A computational study of free convective flow and heat transfer in a saturated porous horizontal annulus is reported. Both isothermal and constant heat flux boundary conditions have been considered on the inner walls while the outer wall is held at a constant temperature. The calculation of the flow field involves consideration of non-Darcy effects, such as inertial and viscous forces, and also the variation of porosity near the walls. While the literature shows that Darcy flow model is inadequate in predicting average Nusselt numbers, the present study examines whether non-Darcy effects, and in particular the presence of the boundary, could play a significant role in explaining this discrepancy. Average Nusselt numbers have been obtained for Rayleigh-Darcy numbers from 20 to 4000 for the case of isothermal boundaries, and 20 to 20,000 for the case of constant heat flux on the inner wall. Radius ratio has been varied from 1.1 to 3. Over this range of parameters, inertia and viscous friction in the fluid phase have been found to produce a small effect on the Darcy flow. The effect of including variable porosity near a boundary is seen to produce channeling near the wall which in turn substantially increases the heat transfer coefficient.