New donors (China), new finance, new ideas?
implications for governance and development
Maputo Residential School on Governance and Development
CARLOS OYA
Development Studies, SOAS, University of London
Email: co2@soas.ac.uk
Maputo, 6 April 2011
Some preliminary considerations on
the China-Africa complex
• ‘Chinafrique’ represents a complex set of vectors
(processes, linkages and relations)
– For instance: trade, investment, aid, migration
• Many of these elements linked in various forms of
‘bundling’ but not always
• Data problems: a lot published material but scarce
evidence – problem of comparing ‘apples and lychees’
(Brautigam)
Literature on China in Africa:
a preliminary assessment
• Significant amount of junk: biased, anecdotal,
methodologically flawed, naïve  ‘China
bashing’
• Good news: some serious scholarship emerging
 Brautigam, CCS-Stellenbosch, SOAS (Large,
Corkin), Mohan-Power, etc.
• Bad news: still early days to assess ‘impact’ of a
complicated process with multiple facets, lack
of comparative analysis, still room for
speculation
Some antidotes against poisonous ideas…
http://www.chinaafricarealstory.com
Review of African Political Economy
articles recently
And some emerging empiricallygrounded research
4
Understanding context and conditions:
China
• Externalization of Chinese system of accumulation
– ‘go out’
• Resource and energy security – long-term viability
of Chinese development model
• Foreign exchange reserve accumulation  use of
reserves  move away from risky financial assets
and more into ‘real’ assets strategically designed to
support China’s growth path
• Rhetoric and reality of historical links with Africa
and the ‘South’ – diplomatic and strategic alliances
Accumulation of international foreign exchange reserves (US$ million)
2,500,000
Brazil
China
India
2,000,000
1,500,000
1,000,000
500,000
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
In Africa... Growing discontent with ‘tradition’
aid system: some responses
• Changes in global aid architecture (Paris and Accra
declarations and beyond) – unlikely in medium term /
too many unfulfilled promises
• Breakdown of OECD policy consensus – contingently
possible at country level
• Effective use of rents: ‘resource’ (Angola), ‘geopolitical’ (Ethiopia) or ‘demonstration’ rents
(Mozambique)
• ‘Emerging’ donors (mainly China, India and Brazil)
and competition  ‘revival of triangulation’ (Large)
and increasing leverage for recipient countries?
Some hypotheses about implications of Chinese
aid to Africa for the political economy of aid
• Hypothesis 1: More policy space and bargaining
power for African governments if additional aid
reduces dependence on ‘Anglo-American’ likeminded donor bloc
• Hypothesis 2: Following China’s example - for
technical cooperation at level of long-term strategic
planning etc.
– learning from concrete lessons of Chinese experience?
More suitable/relevant technical assistance? Alternative
view in the political economy of development?
Some hypotheses about implications of Chinese
aid to Africa for the political economy of aid
• Hypothesis 3: financing necessary development of
infrastructure that is neglected in current Western
aid agenda – renewed focus on economic
infrastructure
• Hypothesis 4: Good governance agenda to be
neglected  China’s reputation around its alleged
support to ‘rogue’ states (e.g. Sudan, Zimbabwe,
Chad): a threat to good governance
‘achievements’?
Yes, impressive growth…
Source: Brautigam (2009, p. 170)
Put all that in perspective:
the relative magnitude of Chinese aid to SSA
US$ million - commitments
30,000
25,000
20,000
DAC donors, total
Multilateral
China
15,000
10,000
5,000
2007
2008
Chinese aid: $1.4bn in 2007; $1.8bn in 2008 and perhaps $2.5bn in 2009 (Brautigam)
Source: own elaboration from DAC database and Brautigam (2009)
Putting China’s aid magnitude in perspective
• Also note that relative importance of Africa for
China’s go out strategy may be smaller than
assumed (in terms of both FDI and aid)
• NB: US$20bn credit line to Venezuela in 2010
• Investments in OECD countries through M&A,
financial assets and purchase of equity
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Hypotheses 1 and 2:
A Beijing policy consensus for Africa?
•
•
•
•
•
•
•
•
Importance of capital accumulation
Economic nationalism
Large-scale infrastructure: ‘to end poverty build a road’
Coordination governance capabilities and centralisation
Experimentation (no single recipe)
Focus on (rural) industrialization and manufacturing skills
Careful management of foreign capital and competition
The economic, political and social challenges of growing inequality
• BUT… China’s ambivalence towards promoting any
development model: (a) no interference in policymaking; (b)
‘uniqueness’ of Chinese development path; (c) but belief in
alternatives to hegemonic neoliberalism
Hypothesis 4: A threat to ‘good governance’?
• What governance? Short-term moralistic/fiduciary vs long-term
development concerns
• Empirical proof: One would have to empirically show that any
‘progress’ made on GG in Africa before China’s rise has been
‘reversed
• Double standards: ‘good governance’ record for OECD donors
 Ethiopia, Rwanda, Senegal, Uganda, Mozambique, etc. – aidgovernance nexus is murky and open to manipulation
•
And note:
– China, albeit unevenly, works in 43 SSA countries and is gradually
moving away from old alliances (Zimbabwe) and assuming new mediating
roles (Sudan)
– Forms of aid ‘in kind’ (Chinese aid ‘packages’) reduce options for
theft/diversion of funds (little or no funds are actually transferred)
So, can ‘emerging’ donors (China) make the difference?
1. Volume matters
2. Co-optation by DAC blocs avoided? Not all emerging
donors similar (eg Brazil)
3. Active promotion of ‘alternative’ economic policies?
4. Perception of increasing bargaining power matters for
agency
5. Much depends on how African governments:
–
–
use their bargaining power to strike better deals with China and
they use potential policy space (and added infrastructures) to
induce changes in DAC donors’ practice
Some examples
• Senegal: China not so important but access to Arab
funding opening space for Wade’s regime to pursue
its large infrastructure projects while main economic
policies remain unchanged
• Angola: policy space achieved and used before
China’s rise through private finance
• Ethiopia: Success in playing off donors and using
geopolitical rent to attract US aid while engaging
China at various levels