Effect of Official Development Assistance (Oda) on Poverty Reduction in Sub-Saharan Africa

This study investigates the effect of Official Development Assistance (ODA) on poverty reduction in 48 Sub-Saharan African countries from 2004 to 2024. Using a longitudinal research design and secondary panel data from the World Bank, UNDP, and AfDB, the study employs the System Generalized Method of Moments (System GMM) to account for endogeneity and country-specific heterogeneity. Poverty, measured by the headcount ratio, serves as the dependent variable, while ODA inflows, GDP per capita, inflation, and trade openness are included as explanatory variables. The results reveal that ODA significantly reduces poverty, with its effectiveness enhanced in countries with stronger economic performance. Lagged poverty, inflation, and trade openness also influence poverty levels, highlighting the importance of macroeconomic stability and policy interventions in complementing foreign aid. The findings conclude that while ODA is a key tool for alleviating poverty in Sub-Saharan Africa, its impact is contingent upon domestic economic management and institutional quality. The study recommends efficient targeting of aid, strengthening governance, fostering economic growth, and integrating trade policies to maximize the poverty-reducing benefits of ODA.