Thesis Final!

(Figure 1.1)
(2013). Chinese, Dragon, Statue [Web Photo]. Retrieved from http://www.globe-
walls.com/wallpaper/chinese-dragon-statue.html
THE RISING DRAGON
CHINESE VERSUS WESTERN AID AND FOREIGN
DIRECT INVESTMENT IN AFRICA: SEEKING A
PARTNER IN DEVELOPMENT
Written By: Sara Boucher
February 2014

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The Rising Dragon
Chinese Versus Western Aid and Foreign Direct Investment in
Africa: Seeking a Partner in Development
By
Sara Boucher
Abstract:
This paper is based on a research undertaking to understand China’s presence in
Africa and how this relates to Western relations with the continent. The research
attempts to determine which option, Europe/US or the Chinese, may be the most
suitable partner in development for Africa, as well as discuss what can be done to
maximize the benefits, and mitigate the negative aspects of that relationship. A
comparative analysis approach is used to judge the viability of each partner, and each
is assessed according to a set of criteria, including the following:
1. Equitable and Respectful Relations
2. Maintenance of Sovereignty
3. Ability and Willingness to Finance Sustainable Development in Africa
4. Shared Experience and Understanding
5. Historical Element
Drawing on the collected research presented in this document, the major finding is that
the Chinese have a fundamentally different approach to aid and investment, and harbor
conceptually distinctive ideas regarding development than the West. Based on the
outcome of the comparative study against the above criteria, it is suggested that Africa
may benefit from selecting China as a partner in achieving its own sustainable
development, and suggestions are offered to effectively leverage this partnership.

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Acknowledgement
I would like to express my deep gratitude to Dr. Lisa Aubrey, my thesis director,
and Dr. Wei Li, my 2nd
reader, for their patient guidance, enthusiastic
encouragement, and invaluable critiques of this research work.
I would also like to thank Mr. Ken Holin, my Barrett Honors Advisor, for his help
and guidance throughout the research process.
My grateful thanks are also extended to Barrett, The Honors College at ASU for
their gracious funding of my research undertaking.
Finally, I wish to thank my parents for their support and encouragement
throughout my study.

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Introduction: Seeking a Development Partner for Africa
Since colonization came to an end in the early 1950s, Africa has struggled to develop.
Under the watchful eye of the Western world, African countries have implemented hundreds of
policies and accepted billions in aid, all with the end goal of social, political, and economic
development. However, after all the loans and policy changes and economic initiatives, many
African states have little, if anything to show for it in terms of development. According to the
National Bureau of Economic Research, “one half of the African continent now lives below the
poverty line. In 1970, one in ten poor citizens in the world lived in Africa; by 2000, the number
was closer to one in two”. In sub-Saharan Africa, “per capita GDP is now less than it was in
1974, having declined over 11 percent” (Picker, 2004). While there are certainly some success
stories to be found, Africa as a whole has suffered from a chronic cycle of underdevelopment,
a process by which attempts to better life conditions are not only stifled, but also pushed
backwards.
The dismal economic, political, and social realities of many African countries have
caused much of the world to lose hope for Africa, questioning whether sustainable, positive
development is even possible. Fund For Peace’s publishes an annual Failed States Index,
which separates every country into four major designations, ‘Alert’, ‘Warning’, ‘Stable’, and
‘Sustainable’ and ranks them within each category based on economic, social, and political
factors. Unsurprisingly, the Global South, which includes Africa, falls into either the ‘Alert’ or
‘Warning’ category, while the Global North consistently places into either ‘Stable’ or
‘Sustainable’. It is alarming though, that the top ten worst states are almost exclusively African
nations, and that not a single country on the continent is in the ‘Stable’ category ("The failed
states," 2013). Given Africa’s track record in regards to development, it is easy to adopt a
pessimistic outlook. The Economist published an article designating Africa as ‘The Failed

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Continent’. While obviously controversial, the piece mirrored the sentiments of many. But
perhaps this assessment of ‘failure’ lacks perspective.
As Claude Ake argues in Democracy and Development in Africa, development has not
had the chance to fail, as it has “never been on the agenda in the first place” (Ake,1996, p. 40).
It is no secret that Africa has long struggled with securing true independence from its former
colonizers, and the issue of there being ‘no Africans at the table’ persists when discussing
development. Historically, the West has exclusively dictated the development agenda, with
Europe and the U.S. single-handedly shaping economic and political development policies,
servicing loans to Third World countries, and deciding on loan terms and disbursement
conditions. It is true, by almost any measure that Africa has failed to develop. But this may
largely be due to the fact that up until very recently African voices have been left out of the
conversation. This ensures that economic, political, and social development is never realized.
Africa doesn’t need a development dictator. It needs a development partner, and for the first
time since the Cold War period, there is more than one contender for this position.
While the IMF and World Bank were drafting loan contracts from air-conditioned
boardrooms in the North, a new foreign donor was knocking at Africa’s door. China, building
from its own development success story, approached the continent offering a new path to
development. Over the next several decades, China would commit over $160 billion in aid to
Africa, quickly climbing the ladder to become one of the largest foreign aid donors. Thus began
the rivalry between the West and the Far East.
China’s aid is based on “mutual benefit” and takes the form of grants and non-
conditional, resource-backed loans to finance African development. The Chinese stress
“respect for the sovereignty of the host country” and do not involve themselves in the political
matters of the nations to which they offer aid (Brautigam, 2009, p. 17). The West by

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comparison is much more hands-on with their aid offerings, providing concessional loans with
attached conditions and plans for achieving development targets. Western aid institutions are
also involved in the political development of the countries they work with, and urge developing
nations to liberalize, pluralize and privatize. There are certainly critics on both sides of the aid
debate, but the fact remains that these two donors are fundamentally different in their aid
motivations and ideologies. Africa is now faced with an alternative option to classic Western
aid models, and nations have the opportunity to decide which path is more favorable for their
development.
This particular research undertaking will attempt to determine which option, the West or
the Chinese, may be the most suitable partner in development for Africa, as well as discuss
what can be done to maximize the benefits, and mitigate the negative aspects of that
relationship. A comparative analysis approach will be used, and each perspective partner will
be assessed according to a set of criteria to be discussed in the first section to follow. This
analysis will be organized into the following sections:
Section 1: Stakeholders, Definitions, and Theoretical Framework
Before the positives and negatives of the China-Africa or Western-Africa can be assessed, it is
essential to establish the key stakeholders involved in the aforementioned relationships, define
some of the concepts which will be discussed, and go through the relevant theoretical
framework to understand what criteria are important when attempting to choose a ‘partner in
development’.

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Section 2: Historical Perspectives and Ideologies
It is crucial to gain an understanding of Africa’s historical experience, and how both the West
and China have interacted with the continent over the years. Also included in this section is a
brief development history of Europe, The US, and China and an overview of Western and
Chinese development ideologies.
Section 3: Western Development Policies, Projects, and Perceptions
This section will look at modern Western aid and development policies and their impact in
Africa. General public perceptions will also be discussed in relation to the West in Africa.
Section 4: Chinese Development Policies and Projects
This section will look at modern Chinese aid and development policies and their impact in
Africa. General public perceptions will also be discussed in relation to the Chinese in Africa.
Section 5: FDI Facts and Figures
It is helpful to get a quantitative perspective on each side’s involvement in Africa with regards
to foreign direct investment. This section will cover financial contributions of the US, Europe,
and China and discuss which sectors are most active for foreign direct investment (FDI).
Section 6: Private Actors in Africa
Often, when comparing China versus the West, private industry is forgotten. However, private
actors, while regulated by their respective domestic governments are not one in the same, so it
helpful to separate the two. This section will provide an overview of some major private actors
from each side, and discuss their involvement and impact in Africa.

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Section 7: Selecting and Managing a Partnership in Development
In the final section, an ideal partner in development for Africa will be proposed, with a recap of
the strengths and weaknesses of the previously reviewed partners. The importance of
managing relations will be discussed, as well as ideas to maximize the positive aspects and
minimize the negative aspects of such a relationship.

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Section 1: Stakeholders, Definitions, and Theoretical Framework
In order to effectively develop an analytical consensus on an ideal development partner
for Africa, it is crucial to discuss the criteria on which these conclusions will be drawn from, as
well as identify the key related stakeholders and define the blanket terms involved. This
section will essentially frame the research and build the foundation for the following
comparative analysis between China and the West.
Stakeholders
Stakeholder #1: Africa
Africa is often thought of as a ‘recipient’ of aid or the ‘host’ of foreign direct investment from the
international community, but every relationship is active for both parties. That is the
assumption made here, that Africa is not passively accepting aid or FDI, but is actively
involved in this exchange.
For the purposes of this analysis, ‘Africa’ will often be referred to as the collection of nations
included on the continent. This is by no means an attempt to suggest that all African countries
are the same, but is rather used for simplicity’s sake as a way to make some broad
comparisons between Chinese and US-EU aid and investment, and its impact on Africa as a
collective. Viewing the situation from a wider lens affords the clearest general perspective
when evaluating development partners.

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Stakeholder #2: The US
Still a major player in aid and FDI in Africa, the US together with Europe has shaped aid policy,
created multilateral institutions like the International Monetary Fund (IMF) and The World Bank
(WB), and dictated development strategy for decades.
Dollar-wise, the US typically gives the most in aid annually, numbering in the billions. However,
that amount has fluctuated significantly over the years depending on relevant events, for
example the US gave more aid during the Cold War period as it competed with the USSR. The
fact remains that the US has amassed a huge influence in the foreign aid game, although there
are now more countries competing for Africa’s attention.
Stakeholder #3: The EU
Europe has the longest history with Africa. As the colonizers of the continent, European
powers have been heavily involved with Africa for centuries, and this trend continues into the
modern day. The constitutions, governmental structure, and official languages of many African
nations are closely based on their former colonizers. In this study, Europe will be taken in its
collective, and will be dealt with in regards to the EU, its main multi-country institution.
While the US surpasses foreign aid to Africa in terms or total dollars, when measured in the
total percentage of the Gross National Index (%GNI), the EU consistently ranks above the US.
It goes without saying that Europe has historically been the main player in Africa, and this is
largely still true today.

