Chinese aid to Africa may do more harm than good

from The Mail and Guardian

Britain has warned China that its offer of billions of dollars in unconditional aid and cheap loans to African governments risks driving back into debt countries that have only just benefited from debt relief, and undermines efforts to create democratic and accountable administrations.

The International Development Secretary, Hilary Benn, on a visit to Malawi, told the Guardian that Britain has already made its concerns known to Beijing but that it is planning to "ratchet up" the level of representation on the issue.

But Benn also criticised the World Bank for tying financial support to African countries to ideologically driven economic policies such as privatisation.

His warning comes as the Chinese President, Hu Jintao, completes a 12-day tour of African countries in which he handed out hundreds of millions of dollars in investment, loans and aid. Beijing has promised $5-billion in soft loans and grants to African states in the coming years as China increases trade with the continent.

Benn said the Chinese money could do more harm than good. "If countries are borrowing to the extent that their debt becomes unsustainable then that undermines all the work that has been done in trying to tackle unsustainable debt. The issue for debt is not debt per se, it's can you afford it?" he said.

"The other issue is governance because in the end China, with all its increasing stake in Africa, has just the same interest as the rest of the world -- and the people of Africa -- have in good governance. We need to talk more to China about how we can work together because we both have the same interests, which are the development of Africa as a continent."

Benn said China's failure to match the conditions placed on aid by countries such as Britain -- including evidence of good governance, respect for human rights and spending directed to alleviate poverty -- could set back progress toward democratic administrations.

"Building accountability and responsiveness is in the end how these countries are going to develop," he said.

Benn added that one of the problems in raising these concerns with China was who to raise them with. "It's not always easy to know whose door to knock on, who's in charge of this," he said.

China bills its involvement as a "strategic partnership with Africa, featuring political equality and mutual trust, economic win-win cooperation". It is a message tailored to suggest that China will not demand democratic reforms, good governance and anti-corruption drives as a condition for aid and trade.

Instead China says it "respects African countries' independent choice of the road of development". Critics say that is a way of justifying doing business with abusive regimes such as in Zimbabwe and Sudan.

Zimbabwe is in negotiations with China over a $2-billion loan to prop up its collapsing economy under the burden of inflation running at about 1 000%. Western governments, banks and international financial institutions have cut off support.

Hu has announced hundreds of millions of dollars worth of trade, investment and aid to African countries during his tour. Cameroon alone received $100-million in grants and loans, although the terms were not immediately made public.

Benn's concerns echo those voiced by the president of the World Bank, Paul Wolfowitz, who last year described China's lending policies in Africa as "a problem" that risked driving African countries back into the debt trap.

But Benn had his own criticisms of the World Bank and other lenders that tie financial support to ideological economic policies such as privatisation.

"It's not right and proper in my view to say that you've got to open up your trade in return for our development assistance or for ideological reasons we think you should privatise these industries. We stopped that," he said.

Britain dropped such requirements six years ago but still ties aid to a proven commitment to reduce poverty, such as increased spending on health and education, the upholding of human rights and evidence of good governance, such as fighting corruption.

"For me that's the right kind of conditionality and I've been having discussions with the World Bank to try and persuade them to follow suit and we've made some progress," said Benn. - Guardian Unlimited © Guardian News and Media Limited 2006