Eager to maintain the growth that has lifted hundreds of millions of people out of poverty, Asia’s booming economies are courting cash-poor but resource-rich African countries with billions of dollars’ worth of investments, trade deals and development aid — and the romance is getting serious.
According to the World Bank, since 2000 there has been a huge increase in trade between Africa and Asia. Today, Africa sends 27% of its exports to Asia compared with 14% in 2000, almost equivalent to Africa’s exports to the United States or the European Union. Asia’s exports to Africa are also growing rapidly, about 18% annually, faster than to any other region.
In 2006, Chinese President Hu Jintao told a conference attended by 48 African leaders in Beijing that China would double aid to Africa by 2009. It would also cancel the debts of 33 African countries, provide $5-billion in low-cost loans and credits and establish a $5-billion fund to encourage Chinese investment in Africa.
In 2008, China promised $20-billion over the next three years to finance infrastructure development in Africa. Up to the end of 2005, the country’s foreign direct investment in Africa totalled $1,3-billion.
Over the past four years, trade between India and Africa has tripled to $25-billion. Indian Prime Minister Manmohan Singh announced at an India-Africa Forum in New Delhi in April that his country would double trade credits to Africa to $5,4-billion in 2008/09 and increase the number of scholarships it gives to students from Africa from about 4 000 to 8 000.
Rules of the game
Yet even as Africa enjoys strong growth due in part to increased exports to Asia, concerns are mounting that Africa’s new partners aren’t playing by the North’s rules of the trade and aid game.
Like aid from the North, Chinese assistance is often tied to the use of Chinese goods and services, notes Dorothy McCormick of the Institute for Development Studies at the University of Nairobi in Kenya, but, she adds, it “does not carry the ‘good governance’ conditionalities that currently characterise Western donors”.
China’s aid also “requires adherence to the ‘One China’ policy” — that is, that recipient countries withhold diplomatic recognition from the Taiwan authorities. As a result, China has often been accused of being lenient with authoritarian regimes in Africa, although some Western governments have also been criticised for supporting autocratic governments on the continent.
As these new players emerge, there have been calls for them to bring their aid and investment practices in line with those of the wider donor community. In a report to a high-level meeting on Africa’s development needs in the General Assembly on September, 22, United Nations Secretary General Ban Ki-moon urged these new development partners to support international efforts to reform and coordinate donor policies.
The Group of Eight (G8) industrial nations — which includes a number of Africa’s long-time donors — has been especially vocal in calling on the new donors to change their aid policies.
At its summit last year in Heiligendamm, Germany, the G8 urged the continent’s new donors “to improve transparency of their aid and to follow internationally shared principles”. At the same time, the G8 pressed African countries to continue to pursue “sound policies”, which generally include maintaining balanced budgets, favouring private-sector development and liberalising domestic and external trade. The G8 also insisted on promoting the “universal values” of human rights, democracy and good governance.
Fear of competition
African critics of Northern donor practices have long viewed such policy prescriptions as heavy-handed. Some interpret recent Western criticisms of the “no strings” aid policies of China, India and other new donors as an expression of concern that Northern influence may be eroding.
After China announced in September 2007 that it would extend about $5-billion in financing to the Democratic Republic of the Congo (DRC) to build roads and other infrastructure, officials from Belgium, the International Monetary Fund and other Northern institutions voiced doubts about such transactions. An editorial in the Congolese daily Le Potentiel responded: “The DRC is sovereign and can contract bilateral and multilateral agreements … It is good for the DRC to multiply its partners.”
And while Western powers are insisting that China and India become more accountable in their aid and investment practices, some in Africa point out that the Northern donors themselves tend to pursue a one-way approach to accountability.
Accountability requirements “are often harder on developing countries than donors”, notes Yash Tandon, of the South Centre, an intergovernmental think tank for developing countries.
He cites Tanzania, which hosted 541 donor missions in 2005 alone and had to account to donors for 700 projects managed by 56 separate offices. Despite recent commitments by Northern aid agencies to improve their practices, he adds, Tanzania’s donors prepare “performance conditionalities” in consultation with the World Bank, but without Tanzania’s participation.
“There is no real mutual accountability,” argues Tandon. “If recipient countries do not perform, they are subject to penalties. But if donor countries do not perform, they are not penalised.”
In normal business transactions, banks and borrowers both take risks and absorb the costs of default, but “in the aid architecture proposed by the OECD, the risks are taken by recipient countries alone”. Such flaws, he notes, are driving African countries to seek donor partners elsewhere.
In contrast, says Sun Baohong, of the Chinese embassy to the US, “We are dedicated to non-interference and social development of African countries” in the spirit of South-South cooperation.
She says criticism of Chinese policy from Africa’s traditional partners is due to misunderstanding and self-interest. “Some people fear for their domination in this regard, and they fear that the alternative constitutes competition.”
Reprinted from UN Africa Renewal