The Aid Debate: Helping Hand, or Hardly Helping?
How can the two faces of aid — waste versus lifeline — be reconciled? The World Bank's research department provides some clues. For starters, much of what counts as aid in official statistics isn't aid at all. Huge loans that the bank and other donors made to African dictators were political bribes for lining up with the West during the cold war. The amount of money that actually trickles down to the poor has been negligible for decades. No wonder past studies have found little measurable impact of aid on poverty.

More important, aid handed over to inept or corrupt governments does not work, even if the money is initially spent on worthwhile health, education or infrastructure projects. Tanzania was given money to build roads, for example, but since the government failed to maintain them, they disintegrated as quickly as donors supplied fresh money to build new ones.

But the larger point made by the bank's researchers is that aid can have tangible results when directed to those governments truly committed to fighting poverty, like Uganda, Ghana and Mauritius.
http://www.nytimes.com/2002/05/26/weekinreview/26WEIN.html