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Wednesday, March 30, 2011

Africa, China, and aid

http://www.washingtonpost.com/opinions/chinas-african-investments-who-benefits/2011/03/28/AF8G7mqB_story.html
The article is another example of China-bashing in this case because China has a purely practical, contractual basis for its alliances in Africa.  That is, as in Angola for example, China agrees to build the countries roads, ports, and airports and in return they get a favorable long-term price for oil.  There is no talk of governance, conditionalities, civil society reform or any of the other moral-based approaches to international aid adopted and promoted by the West.
As a result, China has gained influence, resources, and friends.  Next time there is a vote in the UN that has anything to do with China, watch how Africa votes. 
“Nowhere is the contrast of Chinese and American development strategies more evident” says the above-quoted article. “The U.S. government, of course, has its own checkered history of resource-seeking behavior, especially in the Middle East. But in Africa today, America consistently promotes economic liberalization and good governance while providing aid focused on human needs and structural reform. America’s innovative Millennium Challenge Corp. — which has approved a compact to improve the Malawian energy sector — makes funding contingent on meeting standards of transparency, human rights and the rule of law. At least America tries to nudge African nations in the right direction.”
This approach to development has been a consistent failure.  The MCC programs have little to show for their investment and are as flawed as their sister organization USAID in its grant policies.  Their criteria for qualification are fine in principle (transparency, free press, corruption), but a country with a free press and corruption like Bangladesh could qualify for MCC assistance because it meets certain core criteria.
The reason why most USAID efforts at liberalization and governance fail is because of the development system itself. Only in Eastern Europe after the demise of the Soviet Union did investments work because countries like Poland, Romania, etc. desperately wanted to effect democratic and economic reforms so that they could qualify for the EU.  Countries in Africa, many of which are ruled by kleptocracies have no inherent strong demand for reform, and thus continue to siphon off aid money for their own ends.
Therefore, the US criticizes China for its no-nonsense contractual approach to development – sour grapes because we are losing access to valuable resources and not making any friends as we push for unwelcome reforms.
The article also wrongly criticizes China for making loans not grants to African countries for certain projects.  Loans are exactly what is required.  Grants have perpetuated the entitlement culture in Africa and contributed to corruption.  Eventually all aid should go back to the pre-McNamara World Bank where it was the lender of last resort and loaned at commercial rates if the loan was considered viable but not taken by commercial banks.

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