The FT has reported that:
The much-trumpeted $5bn China-Africa Development Fund, portrayed by Beijing as economic assistance, will be used to invest exclusively in Chinese enterprises and their projects in the continent.
Such policy of "tying" aid to purchasing goods and services from the donor country has been attacked by development experts as wasteful and inefficient, and most donor governments have been abandoning the practice.
This is bad news for Africa. Tied aid is not aid at all. It's domestic economic policy played out on the world stage. It almost always supplies inappropriate products and services, is harmful to genuine economic development in the recipient economy and distorts international trade.
International protest should follow this announcement.
And the closest monitoring of the use of these funds should follow. The easiest way to get developing countries to accept these funds will be the traditional one: the payment of commissions. To ensure corruption does not feature in this activity this cannot be allowed.
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Agreed – but China has the excuse that it’s relatively new to the aid game, and should perhaps have a little leeway. Remember too that tied aid is not the only form of aid which leads to a greatly reduced recipient benefit – so too does most food aid, a lot of overpriced technical assistance and a good deal of general aid which has is directed at projects with aims that reflect no concern for poverty or growth.
The existing donors have a great deal of work to do. Although some of the approach is a little over the top, ActionAid’s take is that $37bn of a total $79bn in aid for the last year (2004 – there’s a big lag) was basically ‘phantom’ aid, leaving just $42bn of ‘real’ aid. Must do better – all round.
Give Alex a job in development
That’s what I say! 🙂