ODA and HDI nexus in sub-Saharan Africa pre- and post-Global Financial Crisis (GFC): new evidence from the ECOWAS region

This study explores the relationship between Official Development Assistance (ODA) and Human Development Index (HDI) in the Economic Community of West African States (ECOWAS) between 1996–2023, encompassing periods before and after the Global Financial Crisis. Using data sourced from the World Bank’s WDI database, the System GMM estimator was employed to examine the direct impact of ODA on HDI and the moderating influence of governance quality. The results indicate a consistent significant negative relationship between ODA and HDI, particularly for the full sample (1996–2023) and post-financial crisis (2008–2023). Interaction analysis between ODA and the six World Governance Indicators (WGI) showed a significant negative coefficient for ODA and regulatory quality, suggesting that the negative impact of ODA on HDI is exacerbated in countries with stronger regulatory environments. Hence, the study suggests that context-specific approaches are needed to ensure that ODA complements the progress driven by strong governance systems.