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Stakeholder #4: China
China has emerged as a major world economic power, and a major influence in Africa. While
the media has just recently turned its attention to Chinese foreign aid an investment in Africa,
China has been significantly involved with the continent since the 1950s, providing aid,
development projects, and concessional loans to African countries.
Many sources have attempted to make estimates on how much China actually given in aid to
Africa annually, and media reports often release huge numbers in the tens of billions per year.
However, due to the fact that China operates on a much stricter governmental structure than
its Western counterparts, the truth is that organizations and media channels making claims
regarding the amount of aid given are operating largely on assumption. China does not release
the figures of how much aid it gives to Africa, so care must be taken not to make comparisons
based on assumption. This study will use some general estimated figures gathered from a
variety of sources to begin to look at what China has been doing in Africa, however since these
numbers will only ever be estimates, no apples-to-apples comparisons will be made in
quantitative terms as a factor in selecting an ideal development partner.
Definitions
Foreign Aid: Defining “aid” is a most essential starting place in comparing foreign donors in
Africa. Aid can be broadly though of as “funding given from governments to promote economic
and social development in less-advantaged countries” (Brautigam, 2009, p. 13). However, this
simple definition is not complete to understand aid in this context, as it leaves out the “how”.
Aid can come in many forms, each with its own benefits and consequences. This research will
focus on systematic aid, which includes aid payments made directly to governments either
through government-to-government transfers (bilateral aid) or transferred through institutions

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like the World Bank or IMF (multilateral aid). This type of aid can be broken down further into
two basic forms, grants and loans. Grants are funds given to countries that do not have to be
paid back, although this type of aid is usually less common and makes up a smaller
percentage of the overall aid offerings. Loans are the most common type of aid, and may be
structured in the traditional manner with interest paid and over a set term, or may be instead
resource-backed as is common with Chinese loans. Resource-backed loans use a resource,
such as coal or oil as the method of repayment for the loan.
Foreign Direct Investment: FDI was defined by the United Nations Conference on Trade and
Development as “an investment made to acquire a lasting interest in an enterprise operating
outside the economy of the investor” (Moyo, 2009, p. 98). Through FDI, Africa can leverage its
resources to gain investment and promote economic development.
Private Actors: Refers to private industry and its interactions abroad. There are private actors
from both the West and China operating in Africa in huge numbers, and they are often viewed
as a direct extension of their domestic government. While it is true that their respective
domestic governments may place some regulatory guidelines on their operation in Africa,
private actors are not their governments and should not be discussed as such. In this study,
private actors and their actions in Africa will be clearly separated from their governments and
their impact compared as a stand-alone occurrence, rather than an integrated portion of
governmental foreign involvement.
The ‘West’: A historical term taken to mean the industrialized, developed nations of Europe
and the US (mainly used during the cold war period)
The Global North: The developed nations of the world, which are economically, socially, and
politically more developed

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Development: The social, economic, and political betterment of a country.
Theoretical Framework: The Path to Development for Africa
What Does Development Look Like?
Before determining criteria of an ideal partner in development for Africa, it is essential to
expand the definition of development, and gain an understanding of what development would
look like in Africa. Development can be discussed as incorporating three major components—
economic development, political development, and social development. Each piece is
important, and real sustainable development will focus on each of these categories. Let’s take
a look at each piece a bit more closely:
Economic Development:
Economic development is the first piece of the development puzzle, and many would argue the
most important. It is first important to establish the difference between economic growth and
economic development. Economic growth is often confused for economic development, but
just because a country may be experiencing economic growth does not mean that it is also
experiencing economic development.
Economic growth is a quantitative concept which can be defined as “an increase in a country's
real level of national output which can be caused by an increase in the quality of resources, an
increase in the quantity of resources, or an increase in the value of goods and services
produced by every sector of the economy” ("Economic development vs," 2000). Economic
Growth can be measured by an increase in a country's Gross Domestic Product (GDP). While
economic growth is a necessary condition of economic development, it is a better measure for

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the economic status of developed countries than it is for developing countries. Economic
growth has a much narrower scope than economic development, but is still a useful measure
to see the quantitative changes in a country’s economy over time.
Economic development on the other hand is a normative concept, defined by American
economist and development pioneer Michael Todaro as “an increase in living standards,
improvement in self-esteem needs and freedom from oppression as well as a greater choice”.
Economic development implies changes in “income, savings and investment along with
progressive changes in socio-economic structure of country”. Economic development is much
wider in scope, and looks at not only quantitative, but also qualitative changes in the
economies of developing countries. It is most often measured with the Human Development
Index (HDI), which takes into account relevant factors like the literacy rate and life expectancy,
which affect productivity. Economic development also looks at the “creation of more
opportunities in the sectors of education, healthcare, employment and the conservation of the
environment”("Economic development vs," 2000). Taken as a whole, economic development
contributes significantly to the growth of human capital indexes, a decrease in inequality
figures, and structural changes that improve the general population's quality of life.
Political Development:
A formal definition of political development is less unanimous among scholars than economic
development, including the meaning, content, and nature of the concept. However, the term is
closely tied with institution-building, that is developing the governmental and regulatory
structures in which politic inhabit. There is a tendency when discussing political development
to slip into an ethnocentric bias, where “political development is identified with political
modernization and modernization is taken to mean westernization by most scholars” (Pye,
2012). However, this is a pitfall when thinking about building effective and sustainable political

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structures in developing countries, especially in Africa. The cultural and ethnic realities in
Africa may not make Western models the most viable, and instead countries should strive to
develop a political structure that takes these all-important ethnic and cultural components into
consideration.
Another crucial distinction to make is that political and governmental stability is not so much a
direct driver of overall development as it is a foundation for said development. There are
numerous countries that have experienced rapid economic growth, and even development, but
due to unstable political structures and resulting violence this development was unsustainable,
and in many cases pushed backwards. So an essential feature of political development must
be sustainability and long-term effectiveness.
With regards to the components of political development, Lucian W. Pye, one of the experts on
political development identified three levels where political development could be observed,
including:
Equality: which signifies mass participation, universal laws, and recruitment on the basis of
merit.
Capacity: which signifies governmental performance, efficiency and effectiveness, and secular
orientation
Differentiation: which signifies diffusion and specialization of structures, division of labor, and
specialization based on integration (Pye, 2012).
Each of the three levels of political development contributes to the system’s overall ability to
provide the sustainable component, which acts to safeguard and promote both economic and
social development.

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Social Development:
The World Bank has defined social development as “promoting the inclusion of poor,
vulnerable and excluded groups, strengthening social cohesion and the capacity for collective
action towards development, and enhancing the capacities of citizens and civic groups to hold
accountable the institutions that serve them” ("The world bank:," 2008). The end goal here is to
increase and promote the human capital of the country, so that all people have an opportunity
to be involved in the development of the country and experience the benefits of that
development. Social development has many indicators, like the education quality of the
country, average schooling length, literacy rate, healthcare quality, etc. This type of
development is often seen as an afterthought, with economic development being more
important, but social development is an integral piece of successful development overall.
Social development, or the increase of human capital leads to increases in productivity,
leading to economic growth and bolstering economic development.
Other Types of Development:
While this study will focus on economic, political, and social development as it relates to Africa,
those are not the sole three development categories. Both sustainability and human resource
development play a part in overall development, and it should be noted that these areas are
important as well. Sustainability supports the gains in economic, social, and political
development by creating a structure that will stand the test of time, and in the case of
economic development it is crucial to keep a sustainable mindset with regards to natural
resources and how development projects are affecting the environment. Sustainability has
been a focus traditionally in Africa, and it remains the ideal in regards to development. Human
resource development serves a foundational purpose, and works on improving and increasing

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human capital through education and skills acquisition, something that supports the overall
goal of development (Anshan, 2011).
Conclusion:
Development is not a linear process, and is very much an all-encompassing and multi-faceted
phenomenon. It is important to remember that separately, economic, political, and social
development will not lead to long-term, sustainable development for countries. Each piece is
equally necessary to achieve this goal.
In this way, it is helpful to think of development in terms of a pyramid. Social and political
development occupies the bottom or foundational pieces of the structure, and work to support
and promote economic development. Neglect either of the foundational components, and the
whole pyramid crumbles, as is such with real-life development.
Figure 1.2: The Components of Development
DevelopmentSocial
Economic
Political
Sustainability
Human
Resource

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Selecting a Partner in Development: Key Criteria
Now that we have discussed the components of development, let’s shift the focus now to
determining what criterion will be considered when choosing a development partner for Africa.
Characteristics of an Ideal Development Partner:
The definition of a partnership is an arrangement in which two parties agree to cooperate to
advance their mutual interests. Therefore, a desirable partner in development needs to
contribute to a mutually beneficial, equitable relationship in which both parties treat each other
with respect. The keystone of this relationship should be cooperative and innovative problem-
solving, which both parties participating equally and on the same plane.
African nations are just that—nations. They are independent, sovereign countries and a proper
development partner must recognize and respect this fact. Certainly both parties can learn
from one another, but in the end African countries should have the final say of what is best for
them and their people.
The point of seeking a partner in development is to cooperate to bring about positive,
sustainable development. Africa has rich natural resources and vast human capital. What it
lacks is the proper financing to build infrastructure and harness those resources, and that is
where a partnership can make a difference. But it is important to clarify that ‘financing’ is not
enough. In order for development to be sustainable, Africa has to be able to repay the
financing it secures. A suitable partner will understand this, and work with African countries to

