Are African leaders misusing Chinese development finance?

Wednesday, August 19, 2015

In a 2012 blog post, MIT’s Daron Acemoglu and Harvard’s James Robinson call attention to a “fancy school” built in a small village in Sierra Leone and financed by Chinese development aid. They ask a pointed question: “Why would anyone want to build a wonderful school in the middle of what Africans call ‘the bush’?” As Acemoglu and Robinson explain, “Yoni is the home village of Sierra Leone’s president, Ernest Bai Koroma.”

African leaders seem to value aid from China because of the way in which Beijing puts the ‘country ownership’ principle into practice and fosters respect for the autonomy of a recipient government to manage their own development policies. As President Museveni of Uganda explains, “[t]he Western ruling groups are conceited, full of themselves, ignorant of our conditions, and they make other people’s business their business, while the Chinese just deal with you as one who represents your country […] .” Similarly, one official from South Sudan claims: “the U.S. and our other [Western] friends regularly tell us with certainty what we need. The Chinese appear more open to talking and to hearing what we want.”

In a new paper, “Aid on Demand: African Leaders and the Geography of China’s Foreign Assistance,” we investigate whether the “school in the bush” is a mere coincidence or representative of a broader pattern. Specifically, we investigate whether and to what extent foreign aid is disproportionately allocated to the birth regions of African leaders and/or those regions populated by the leaders’ ethnicity. We argue that China’s procedures for allocating aid gives political leaders in aid-receiving countries more discretion in siting development projects compared to those from Western donors. Such ‘aid on demand’ may enable the recipient government to site projects according its personal or political ‘needs’ rather than according to the needs of the recipient population. To test this claim, we compare the subnational allocation of Chinese and World Bank development finance.


Source: International Growth Centre (link opens in a new window)