Health Aid and Health Improvement in Sub Saharan Africa

Using a sample of 28 sub-Saharan African countries during the period of 2000-2010, this paper examines the effect of health aid on health outcomes. After taking into account the endogeneity and using the instrumental variable approach, the results reveal that health aid improves health outcomes in sub-Saharan African countries. More specifically, for each additional unit of health aid, life expectancy increases by 0.14, prevalence of HIV decreases by 0.05 and infant mortality decrease by 0.17. This effect operates mainly through the improvement of primary completion rate of female. However, the magnitude of the effects is too small if African countries would like to achieve MDGs through additional health aid. Furthermore, the Oaxaca-Blinder decomposition indicates that differences in terms of the amount of health aid received do not explain the health outcomes gap between post conflict countries and stable countries. The relevant variables are governance and the female primary completion rate. The policy implications of the paper are further discussed.