The myth that is no-strings-attached Chinese ‘aid’ to Africa

The news out of Tanzania this week was that China would advance Africa $20 billion in “unconditional” loans. As is increasingly the norm these days, the wide reaction—interestingly from Africans—was loudly along the lines of “what’s the catch” and “yeah, right”.

We have to hand it to the rattled West. With African nations increasingly looking for development funding options from which they can tap and still keep some of their dignity, the Western PR machine has worked overtime to shape the modern narrative around Sino-African relations.

Unsurprisingly, most of it is either exaggerated or outrightly negative. It is no wonder that its target, China, has looked to grow its own media outlets to tell its story, while also countering by trumpeting suspiciously weak historical links with Africa.

Every country uses all the tools it has at its disposal to advance its foreign policy agenda, and both China and the traditional donors are no different in this regard.

But it is the perception that China offers no-strings-attached, easy deals that has raised the most dust—and angst.

Going by official lines, what China actually offered was a credit-line to African nations over the next two years, as opposed to an unconditional loan. Same difference, many would say.

Well; not really. Like other traditional donors, China generally either offers normal aid and export credits, or goes for lines of credit and resource-supported loans.

The Organisation for Economic Cooperation and Development defines aid as “official development assistance (OAD)”. In other words, this is financing offered on concessionary terms to a developing economy and for the purpose of promoting its economic development and its welfare.

Hysterically reported

With this very broad definition, China, contrary to popular perception, offers very little aid, instead doing more of deals that are a commercial win-win for it, such as providing export credits either for countries buying from it, or for its own companies looking to do deals in Africa. Significantly, these appear to be the majority, and are more often than not market-based.

China’s traditional aid projects on the continent are more of the simple ones—a hospital here, a bridge there—and are often a tool of foreign diplomacy.

The other way it does deals are the resource-backed loans and lines of credit mentioned earlier. It is this category that is often hysterically reported. While one suspects that the Asian giant does not really mind the figures being puffed, it perhaps should, as this has contributed to the growing—and misplaced-- African feeling of being overrun by the Chinese.

It is important to note that they are not as widespread or skewed as widely reported. Indeed, most such deals are initiated by African countries. A country may look to develop, say its oil fields, and tap Chinese firms for this, offering proceeds as security or payment.

Another may use its resources to attract big infrastructure loans from China on more agreeable terms. Interestingly, but as a topic for another day, very little money actually flows directly into African coffers, reducing the scope for embezzlement.

The thing to note for now is that the current relationship is a win-win for both China and Africa.

Africa gets its development funding with less hassle, while China does brisk business, finding markets for its goods, companies and services and lending at market or near-market rates.

What it definitely is not, is a free-for-all, no-strings attached relationship.


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