# **Introduction**

Although recent economic policy reforms in Sub-Saharan Africa have enabled countries in the region to restore economic growth, the region's lack of human and physical capital, their increasing debt overhang,' and inability to attract financial flows from private sources represent major obstacles to achieving sustainable economic growth (Cohen, 1995).

The lack of private financial flows in recent years has made Sub-Saharan African countries increasingly dependent on official development assistance (ODA), defined as financial flows from donor countries in the form of either grants or highly concessioral lending. Of the $132.7 billion in total external debt owed at the end of 1993 by the socalled Special Program of Assistance (SPA) countries 69 percent was owed to official creditors (bilateral and multilateral).2 Of that, 59 percent (41 percent of the total) originated as financial flows extended on concessional terms.

At the same time "aid fatigue" has become a common concern among many in the field of development in recent years. In fact ODA from OECD countries dropped by almost $5 billion recently, from $60.9 billion in 1992 to $56.0 billion in 1993, and fell by another 6 percent (in real terms) during 1994.4 The main cause of this drop is the increasingly tight budget constraints of the major donor countries. For example, between 1992 and 1993 ODA from the United States fell from $11.3 billion to $9.7 billion, and even Sweden (traditionally a strong aid supporter) cut its aid from $2.5 billion to $1.8 billion in the same period (OECD, 1995).

Given the increasing demand from poor developing countries for additional aid flows on the one hand and the limited resources available from industrial countries on the other, aid effectiveness has become a critical issue. In this context official donors in recent years have stepped up their aid efforts in two ways: by providing more grants (with no repayment obligation) and by providing official debt forgiveness, bilaterally and through the Paris Club (World Bank, 1994c, 1995, 1996).

This paper evaluates these efforts based on limited data accumulated over 198993. We provide a descriptive analysis of the impact on the recipient countries of the different aid efforts and channels used in the recent past. Our analysis is limited in that

> I Sub-Saharan Africa is the only region that saw debt indicators worsen during 1995 (World Bank, 1996).

> 2 The SPA is a forum that was formed in 1988 with the international donor community and under the **chairmanship** of the World Bank to coordinate external support for reform programs undertaken by low-income, debt-distressed countries in Africa. The objectives of the SPA are to ensure that adequate balance of payments finance is available for reform programs and to provide a forum for improving the effectiveness and efficiency of donor assistance for the program. Currently, 32 African countries participate in these activities along with bilateral and multilateral donors.

> 3 The share of debt owed to official creditors increases from 69 to 72 percent when Nigeria is excluded from the sample, and the share of concessional debt rises from 59 to 71 percent (51 percent of the total). ODA from OECD countries was equivalent to 0.29 percent of donors' GNP in 1994, its lowest level since 1973 (World Bank, 1996). The ODA figures calculated by the OECD differ somewhat from those calculated by the World Bank. A major difference is that the OECD data include Technical Cooperation grants; World Bank data do not.

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