Bretton Woods institutions send mixed messages about China’s role in Africa
By Bank Information Centre (BIC)
[Introduction]: Since the Chinese economy has taken off and it has increasingly looked to Africa to provide raw materials, the World Bank and IMF have been confronted with the question of how to respond. Recent statements by the institutions have shown that these responses are careful and at times contradictory.
This article comments on the position taken by the WB and the IMF on the increasing presence of Chinese investment in Africa.
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The Paradox of Foreign Aid
By Professor Arthur Mutambara
In this article Professor Arthur Mutambara stresses that despite the stated intention to assist the poor economies; ostensibly most foreign aid benefits the donor countries. The modus operandi has been that the rich West provides financial assistance or loans to poor nations to engage Western consultants or institutions to carry out unsustainable and useless projects on the continent.
While he admits that there has been abuse, incompetence, and corruption by recipients, these constitute a second order challenge. The problem is that aid and debt have become a control mechanism to ensure that oil, minerals and other natural resources were channelled to serve the interests of Western economies
Instead, aid should aim to build stronger domestic institutions and transfer skills to local leaders, managers and entrepreneurs. There has to be close alignment of aid with national priorities, working hand in glove with African institutions. This approach stresses the effectiveness of aid as transitory support, avoiding long-term dependence.
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The Urgent Need for Financial Reform to Mobilise Savings in Sub-Saharan Africa
By Sedat Aybar and Costas Lapavitsas
A highly unsatisfactory mobilisation of savings by the liberalised financial systems of Sub-Saharan Africa has severely constrained investment and growth in the region. To a large degree, Sub-Saharan savings are directed towards non-financial assets and the informal financial sector because:
• one can demonstrate status and wealth this way
• the financial environment is typically risky
• there are few formal options
• minimum deposit and balance requirements as well as the time and administrative effort needed to access the formal sector are too high
The paper highlights the need of improvements in access, adequacy and reliability of financial assets as well as more effective public mechanisms to mobilise savings.
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China-Africa Economic Relations: The Case of Zambia
By Inyambo Mwanawina, AERC, February 2008
This study provides information on the size, structure and significance of China-Zambia relations. It examines the nature and scope of Chinese investment in Zambia, looking at the pattern and magnitude of trade between them as well as the characteristics of Chinese development assistance to Zambia.
China’s engagement with Zambia is based on the Forum on China-Africa Cooperation, which has created new opportunities and challenges in Zambia’s development effort. The opportunity provided by China to tap on its experience in acquiring technology and financial resources needed to scale up the country development effort and move rapidly towards increased wealth creation and the achievement of the Millennium Development Goals. The challenge lies in turning and regulating Chinese interests in the country to the mutually benefit of both China and Zambia without endangering the country’s social-cultural heritage and environment.
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Lending Policies of the IMF: HIPC and Debt Relief in Africa
By Nancy Dubosse, AFRODAD
As the issue of aid effectiveness takes centre stage in the context of the looming deadline of the Millennium Development Goals, a spotlight shines on the International Monetary Fund (IMF) lending practices to low-income countries; particularly those in Africa.
This paper provides a brief survey of Africa’s indebtedness and the Highly Indebted Poor Countries (HIPC) programme and an identification of the main conceptual points of disagreement with the Poverty Reduction and Growth Strategy (PRGF) programme, which is a requirement of HIPC, demonstrated with country examples, and recommendations.
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Old habits die hard: aid and accountability in Sierra Leone
Author: EURODAD
The paper analyses Sierra Leone as an interesting case to see to what extent practices have changed since the Paris Declaration (PD) in 2005. The fact that the government of Sierra Leone is so highly dependent on aid and carries limited weight in the international community clearly poses a challenge for real shifts in power relations to take place. The research focuses on questions of accountability and ownership and it is primarily concerned with whether the commitments agreed to in the PD have translated into a more accountable, democratic and country-driven aid system.
Based on interviews with donor, government and civil society representatives, the paper exposes the situation of aid in the country and finds not so surprising that Sierra Leone has not moved forwards more quickly in improving the aid system and in implementing more efficient and effective aid modalities.
Finally, the paper presents some recommendations that Donors, Government and Civil Society should follow in order to improve the quality of aid.
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Assessing Resource Mobilization and Management Strategies for MDGs in SADC
Author: Charles Mutasa, SARPN, June 2007
In this paper the author stresses the fact that while the accomplishment of the Millennium Development Goals (MDGs) goals is extremely dependent on financing sources, the capacity to absorb donor funds and implement projects in South African Development Community (SADC) is very limited.
Lack of absorptive capacity has lead to reduced financial support and the use of other channels for assisting regional cooperation. This contributes to SADC’s lack of harmonization and represents a setback to attaining the MDGs and sustainable development in general and tends to weaken aid effectiveness.
The paper explores alternative and additional resources from both domestic and external sources and discusses the challenges to resource mobilization.
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Challenges of the current Aid Architecture: Addressing the development needs of Africa
Author: Vitalice Meja, AFRODAD
While the amount of aid has been significant in Africa, it has not contributed sufficiently to a higher growth neither reduction of poverty or creation of sustainable conditions for economic development. In some cases has even contributed to lower growth, corruption, and weakened government internal mechanisms. In this paper, the author describes the main obstacles for aid effectiveness in Africa.
While improving aid architecture under the Paris and Rome agreements could mean a dramatic change for African countries, there is concern over the lack of progress towards the coordination, alignment and harmonisation between and among donors with the African governments.
The paper outlines some of the underlying factors behind these failures and discusses some action points that the African governments and donors could consider towards a better aid architecture.
The paper concludes that aid architecture must address political interests of both donors and recipient as well. Aid would only work with good public institutions and if policies are nationally-owned. It is also needed to address weak public finance management systems, to achieve respect for public systems by donors and the engagement with non-state actors and parliaments.
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Concerning Kenya: The Current AU Position on Unconstitutional Changes in Government
By Chidi Anselm Odinkalu, Senior Legal Officer for Africa, Open Society Institute, AfriMAP
Ahead of the forthcoming tenth summit of the African Union (AU), to be held in Addis Ababa in January 2008, this article sets out the legal foundations and principles that should inform the decisions of the AU and international community in responding to the allegations and issues arising from the current situation in Kenya.
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Tanzania: Our Minerals, Aid and Aids
Source: AllAfrica.com
This article looks at the how local politics around corruption and foreign direct investment coincided with visits from VIPs from the Commonwealth fraternity. The UK's Douglas Alexander, the Secretary for International Development during his visit expressed concern for large sums of money being paid out fraudulently to local and foreign companies from the Bank of Tanzania. But he also said the UK would double its aid to Tanzania. Regarding the issuing of mining contracts, the Canadian Prime Minister, Stephen Harper, agreed with his Tanzanian counterpart that the Tanzanian government needed to negotiate with investors in the mining sector in order to reach a 'win-win' situation. He too announced increases in aid, saying that Canada would donate $105 million over 5 years as part of the $500 million health improvement program for Africa and Asia.
The article also sheds light on a study by the Overseas Development Institute on effectiveness of development assistance. In this study, 261 senior stakeholders in receipient countries were asked to assess the performance of the African Development Bank (AfDB), European Commission(EU), United Nations Children's Education Fund (UNICEF), Global Fund for HIV/AIDS, TB and malaria, United Nations Development Programme (UNDP) and World Bank. Tanzanian respondents in particular took issue with the World Bank accusing it of imposing policies on the government and meddling in project implementation. According to the researchers, the World Bank is perceived as imposing a neo-liberal policy framework.
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