Chinese aid helping Africa
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.