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China, don’t give us aid

By Andrew M. Mwenda

On Monday, I was invited to speak at an Africa-China conference under the theme ‘China’s partnership with Africa: improving aid architecture for policy effectiveness.’ By sustaining rapid economic growth over the last two decades, China has emerged as a major global economic power. The major driver of this growth is export of manufactured products. This has made China hungry for raw materials.

African countries are largely producers and exporters of raw materials. The demand from China is already increasing the price of these materials in international markets. This creates big opportunities for both China and Africa to make joint gains from trade and investment in the production and export of these materials. Why then should Africa’s partnership with China be based on charity (assistance) rather than on these mutual gains?

There is a lot of excitement in Africa about China. Many Africans and outside observers think that the entry of China into the global aid market will improve the architecture of aid. But this argument is misleading because at root, aid is an ineffective instrument of development policy that distorts the incentives of recipients to use it profitably. Aid tends to increase corruption, subsidize incompetence and disarticulate the interest of ruling elites from those of citizen.

Secondly, aid is just one input into the development process. Yet development depends on the interaction of many other variables within a society. therefore, what you get from aid is not specific to the money and technical assistance it brings. Rather, it is on how it interacts with other variables within a given country ‘ most especially its politics. That is why we need appreciate how political power is organized, how it is exercised and how it is reproduced.

In most of the nations of Africa, political power is organized around individuals rather than institutions. Thus decision making tends to be arbitrary. It is exercised through neo-patrimonial relations by a selective allocation of economic benefits to targeted groups and individuals. And it is through these practices that our governments build coalitions that govern us.

From this perspective, it does not matter whether foreign aid comes from China or the West; or whether the architecture of aid is changed or remains the same. When aid is poured into the kind of neo-patrimonial politics we see in Africa, it tends to accentuate the forms of institutional dysfunctions common to our countries. Therefore, Africa is unlikely to benefit from aid, however, delivered when politics is still organized in this medieval fashion.

China’s recent interest in increasing its aid to Africa is not worth getting particularly excited about. Chinese aid is not very different from all other aid Africa has received from the West before. Western countries pledged to double aid to Africa over the next decade. They also agreed to cancel most African nations’ debts. With increased aid and canceled debt, Western aid to Africa has significantly increased. China isn’t doing anything new or different; it is only following in the West’s footsteps, down a path that’s not particularly productive.

Aid is attracted to our poverty, rather than our wealth. We have both poverty and wealth living side by side in Africa ‘ with poverty as the most dominant condition. Yet in trying to address the most dominant problem, aid is seeks to fix our weaknesses (poverty) instead of leveraging our strength (wealth). This way, it tends to subsidize failure rather than to reward success, innovation and entrepreneurship.

The history of humanity shows that nations are never transformed by the masses from below but by elites from above. The most successful individuals and classes play the role of change agents of the society and pull the rest along. The industrialization of the West was promoted by capitalists; the communist revolution in China was orchestrated by intellectuals who rallied the masses of peasants. We should be looking for Africa’s change agents and discussing ways in which we can empower them further to play this historic role.

One way to change Africa is to alter the way aid is given. In countries with extremely weak states, corrupt bureaucracies and factionalized politics but endowed with excellent private sector potential, aid should seek to reward innovators in the market rather than crooks in politics. Under this model, we should think of aid as venture capital ‘ extended to businesses that have shown an incredible knack for innovation. Uganda, Ghana, Kenya, Tanzania etc fall into this category.

In Rwanda and Ethiopia, where we have seen the emergence of developmental states ‘ states with the political discipline, the bureaucratic ability and the moral purpose to pursue a collective vision, we can give aid using the traditional tools. There are a number of factors that create the kind of state we see in Ethiopia and post genocide Rwanda. One of them is the dominance of power by an ethnic minority ‘ the Tigray in Ethiopia and the Tutsi in Rwanda. Lacking the ethnic legitimacy to rule, they seek to build it through the provision of public goods and services ‘ roads, bridges, education, health etc.

The other is the presence of a strong group threat which imposes on them an equally strong revenue imperative to build a military and security apparatus to starve off any violent power-grab. This inadvertently leads to the building of a strong and effective state which can be an effective agent of social transformation.

The supply of effective leadership and organization to implement the collective vision is vital. The mere existence of a minority in power coupled with a strong existential threat does not ‘ in and of itself ‘ automatically produce a Paul Kagame or a Meles Zenawi. Both these leaders and their organizations were produced by the nature of the political-military struggle they went through. By confronting strong opponents, they needed to build superior leadership ability and superior organizational forms to survive leave alone to succeed.

The lesson from the above is that the conditions that create developmental states and therefore make aid to governments effective are rare to find and difficult to re-create. We should treat Rwanda, Ethiopia and Botswana as exceptions. In dealing with most of Africa, we need to avoid the state whenever possible and rely more on the private sector.

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