In aid of trade

PUBLISHED : Tuesday, 19 July, 2011, 12:00am
UPDATED : Tuesday, 19 July, 2011, 12:00am

China's foreign aid strategy in Africa stands accused of favouring resource-laden nations, downplaying issues of 'good governance' and prioritising infrastructure over other development needs: China's onto something - and the West knows it.

Following the record rise in food prices this year, condemning millions more into extreme poverty and hunger, the last month has seen the G20's inaugural meeting of agriculture ministers focus on food security, the release of the UN's Millennium Development Goals report and now, in Geneva, the WTO's review of its Aid for Trade initiative: it's the season for poverty postulation. In June, US Secretary of State Hillary Rodham Clinton warned Africa that China may have its own agenda. 'China's foreign assistance and investment practices in Africa have not always been consistent with generally accepted international norms of transparency and good governance,' she said.

The West has spent around US$400 billion in aid to Africa over the last half century, and for the most part 'transparency' and 'good governance' were not serious considerations.

Since the end of the cold war, the West felt less of a need to buy friends in Africa, so aid flows ebbed. African heads have increasingly been turned eastwards. China arrived in Africa in the 2000s, viewing the continent more in terms of business than aid. Unburdened by Washington Consensus preconditions of structural adjustment and inconsistent definitions of good governance, Africa was presented with aid made easy.

Decades of Western cash flows, regularly directed to corruption-rife national governments, is now being supplanted by aid with Chinese characteristics: without political preconditions, China is building roads in Ethiopia, pipelines through Sudan and railways across Tanzania. China's also snapping up the lion's share of oil from countries historically shunned by the West such as Angola and Sudan. While minerals such as cobalt and copper are big attractions for Chinese industry, China's burgeoning middle class is enjoying a broadening array of produce, including South African wines and Ugandan coffee.

China gains an injection of fuel and caffeine, Africa gains the infrastructure needed to facilitate trade. From US$10 billion in 2000, bilateral China-Africa trade nudged US$115 billion for 2010, with trade agreements signed with 45 African countries. Since 2006, China's 'going global' policies added a new dimension, and invited criticisms of economic imperialism: from Nigeria to Ethiopia, Egypt to Zambia, China is peppering Africa with trade and economic co-operation zones - potential springboards for export-oriented growth, if developed appropriately with their hosts.

China is focused on long-term economic development, from which both donor and host should benefit: communist China showing the West how to do aid, capitalist-style. Western donors have so far focused on the short term and often prescribe conditions that aid the donor. For instance, US food aid regulations require 75 per cent of provisions to be purchased and shipped from the US.

But the West too is now beginning to think longer-term. All sides - including the erstwhile forgotten voices of Africans themselves - now agree upon the importance of providing the infrastructure to connect smallholder farmers to regional and international markets. With multilateral organisations including the World Bank on board, we are seeing a convergence of common development policies centred upon agricultural-led growth and aiding trade. Indeed, the genesis of the Aid for Trade initiative can be traced to a 2005 ministerial conference of the WTO, held where China converges with the West: Hong Kong.

As UN Secretary General Ban Ki-moon later affirmed, Aid for Trade commits donors 'to finance export-oriented infrastructure (for example, roads, ports and power)' in the least-developed countries. Of course, more is required. For example, to complement Aid for Trade, developed countries should honour their 2005 pledge to eliminate export subsidies on agriculture.

Other issues, including aggressive speculation on agricultural commodities and the new scramble for African land - particularly to grow crops for biofuels - must be curtailed. While China demands a torrent of natural resources, China also craves peace and political stability in Africa. To that end, China increasingly finds itself tacitly sharing Western democratic concerns regarding good governance.

Rather than holding opposing views, China and the West share much common ground. China's emphasis on trade as central to economic development dovetails with the Obama administration's flagship Feed the Future global programme. However, while the Chinese are getting on with the job, political, financial and technical support for Western-led initiatives has been sluggish, as the Millennium Development Goals report suggests.

Developed countries must act assertively, directly funding capacity-building projects rather than governments - Chinese-style. Paul Letters is a writer and commentator