How China Delivers Development Assistance to Africa Dr Martyn Davies Executive Director Centre for Chinese Studies Stellenbosch University South Africa Beijing, China, 27 th March 2008

An Accurate Perception?

Contents of Discussion Objectives of the research Drivers of China’s aid policy Components of China’s aid policy The role of policy banks An evaluation Recommendations Summary

Objectives of the Research To evaluate the dynamics of foreign aid policy making in the PRC Government & to gain a better understanding of the institutions involved To gain an empirical understanding into China’s ODA in 3 African country case studies - Ethiopia, Ghana & Zambia To provide informed commentary on the implications for the continent, traditional donors & China’s development assistance itself in Africa

Drivers of China’s Aid Policy What is aid? China’s perspective Drivers of China’s foreign aid policy towards Africa China’s priorities in Africa How much is China giving? Who gives? National & provincial disbursements FOCAC – Dialogue & direction

Components of China’s Aid Policy Types of Chinese Aid Grant aid & technical assistance Concessional finance & interest-free loans Debt Relief Aid policy formulation – Who decides? Project Monitoring

The Role of Policy Banks China Export-Import Bank (EXIM) Infrastructure financing / export credits Sole provider of Chinese concessional loans More than 300 projects in Africa by June 2007 MoU with World Bank China Development Bank (CDB) Not an aid disbursement bank Loans of US$ 1 billion outstanding to Africa by March 2007 Launch of the CADF – commercial fund

An Evaluation South-South Cooperation The Aid & Trade intersection Roll out of the Angola Model Political Drivers & Asian competition The notion of conditionality

Recommendations for African Stakeholders Gain understanding of the Chinese approach to aid Regional Economic Community Coordination Poor Coordination may lead to Chinese aid fatigue Avoid dividing traditional & emerging donors Strengthening the African voice Improving reporting mechanism/ aid monitoring Improving debt reporting

Recommendations for the PRC Effective aid management Cooperation with traditional donors Greater transparency on aid & loan agreements Broadening the FOCAC constituency Engaging African multilateral institutions

Recommendations for Traditional Donors Building constructive partnerships with relevant Chinese organizations Improved donor harmonization Strengthening Goal 8 (Global Compact) of the MDGs Avoiding politicization

Summary This is undoubtedly a politically charged topic Is it a case of Morality vs. Mutual Benefit? A coalition finance-investment model is emerging Risk in Africa is being re-calculated Defining & deciding on the applicability of the “China developmental model” Harmonization / consolidation is all important Africa needs to be more proactive China could pursue greater transparency to diffuse suspicion China’s engagement offers a massive opportunity to the continent

Dr Martyn Davies Executive Director Centre for Chinese Studies Stellenbosch University South Africa T F PO Box 3538, Matieland, Stellenbosch, 7602, South Africa

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