International Development Studies, Institute of Society and Globalisation Donors go back home: New financing possibilities and changing aid relations in Zambia EADI 2011 York September 2001 Peter Kragelund

International Development Studies, Institute of Society and Globalisation Aim and main argument Literature on NTSA hints at: –Erosion of traditional partners power base –Increased policy autonomy for African governments to define and implement own policies Aim: scrutinise how the rejuvenation of NTSA affects Zambias aid relations Argument: –Aid relations change. Slowly, incremental and episodic –NTSA matter, but long-term economic growth, booming commodity prices and improved creditworthiness matter more

International Development Studies, Institute of Society and Globalisation Stylised facts about non traditional state actors (NTSA) in Africa Examine total flows of finance rather than only focus on flows comparable to ODA Aid from NTSA resembles DAC aid 30 years ago Many NTSA now provide aid to African economies but none is comparable to China

International Development Studies, Institute of Society and Globalisation Changes in policy autonomy Policy autonomy defined by: –Economic, ideological, political and institutional conditions Changes in these conditions affect policy autonomy –changes in power relations btw: Internal and external interest groups & sectoral interests

International Development Studies, Institute of Society and Globalisation From ownership to donorship in Zambia 70s: copper prices –Most indebted country relative to GDP (1984) –Close connection to IFIs 1991: Multiparty election –Honeymoon aid dependency HIPC / PRSP donors controlled more, not less of the policy agenda (W)HIP + JASZ: harmonisation among donors policy autonomy

International Development Studies, Institute of Society and Globalisation Signs of change I National Development Plan manages and harmonises arrangements with donors FNDP ( ): –Grossly underfinanced –Wish list for the donors –Lack of human & fin. capacity to implement plan SectorDonorsSectorDonors Macro-economics13Tourism2 Governance9Science & technology1 Health9Housing0 PSD9

International Development Studies, Institute of Society and Globalisation Signs of change II SNDP: Written without (direct) involvement of donors Role of aid in budget –53% (2001) 25% (2008) 8% (2011) –SNDP highly underfinanced Increased mobilisation of own resources Donors withdraw funds (embezzlement) –MoH: 2 donors withheld US$ 33 mn –Global Fund: US$ 137 mn –Decision not to enforce verdict against Chiluba

International Development Studies, Institute of Society and Globalisation Signs of change III: Pack your bags and go back home If somebody is fed up with us, they should pack their bags and go R. Banda Stop treating Zambia as if it is still a colony G. Kunda

International Development Studies, Institute of Society and Globalisation Chinese aid to Zambia: altering the power relations in the future? Historically important –Tazara, Ministry of Defence, Mulungushi textile mill, Chingola maize mill, roads … –Grants worth: US$7.2 mn (2006), US$6.2 mn (2008) + loans … Still small compared to TD …, but Mobile hospitals (US$ 53 mn) –Settled at highest political level (n o involvement of MoH) US$ 1 bn concessional loan to ease budgetary constraints –40% of Zambia s total debt stock!

International Development Studies, Institute of Society and Globalisation Indian, Brazilian and South African aid to Zambia: too small to affect aid relations India: –Few small grants (medicine, agricultural equipment, food relief … ) –Credit lines + FDI visibility perceived importance Brazil: –÷ Grants & loans, but co-financed TA –Role model for Zambia (economic growth and poverty alleviation) South Africa: –Development projects on ad hoc basis

International Development Studies, Institute of Society and Globalisation Conclusions Outburst relate to domestic politics –In Zambia & in donor countries NTSD do affect aid relations –Aid money is still small, but increasing –Allows the GRZ to finance parts of the SNDP that TDs are not willing to finance –Broaden development experiences But availability of internal resources and new lending possibilities are also of huge importance