Aid Thoughts is Danger, Achtung!

I’m not sure how this one passed me by, but on December 4th, the Guardian published a Wikileaks extract which relates  the outcomes of discussions between US Embassy staff and African leaders regarding the increasing role of China on the continent.

I’ve already made it clear that I think the Chinese role is not nearly as worrisome as it’s been made out to be, though subsequent reading on the situation in Zambia suggests that terrible Chinese labour practices have been exported along with their money and expertise in mining and road building. One of the key messages of my previous piece on China was that Africa likes the way China does business, despite all the worries the West has, and wants other donors to be more like them. This is spelt out in stark language in the leaked cable:

China’s fast, efficient, “no strings attached” bilateral approach is popular in the region, as is the PRC preference for infrastructure over governance projects. African officials fear that U.S. or European interference will slow down the assistance process and tie conditions to Chinese aid. In the past, the EU angered many African countries when it proposed trilateral cooperation. The Chinese subsequently backed out of discussions citing lack of African support. In addition, African officials believe that competition between donors has had positive consequences for African development, giving the African countries options after several decades of a largely “Western” development model.

Firstly, this makes it completely explicit that China’s focus on productive activities, done quickly and without linking them to anything that does not directly concern their success is far more popular than the more involved, convoluted way the Western donors try to impose conditionality-by-stealth through a complex system of linked aid projects and general budget support. Secondly, it makes it clear that African governments are probably more keen on competition than coordination, which will probably please Owen Barder, who sees this as key to the positive evolution of the aid system. I’m agnostic on this one: I think competition is good, but the basic incentives of aid are so confused it may not work exactly the way it should (i.e. fostering specialisation according to comparative advantage). A bit of both coordination and competition would be ideal. The basic message is spelt out with clarity that no-one can possibly misinterpret:

Africans don’t want conditions, they want options

The effect of competition has already been felt, the cable suggests:

[South African Minister Dave Malcolmson] recalled that after the 2006 Forum on China-Africa Cooperation (FOCAC) summit, when China announced its commitments to Africa to much international media fanfare, traditional donors changed their attitude. They recognized that they had to measure up to China and “came calling.” The EU proposed infrastructure projects (after having defacto given up supporting these types of projects) and the World Bank began to support more agriculture projects.

I’ve noted this as well. This is a really good thing, a renewed focus on the economy after more than a decade of neglect in favour of social development and governance. However, is this really how competition should work? They are trying to one-up one another, not to focus on areas where they can best make a case for being the lead donor. I think it will take a few years before we see how this reaches equilibrium. Hopefully it will lead to a situation where two or three donors of very different backgrounds will dominate each sector, reducing burden on recipient Governments but providing a broad coverage of support across sectors and competition within them.

An example of the kind of approach I’d like to see was also praised by Malcolmson:

He cited the DFID’s relationship with China as an example of healthy cooperation. DFID’s success has come from focusing on small projects and working largely outside formal channels…

More interesting words were expressed (after the jump):

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Wrong About China

When I was in Ethiopia, one thing that struck me immediately was how big and visible the Chinese presence there is these days. While my travels were mainly restricted to the north of the country, virtually every road I came across that was under construction (and there were a lot of these) had Chinese staff overseeing the work. There were entire camps for workers in the road building trade, proudly flying a much larger Chinese flag alongside the Ethiopian one.

China scares a lot of people in development. Over the last two or three years, increasing attention has turned to the role of ‘new’ or ‘non-traditional’ donors. These labels are generally applied by what we would think of as the establishment donors: the US, UK, Scandinavian countries and the major multilaterals. They consider the ‘non-traditionals’ to be those donors who come from outside their cabal of policy voice: South Korea, India, China and Brazil being the most prominent. Given that some of the ‘establishment’ donors are relatively recent additions to the group of large-scale donors, and some of the ‘non-traditionals’ have long-standing bonds of mutual support with other developing countries I don’t think these labels really work. I find it more accurate to group donors along the lines of when they themselves developed. The first set of donors, centring around Europe and America, are the ‘first-generation’ of developers while the rest can broadly be classed as ‘second-generation’ developers. These two sets have different approaches to development.

China is the big one among the second generation donors, and just as China’s policy approach to increasing the power and wealth of its economy has a lot of Western policy makers and economists worried, so has its approach to its relatively new role in Africa begun worrying Western aid agencies. Generally, Chinese aid to Africa draws three major critiques from the first-generation donors. These are:

  • China’s aid is too unconditional – they do not penalise poorly or repressively governed countries and do not require the same standards of fiscal and economic management prior to undertaking massive aid projects.
  • Their self-interest is too great an influence on their aid – they focus too much on providing business to Chinese firms and in extracting resources for Chinese use, rather than the unalloyed betterment of the aid-recipient country.
  • They are far too opaque a donor – they do not provide sufficient information on the volume, distribution and modes of disbursement of their aid. This raises worries that their aid is not very user-friendly. China, for example, does not appear in AidData’s data set as a donor.

Having worked for a few Governments that receive aid from China, and seen up close the good and bad of all donors’ practices, I’m beginning to feel that the first-generation donors are wrong about China. Not only are the some of the criticisms they make of China’s modus operandi either incorrect or hypocritical, it also seems that China’s presence as a donor has a positive consequences that are insufficiently remarked.

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