There is a new kid in town and its name is the People’s Republic of China. Its entrance into the rich and elite foreign aid club has redefined the foundations of foreign aid. At last summer’s Conference of the Forum on Africa China Cooperation, the mighty dragon has pledged $20 billion USD over the next three years for infrastructure and agricultural development.
China’s entrance into Africa is at the forefront in the rapid shift taking place in global giving. The four BRICs (Brazil, Russia, India and China) are giving to countries who have traditionally relied on the western OECD-DAC donors, the so called “old guard” of foreign aid. China is the largest of the new emerging donors and gives out more aid than the World Bank. The BRIC countries are reshaping the foreign aid landscape and bringing new opportunities and challenges to developing nations. the OECD-DAC countries are loosing their monopoly on foreign aid. The BRICs are seeing tremendous growth in their foreign aid expediters. Its philosophy on foreign aid is based on mutual assistance and benefits. They see themselves and development partners instead of donors. They preach a policy of non interference and do not attach policy conditions on their foreign aid.
So, how does China’s foreign aid affect Africa? According to China’s first white paper on foreign aid, 45% percent of total Chinese aid goes to Africa. According to estimates, China’s total engagement with the developing world totals up to $25 billion USD China spends 60% of its foreign aid on interest free loans and concessional loans while the remaining 40% is spent on grants. Unlike the traditional DAC donors, whose aid is coordinated through their respective development agencies, Chinese aid is coordinated through its foreign missions. 61% of China’s aid is directed towards the recipient country’s economic infrastructure such as transportation, energy and communications which is essential to a country’s economic development and growth. Contrary to popular belief that the majority of Chinese aid exploits a country’s energy and natural resources, only 8.9% falls into this category.
Recipient countries like those in Africa have welcomed Chinese aid and investment. Since the recession in 2008, the foreign aid budgets of the traditional DAC donors have shrieked and more conditions have been placed on the aid dished out. China has great appeal to recipient countries, According to a study by the Economic Strategy Institute, China’s sheer competence and speed in which it is able to negotiate and execute its development programs is a central to its appeal.
Across Africa Chinese aid is viewed very favorably with many countries showing approval rating over 60%. The president of South Africa Jacob Zuma praised China’s approach to Africa for being more preferable to western donors. “We are equals, and agreements entered into with China are for mutual gain.”
China faces criticisms that its policy in Africa is solely fuelled by a hungry desire for natural resources. Critics point out that China dishes out aid to countries without taking into considerations the recipient’s human rights record or the transparency of its institutions. This might be impeding the efforts of Western donors to build stable, strong and transparent institutions in the region. It has also been pointed out that Chinese investments in Africa only benefiting Chinese industries and the people are not reaping on the benefit of these investments.
Is Chinese engagement in Africa better, just as bad or worse than the West? Dambisa Moyo in her book “Dead Aid” argues that the western donor countries have provided over $1 trillion USD in aid to Africa and it is not working. Africa is poorer and more in debt than it is 50 years ago. She suggests China’s method of engagement with Africa though not perfect could serve as a better alternative to the western model. In addition, is the west any better than China in its policies in Africa? China serves as a rival for Africa’s resources and influence.
Let’s face it foreign aid is not given because countries have unlimited bank accounts. They are given to fulfil a donor country’s self interest. These include favourable considerations for corporations, business, trade, natural resources and political considerations. The West doesn’t give aid to promote democratic institutions and transparent governance. They have sent aid packages authoritarian countries from Zimbabwe to Libya to Pakistan and North Korea. Countries don’t go to Africa to make a difference, they go there to make a profit. China is no different. Maybe China’s approach will have a better impact in Africa in the next 50 years than the West had in the previous 50.
- Ecobank sees more benefits in China-Africa trade (nzweek.com)
- Brian Atwood’s legacy as OECD-DAC chair (devex.com)
- In Africa’s warm heart, a cold welcome for Chinese (chinadailymail.com)
Categories: Finance & Economy