In Nigeria, with renewed efforts at building rails, bridges and roads, it is difficult to imagine how the country could enlist support to cover its infrastructural goals more easily and better than through the Chinese option. The loans target projects and are not offered as cash grants to local authorities, thereby helping to check the issue of diversion, which the country is long-accustomed to.
China, since the turn of the century, has increasingly had a deeper presence in Africa as a donor and trade partner. This has evoked debates on the nature of the Chinese involvement and its implications for governance and the economy in Africa. As we speak, African leaders are in Beijing attending the Forum on China-Africa Cooperation, where the Chinese leader, Xi Jinping, has announced a $60 billion package of aid and trade to countries in the continent. 44 African leaders attended the maiden Forum on China–Africa Cooperation (FOCAC) in 2000. Currently, 53 of them, including Nigeria’s Muhammadu Buhari, descended on Beijing pitching for support for their various economies. According to an official disclosure (China Foreign Aid, 2014), 51.8 per cent of the Chinese foreign aid expenditure of US$14.1 billion, between 2010 and 2012, went to 51 African countries, out of the 121 recipients. From 2000 to 2015, the Chinese government, banks and contractors extended US$94.4 billion worth of loans to African governments and state-owned enterprises, according to the China-Africa Research Institute. So, China now poses a challenge to the West in the latter’s historically cultivated sphere of influence.
In 2009, President Paul Kagame of Rwanda said, “We appreciate support from the outside, but it should be support for what we intend to achieve ourselves.” This explanation sums up the sentiments of African leaders towards their traditional Western donors, due to the latter’s conditionality criteria and the prescriptive nature of their assistance. It equally provides a background to the rising popularity of China, as an alternative, in Africa. But there are push effects on the side of China, also. The Chinese economy continues to grow rapidly, reaching US$11.199 trillion in 2016 from US$2.225 trillion in 2005. So, it wants to expand its markets and secure reliable supplies of resources in support of domestic production. Then, the Chinese are pressed for international political support towards their national interest of stopping Taiwan’s sovereignty. Africa has the highest number of countries in the world; so, it proves strategic to the Chinese, with regard to the “One China principle”.
A major feature of China’s aid delivery is non-interference; it comes without conditionality. Indeed, this has been elevated to a documented policy level. Thus, the Foreign Aid White Paper (2014:1) states that, “China adheres to the principles of not imposing any political conditions, not interfering in the internal affairs of the recipient countries and fully respecting their right to independently choosing their own paths and models of development.” This endears China to Africa as an alternative to Western donors because the conditionality criteria for receiving aid has been interpreted as neo-colonialism, neo-imperialism and an imposition of “unsuitable” Western standards on Africa. The failure of the International Monetary Fund-imposed Structural Adjustment Programmes may have fuelled this sentiment in Africa. Then, the economic progress witnessed in Asia without Western-styled liberal democracy, for instance in China, appears appealing to African leaders from Angola to Rwanda. However, as it does not attach conditionalities to its assistance and is not being sensitive to issues of governance, critics say China is worsening authoritarianism in Africa and this irks some commentators and researchers alike for undermining the “good work of Western donors around governance, human rights and environmental sustainability.” In any case, much of this is hypocritical hype, intended to paint Western interests in Africa as more enlightened and well-meaning. I do not accept the Western interest in Africa as “pure”, after all, they supported African dictators, for instance, Mobutu Seseko in DR Congo, during the Cold War, alongside others of his ilk in the continent.
…China’s involvement in Africa offers Africa a “win-win” situation, trading its resources for infrastructure that will help move up the development curve. However, there is one question of under-pricing African resources by China. But the resources may remain untapped, while the infrastructural deficit keeps widening.
