Agricultural Foreign Aid Allocation in Sub-Saharan Africa: The importance of Democracy and Quality of Governance

The objective of this research is to revisit the determinants of the allocation of foreign aid to agriculture in Sub-Saharan Africa, with a particular focus on the effects of democracy and quality of governance. The data for the study cover the period 1996-2018 in 47 Sub-Saharan African countries. Since democracy and quality of governance are a complex and multidimensional concepts, we measure them using three variables for democracy and five variables for quality of governance. In the quantitative analyses, we perform two estimations: country fixed effects and feasible generalized least squares regressions. We find that the strength of democratic institutions and government voice and accountability positively determine foreign aid to agriculture. Moreover, the quality of governance affects the allocation of foreign aid. Indeed, political stability and absence of violence/terrorism, government effectiveness, regulatory quality, rule of law, and control of corruption positively determine the allocation of foreign aid to agriculture. Our findings have strong policy implication for Sub-Saharan Africa countries, which shows that it is more desirable to promote good governance and improving the processes of democratization in each country to shift agricultural aid flows from international aid agencies and donor’s countries.