Aid and poverty in Africa. Do well-being measures understate the progress?

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In the last 15 years international aid donors to Africa have shifted their focus dramatically toward health and education; the share of social sector support in total aid rose from 33% to 60% from 1990-94 to 2000-04 alone.

If this aid has been effective, it is unlikely to be captured in GDP or income poverty figures. This paper uses Demographic and Health Survey at multiple points in time for ten Sub- Saharan African countries to explore changes in well-being over time in the region. We compare the evolution of both assets and health that are considered as the two dimensions of the well-being. These dimensions are simultaneously estimated using the structural equation models with latent variables that have been developed in the psychometric literature. The comparisons of well-being across time in each country are based on the stochastic dominance analysis. The main results suggest that assets and health have been improved during the last two decades in most of these countries. A decline in assets is observed for three countries while health deteriorates in two countries. The reduction in poverty in most cases appears to be explained less by aid alone but other macroeconomic factors play a significant role.