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come up with a feasible method of financing that will ensure ability to repay on the loans,
adding an element of confidence for both parties.
Often the most successful relationships involve parties with common values, motivations,
goals, and perspectives. The more parallels that exist in these areas, the easier it is for the
parties to see ‘eye-to-eye’ in negotiations, and the easier the overall relationship functions.
Shared experience is crucial because it allows open and honest communication, as neither
party feels as though they are inferior to the other. Shared experience is great because there
are numerous opportunities for parties to learn from one another.
It has been said that the past is often the best predictor of the future. This translates to
relations as well. While it is true that all relationships have their issues at times, the best
development partner will have had a overall positive relationship with Africa in the past, and
this will lend itself to a partnership will less tension and more cooperation.
Criteria and Comparisons:
The above characteristics will function as the criteria for comparing between the West and
China when attempting to choose a partner in development for Africa. Rather than imposing a
point system and assigning a weight to each category, a more comprehensive approach will be
utilized. The ideal development partner will be the contender who most closely matches the
characteristics important for such a partnership, which again are:

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The following sections will provide an overview of each candidate’s history, ideologies,
perspectives, policies, and current actions in Africa. This information will then be compared
against the criteria to propose the most suitable partner in development for Africa.
Method:
The social science methodology is grounded in an analytical approach, and contains a
strong observatory component. Most social science literature attempts to understand the
underlying causes of an issue and observes its effect on people, places, and things, but often
makes no attempt to propose solutions to the issues it focuses on. There are certainly benefits
to this method of viewing social problems and phenomenon. It prevents the research from
being biased, and adds creditability to the findings. However, in a practical sense, it also does
nothing to solve the problems it studies. This can be understood as a ‘positivist’ approach.
There is also a more modern ‘post-positivist’ approach that amends the positivist strategy by
beginning to think about the effects or, rather than just the cause of various social science
issues. While positivists believe that “the researcher and the researched person are
independent of each other, post-positivists accept that theories, background, knowledge and
values of the researcher can influence what is observed. However, like positivists, post-
positivists pursue objectivity by recognizing the possible effects of biases” (Postpositivism,
2014). Even this approach, while it does attempt to address possible solutions, falls short in
many respects of creating actionable solutions or imagining how these proposed solutions
might function in real time.

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In contrast, informed, action-based problem solving is a cornerstone of business
strategy. It rests at the very core of private enterprise in a capitalist system. This is perhaps
where business practices can lend a hand to social science methodology. With this research I
hope to apply crucial business practices such as sensitivity to efficiency, total cost analysis,
and strategic implementation to a social science-focused topic. In this way, a blend of
fundamental business strategy and social science analysis can be achieved. I believe that this
method is truly the most effective when discussing Africa’s development. Simply understanding
and analyzing the problems are not enough. It is crucial to start a dialogue about how we can
solve the problems that exist in the most efficient, cost-effective, and sustainable way.

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Section 2: Historical Perspectives and Ideologies
Africa has had a vast and varied history, colored with colonialism and shaped by not
only the people that have called this continent home, but also foreigners who have interacted
with it. It is crucial to gain an understanding of Africa’s historical experience, and how both the
West and China have related with the continent and its people over the years. The
development histories of Europe, The US, and China will also be discussed, as well as an
overview of Western and Chinese development ideologies.
The African Historical Experience: Western Influence and Development Ideologies
Most of the scientific research available today designates Africa as the birthplace of
humanity. From the Nile Valley to the kingdoms of West Africa, societies developed and
became hubs of trade, education, innovation, and culture. Africans were segmented into many
complex tribes and communities that were technologically, politically, and socially advanced.
Many African societies with hierarchical government structures traditionally kept slaves, but
they were part of the social structure in a much different context. Slaves “were an indication of
power and wealth and not used for commercial gain” ("BBC: The story," 2013). However, with
the arrival of Europeans, the nature of African slave ownership changed forever.
Western countries have had a long and dark history in Africa. Beginning in the
1870’s, “Africa faced European imperialist aggression, diplomatic pressures, military invasions,
and eventual conquest and colonization” (Iweriebor, 2011). Europe was engaged in a mass
Industrial Revolution, and desperately needed the raw materials and resources that African
countries were rich in. The ‘Scramble for Africa’ culminated with the Berlin Conference of 1884,
when the “Magnificent African Cake” was divided among the European powers, and thus

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began “100 years of greed, plunder, and terror” (Hochschild, 1998, p. 108). They laid the
groundwork for colonization and drew lines on maps with no regard for ethnic patterns.
Figure 2.1: Colonial Africa and Territory Division
(2010). Colonialism 1914 [Web Graphic]. Retrieved from
https://exploringafrica.matrix.msu.edu/students/curriculum/m9/activity4.php
During this time, the continent was ransacked and resources were exploited using slave
labor. By the 1900s, most of Africa had been claimed by “by seven European powers—Britain,
France, Germany, Belgium, Spain, Portugal, and Italy” (Iweriebor, 2011). They set up colonial
administrative systems to organize the indigenous people into societies and “facilitate control
and economic exploitation” (Iweriebor, 2011). In essence, the colonial era left in its wake
massive destruction and cultural erosion that persists today, and Europe was central to these

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events. The United States, while not a colonizing nation, played an integral role in the
Transatlantic slave trade. This was a phenomenon in which “at least 12 million Africans were
forcibly removed from the continent” ("BBC: The story," 2013). While the U.S. did not claim
colonies, it was the first country to “recognize the sovereignty of the Belgian king Leopold II
over the Congo, and it sent observers to the 1884–1885 Berlin Conference, where it
acquiesced in the partition of Africa” ("BBC: The story," 2013).
While the 19th century was the age of imperialism in the third world, the 20th century
marked the age of nationalism and independence. WWII had weakened Europe, both militarily
and monetarily. The rebels of several territories fought back against their colonizing nations,
reclaimed their land, and established new independent nations. Nationalism itself was a
movement toward the resistance of outside rule, pride in one’s identity, and the desire for
political self-determination (Isbister, 2006, p. 97). By the end of the 20th century, the majority
of the Third World had achieved independence from their former colonizing powers. In this
respect, the Nationalism Movement was successful.
As emerging African nations attempted to set up state institutions and spur economic
development, Europe lay in shambles after the war. At the Bretton Woods meeting in 1944,
representatives “from some forty-four countries resolved to establish a framework for a global
system of financial and monetary management” (Moyo, 2009, p. 11). A massive injection of
American funds through The Marshall Plan provided capital for “rebuilding the factories”
(Isbister, 2006, p.32). Comprised of mostly grants, the Marshall Plan “sparked economic
recovery” and bounced Europe back from complete economic ruin (Foner, 1991). Due to this
plan’s overwhelming success, the West adopted it as the new model for developmental aid for
the Third World, believing that the Global South, like Europe, “simply needed to construct

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capital goods—factories and machines—and their problems would be solved” (Isbister, 2006,
p. 74).
The West’s aid strategies and ideologies are deeply rooted in the Marshall Plan, and
even though it is a very poor model for development in the Third World, they cling to its
success. Unfortunately, the plan’s premise is not one that translates well to Africa. With the
Marshall Plan, the money was “going into already existing physical, legal and social
infrastructures which simply needed fixing” (Moyo, 2009, p. 36). At the point when aid started
flowing to Africa, there were hardly any formal, functioning institutions to speak of, and the
State was weak in those nations that did have systems in place. Another important distinction
was that The Marshall Plan was a deliberately large cash flow (over $100 billion in today’s
dollars) to rebuild and stimulate European economies (Ritschl, 2008). When this development
model was exported to Africa, the money was not there in the same force, “governments of the
rich countries sent foreign aid to the poor, but on the whole, they have not been generous. The
United States and Britain…have reduced their commitment to aid, expressed as a percentage
of GDP” (Isbister, 2006, p. 56). That said, many of the West’s theories on aid over the decades
have stemmed from this plan, including structural adjustment, the neo-liberalism framework,
and the promotion of democracy as a partner to development.
Structural Adjustment Policies (SAPs) are economic initiatives that countries have to
follow to be eligible for loans from the World Bank and IMF, and started in the 1980s. Although
SAPs are supposedly designed for individual countries, they have many commonalities
including “export-led growth, privatization and liberalization, and the efficiency of the free
market”. SAPs generally require countries to “devalue their currencies against the dollar, lift
import and export restrictions, balance their budgets and not overspend, and remove price
controls and state subsidies” ("The whirled bank," 2003).

