EU development aid to Kenya had no significant impact on the economy, according to official audit

According to the latest report issued by the European Court of Auditors (ECA), the €435 million development aid distributed by the EU in Kenya between 2014 and 2020 did not significantly contribute to the country’s economic growth.

The auditors who prepared the report, issued on the 8th of September, called for the way in which aid is channelled to be considered.

ECA Member, Juhan Parts, said that “We did not see sufficient evidence that the aid is channelled to where it can do most to reduce poverty,” adding that “job creation is the most effective and sustainable way to reduce poverty, so EU funds should primarily be focused on economic development.”

The vast majority of the development aid that Kenya receives from the EU comes from the European Development Fund (EDF) and aims to support good governance and boost sustainable economic growth. Kenya received €435 million from the EDF between 2014 and 2020 which represents about 0.6% of its tax revenue.

A third of the Kenyan population lives in extreme poverty, having only less than $1.90 per day, and more than 20% of Kenyans are malnourished, it has one of the largest, quite innovative, and digitalized economies in Eastern Africa. Its GDP growth has recently been below the regional average, nevertheless, the economy can be assessed as being fairly stable and predictable so Kenya’s situation is different to other countries in the region. However, the EU treats Kenya in the same way as other, poorer and weaker countries where development aid is distributed and thus the aid is not channelled in an effective way, as Juhan Parts pointed out. He claims that the EU should conduct a comparative analysis of different countries where aid is sent in order to avoid wasting money.

As the report of ECA shows, the money allocated to Kenya was not spent effectively and neither did it address the most pressing needs. Moreover, the distribution of aid was not dependent on such issues as the country’s performance, governance, or involvement in conducting reforms or fighting against corruption. In 2019 Kenya was ranked 137 out of 180 countries in the Transparency International’s Corruption Perception Index. The ECA discovered that between 2014 and 2020, the European Commission and External Action Service distributed about 90% of aid in Kenya based on the standard formula for the ACP countries (African, Caribbean, and Pacific Group of States) and therefore failed to target specific goals and development challenges.

The EU aid was distributed amongst many different areas such as agriculture, drought emergencies, energy and transport infrastructure, elections, public financial management, and the justice system. The ECA estimates that a lack of tangible results for the development aid given by the EU to Kenya stems mostly from a gap in analysis and the lack of a proper assessment of the country’s needs. The report also indicates that the EU did not pay enough attention to the manufacturing sector and digital economy which translated into the lack of visible impact of the aid on Kenyan economy.