For some time now, Western development aid has been criticized as ineffective. Over the past 60 years, the West has given an estimated trillion dollars in aid to Africa, and there is a growing body of evidence that this aid has actually made the continent worse off than before. Aid, argues Dambisa Moyo, in her book Dead Aid: Why Aid is Not Working and How There is a Better Way for Africa, is to African governments what oil is to Middle Eastern ones. It perpetuates bad governance and enriches rulers at the expense of everyone else. Moyo points out that Africa is more in debt and more impoverished than it was 40 years ago. She believes that aid is partially, if not mostly, to blame.
Over the last few years, China and the other BRIC countries have significantly increased their spending on international development projects, particularly in Africa. These countries are supplanting Western donors as Africa’s major suppliers of foreign aid, and redefining the aid paradigm.
The vast majority of Chinese development in Africa is not aid, per se. The Organization for Economic Cooperation and Development (OECD) breaks development finance down into two categories: Private and Official. Private development finance includes remittances, FDI, private grants, and other instruments. Official development finance, on the other hand, includes both Official Development Assistance (ODA), and Other Official Flows. ODA is strictly defined as grants and concessional loans—what organizations like the Congressional Research Service commonly call “aid.” Other Official Flows are defined more broadly. They include export credits, certain types of resource-secured loans, military aid, subsidies for private investment, and a slew of other government mechanisms.
The vast majority of Western aid to Africa is in the form of ODA, in other words, concessional loans, debt forgiveness and grants. Chinese development, in contrast, is not majority ODA but rather Private and Other Official Flows. This fact is obscured, as Deborah Brautigam explains, by China’s lack of regular official reporting on its aid activities, and by the state-driven nature of the Chinese economy.
The difference is not merely technical. It reflects a major difference in China and the West’s approaches to aid-giving in Africa. China’s overall strategy is profit-driven and self-interested. It seeks to acquire as many natural resources as possible, support Chinese businesses and promote Chinese diplomatic policies. Its apparent proclivity for propping up pariah states and its nonchalance towards human rights and environmental standards has led Western governments and African ones to label China as a bad influence in the region.
However, many argue that China’s strategy, despite its drawbacks, may benefit Africa in the long-run. Take natural resources, for example. China does not view African countries that are rich in natural resources as poor. Therefore, it is reluctant to give grants and concessionary loans and prefers to use resource-backed loans, such as the “oil-for-infrastructure” type loan it gave to Angola, instead. Many Africans prefer this approach and view China’s economic role in the region as beneficial. South African President Jacob Zuma, recently said “we are particularly pleased that in our relationship with China, we are equals and that agreements entered into are for mutual gain.”
Another major difference between Chinese and Western development in Africa is the focus on infrastructure. Western donors focus more on emergency and humanitarian projects. In 2011, 61% of China’s total concessionary loans to Africa went to infrastructure projects, most built by Chinese contractors. The roads, ports and railways are meant to bypass South Africa and give China access to the wealth of oil and other resources in Africa’s interior.
China’s focus on infrastructure and commercially viable investments is starting to have a positive effect on Africa’s economy. It is also increasing Chinese influence in the region. While China is unlikely to use its new found influence to pressure African governments to be more accountable on human rights issues, its investments will have tangible effects on African development.