25
Devaluation essentially makes the country’s products cheaper for foreigners to
purchase, but at the same time it makes foreign imports more expensive. In theory, this
measure should discourage the country from buying foreign products or equipment, but since
the IMF gives the country in question their loan in foreign currency, it actually incentivizes
import purchasing.
Figure 2.2: Debt Increase Relative to Years Implementing Structural Adjustment
Programs
(2010). SAP and Debt [Web Photo}. Retrieved from http://professornerdster.com/synopsis-of-race-
against-time-part-ii-3/

26
Another goal of SAPs is to balance the budget, and cut down on the country’s deficit.
There are two main ways of accomplishing this, increasing taxes or cutting government
programs and spending. The IMF pushes cutting spending, and this results in “deep cuts to
programs like education, health and social care, and the removal of subsidies designed to
control the price of basics such as food and milk…so SAPs hurt the poor most, because they
depend heavily on these services and subsidies” ("The whirled bank," 2003). SAPs also
encourage countries to ramp up production and export of primary commodities like cocoa or
raw materials to increase foreign exchange. However, since these commodities are pegged to
the volatility of the global marketplace, they often fluctuate and decrease in price
unpredictably. So by “devaluing the currency and simultaneously removing price controls, the
immediate effect of a SAP is generally to hike prices up three or four times, increasing poverty
to such an extent that riots are a frequent result” ("The whirled bank," 2003). In fact, the name
"Structural Adjustment Program" has garnered such criticism and negative associations that
the World Bank and IMF have since launched a new initiative, “the Poverty Reduction Strategy
Initiative, and makes countries develop Poverty Reduction Strategy Papers (PRSP)” ("The
whirled bank," 2003). However, this is just clever marketing because a change in name does
not equate to a change in policies, and countries are still being forced to adopt the measures
of the SAPs under the new guise of The Poverty Reduction Strategy Initiative.
Another major development ideology of Western countries has been the Neo-liberalism
framework. This is based on the tenants of ‘pluralize, liberalize, privatize’ and pushes countries
to develop multi-party political systems, dramatically liberalize their economies and trade, and
privatize state-owned industries. Essentially, neo-liberalist theory argues that, “the fundamental
factor responsible for the economic crisis in Africa is the excessive state regulation of the
economies of African countries, which among other things distorts the process of economic

27
development and leads to inefficiency in the allocation of resources” (Che, 2005). The effects
of implementing measures in line with neo-liberalist goals have been “African countries and
peoples with an apocalyptic situation in terms of the indices of the quality of life, from falling
longevity, collapse of wages, and increasing illiteracy” (Shah, 2013). The question becomes
then, why haven’t any of the West’s development initiatives and ideologies been successful in
actually developing the Third World, especially Africa? There are hundreds of convincing and
plausible answers to this question. Some would argue that the Global North has no desire to
see Africa develop. This accusation may or may not be true, but let’s put aside intention for a
moment. Perhaps the reason the West’s policies have not worked in Africa is simply because
their development story is too different to provide a suitable model to copy from and
implement.
Europe’s development was largely made possible by taking from abroad, especially
from Africa. While it is often a detail overlooked when discussing development, the fact
remains that “of all the continents in the world, Europe is the most resourceless. There was
some coal, yes; but not much else. Therefore, almost everything that Europe needed, and still
needs, to develop and survive, had to come from abroad” (Boateng, 2005). This explains the
colonial mindset, and the thousands of Europeans who “went out into the world to acquire
land, resources and wealth which were in turn shipped back to develop Europe, and by
extension the USA” (Boateng, 2005). And many of these riches came directly from Africa. As
Professor Ali Mazrui said, “The labor of Africa’s sons and daughters was what the West
needed for its industrial takeoff. The slave ship helped to export millions of Africans to the
Americas to help in the agrarian revolution in the Americas and the industrial revolution in
Europe simultaneously” (Boateng, 2005). Taking the Global North’s development history into

28
account, the West’s methods cannot be replicated to the benefit of Africa, because their
development was made possible through theft and forced labor.
The African Historical Experience: Chinese Influence and Development Ideologies
China, however, has a comparatively different development story. The Chinese first
encountered the African continent during the Ming Dynasty, when a fleet of vessels “sailed to
the coast of East Africa several times between 1418 and 1433” but it should be noted that “the
Chinese did not colonize the lands of Africa…they took not an inch of land, not a slave, but a
giraffe for the emperor to admire” (Brautigam, 2009, p. 23). Spurred on by widespread poverty
and suffering, and tension between the Communists and the Nationalists, in 1949 the Maoists
came to power, “after a bloody civil war between the Communist Party and the Chiang Kai-
Shek lead Nationalist Party” (Berens, 2001). After the Nationalist defeat, Mao set about putting
in place a radical communist regime throughout China. During this period, China had “closed
doors” to the outside world in terms of trade, with leaders stressing self-reliance (Brautigam,
2009, p. 25). It wasn’t until the reformers, lead by Deng Xiaoping, took over rule that China
opened its doors and began its development journey. Xiaoping urged China to experiment and
develop, “but not like Mao, in a great leap…cross the river by feeling the stones” (Brautigam,
2009, p. 52). And feel the stones they did. Change was slow to come as “they had to persuade
a nation that had barely survived the radicalism of the Maoists to embark on a new transition”
(Brautigam, 2009, p.51). China learned some very important lessons concerning both foreign
aid and development as it improved its own economic footing in the world. In the early 1970s,
“China was primarily an agrarian economy with immense reserves of natural resources—oil,
coal, gold, copper—similar in structure to many African countries today” (Brautigam, 2009, p.
46). Before the Cultural Revolution, the nation had been obsessed with self-reliance, but soon
figured out that partnerships were the key to success.

29
The first trading partner to stroll through China’s newly opened gates was Japan.
Concerned with energy security after oil price shocks, Japan was looking to gain new
suppliers, and began importing oil from China’s Daqing fields (Brautigam, 2009, p. 45). It was a
partnership born of mutual benefit. Each nation needed something from the other, and both
saw the benefits of cooperation and trade. The initial deal was that Japan would “finance the
export of $10 billion of its modern plant, industrial technology, and materials” and China would
repay the loan in oil and coal (Brautigam, 2009, p. 47). This gave Japan the access to energy it
needed, and China received the equipment and training necessary to develop. This was a
learning experience for the Chinese, who saw how two trading partners at different stages of
development could help one another. This successful trade relationship with Japan “would
later be repeated in China’s courtship of resource-rich countries in Africa” (Brautigam, 2009, p.
48). In the 1980s, China sought more Japanese investment to further draw upon the rich oil
reserves, and the Japanese provided financing to build infrastructure for “power plants,
railways, urban water supply, telecommunications, and highways…Japanese firms prospered,
and China’s infrastructure expanded to support the demands of the growing economy”
(Brautigam, 2009, p.48). It wasn’t long before Japan had competition for these energy
reserves. In fact, China used its partnership with Japan to instigate an all-out bidding war to
finance oil exploration and build infrastructure in what is referred to as “the scramble for China”
(Brautigam, 2009, p. 49). This competition meant that China got the funds it needed to
continue to develop economically at little-to-no interest, as the several countries vying for
Chinese contracts attempted to out-bid each other. This strategy worked well for China, and in
this way they were able to jumpstart their development. The exportation of oil was a temporary
solution, but it bought them the opportunity to begin industrialization and opened the doors to
new deals with other countries. While not all Chinese were better off despite the economic
surge, it is estimated that approximately 400 million people were lifted out of poverty

30
(Brautigam, 2009, p. 50). It should be noted that income distribution gaps increased due to this
development, and have continued to widen since. Economic development for China did not
equate to income equality for all Chinese, however some Chinese were drastically better off
and the country as a whole did make some real strides towards modernization.
As China began to expand economically, it set out to develop its aid program, first in
Vietnam, and then in Africa. It should be noted that this expansion into relations with African
countries. In 1982, Chinese leader Zhao Ziyang went on a tour of Africa to “advance…on the
path of South-South cooperation” (Brautigam, 2009, p. 53). It is on this trip that he announced
the four principles that would embody a partnership with China, including “equality and mutual
benefit, stress on practical results, diversity in form, and common progress” (Brautigam, 2009,
p. 53). Nowhere in his speech did Zhao mention aid. He instead emphasized the cooperation
that would take place to “build capacity and foster growth in China as well as in Africa”
(Brautigam, 2009, p. 54). This is a very different focus than that of the West. The Chinese
believe instead that aid cannot be one-sided and in this way they “avoid the paternalism that
has come to characterize aid from the West” (Brautigam, 2009, p. 68). The Chinese, coming
from a long history of self-reliance, encourage this trait among their partnerships in Africa. In a
speech about Chinese aid in 1964, Premier Zhou Enlai stated “It is not our intention to make
[Africa] dependent on us…they need to rely mainly on their own efforts…this will free them
from capitalism’s sticky embrace” (Brautigam, 2009, p. 55). As the West changed economic
development policies from year to year, China stuck to promoting those strategies that had
produced real results for them, and “emphasized infrastructure, production, and university
scholarships at a time when Western donors downplayed all of these” (Brautigam, 2009, p.
54). These values of development are present in all Chinese partnerships and projects
undertaken in Africa.

31
While the West condemned the State, China built state-owned factories in Africa. In
Mali, Sudan, Tanzania, and Ghana, they had been exporting raw cotton, but “Chinese-built
textile mills allowed them to produce the lengths of printed cloth favored by African women for
their lapas” (Brautigam, 2009, p. 66). Tanzania and Zambia, two of China’s closest foreign
friends, had long wanted a railway to connect the two countries and push copper products out
through Tanzania to the sea. The project was rejected an infeasible by the World Bank.
Germany, Britain, and Canada also declined. China, however, signed off on the venture and
together 16,000 Chinese and African builders set the tracks and constructed the railway
(Brautigam, 2009, p. 83). The Chinese have always emphasized trade over aid, and frequently
make dealings with African governments for local products and resources in exchange for
equipment, training, and development projects. China is a rapidly expanding economy, and
they need almost everything Africa can provide including “cotton from Egypt, rubber from Sri
Lanka, coffee from Ghana, copper from Zambia…Tanzania bought spare parts for Chinese
projects by exporting cashew nuts…Sierra Leone exported coffee and cocoa to make some of
its loan payments” (Brautigam, 2009, p. 63). This system of “interweaving trade and aid was
alien to the foreign aid norms of the West” but worked well for African countries who were
resource rich, but cash poor (Brautigam, 2009, p. 60). Chinese aid historically has aimed to
uphold the value of equality. In their African projects, “Chinese experts jumped into the muddy
rice paddies beside local farmers” and encourages African officials to “disregard fixed ideas
about work they considered beneath them” (Brautigam, 2009, p. 45). While the World Bank
and IMF set about recruiting chiefs to run their “integrated agricultural development projects,
the Chinese asked to work only with peasant farmers” (Brautigam, 2009, p. 67). Because
China has never held a ruling position over African countries, it treats them as equals in the
partnership. When working on development projects, Chinese workers would “transfer their

