CUTS – FICCI Conference Global Partnership for Development « Where do we stand and where to go ? ». The issues of Chinese Aid to Africa. Delhi August 13, 20082 Jean Raphaël Chaponniere Agence Française de Développement Asian Department.
The « coupling » between Asia and Africa intensifies
Bilateral trade in US billions with Africa (North Africa incl)A broader perspective
Large scale projects such as Tanzam built between 1973 and 1976 (US $400 millions) have been the exception as Chinese aid financed small projects as well as technical and medical assistance.
Number of cooperation agreements between China and African statesAn emerging donor ?
Various estimates conclude that China is not yet a major donor in Africa.
While OECD countries may not meet their Gleenagles objective, China will probably double its aid by 2009 and will be a major donor in Africa during the next decade
Esimates of Chine Aid to Africa in US$ Billions in 2006A minor or major donor ?
Among the reasons there is the CAD’s Helsinki Arrangement that forbad interest rate subsidies to commercially viable projects. As the private sector did not engage in those projects, this “market failure” opened the way to Chinese ODA.
Aid to infrastructures in dollars and % of OECD’s ODA to AfricaCompetition or complementarity ?
In current dollars, OECD aid to infrastructures in Africa is equal to its level in the 1970’s
If China does not cooperate to this scheme, this collective effort may not be effective. This could eventualy lead to a new debt crisis
Sub saharan African debt (% of GDP and exports)
2005Is China a free Rider ?
(i) their extensive presence in Africa that reduces their cost
(ii) good financial conditions
(iii) and, not systematically, the use of Chinese labour.
Chinese aid is tied as it finances Chinese (as well as foreign subsidiaries) exports.
The fact that Chinese firms won contracts financed by bilateral donors while Chinese aid is tied, has led to discuss the relevance of untied aid in OECD countries.
Knowing the competitiveness of Chinese contractors, the untying of Chinese aid and the use of international calls for tender by China would probably have little impact on Chinese firms.
However, China may be reluctant to untie her aid as open tender may create transparency problem within China.The issue of tied aid
OECD donors have started to negociate with the Chinese ExIm Bank. Cooperation with China in Africa could lead to an effective Trilateral Cooperation.