Then, other recognisable features include resource diplomacy, being needs-based and an intertwinement of aid and trade. China’s assistance is considered streamlined and speedy in reaching its target. A recipient identifies a project for which it needs assistance and, once an agreement is reached, China EXIM Bank gives a concessional loan, with interest subsidised by the Ministry of Commerce, which assigns a Chinese contractor to execute the project. This chain does not allow cash into hands of the recipient, which then addresses the risk of diversion. But crucially, the loan, usually, is repayable with the recipient’s natural resources. This helps cover the critical infrastructural deficit with the currency being the otherwise untapped resources needed for expansive production in the donor’s domestic economy. So, China’s involvement in Africa offers Africa a “win-win” situation, trading its resources for infrastructure that will help move up the development curve. However, there is one question of under-pricing African resources by China. But the resources may remain untapped, while the infrastructural deficit keeps widening. Western companies like Shell and Chevron, which control oil industries in Africa, have been accused of under-reporting production too. The case of Angola, perhaps the biggest recipient of Chinese aid in Africa, may be suitable to illuminate the basis for the Chinese popularity in Africa.
The Sino-Soviet ideological rivalry and the former’s projection as a champion of the Third World against imperialism manifested during the Angola war for independence. While although China accused the Soviets of instigating the civil war to gain influence over the oil resources in Angola in the 1970s, the Asian giant now turns to the same resources as a vital component of its trade relationship with Angola – and as a donor – today. By the end of the civil war, which lasted between 1975 and 2002, Angola was urgently in need of (external) finance for reconstruction and infrastructural development. It was against this background that both China and the Western donors, led by the IMF, separately, approached Angola as sources of development assistance. But the characteristic features of both donors would determine Angola’s eventual choice. The IMF proposed a staff-monitored programme conditionality criterion for the credibility of the country’s economic policies before opening the door for funds needed for reconstruction. However, the China Construction Bank and China EXIM Bank, in the same year 2002 that the war ended, provided the first funding (US$145 million) for reconstruction with far fewer conditionalities.
…by 2010, when the cumulative Chinese loan to Angola stood at US$9.5 billion, the Asian giant’s development assistance to the oil-rich African nation had surpassed the combined contributions of all Development Assistance Committee members, otherwise known as Western donors. Accordingly, the “Angola Model” is now used to describe any reference to similar plans for rapidly and exponentially expanding aid relations.
Hence, in 2003, Angola announced it was discontinuing further negotiations with the IMF. Between 2003 and March 2004, China (seeking energy for its development) and Angola had reached an economic and commercial cooperation agreement, culminating in a US$2 billion oil-backed financing package for public investment projects. Compared to the IMF, the terms for the credit were viewed to be less invasive of domestic policy and more trade-based. The oil-backed credit facility involved an agreement that 70 per cent of the contracts for the projects would be awarded to Chinse firms, oil supplies to China, a 12-year repayment period, a grace period of three years, and a deeply concessional interest rate. By 2015, the Chinese loan to Angola had reached US$19.2 billion. So, by 2010, when the cumulative Chinese loan to Angola stood at US$9.5 billion, the Asian giant’s development assistance to the oil-rich African nation had surpassed the combined contributions of all Development Assistance Committee members, otherwise known as Western donors. Accordingly, the “Angola Model” is now used to describe any reference to similar plans for rapidly and exponentially expanding aid relations.
In Nigeria, with renewed efforts at building rails, bridges and roads, it is difficult to imagine how the country could enlist support to cover its infrastructural goals more easily and better than through the Chinese option. The loans target projects and are not offered as cash grants to local authorities, thereby helping to check the issue of diversion, which the country is long-accustomed to. Going forward, the media and the civil society should step up the pressure to seek actual details of the repayment agreement: Are we also paying with our resources? Under late President Umar Yar’Adua, China had approached Nigeria with some attractive $50 billion loans to be invested in refineries, roads, rail lines, power projects and to be repaid with crude oil extraction. That was rejected because the then government was concerned about the underpricing of the resource.
Taiwo Hassan Adebayo, a journalist and development enthusiast, writes from London.