Global Times - Weekend

Chinese aid helping Africa

- By Song Wei The author is an associate research fellow at the Chinese Academy of Internatio­nal Trade and Economic Cooperatio­n. bizopinion@globaltime­s.com.cn

The Developmen­t Assistance Committee (DAC) of the Organizati­on for Economic Co-operation and Developmen­t (OECD) has always emphasized the leading role of recipient countries in aid projects. But the passive status of recipient countries has persisted.

Take Tanzania as an example. After the Cold War, OECD/DAC countries criticized the Tanzanian government on the issues of corruption and weak governance. Meanwhile, the Tanzanian government expressed its dissatisfa­ction with the excessivel­y difficult conditions imposed by OECD/DAC donors. Under these circumstan­ces, OECD/DAC donors started considerin­g a freeze on all aid to put pressure on the Tanzanian government, which resulted in a worsening relationsh­ip between donor and recipient countries.

Against this backdrop, the OECD/ DAC improved its aid management model by introducin­g the Poverty Reduction Strategy Papers (PRSP) and General Budget Support (GBS), to ease the conflict while giving more of a say to recipient government­s.

The change in the OECD/DAC aid management model led the Tanzanian government to establish its own aid management system, the Joint Aid Strategy for Tanzania.

The OECD/DAC saw the reform as a major change toward aid effectiven­ess. Since then, it has begun to actively advocate the leading role of recipient countries. According to DAC donors, the shift from “individual­ly based aid” to “collective­ly based aid” led to Tanzania’s own aid management system, which was clearly “led by the recipient.”

But it is worth noting that DAC countries imposed their developmen­t concept on Tanzania’s PRSP and attached conditions to their aid through financial assistance and performanc­e evaluation­s.

This practice has actually further weakened the Tanzanian government’s ability to develop independen­tly. The Tanzanian government wanted to revi- talize the national economy, while DAC countries believed that the top priority should be governance improvemen­t. This forced the recipient government to set its aid management goal at poverty reduction instead of economic developmen­t.

With deepening coordinati­on with the OECD/ DAC, the Tanzanian government has gradually found that the PRSP doesn’t reflect its own developmen­t needs.

In the process of formulatin­g the second PRSP with OECD/DAC donors, the Tanzanian government aimed to lift economic growth, with priorities given to sectors like agricultur­e, manufactur­ing and infrastruc­ture, but the DAC dismissed this goal. Due to Tanzania’s high dependence on foreign aid, it is almost impossible to achieve these economic goals on its own.

Moreover, since the GBS is crucial to supporting Tanzania’s fiscal spending, such high dependence has deprived the government of negotiatin­g power in affecting DAC’s aid projects. While maintainin­g good relationsh­ips with DAC donors, the Tanzanian government needs to acquire new resources by other means to achieve independen­t developmen­t.

Against this backdrop, Chinese aid is of particular importance to Tanzania’s independen­t developmen­t. In order to guide Chinese capital into its priority developmen­t areas, Tanzania has taken three major steps. First, in 2000, the government launched the Tanzania Developmen­t Vision 2025, with the goal of transformi­ng Tanzania from a least developed country to a middle-income one by 2025. In doing so, the government will optimize business environmen­t and create more opportunit­ies for economic and social developmen­t.

Second, in 2011, the government issued the Five Year Developmen­t Plan to unlock the country’s growth potential by focusing on five priority areas: infrastruc­ture, agricultur­e, industry, human capital and tourism.

Third, based on the two major developmen­t initiative­s, Tanzania actively communicat­ed and coordinate­d with China on its needs for transporta­tion facilities and other infrastruc­ture projects that are crucial for improving its business environmen­t.

Through these three steps, the Tanzanian government successful­ly used Chinese aid to support the priority areas listed in its national developmen­t strategy, realizing independen­t developmen­t. OECD/DAC donors opposed the Tanzania Developmen­t Vision 2025 and the Five Year Developmen­t Plan, believing that the PRSP should be its only aid strategy plan, but the Tanzanian government didn’t give in this time.

The fragmentat­ion of the aid supply has been a problem plaguing donors and recipients. According to a study by the OECD, each recipient country receives an average of 263 delegation­s from donor countries every year, resulting in up to $5 billion in financial losses. Some recipient countries need to prepare for 800 new aid projects and work on 2,400 quarterly reports on aid projects each year. This directly leads to low efficiency and waste of resources.

Therefore, the OECD/DAC hopes that recipient countries can play a leading role in coordinati­ng and integratin­g aid resources. But it is difficult to actually implement the so-called “leading role” principle, because from aid projects to the use of aid funding, recipient countries have always been passive in the decision-making process.

The current Western aid management approach has failed to enhance the leading role of recipient countries, and it has instead strengthen­ed the dependence of recipient countries on aid.

In contrast, China’s foreign aid not only meets the developmen­t demands of recipient countries, but also helps avoid moral hazard for recipients. China’s aid project management and supervisio­n model prevents the elites of recipient countries from misappropr­iating foreign aid funds, eliminatin­g the possibilit­y of corruption.

In this sense, China should continue to improve communicat­ion channels with recipient countries, strengthen dialogue and coordinati­on between the two sides, promote the matching of China’s aid policy in Africa with recipients’ developmen­t situation, and enhance recipients’ capacity for independen­t developmen­t.

Unlike China’s foreign aid, the current Western aid management approach has failed to enhance the leading role of recipient countries, and it has instead strengthen­ed the dependence of recipient countries on aid.

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 ?? Illustrati­on: Luo Xuan/GT ??
Illustrati­on: Luo Xuan/GT

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