How China Delivers Development Assistance to Africa

Dr Martyn DaviesExecutive DirectorCentre for Chinese StudiesStellenbosch UniversitySouth Africa

Beijing, China, 27th March 2008

An Accurate Perception?

An Accurate Perception?

Contents of Discussion

Objectives of the research

Drivers of China’s aid policy

Components of China’s aid policy

The role of policy banks

An evaluation

Recommendations

Summary

Objectives of the Research

To evaluate the dynamics of foreign aid policy

making in the PRC Government & to gain a better

understanding of the institutions involved

To gain an empirical understanding into China’s

ODA in 3 African country case studies - Ethiopia,

Ghana & Zambia

To provide informed commentary on the

implications for the continent, traditional donors &

China’s development assistance itself in Africa

Drivers of China’s Aid Policy

What is aid? China’s perspective

Drivers of China’s foreign aid policy towards Africa

China’s priorities in Africa

How much is China giving?

Who gives? National & provincial disbursements

FOCAC – Dialogue & direction

Components of China’s Aid Policy

Types of Chinese Aid

• Grant aid & technical assistance

• Concessional finance & interest-free loans

• Debt Relief

Aid policy formulation – Who decides?

Project Monitoring

The Role of Policy Banks

China Export-Import Bank (EXIM)

Infrastructure financing / export credits

Sole provider of Chinese concessional loans

More than 300 projects in Africa by June 2007

MoU with World Bank

China Development Bank (CDB)

Not an aid disbursement bank

Loans of US$ 1 billion outstanding to Africa by March 2007

Launch of the CADF – commercial fund

An Evaluation

South-South Cooperation

The Aid & Trade intersection

Roll out of the Angola Model

Political Drivers & Asian competition

The notion of conditionality

Recommendations for African Stakeholders

Gain understanding of the Chinese approach to aid

Regional Economic Community Coordination

Poor Coordination may lead to Chinese aid fatigue

Avoid dividing traditional & emerging donors

Strengthening the African voice

Improving reporting mechanism/ aid monitoring

Improving debt reporting

Recommendations for the PRC

Effective aid management

Cooperation with traditional donors

Greater transparency on aid & loan agreements

Broadening the FOCAC constituency

Engaging African multilateral institutions

Recommendations for Traditional Donors

Building constructive partnerships with relevant

Chinese organizations

Improved donor harmonization

Strengthening Goal 8 (Global Compact) of the MDGs

Avoiding politicization

Summary

This is undoubtedly a politically charged topic

Is it a case of Morality vs. Mutual Benefit?

A coalition finance-investment model is emerging

Risk in Africa is being re-calculated

Defining & deciding on the applicability of the “China developmental model”

Harmonization / consolidation is all important

Africa needs to be more proactive

China could pursue greater transparency to diffuse suspicion

China’s engagement offers a massive opportunity to the continent

Dr Martyn Davies

Executive Director

Centre for Chinese Studies

Stellenbosch University

South Africa

T +27 21 808 2840 F +27 21 808 2841

PO Box 3538, Matieland, Stellenbosch, 7602, South Africa

www.ccs.org.za

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