Sanusha Naidu
4 September 2008
opinion
'Equality and mutual benefit' are reflected today in Chinese leaders' frequent emphasis on aid as a partnership, not a one way transfer of charity, -quoted in Deborah Brautigam's, China's African Aid: Transatlantic Challenge.
India intends to be a partner in Africa's resurgence- Prime Minister Manmohan Singh address to the Nigerian National Assembly in 2007
The rise of China and India has indeed created a new set of impulses in the international system. Not only are these two emerging giants making notable waves in the way that international finance, trade and investments are being shaped but also in the way that the rules, which govern the global governance regime are being influenced. Nowhere is this more apparent than in the realm of the international architecture on aid effectiveness. While the debate rages on around whether China and India are new or reemerging donors in the world today, their behaviour as development partners is certainly changing the global aid picture and most importantly in Africa.
Over the past several years, the politics of aid has been an overarching issue in Africa's development debate. Since 2000 the Group of Eight industrialised rich states (G8) have been promising to double aid to Africa. Unfortunately these promises have largely been unfulfilled with the G8 countries opining that aid money has been misused by African recipients, or that African governments are not conforming to the conditionality of good governance and democratic reform. From the African side the prescriptive nature of the aid policy of traditional donors, their inertia and shifting of the goal posts around what constitutes this doubling of aid has been equally frustrating.
While the G8 and the DAC members are stumbling to find practical ways to ensure that aid is being effectively used to promote sustainable development across the continent, subtle changes are beginning to show with the increasing and deepening footprint of China and India across the continent. Their use of soft power coupled with generous financial packages, and notwithstanding the rhetoric of South-South cooperation has found traction amongst African leaders. But what really makes China and India attractive as development partners for many African governments is the parochial view that Beijing and New Delhi understand Africa's development needs and are not preoccupied with setting high governance benchmarks that could undermine the delivery of aid, prolong the implementation of projects and emasculate development.
Welcomed by African governments as alternate sources of development finance and for their less cumbersome procedures, these two Asian partners have modelled their development finance on a framework of concessional loans and aid for resource security and infrastructure reconstruction. China's development assistance to Africa best illustrates this.
China's increasing penetration of the African market and role as an alternate development partner has raised significant issues regarding the impact this will have for Africa. Will it see new forms of aid dependency? Or does Beijing engender a more inclusive and cooperative engagement with its African partners? What dynamics underpin China's development assistance to Africa and are African governments more pragmatic in their aid relations with China, drawing on their experience with traditional donors? Fundamentally is China's use of development assistance entrenching Africa's indebtedness, leading to a new form of debt risk for African governments? Finally is Chinese aid meeting the expectations of improving the livelihoods of Africa's people?
Balancing China's role in Africa is the increasing presence of India in the continent. Similar questions are being asked of India's development assistance. But perhaps a more significant question is: who will be the better development partner for Africa?
Seemingly then China and India as Africa's 'new donors' has certainly sparked a debate amongst western and African commentators alike. Much of the debate focuses around whether China and India disburse their aid differently and what implications this has for existing western donors in Africa. This is obviously motivated by the fact that China and India are non-DAC donors and somehow represent a challenge to the status quo. Indeed China and India have become significant development partners to most African countries, but their development assistance still remains a negligible portion to that of the DAC and multilateral donors who remain Africa's main development partners.
DEFINING CHINA AND INDIA'S DEVELOPMENT ASSISTANCE
At the very outset it must be stressed that by not being DAC members, it is complex and perhaps cheeky to measure China and India's aid through the lens of the DAC definition of Overseas Development Assistance (ODA) with its main objectives of promoting economic development and welfare at concessional financial terms, and loans including a minimum grant element of 25 per cent. But since no other structure exists by which to gauge China and India's behaviour as donors or until such time both formalise their own evaluation frameworks, China and India will be measured against the DAC consensus. In so doing there maybe certain overlaps with the DAC definition of ODA, but for purposes of clarity and distinction we define China and India's aid as development assistance mainly because of the controversy and sensitivities that surround this topic and in keeping with how both countries perceive their behaviour.
What makes China and India interesting developing partners is that both of them have until fairly recently been recipients of large ODA disbursements. In the last three to four years this situation has altered with a significant decline in their inward aid flows as a percentage of GDP (Gross Domestic Product), which has been offset by their concomitant rise as development partners. [Between 1990 and 2003, China's aid as a percentage of GDP declined from 0.6 per cent to 0.1 per cent. During the same period India's aid decreased from 0.4 per cent to 0.2 per cent. See Manning, R. (2006): 'Will "Emerging Donors" change the face of International Cooperation', Development Policy Review, 24(4), pp. 371-85] But this does not suggest that ODA flows have dried up altogether. Instead China and India continue to receive limited multilateral and bilateral aid simply because their rising global economic status, middle income profile and transition from aid recipients to aid donors has raised the bar around whether China and India continue to qualify for further international development assistance. To this end western donors are reviewing their country assistance programmes to both countries (Davies 2007, p. 33). And this is becoming more explicit in the Chinese case. The UK's Department for International Development (DFID) China office recently had their programmes assessed in London to determine their success and set out what the next stage of their engagement with Beijing should be as China transitions into a fully fledged aid donor. Similarly, Japan, which is currently China's largest bilateral donor, has indicated that they will be scaling down their aid programme to Beijing by the end of 2008.
In India the situation appears more complex. New Delhi seems to have taken on a more aggressive engagement with its donor partners by asserting that it wants to exert more control over its aid flows. An early announcement in 2003 and following the 2004 Asian Tsunami disaster where India refused humanitarian assistance but instead provided disaster relief to its neighbours signalled New Delhi's intentions to be independent and manage its own domestic affairs without interference from western donors. While there remains some donor activity, it would appear that the Indian government chose this symbolic gesture to demonstrate to its development partners that it still remains a sovereign state that must be respected (Price 2004, Jobelius 2007).
Both China and India have very similar aid strategies. It is a mixture of both monetary and non-monetary forms of assistance. According to McCormick:
'Monetary aid includes grants and concessionary loans. Non monetary aid includes debt relief, 'free' or low cost technical assistance, access to scholarships or training programmes, tariff exemptions and outright gifts of buildings, equipment, or other capital goods (2008, p.79).'
Clearly Beijing and Delhi apply both types of aid in their development assistance packages to Africa. Based on this it can be concluded that there are some broad correlations with the DAC ODA definition, particularly where the promotion of economic development and welfare are the main objectives at concessional financial terms. To this end China and India concur that their development assistance to the developing world is precisely aimed at creating conducive conditions for economic self-sustainability and social development. In Africa this seems to be the official rhetoric for disbursing development assistance.
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