Assessing China's Aid in Africa - Evidence given to the Africa All-Party Parliamentary Group
China's aid programme in Africa raises many issues but there has been little serious analysis of its extent and implications. Dr P B Anand, Head of the Bradford Centre for International Development, gave evidence on this key issue to the APPG earlier this year and work based on this has now been published.
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African cities seem to be undergoing a transformation. Shiny new ring-roads, spanking new ports and airports and other infrastructure projects are springing up in many capitals. Financial journals and newspapers attribute a lot of this to China’s aid to Africa. However, most assessments of China’s aid to Africa include polemics such as: “China is buying up all resources in Africa”, and “China’s aid with no strings attached is propping up corrupt non-democratic regimes in resource rich Africa countries”.
The Africa All Party Parliamentary Group initiated an inquiry in 2013 to examine the key challenges to development of democratic institutions in Africa. In one of its meetings held in June 2013, the APPG focused exclusively on China’s aid to Africa. I was invited to give evidence at this session.
At Bradford, I had the privilege to co-ordinate the China Development Bank executive education programme since 2007. This experience has given me some insights to understand the largest development bank in the World. Based on this familiarity and analysis of both secondary literature and some macro-level data on China’s aid to Africa, I tried to present some analysis of facts as my evidence to APPG.
Traditional aid donors are members of what is known as the Development Assistance Committee of the Organisation for Economic Co-operation and Development (OECD-DAC). China is not yet a member of the OECD-DAC. Assessing China’s aid is very difficult mainly because data is not available in the same format as data on activities of the OECD-DAC members. Though Chinese government has recently published a White Paper on its aid, there are many reasons why it is difficult to assess Chinese aid. Some of China’s aid is given in kind as bilateral co-operation- how this is monetised is not clear. Also various aid instruments are used including: grant-in-aid, soft loans, natural resource-for-infrastructure swaps and so on. Also, some of the aid is actually in the form of export credit guarantee given to Chinese private firm that can mobilise resources from the capital market and build the facility in Africa.
Notwithstanding these difficulties and shortcomings, I have tried to analyse Chinese aid to Africa during 2000 to 2012 and compare this with OECD-DAC assistance also during the same period. Some startling results were observed. Overall Chinese aid is approximately equivalent to a fifth of OECD-DAC aid during that period. Chinese aid per annum more than doubles after 2005 and much of this aid seems to be going predominantly to physical infrastructure and productive activities whereas significant share of OECD-DAC aid has gone mainly to social infrastructure, governance peace-keeping and humanitarian issues. The most important finding was that there was no significant difference between Chinese aid and OECD-DAC aid in terms whether one is skewed towards more corrupt or non-democratic regimes.
The APPG published its report in May 2014 with the title ‘Democracy Soup’. It is available here (PDF):
Further analysis of this is being presented in a chapter on the development assistance by BRICS countries in a forthcoming book on BRICS and emerging economies that I am co-editing with Dr Flavio Comim, Dr S Fennell and Dr John Weiss.
An analysis of finance for infrastructure in Africa is available in a paper I have co-authored with Professor Tony Addison, Deputy Director of the UNU-WIDER. This is available here (PDF):
In that paper we have tried to assess the role of aid from China and other BRICS countries as also domestic finances of infrastructure in Africa. One of main findings was that most of infrastructure investment and maintenance in Africa is not funded by OECD-DAC donors, nor by Chinese or other new donors but by African citizens themselves. Our main recommendation was that OECD-DAC aid in Africa must have paradigm-shift – instead of building individual infrastructure projects we suggested that the OECD-DAC aid should focus more on building the necessary regulatory and analytical institutional capacities so that African governments can use the available resource far more effectively and also access the capital markets to generate resources.
Comments are most welcome: email p.b.anand@bradford.ac.uk