Chinese Foreign Aid Policy to Africa- Is It A Messiah or a Monster?

Recently, China’s economic presence has been felt in Africa. After registering exponential growth within its borders, China has been looking for opportunities to invest. It has turned to Africa and found opportunities in different sectors including infrastructure, agriculture, education, health, communications, and trade. Notably, the Chinese investment grew from 210 million dollars in 2000 to 3.17 billion dollars in 2011. With such funding, Africa has been able to channel the money towards development. Even so, economists and some members of the political class have raised concerns about the goal and the nature of Chinese funding in Africa. These questions have sparked a debate among the policy makers as to whether the aid is a messiah or a monster.

Generally, China provides eight different types of foreign aid. These are complete projects, technical cooperation, human resource development cooperation, medical assistance, goods and materials, emergency humanitarian aid, debt relief and volunteer programs. In this light, one may look at a close range and ask-does China really provide foreign aid? Well, it can be argued that the Chinese government defines foreign aid differently. The Organization for Economic Co-Operation and Development (OECD) defines aid as the type of financial help offered to developing countries and multilateral institutions for the purpose of promoting welfare and development in the recipient country. Since China is not a member of OECD, it is possible that it defines foreign aid differently. It may well be that the bulk financing falls under the category of development financing rather than on aid. It is actually established that some of the money channeled towards Africa by the country is offered as long-term loan. Such loans are then paid with little interest, which means that the Chinese government will in long-run benefit from the aid it offers to Africa. In November 2013, a risk analyst from export-import bank of China indicated that at least 1 trillion U.S dollars will be offered to Africa; they will be in terms of direct investment, soft loans and commercial loans. The question is- who will be real beneficiary of this funding?

Economically and politically, it can be argued that the biggest issue is with China’s financial funding is adoption of a mixed strategy. Government agencies as well as commercial entities in the country are known to mix and combine foreign aid with other aspects such as direct investment, labor cooperation, service contracts and foreign trade. Though the country is able to maximize feasibility and flexibility of its projects, it is completely difficult to point at the portion of finances that can be categorized as aid. Further still, even when the Chinese government does not require interest for its loan on infrastructural projects, only the Chinese companies are involved in the constructions. Thus, the employment opportunities are not created for the receipting countries and still, technology is not also shared with them. In the long-run, Africa may become dependent on the Chinese government for development and economic growth. Still, the Chinese service contractors are able to secure sustainable and profitable businesses in Africa; they are able to secure the natural resources in the process of construction and development and may use them to advance their country. Though this is the case, it is still important to acknowledge the fact that Africa has continued to grow exponentially after receiving economic aid from China. This still leaves analysts with the question of- is China a messiah or a monster to Africa?

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s