Who needs official development assistance?



About 71 percent of the countries of the world.

Official development assistance is defined by the Organisation for Economic Co-operation and Development (OECD) as concessional funding given to developing countries and to multilateral institutions primarily for the purpose of promoting welfare and economic development in the recipient country.

Between 2000 and 2013 Chinese development assistance to African countries totalled nearly $100 billion whilst US development aid to Africa over the same period was slightly more than $100 billion. That’s a lot of money and neither in the case of the US nor that of China is this the demonstration of altruism it was originally conceived to be.

Both of these large figures pale beside the contribution of the EU and it’s member nations, which totalled over $250 billion in the period. Africa receives over 40 percent of all Chinese foreign “aid.” Most of China’s development “aid” does not follow the OECD definition; it is in fact in the form of long-term repayable loans, no doubt collateralised.

Chinese development aid tends to focus on projects, infrastructure in particular—energy, transportation and communications and of course the extractive industries. Aid from USA and the OECD nations tend to be more aimed at programs such as HIV, other health services, environmental matters and education—items which figure very low on China’s list of deserving sectors.

Development aid is an important geopolitical tool. Underdeveloped countries tend to vote together with their main benefactor at international forums such as the United Nations. China’s aid gives access to minerals in African states, much of which are shipped back to China. It has been said that for every RMB 1 billion that China contributes it expects to get RMB 6 billion back. Cameroon in Africa has China as its largest market for the export of logs. Since 1990 3,300,000 hectares of forest have been cut down to feed Cameroon’s export markets.

Overall China and the OECD nations provide a lot of money to the less developed world. China itself is a less developed economy and was until recently a recipient of ODA from the developed world. To get these numbers in perspective the Gross Domestic Product [GDP] of the Philippines is about $280 billion.

The EU and its member states provide development funding to Africa, which is almost as much as the GDP of the Philippines. ODA for the Philippines in 2014 amounted to $14.37 billion, of which 8 percent was from USA and 6 percent from the EU and its member states. Japan contributed 23 percent and China less than 1 percent. Africa is getting about 2.5 times more development aid per head than the Philippines from China, USA and EU, but then the Philippines does better than Vietnam in terms of development aid receipts.

There is nothing to be ashamed of in being a recipient of ODA; after all 139 of the world’s 196 nations are recipients, which makes something of a burden for the people of the other 57 donor states!

It looks to me that if infrastructure is what is needed, then talk to the Chinese; for the development of society—health education etc.—then talk to the OECD nations. Get the requests the wrong way around and there could be lots of unfulfilled expectations!

ODA is a fact of life; it’s a sort of redistribution of wealth, in theory at least done with the best intentions; it’s just important to ensure that it arrives where it is intended to go to serve the people. If you are running a less developed nation, then take as much ODA as you can get and use it to develop the economy and improve people’s lives as it is intended to do, just watch out for the “strings” attached.

Mike can be contacted at mawootton@gmail.com


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