32
expertise fully and live at the standard of local counterparts”, a practice that the West has
never considered important (Brautigam, 2009, p. 68).
China’s simple approach to aid is “an attractive alternative to what is seen as the
endless nit-picking of the IMF and the Paris Club of creditors, which have been quibbling over
terms for years” (Moyo, 2009, p. 108). China has real credibility as a nation that developed
economically in a different fashion than its Western counterparts. The Chinese used mutually
beneficial partnerships to pull its people out of poverty and become an economic powerhouse.
China as a “model for prosperity” has gained the attention and “captured the imagination of
ordinary Africans” (Brautigam, 2009, p. 33). Unlike the West, who conquered Africa “through
the barrel of a gun”, China prefers to use “the muscle of money” to provide discernible benefits
and infrastructure, “there are now roads where there were no roads, and jobs where there
were no jobs” (Moyo, 2009, p. 110).
China’s development path is a success story that is a plausible model for Africa to look
to. China was once resource-rich and cash poor. They were once an undeveloped, agrarian
economy. They once had widespread poverty. But through efficiently leveraging key
partnerships with more developed nations they were able to drastically improve their quality of
life, and rise to become the second largest economy in the world.
Conclusion
From a historical perspective, the West’s development story, interactions with Africa,
and development ideologies are fundamentally different than that of the Chinese. Europe
colonized Africa, and while that period in history is over, it is not forgotten. As former
colonizers, Europe’s development agenda in Africa is questionable, and the relationship
dynamic is still more like that of a ruling authority even though African nations have since

33
become sovereign. The U.S., while not a direct colonizing country has taken a development
policy position mirroring that of European countries, especially in regards to the international
financing institutions like the IMF and World Bank. China, from a purely historical standpoint
has much more credibility as a possible development partner due to the fact that they did not
colonize Africa. Add to that the Chinese development history that has many parallels with the
African experience and their pragmatic approach to development and China is potentially a
suitable fit as a development partner.

34
Section 3: Western Development Policies, Projects, and
Perceptions
Having obtained a historical grasp on Western influence in Africa, let us shift the focus
now to modern development policy, recent projects and initiatives, and some general
perceptions of Western interactions with Africa in the modern day.
Modern Western Development Policy: The United States
The low point for US-Africa relations was arguably at the end of the Clinton era. Under
his administration, the U.S. had failed to intervene during the Rwandan genocide, and
American covered its eyes to what was happening in Africa, both physically and financially.
However, the Bush administration made drastic changes to the country’s foreign policy toward
the continent. During his time in office, an extensive HIV/AIDS program was implemented, and
foreign aid to Africa tripled. Bush reacted strategically to 9/11 and the newfound oil insecurity
in the Middle East after the terrorist attacks. The increasing necessity of African oil to the
American economy “led Washington to worry about its continued flow, not least because of the
perception that Africa’s oil-rich states were among the least stable and poorly governed states
on the continent” (Van de Walle, 2009). Therefore, guaranteeing stability and promoting good
governance incentivized the “increased diplomatic presence and foreign aid in countries like
Equatorial Guinea and Nigeria, as well as occasional US navy tours to the region and
increased technical cooperation to local navies” (Van de Walle, 2009).

35
The Bush policy shifted focus to Africa through linking the concept of development with
security, thereby increasing political support for a more robust aid strategy. In fact, during his
terms,
foreign aid to the region, which grew from $2.5 billion in fiscal year 2000, to $7.5
billion in 2007. In fiscal year 2008, five sub-Saharan African states were among the
15 leading recipients of US foreign aid. They were Kenya ($599 million), South
Africa ($574 million), Nigeria ($486 million), Ethiopia ($455 million) and Sudan
($392 million). By comparison, only Ethiopia had been in this select group ten years
earlier. Africa’s share of total US aid increased from 13.3 to 28.6 percent during this
period, though the US continued to provide a lower percentage of its overall aid to
Africa than the other major donors, who were typically above 40 percent
(Van de Walle, 2009).
That said, numerical changes are not always a sufficient condition for real-world changes. In
some respects, African policy under the Bush administration maintained the weakness of those
administrations before him. The main criticism is that the famed aid increases “were not the
result of some careful strategic thinking about the region” but were used instead as “an end in
themselves, to be touted politically” (Van de Walle, 2009). Bush’s approach to aid was
essentially fueled by the ‘war on terrorism’, rather than economic development or poverty
alleviation for Africa.
When Obama ran in 2008 for office, Africa was barely mentioned. This is especially
odd, given that “he is personally linked [to Africa] through his father…and indicated an abiding
interest and has perhaps more knowledge than any recent president” (Van de Walle, 2009).
His early strategy was ambiguous to say the least. But, in response to a Chinese-lead re-
engagement with Africa, a new policy was drafted and published in June 2012. The policy calls
for “strengthening democratic institutions” and “boosting economic growth” across the
continent (Obama, 2012).

36
As is stated in President Obama’s opening letter at the beginning of the policy, “We will work
with our African partners to build strong institutions, to remove constraints to trade and
investment, and to expand opportunities for African countries to effectively access each other’s
markets and global markets” (Obama, 2012). The document goes on to outline the ‘Four Pillars
of U.S. Strategy” which include the following:
1. Strengthen Democratic Institutions
2. Spur Economic Growth, Trade, and Investment
3. Advance Peace and Security
4. Promote Opportunity and Development
It is clear, that the administration has placed the most emphasis, and dollars, on the
maintenance and improvement of African democratic structures. It has been argued that the
renewed push for democracy “is aimed at compelling African governments to carry out free
market reforms, including privatizations and the abolition of subsidies and import controls”
(Van Auken, 2013). Another central motivation for the democracy focus is “countering Chinese
influence with the charge that Beijing, supposedly unlike Washington, is uninterested in
“democracy” and “human rights” in Africa” (Van Auken, 2013). Pursuant to this charge of a
democratic focus, the administration will seek to attach conditions in line with this end goal. But
even though the ‘hoops to jump through’ for American aid are increasing, the financial
contributions are not. In point of fact, “US aid to Africa has declined under Obama, falling from
$8.24 billion during the last year of the Bush presidency to less than $7 billion today” (Van
Auken, 2013). Despite the decline in aid, there are still ongoing programs that the
administration feels will help with regards to African development and poverty alleviation. The
key initiatives include:

37
Feed the Future Initiative: USAID’s global hunger and food security initiative, which seeks to
increase agricultural production and research new relevant technologies. There is $1.06 billion
allocated for this project.
Global Health Initiative: This program is aimed at overcoming malaria, promoting safe birth,
and addressing the HIV/AIDS epidemic on the continent. A total of $2.65 billion is reserved for
this initiative.
Other Areas of Focus: Increasing access to electricity, supporting democracy, human rights,
and good governance, responding to humanitarian crises, and increasing resilience to climate
shocks. These focus areas represent the remainder of the $7 billion in total USAID to Africa.
While $7 billion sounds quite substantial, when this figure is considered in comparison to other
U.S. aid expenditures it shrinks in the mind quickly. For example, “the size of the Iraq and
Afghanistan programs are $60 billion and $89 billion respectively” (Peter, 2013). Those
gargantuan numbers render the aid commitment to Africa rather miniscule.
While Chinese interest has forced the U.S. to reconsider its strategy in Africa, “policy
towards Africa suggests that the US is not adept at forging a coherent and strategic policy
towards a region perceived to be of secondary importance” (Van de Walle, 2009). The
development of Africa just doesn’t seem to be a priority for the U.S. and this is evident in its
financial strategy relative to other areas in the world, and its lack of interest in visiting and
actively engaging the countries on the continent it does support. When President Obama was
elected, many in Africa were excited to see how he would engage the continent given his
familial and racial connections. Tolu Ogunlesi, a reporter for the Guardian Africa Network
recounted his reaction to Obama’s tour, “ When he was first elected there were celebrations
across the continent, and perhaps unrealistic expectations that he would champion African

38
interests on the world stage…Since then his absence has been keenly felt, sparking
accusations that he has betrayed his roots” (Ogunlesi, 2013). His policy was unclear and
lackluster in the eyes of many, and largely maintained the strategies of the Bush
administration. His 2013 tour in Africa included stops in Senegal, South Africa, and Tanzania,
but oddly he didn’t make the time to visit Kenya, the land of his father. CNN comments that
“Obama was in Africa to promote an increased partnership amid criticism the United States
has, outside of military interests, focused its attention on other areas of the world” (Schwarz &
Yellin, 2013). It may, however, be too late. For in the scramble to do business with Africa,
America is lagging behind. The U.S. is “no longer Africa’s leading trade partner; it lost that
position to China in 2009” (Ogunlesi, 2013). In a new effort to counter Chinese influence,
Obama has announced plans to “invite 47 leaders to a landmark US-Africa summit in August,
seeking to widen US trade, development and security ties” (New Vision). He will send
invitations to “all African nations that are currently in good standing with the United States or
are not suspended from the African Union -- meaning there will be no place for states like
Egypt or Zimbabwe” (New Vision). Whether or not this summit will prove a success for Africa-
US engagement remains to be seen, but it is a much-needed move at this point.
Modern Western Development Policy: Europe
Next, let us look at the development policies, projects, and perceptions of Europe, the
other half of what we define as the ‘West’ for the purposes of this comparative analysis.
Obviously Europe is a collective term for several countries, each having their own ideas and
policies regarding the development agenda in Africa. There are different ways to approach this
discussion. We could look at the top five or so European countries that interact with Africa, for
example, by their amount of aid given to the continent. But then the issue arises of how to
determine this figure. If we go by gross dollar amount, the frontrunners are the UK, France,

