There are conflicting ideas on the usefulness of foreign aid, according to Wolfgang Fengler in a recent article in the Daily Nation. Peter Singer and Jeffrey Sachs argue that aid works but the problem is that we do not provide enough of it; massive increases in foreign aid would result in the eradication of poverty. William Easterly and Dambisa Moyo, on the other hand, argue that aid stifles progress in poor countries by undermining accountability between governments and their citizens.
According to Fengler, there are three main myths about the role of aid in Kenya:
- 1. Kenya needs donors to finance its budget. In fact only around 15% of public expenditure in Kenya is foreign financed.
- 2. Kenya’s financial management systems are too weak to permit direct budget support. In fact, Kenya’s public financial management systems have been greatly improved over time.
- 3. Projects need to be small and ring-fenced from government processes. In fact, this causes aid fragmentation and weakens institutions.
Those who regularly follow Kenyan news and politics might feel that Fengler is overly optimistic in his assessments. While Kenya might not be technically aid dependent, there would need to be drastic expenditure cuts, such as abandoning free education, if foreign aid was cut off. Further, continuing reports of large-scale corruption in government and in foreign-funded projects suggest that Kenya still has a long way to go in improving its financial management systems.