This paper re-examines the question of aid effectiveness in Sub-Saharan Africa (SSA) byrnanalyzing the effect of foreign aid on selected components of HDI including economic growth,rnadult literacy and under-jive mortality rates. The estimation technique of Dynamic Panel Datarn(DPD) System-GMM has been applied to a panel data from 44 SSA countries for the period 1973-rn2007. The data shows that during the period considered, SSA's share of aid inflows to therndeveloping world is significant. However, following the global financial crisis, total foreign aidrnand SSA 's share is expected to decline. This requires better use of the limited aid resource. Thus,rnsearching for ways to use the aid in an efficient manner and spending the money in those activitiesrnand/or sectors which yield better economic outcomes is seems to be imperative. The estimatedrnresults indicate that the impact of aggregate aid on economic growth is statistically insignificant,rnbut the aid enhances economic growth when matched with good domestic macro-policies.rnHowever, the effectiveness of aid to the education and health sectors is justified irrespective of thernquality of domes ti c institutions. This implies that aid to the region can bring improvement inrnhuman development if coupled with good macro policies and institutional setup. The Robustness ofrnthese results is also checked with respect to the use of different definitions of foreign aid (aid perrncapita and aid-to-GDP ratio) and results remained unchanged. Thus, the policy implication is thatrnaggregate aid to the region can bring economic growth if efforts are made to improve the policyrnenvironment. Moreover, for the overall improvement in human development, foreign aid to thernregion should better target education and health sectors, which UN Millennium DevelopmentrnGoals (MDGs) target. In general, the result suggests that macro-policies would help countries ofrnthe region not only to grow but also to make aid more effective to spur economic growth. Thus, inrnthe medium and long-term, to realize the benefits of good policy in a better way, revising andrnworking towards appropriate institutional setup and macro polices in the region is advisable.