Abstract:
Donors play a critical part in the functioning of the national health systems of many countries in Africa. However, the streamlining of the funding regime to achieve effective utilization of donor funds still remains a challenge despite the imposition of financing conditions by the donors. Donors have consistently given funding conditions for their developmental aid and even explored different program financing models. Empirical evidence indicates that several implementing agencies in developing countries characteristically deviate from implementing the conditions that donors have set as a requirement for granting foreign aid and this considerably lowers the absorption rate of these funds into the intended projects. This, therefore, puts into question the effectiveness of the donor financing conditions on the effective utilization of donor funds. Therefore, the general objective of the study was to establish the influence of donor imposed financing conditions on effective utilization of donor funds focusing on the health sector in Counties of Nyanza Region, Kenya. The study used descriptive survey research design and targeted 4 donor organizations with projects in Kisii, Kisumu and Homa Bay Counties all in Nyanza Region. 84 persons comprisingfund management team members, accountants, auditors, and fund evaluation team members from the area obtained using stratified random sampling participated in the study. Pre-tested questionnaires were used for data collection. Both descriptive and inferential statistics were used for analysis. The findings revealed that donor financing conditions on projects insulated the projects funding base from interferance by external actors, thereby, effectively mitigating the agency problem in fund utilization. It was, therefore, recommended that there needs to be better correspondence between the donors and the implementing agencies on the modalities influencing fund disbursement so as to avoid costly delays
