The Nuex Between Foreign Aid and Economic Growth in Sierra Leeone (1994 -2024)

This study investigated the relationship between foreign aid and economic growth in Sierra Leone using annual data from 1994 to 2024. Specifically, the study first, estimated the impact of foreign aid on economic growth; and second, the study investigated the direction of causality between foreign aid and economic growth in Sierra Leone. The ordinary least square estimation technique was used for analysis. The empirical findings suggest that foreign aid inflow into Sierra Leone is imperative for economic growth in Sierra Leone. The study further found that gross capital formation and labour force impact significantly on economic growth whereas, foreign direct investment impacts negatively and insignificantly on economic growth. The study further found that there is no causality between foreign aid and economic growth in Sierra Leone within the period under review. Based on the findings from this study, it is recommended that vigorous effort should be made by government to create a stable economic and political environment and effective competitive policies. This work has tried to emphasize that aid programmes should be broadly consistent with a strategy aimed at developing human capital. In the absence of foreign aid, there is no doubt that the height of development in human capital in Sierra Leone would be even lesser than that prevailing. This work recommends that foreign aid could be better prioritized in the following ways; In order to lessen the extreme disparity that exists in Sierra Leone, foreign aid must be directed more specifically at individuals living in the poorest areas of the nation. The rate of school dropouts will decrease with less disparity, notably in Sierra Leone. Additionally, recent studies show that nations with less inequality have a higher likelihood of improving their literacy rates as a result of foreign help. Therefore, there should be more foreign aid programs launched in each of Sierra Leone four geopolitical zones.