39
Germany, the Netherlands, and Spain. But if we use the top donors by % of Gross National
Income (GNI) the list of top countries shifts significantly to Luxembourg, Norway, Sweden,
Denmark, and the Netherlands. Since Europe maintains itself in a collective as the European
Union, it is thus simpler and more representative to talk about Europe’s policies under its
collective identifier. While that may not show the detail and diversity of African policy from
country to country (and this may very well differ significantly), it does offer a birds-eye-view of
the general approach toward Africa for Europe, and for the nature of this study that perspective
should prove adequate.
Prior to discussing detailed projects and perceptions, let us develop a working
knowledge of the EU’s main policy toward Africa. The important thing to note is that the
European Union mainly approaches its Africa policy as part of a larger ACP (Africa, Caribbean,
and Pacific) policy. There are two main frameworks that shape EU policy with regards to
Africa, “the African, Caribbean and Pacific (ACP), enshrined in the 1975 Lomé Convention and
updated in 2000 by the Cotonou Agreement…and more recently, a continental approach has
gained ground, which led to the Joint-EU Africa Strategy (JAES) conceived in the 2007 EU-
Africa summit in Lisbon and reflecting the pan-African dimension” (European Commission,
2011). Let us unpack this collection of policy:
The Contonou Agreement
The Cotonou Agreement establishes three main EU-African, Caribbean and Pacific (ACP)
Joint Institutions:
1. ACP-EU Council of Ministers: meets annually at Ministerial level to discuss matters of
common interest in EU-ACP relations. It gathers representatives from all ACP and EU

40
countries, and the European Commission and, following the Lisbon Treaty, the European
External Action Service (EEAS).
2. ACP-EU Committee of Ambassadors: meets generally to prepare for the Joint Ministerial
Council. It is composed at ambassadorial level by representatives from all EU and ACP
member states, in addition to the European Commission. The EEAS also attends.
3. ACP-EU Joint Parliamentary Assembly: a unique body whose goal is to bring together
elected representatives of EU and ACP countries. The bulk of its activities relate to the
promotion of human rights, democracy and the rule of law. It takes place twice a year, with a
venue rotating between EU and ACP countries.
The Cotonou Agreement essentially broadens the scope of EU-ACP partnership while seeking
to adapt it to the changing international environment and the deriving challenges. Its three
pillars are:
1. Development cooperation (funded by the EDF)
2. Economic and trade cooperation through the EPA's, seeking to make EU-ACP trade
regimes WTO-compatible
3. A stronger political dimension. (European Commission, 2011).
The second vehicle for EU-Africa aid and relations is the Joint Africa-EU Strategy (JAES).
Adopted by the heads of state from Africa and Europe at the Lisbon Summit in 2007, JAES
strategy focuses on the following:
• Peace and Security
• Democratic Governance and Human Rights
• Trade, Regional Integration and Infrastructure

41
• Millennium Development Goals (MDGs)
• Energy
• Climate Change and Environment
• Migration, Mobility and Employment
• Science, Information Society and Space
(European Commission, 2011).
The main financial instrument for development cooperation in ACP countries is the
European Development Fund (EDF). The EDF is now at its 10th round (2008-2013) and
includes three financial envelopes: a national envelope covering bilateral cooperation with
individual ACP countries, a regional one covering relations with ACP regions, namely Central
Africa, West Africa, Eastern and Southern Africa and Indian Ocean, the Southern African
Development Community (SADC), the Caribbean and the Pacific; and a third one to address
the common challenges facing ACP States that transcend geographical criteria. Moreover, the
intra-ACP envelope funds the African Peace Facility.
The 10th
round (2008-2013) of the European Development Fund includes a total budget of
€22.682 billion, or approximately $30.652 billion dollars allocated in the following ways:
• €21.966 billion ($29.684 billion dollars) directly to ACP countries
• €286 million ($386.5 million dollars) to the OTC (overseas countries and territories of
EU countries)
• €430 million ($581.1 million dollars) to the Commission to support programming and
implementation of the EDF
The European Union makes it clear that while the joint fund is comprised as outlined above,
“The Member States have their own bilateral agreements and implement their own initiatives

42
with developing countries that are not financed by the EDF or any other Community funds”
("European development fund," 2007). Concerning the EU, key programs and initiatives
include:
Aid for Trade: One of the EU’s main programs, aimed at increasing trade and investment with
Europe. Specifically the program and its funds target:
Internal "behind the border" constraints such as a lack of productive capacity and
ability to meet standards in high value export markets, excessive red tape, or poor
infrastructure; all of which make it difficult for developing countries to exports their
products and undermine the potential benefits of increased imports. Targeting
these constraints is what Aid for Trade (AfT) is all about, along with strengthening
countries’ capacity to negotiate and implement trade agreements to their benefit
("Press release: Aid," 2011).
Much of what this program does is to make sure that all African exports meet European
safety standards (especially produce and other food products), and to increase exports
and lift restrictions related thereto. Like with any other aid program through the EU,
“AFT has to go through policy dialogue, needs assessments, inclusion of priorities into
national and regional development strategies and formulation of response strategies”
("Press release: Aid," 2011).

43
Figure 3.1: Aid For Trade
(EU and Member states, in EUR million)
(2013, July 08). Aid For Trade [Web Graphic]. Retrieved from http://europa.eu/rapid/press-
release_MEMO-13-649_en.htm
This figure shows the contributions to the Aid for Trade program by the European Union and its
member states over time. While contributions by member states have fluctuated from year to
year, since 2005 the EU has been quite consistent with its portion of the contributions. The
average for the years 2001-2011 was €2.188 billion.

44
Figure 3.2: Aid For Trade by Region
(EU and Member states, in EUR million)
(2013, July 08). Aid For Trade By Region [Web Graphic]. Retrieved from http://europa.eu/rapid/press-
release_MEMO-13-649_en.htm
This figure emphasizes the EU’s focus on African countries in relation to the AFT program. The
contributions to Africa are around double what is spent in Asia, the next highest region, and the
expenditures, while decreasing over the period 2008-2011 are still significant in terms of
percentage of total aid budget.
Euro-African Partnership for Infrastructure: Adopted in 2006, this initiative is one of the
EU’s key programs with the aim to aid in the development of large infrastructure networks in
the following areas:

45
• Transport: (road and railway networks, ports, maritime and river routes, air transport), in
order to reduce costs and improve the quality of services
• Water and Sanitation Networks: in order to improve the management of water resources
at local, national and cross-border basin level, and also access to drinking water and
adequate sanitation facilities
• Energy: in order to allow network extension, distribution in rural areas and improvement
of cross-border connections
• Information and Communication Technologies (ICT): to ensure adequate access to
affordable technologies by supporting regulatory reform, capacity building and
broadband infrastructure development
A total of €5.6 billion was allocated to projects related to this program in the 10th
round (2008-
2013) of EU budgeting.
ACP-EU Energy Facility: This program allocates €220 million to increase access to modern
energy services for people in Africa, the Caribbean and the Pacific (ACP). The three identified
priority areas include improving access to energy services, creating an enabling environment
for energy services through good governance, and supporting future large-scale investment
programs.
European Water Facility for the ACP Countries: This program operates with a budget of
€500 million to fund two types of activity: improving water management and governance, and
co-financing drinking water and sanitation infrastructure.
This is not an exhaustive list, but it covers the largest programs and initiatives. The EU
does attempt to cover a wide range of issues related to development, but the effectiveness of
this aid varies from project to project. Also, the EU is notoriously slow to implement, because it

46
requires the signing off of so many heads of State and the synchronizing of many different aid
cycles along with the recipient country. The EU is testing a new method called ‘Joint
Programming’ which is meant to streamline the implementation process, "to give the EU
leverage to impose conditionalities more effectively…the EU is piloting joint programming in
Ethiopia, Ghana, Guatemala, Laos, Mali and Rwanda for 2014-20” (Tran, 2012). Whether this
will actually improve the process remains to be seen.
As Mirjam Gehrke discusses in Africa: A New Era Possible in EU Development Aid,
“More than half of global development aid comes from the EU and its member states.
However, developing countries only receive European aid if they meet a set of criteria…on the
political level, there is an agreement in Europe on certain standards like the demand for a
democratic system and the respect for human rights in the receiving country” (Gehrke, 2014).
This is a tenant generally attributed to aid from the West. Europe, along with the U.S. hold fast
to the idea that imposing good governance conditions increases the effectiveness of their aid.
This may be true in some cases, but the West is not the only actor competing for Africa’s
attention. The EU, as well as the U.S. will have to evaluate how its aid schemes will function as
China, India, and other rising nations enter the donor pool.

47
Section 4: Chinese Development Policies, Projects, and
Perceptions
Having obtained a historical grasp on Chinese influence in Africa, let us shift the focus
now to modern development policy, recent projects and initiatives, and some general
perceptions of Chinese governmental interactions with Africa in the modern day.
Modern Development Policy: China
As a starting point to understanding Chinese aid today, it is important to know how the
government system is structured in China, that is, who is deciding which countries receive aid,
at what time, for how much, and at what cost. While the West operates using varying degrees
of democracy, China’s governmental system is different on a foundational level. As a single-
party socialist state, China just doesn’t have to jump through the same hoops or get approvals
from as many departments as the U.S. or European governments do. That’s not to say that the
aid system is without a defined structure, but it is comparatively simpler. Like most high-level,
high-budget decisions in China, aid is managed directly from the State Council, which includes
China’s premier and vice premiers and the rest of the cabinet. Its main tasks are to “approve
the annual aid budget, any grants of cash above $1.5 million, all aid projects above $12.5
million, aid to ‘politically sensitive countries’ and any requests to exceed the annual plan for
foreign aid” (Brautigam, 2009, p.107). Under the executive government, there are four
departments that manage all other aid-related tasks: The Ministry of Finance, Ministry of
Commerce, Ministry of Foreign Affairs, and China Eximbank.

