Business Day

China offers Africa trade, not aid


THE views she expressed were outrageous. Because they were made by a woman — and a black woman at that — they demanded attention. And the more attention her opinions received the more the chattering classes realised she was right.

The woman is Lusaka-born Dambisa Moyo, and it was her first book, Dead Aid (2009), that rocked the donor establishm­ent.

You know, those teams of dogooders who sail out of Africa’s capital cities in their fleets of 4x4s, rock up at the homes of bemused villagers, ask questions that can’t be answered, and then just as suddenly disappear in clouds of dust, never to be seen again.

Moyo argued that endless developmen­t assistance to African government­s has promoted a culture of dependency, encouraged corruption and done nothing to promote the good governance that would lift Africans out of the perpetual cycle of poverty.

Given that background, it’s certainly worth looking closely at a mod- est Johannesbu­rg-produced magazine, Africa in Fact, published by Good Governance Africa. I did not know, for example, that although Africa plays host to 15% of the world population it contribute­s less than 3% of its gross domestic product. Or that over the past half-century the internatio­nal community has poured ... wait for it ... half-a-trillion dollars in aid into Africa.

Where has all that money gone?

As most of us know, it has been pilfered by those who have mastermind­ed a thousand and one routes of easy access, down which they have guided the money into offshore bank accounts, and from which they enjoy their unjustifie­d wealth. Mali is a case in point. Since independen­ce in 1960 it has suffered droughts, military dictatorsh­ips and two coups. A third coup last year set the seal on a legacy of gross misrule and general incompeten­ce. And it is wrong to assume the country comprises a rich south and poor north, although it is true that the north is Tuareg country, largely inhospitab­le and desert-like. These days the Tuareg are less nomadic and they want a say in the country’s politics and economy.

When they didn’t get it, they helped themselves, ably fortified by the arsenal previously the property of Libya’s Muammar Gaddafi.

That encouraged infiltrati­on by extremist Islamist groups and, when it looked as though nothing would stop them seizing the entire country, France responded with military interventi­on. All this has been compounded by the insistence by western donors on the modernisat­ion of the family code and greater rights for women, prompting indignant resistance on the part of popular Muslim imams. It didn’t help either that a World Bank attempt to privatise cotton production, critical in Mali’s economy, was resisted by the government and resulted in producers losing money and trust in the central authority.

Despite the regime’s delinquenc­y, the West continued to pour in aid, which accounted for a quarter of Mali’s public expenses in 2009.

The French interventi­on chased armed groups out of the northern cities. Aid agencies can now once again reach northern Mali.

Unless the old problems are to recur, the West’s approach to the assistance it provides requires drastic reconfigur­ation.

Another area that should concern western donors and countries is the increasing involvemen­t of China. It is building bridges, dams, power plants, railway lines and highways in many parts of the continent.

But it doesn’t do this as part of an aid package. Instead, it makes loans on normal conditions like other commercial banks. This amounts to a form of trade finance.

But, pay attention, although the deals are usually repayable on the basis of three-month London interbank offered rate plus a percentage, it is the term that is attractive — often 15 years and longer. And the deals are sealed with commoditie­s. In the case of Angola, for example, China wants a fixed amount of oil valued at the internatio­nal spot price on the day of shipment. In other words they are market-related loans with more favourable interest rate terms and much longer credit horizons.

No wonder the West, and its ever anxious donors, are losing out.

E-mail: Twitter: @TheTorqueC­olumn

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