48
Figure 4.1: China’s Aid Institutions
Brautigam, D. (Designer). (2009). China's system of aid and economic cooperation [Print Photo].
The Ministry of Finance: Responsible for allocating donations to multilateral organizations
(UN agencies, World Bank’s International Development Association, ect), managing the
cancellation of foreign aid debt owed to China, and signing off on the annual aid proposals.
The Ministry of Commerce: Housed in the larger Ministry of Commerce is the Department of
Foreign Aid. This small department of around 100 (comparatively, USAID has 2,200
employees) is the heart of China’s aid system and “programs all the zero-interest loans and
grants, drafts the aid budget and aid regulations, manages the Foreign Aid Joint Venture and
Cooperation Fund, and coordinates with China’s Eximbank on concessional loans.

49
The Ministry of Foreign Affairs: These diplomats are on the ‘front line’ in advising the
leadership in China on how much aid to give to particular African countries. They also draft the
annual plan for aid with the Ministry of Commerce and signs off on any changes in the aid
plan.
The China Eximbank: The bank manages the disbursement and maintenance of export
seller’s credits (preferential loans for Chinese companies operating abroad), export buyer’s
credits (for foreigners importing Chinese goods or services), and the foreign aid program.
Now that we understand how the Chinese aid system operates, let us turn now to what
policies and principles guide it. In Ghana on January 15th
, 1964, Premier Zhou Enlai
announced the Eight Principles for China’s Aid to Foreign Countries. They are as follows:
1. The Chinese Government always bases itself on the principle of equality and mutual
benefit in providing aid to other countries. It never regards such aid as a kind of
unilateral alms but as something mutual.
2. In providing aid to other countries, the Chinese Government strictly respect the
sovereignty of the recipient countries, and never attaches any conditions or asks for any
privileges.
3. China provides economic aid in the form of interest-free or low-interest loans and
extends the time limit for repayment when necessary so as to lighten the burden of the
recipient countries as far as possible.
4. In providing aid to other countries, the purpose of the Chinese Government is not to
make the recipient countries dependent on China but to help them embark step by step
on the road of self-reliance and independent economic development.

50
5. The Chinese Government tries its best to help the recipient countries build projects
which require less investment while yielding quicker results, so that the recipient
countries may increase their income and accumulate capital.
6. The Chinese Government provides the best-quality equipment and material of its own
manufacture at international market prices. If the equipment and material provided by
the Chinese Government are not up to the agreed specifications and quality, the
Chinese Government undertakes to replace them.
7. In providing technical assistance, the Chinese Government will see to it that the
personnel of the recipient country fully master such technique.
8. The experts dispatched by China to help in construction in the recipient countries will
have the same standard of living as the experts of the recipient country. The Chinese
experts are not allowed to make any special demands or enjoy any special amenities.
(Source: Speech by Chinese premier Zhou Enlai, Accra, Ghana, January 15th, 1964.)
These principles have been the center of much debate and controversy. Many have praised
these tenants while others have condemned them. But, like it or not, these principles are the
backbone of the Chinese aid engine, and are still in policy to this day.
Why Does China Give Aid?
There is a prominent myth prevalent in Western media and echoed by Western
governments that China’s only motivation for giving aid in Africa is to secure as many natural
resources as possible for itself, in essence, a land grab. It’s not hard to guess why this has
become popular opinion. The Chinese are very active in the areas of Africa that contain the
rich oil and mineral resources, and it would be incorrect to say that this isn’t important to them.
But they aren’t just interested in countries with the most natural resources. It’s important to
consider two facts:

51
• China gives aid to every single country in sub-saharan Africa that recognizes the Chinese
government.
• China doesn’t seem to give more official development aid to countries with more
resources. Grants and zero-interest loans from the Ministry of Commerce are distributed
fairly evenly across countries (Brautigam, 2009, p.279).
Figure 4.2: African Countries Receiving Chinese Aid
Brautigam, D. (Designer). (2009). China’s Aid Agreements in Sub-Saharan Africa [Print Photo].

52
So, if China isn’t reenacting a colonial resource-grab, then why do the Chinese give aid? The
Chinese tend to think big-picture about aid and foreign relations. While “resources matter,
China’s mutual benefit approach is about generating business” (Brautigam, 2009, p. 279). And
China doesn’t discriminate on sectors. Yes, oil could be one area they would engage in, but
anything that has the potential of generating a decent return is attractive to the Chinese. As a
Nigerian diplomat commented on the Chinese in Africa, “The Chinese are trying to get involved
in every sector of our economy. If you look at the West, it’s oil, oil, oil and nothing else”
(Brautigam, 2009, p. 279).
How Does China Give Aid?
China uses a variety of different aid instruments as vehicles to deliver aid. These include
resource-backed infrastructure loans, debt relief or loan forgiveness, education, and turn-key
projects. Let’s take a closer look at each of these types of aid:
Resource-back Infrastructure Loans:
Unlike the Bretton Woods institutions that have notoriously condition-ridden loans that
require months or years of negotiation, the Chinese take a more simplified and direct
approach. Borrowing from their own development experience with Japan, they work with
African states to guarantee the loan with whatever resources are available. This is a huge
benefit for African nations, because they get the infrastructure they need, and which many
Western institutions are unwilling to provide. Case in point is the DRC’s loans for infrastructure
in 2008. China’s Eximbank “agreed to finance more than $6 billion in infrastructure, using just a
single copper and cobalt mining joint venture as guarantee” (Brautigam, 2009, p.146). As the
CEO of Congo’s state-owned mining company commented, “Congo doesn’t have to wait for its
infrastructure until it has the money. Building starts immediately with the natural resources as

53
guarantee. Except in oil-rich states, I know of no other deal quite like this. The Chinese
approach side-steps all the conditionality and just gets right to the point” (Brautigam, 2009, p.
146).
The other unique feature of Chinese loans is the absence of conditionality. Conditionality
is taken here to include imposed economic policies or governance reforms that are tied to the
aid. Unlike the West, China doesn’t incorporate these conditions into its aid. This has been a
highly criticized feature, especially by the Bretton Woods institutions that are increasingly
losing loans to China. The fact is that Chinese aid is based on an equal, mutually-beneficial
relationship. It views African states as sovereign, and doesn’t concern itself with the internal
governmental affairs of nations. African leaders view this policy as an opportunity to self-
govern in a way that is denied them by the West. A Ugandan official commented on Chinese
aid: “The fact that a country gives you aid makes them think that they have a license to tell you
how to run your affairs. These conditions are probably well-intentioned, but they are
humiliating” (Brautigam, 2009, p.149). Jose Cerqueria, an Angolan economist provides his
opinion of Chinese financing: “China’s straightforward approach is an attractive alternative to
what is seen as the endless nit-picking of the IMF and the Paris Club of creditors, which have
been quibbling over terms for years…China is welcome because it eschews the IMF’s
ideological and condescending attitude” (Moyo, 2009, p.108).
Some have made the argument that a lack of conditions to encourage good governance
and appropriate economic procedures leads to the opposite and props up corrupt
governments. Certainly there is some truth to this claim, as China does engage economically
with Sudan and the corrupt government regimes of Zimbabwe’s Robert Mugabe and Mobutu in
Zaire. However, the West, with it’s trade embargoes to governments it deems corrupt may be
‘too little, too late’ as it were. It is, after all, “under the auspices of Western aid, goodwill and

54
transparency that Africa’s most notorious plunderers and despots have risen and thrived”
(Moyo, 2009, p.108). For better or worse, China just has no interest in assuming a managerial
role in another nation’s affairs. As a Chinese official commented, “We don’t believe in
embargoes…that just means that the people suffer. From a practical consideration, embargoes
and sanctions can’t solve problems” (Brautigam, 2009, p.285). So while the Chinese choose to
not get involved in these areas, the West obsesses over them. However, this focus on ‘good
governance’ has produced little in the way of tangible results. As Serge Mombouli,
ambassador from Congo-Brazzaville suggests, “We cannot be talking just about democracy,
transparency, good governance. At the end of the day the population does not have anything
to eat, does not have water to drink, no electricity at night, no industry to provide work…people
do not eat democracy. China provided tangible things, while the West pushed for something
less tangible” (Brautigam, 2009, p. 287). China’s position comes from its own history, and in
the Chinese experience the simplest and most effective way to improve governance issues is
to get rid of poverty and develop economically. Just decades ago China was in a similarly
bleak political situation, but tensions were eased dramatically when people were lifted from
poverty. Violence decreased, government structure became more stable. The Chinese believe
this could be Africa’s solution as well.
Loan Forgiveness
Another form of official development assistance (ODA) is loan forgiveness, and China
uses this frequently. The West was the first to employ a debt relief program in 1996, called the
Highly Indebted Poor Countries (HIPC) program. The HIPC program began canceling debts of
countries that qualified, by in Western form, “only after countries successfully followed a
complicated steeplechase with hurdles that could take years to jump” (Brautigam, 2009,
p.127). China launched its own loan forgiveness program in 2000, but unlike the West,

55
“Chinese debt cancellation was unconditional…they did not require governments to prove their
ability to manage their economies or to develop strategies to use the cancelled debt for poverty
reduction” (Brautigam, 2009, p.129). China uses this in tandem with other types of aid, and by
2008, “Premier Wen Jiabo announced that China had canceled a total of 24.7 billion yuan, or
about $3.6 billion” (Brautigam, 2009, p.130). Since then, there have been more pledges to
cancel debt, but this is still quite modest compared with the IMF/World Bank debt cancellations
under HIPC, which to date “have been approved for 36 countries, 30 of them in Africa,
providing US$75 billion in debt-service relief over time” ("Debt relief under," 2013).
Education/Training
This type of aid is commonly used by the Chinese government in Africa. China’s
dedication, and some would say obsession, with education helped to fuel an economic revival
in their economy and they believe in the power of education for Africa as well. In fact, “Chinese
officials estimate that they have provided scholarships to 18,000 African students from 50
countries and sent 700 teachers to 33 countries since 1949. Since 2009, the Chinese
government has offered 4,000 scholarships to African students every year” (Nesbitt, 2011).
This is dramatically higher that in Western countries, such as the U.S., which has largely
abandoned the education scheme it took up in the 1990s, “in 1990, USAID programs funded
9,128 university students, but only 1,212 in 2000” (Brautigam, 2009, p.121).
China, in it’s goal of providing infrastructure in Africa, has also undertaken the building of
schools and vocational centers. In Ethiopia, “a large training and vocational education center
financed by Chinese aid and jointly operated by the two countries opened in early 2009. The
school will enroll 3,000 students, with courses taught by Chinese and Ethiopian teachers in
construction skills, architecture, engineering, electronics, electrical engineering, computer,
textiles, and apparel. China also built a vocational training center in Uganda, and the Chinese

56
are building two centers in Angola” (Brautigam, 2009, p.158).
Turn-Key Projects
The Chinese focus on building industry and infrastructure makes grants for projects a
significant portion of an aid package from China. Whether it’s a power plant in Ghana, a metal
processing plant in Zimbabwe or a textile factory in Kenya, the Chinese see the value-added
for Africa and themselves through investment in industry and infrastructure. When undertaking
these types of projects, the Chinese use a modified version of the model the Japanese used
with them during their development, the ‘Request-Based System’. This usually involves
Chinese companies identifying possible projects and pitching them to the recipient country’s
government for their opinion and approval. The recipient country then ‘requests’ that the
Chinese government fund the project. In the China-Japanese development partnership, “the
system helped Japan expand exports, and its focus on raw materials like cotton or timber,
energy, industry, and mining was designed for mutual benefit” (Brautigam, 2009, p. 141).
China’s model incorporates suggested projects by Chinese companies, but also allows African
countries to propose projects that it deems important. Then a competitive bidding process
ensues to identify the company or entity that will manage and complete the project. This
process is an improved form of the Japanese model, because in the case of Japan at that
time, they were the only ones bidding so there was a much greater risk of corruption. Today,
the Chinese are usually one of many bidders, among the West, India, Japan, and South
America. This mix of countries creates a check on the system, and “is intended to ensure that
a project’s costs are realistic and fair” (Brautigam, 2009, p. 141). Some recent notable projects
include:
• China has built over 100 schools, 30 hospitals, 30 anti-malaria centers and 20 agricultural
technology demonstration centers in Africa.

57
• On November 28th, 2013, the contract was signed for a $13.8 billion standard gauge rail
line that is expected to link five East African countries and replace the line built by the
British.
• $232.4 million for the Kariba South hydropower expansion project in Zimbabwe
• $3 billion interest-free loan from China Development Bank for oil and road projects in
Ghana
• $1.4 billion for the construction of a railway from Khartoum to Port Sudan in Sudan
• $2.2 billion for dam construction in Ethiopia
• $672.9 million for a light rail network in Nigeria
• $464.8 million for rebuilding roads in Angola
• $138 million for updates to the Kenyan urban power grid
• $304.2 million for construction of the Central Zongo II Hydroelectric Dam in the DRC
• $732.1 million for the Kafue Gorge Lower Power Plant in Zambia
(Provost & Harris, 2013).
The above are just a select few of the thousands of projects completed in Africa with the
Chinese. According to research conducted by AidData, “China has committed around $75
billion to over 1,700 different projects across Africa in the past decade” (Provost & Harris,
2013).
Final Notes on Chinese Aid
Concerning infrastructure projects, it is worthwhile to note that there is a priority system
built-in. The Chinese first prefer to repair or revive infrastructure that’s already in place where
applicable. It’s more efficient, and makes loan funds go further. Second, the Chinese will
generally agree to an African-proposed project before suggesting other options. This goes
along with their pledge of non-interference. Wherever possible, they encourage African States
to ‘speak for themselves’ in respect to projects within the country.

58
There has been much debate over the mix of workers dispatched to complete these
projects. Many have alleged that China sends an overwhelming majority of Chinese workers to
construction projects and that they don’t hire Africans. This is a myth that fortunately is largely
just that.
Figure 4.3: Chinese Projects and Investment
(2012, August 15). Chinese Investment Offers in Africa Since 2010 [Web Photo]. Retrieved from
http://www.stratfor.com/image/chinese-investment-offers-africa

59
The fact of the matter is that the ratio of Chinese to African workers varies wildly
depending on the recipient country’s policy, the timeline demanded for completion, the ability
to find skilled workers, and how long the Chinese company has been in that particular area.
For example, “in Sudan, where Chinese companies have been working in the oil industry for
over a decade, 93% of workers in China’s oil operations were Sudanese” (Brautigam, 2009,
p.156). Similarly, in Tanzania, “Chinese companies employed Tanzanians at a ratio of eight or
nine for every Chinese” (Brautigam, 2009, p.156). China will also respect local governmental
policy, so countries that have these in place are successful in employing more local workers. In
the case of Angola, the “require all employers to have at least 70% Angolan staff” and similarly
in the DRC “at least 80% of the workers in China’s multibillion dollar infrastructure and mining
venture must be Congolese” (Brautigam, 2009, p.157).
Another interesting point of difference between West and East is the cost for experts to
manage implemented projects. The fact is, the Chinese are cheaper. The export of expertise
from the West comes at a cost, due to “the scores of relief workers who make triple digits in
salaries for ‘working in dangerous zones’” (Brautigam, 2009, p.157). As an official in the
President’s office in Sierra Leone notes, “Chinese interventions are not tied to a lot of experts
who get half or three-quarters of whatever aid is coming to the country” (Brautigam, 2009, p.
157). The Chinese pay a fair market rate for what the same position would command in China
(usually far less in salary than the West) and this rate is used for dispatching Chinese to Africa.
Also, in keeping with their 8 Principles of Aid, Chinese workers don’t get bonuses or kickbacks
for ‘working in a dangerous zone’ like is common with those being dispatched from the West.
The result is tangible savings for African nations.

60
The Chinese aid strategy in Africa is aimed at mutual benefit for each party involved, and
attempts to follow the model that worked for China personally, and helped them to lift millions
of people out of poverty. Their focus is infrastructure and industry; to both make business
function more easily through upgraded electricity systems or road revival projects, and also to
generate a steady and stable return for economic growth. There are some discernible benefits
of Chinese aid when compared with the West, but China’s policies aren’t perfect. While the
West tends to focus on the intangible goals of democracy and good governance to the
detriment of tangible and much-needed infrastructure, China doesn’t really bother at all with
political or environmental concerns. However, when we look at from an impact or value-added
perspective, the Chinese have done more to help Africa develop in the last decade than the
West has managed in the last half-century. There are roads and railways where there used to
be grass and dirt. There is electricity where there used to be darkness. There are schools,
hospitals, and stadiums where nothing stood just five or ten years ago. Due to new raw
material processing plants and construction projects, Africans that used to be jobless are now
employed. While the West was arguing over ideologies, China came to Africa with the ‘muscle
of money’ and the promise of a partnership.

61
Section 5: Foreign Direct Investment Facts and Figures
While not considered Official Development Assistance (ODA), FDI is still beneficial, both
to the host country and the originating country. FDI, defined by the United Nations Conference
on Trade and Development as ‘an investment made to acquire a lasting interest in an
enterprise operating outside the economy of the investor’ reached a record $1.4 trillion
worldwide in 2006. Of that, Africa attracted only $17 billion of that total (Moyo, 2009, p.103).
That’s interesting, given that Africa is a prime location for FDI—its labor costs are low, and
investment opportunities are high. China, among others, has begun to take notice in a major
way, and have finally started to come to Africa to do business, sparking a global race to African
markets. FDI flows to African countries “increased by 5 per cent to US$50 billion in 2012 even
as global FDI fell by 18 per cent”, UNCTAD’s annual survey of investment trends reports”
("Foreign direct investment," 2013). This section will explore this relatively new phenomenon,
comparing and contrasting FDI flows from China and the West, and adding a quantitative
perspective to this subject.
Chinese FDI: Facts and Figures
Like many aspects of its involvement on the continent, the Chinese have been very active
in FDI. They have invested all over, and have really been integral in sparking competition and
general interest in Africa as a business destination. China does everything it can to encourage
FDI, both directly through the government, and “by encouraging private Chinese enterprises to
invest in Africa, usually through preferential loans and buyer credits” (Moyo, 2009, p. 105). The
amount of FDI China has amassed in the last decade is staggering, “As of mid-2007, the stock
of China’s FDI to Africa was US $100 billion” (Moyo, 2009, p. 105).

62
Figure 4.4: Countries Ranked By FDI Flows
(2014). Foreign Direct Investments (FDI) to Emerging Markets Doubles Over Past Decade [Web Photo].
Retrieved from http://www.weareallglobal.com/change/
While the U.S. has continued to engage most actively in FDI, China’s jump from 9th to 2nd in
approximately ten years time is remarkable. While not all Chinese FDI is directed specifically at
Africa, “Foreign Direct Investment in Africa has grown at an average of 146% annually over the
last 22 years to reach US$36 billion in 2007 alone, while trade between Africa and the rest of
the world (particularly Asia) has been steadily increasing” (Al, 2014).
The diversity of investments is also something to note. It is a common misconception that
Chinese FDI is overwhelmingly aimed at mining and other natural resources, but in reality this
is not the case. As an Economist article suggested, “Africa is now more often seen by Chinese
firms as a place to do business other than digging stuff out of the ground” and in an IMF study
conducted in 2011 it was discovered that “only 29% of Chinese foreign direct investment in

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