NKWAH Akongnwi NGWA: South-South Development Cooperation: The impact of Emerging Donors’ Aid on African Countries (The Case of Sino-Cameroonian Aid Relations)
UNIVERSITE DE YAOUNDE II THE UNIVERSITY OF YAOUNDE II Institut des Relations Internationales du Cameroun
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SouthSouth-South Development Cooperation: The impact of Emerging Donor’s Aid on African Countries
(The Case of Sino-Cameroonian Aid Relations) A dissertation submitted and publicly defended in partial fulfilment for the award of a Professional Masters Degree in International Relations, Option: Diplomacy Speciality: International Economic Cooperation, Development and Regional Integration
BY NKWAH AKONGNWI NGWA Master’s Degree in Economics of Human Resources
SUPERVISOR Pr. Avom Disire
DIRECTOR Dr. Wonyu Emmanuel Chargé de cours a I’IRIC
Agrégé des Facultés de Sciences Economiques IRIC 2012
NKWAH Akongnwi NGWA: South-South Development Cooperation: The impact of Emerging Donors’ Aid on African Countries (The Case of Sino-Cameroonian Aid Relations)
This work is dedicated to the NKWAH’S and MFORLEM’S families; especially to my lovely Uncle, Mr. NKWAH Joseph AMBE, and my son, NKWAH Emmanuel NGWA-Anye.
For their constant support, close follow up and religious transparency, which ignite in me a sense of purpose, direction, focus and dynamism
NKWAH Akongnwi NGWA: South-South Development Cooperation: The impact of Emerging Donors’ Aid on African Countries (The Case of Sino-Cameroonian Aid Relations)
AKNOWLEDGMENT Upon completion of this document, I have worked with a group of people whose contributions, in various ways, have added a special dimension to the final product. First and foremost, I would like to express my deepest appreciation to Almighty God, who has blessed me abundantly with so many gifts, some of which I am still to discover. He continuously grants me the spirit of hard work and endurance. I must say that this work would not have been realized without His protection and help. I, therefore, say THANK YOU LORD. Secondly, I would like to thank my lecturers at the International Relations Institute of Cameroon (IRIC) for satisfying my hunger for knowledge. I am especially grateful to Pr. Désiré Avom for raising in me the interest of studies in the field of international cooperation and development. I owe a lot to Dr. Emmanuel Wonyu for taking time off his busy schedule to give me the necessary guidance and scholarly advice that served to give me a clear understanding this topic. I extend gratitude to Pr Narcisse MOUELLE KOMBI, Pr Jean-Louis Atangana Amougou and Mr. Piérre Emmanuel Tabi, Minister Plenipotentiary, Director of IRIC for their unique educational skills, guidance and for granting me the opportunity to carry out this academic research. Thirdly, I gratefully acknowledge H.E. MOUKOKO Mbonjo, Minister of External Relations, H.E Nkwelle EKANEY, High Commissioner of Cameroon in London, Mr. TENDA Robert NEBA Minister Plenipotentiary (M.P), Mr. NDOUMBA Nestor (M.P), Dr FOZEIN KWANKE Thomas, and Dr NKOBENA Boniface my mentors and models for their professional advice and for the tireless support they gave me throughout my training process. I acknowledge their technical assistance and hope to keep up our collaboration in the future. Ultimately, I want to appreciate my nephew AMBE Lovert NEBA, my friend MAMBO Patience Anye TANKEM, for they have shown me the true value of brotherhood and sisterhood; all are in my heart. Collective and individual acknowledgement goes to my fellow classmates at IRIC and of the Diplomacy 2010 batch, whose presence, somehow, perpetually refreshed inherent significant ideas. I express thanks especially to ADJOA Mebe Elise Christelle, BIKOE Jean Renaud, ESSAN Odette, METSO EYEBE Odile, SEING YADIA Didier, BAIYE Nelson, Emmanuel NYAMBI S AJI. I really cannot express how I feel; only God can. In essence, their true diplomatic nature made them oases of ideas which exceptionally inspired and motivated me to being the best I could be.
ABC: Agência Brasileria de Cooperação ACP: African, Caribbean and Pacific ADIN: Africa Development Interchange Network ADS: Approved Destination Status AE: Aid effectiveness AFD: French Agency for Development AfDB: African Development Bank Group AFRODAD: African Forum and Network on debt and Development AGOA: Africa Growth and Opportunity Act APF: Africa Partnership Forum ARF: African Renaissance and International Cooperation Fund ARMP : Agence de Régulation des Marches Publics ASA: Africa – South America Summit Association AU: African Union AUC: African Union Commission BOND: British Overseas NGOs for Development BRIC: Brazil, Russia, India and China BRICS: Brazil, Russia, India, China, South Africa BWI : Bretton Woods Institutions CAA : Caisse Autonomed’Amortissement CAADP: Comprehensive African Agricultural Development Program CAMYOSFOP: Cameroon Youth and Students Forum for Peace CEMAC: Central African Economic and Monetary Community CIB: China, India, Brazil CISA: China, India and South Africa CNPC: China’s National People’s Congress COMESA: Common Market for Eastern and Southern Africa CPC: Communist Party of China CPDM: Cameroon Peoples Democratic Movement CSOs: Civil Society Organizations CSP: Comprehensive Strategic Partnership CTS : Comité Technique de Surveillance (Technical Committee for Surveillance) DAC: Development Assistance Committee DE: Development effectiveness DFID: Department for International Development EARN: Europe Africa Policy Research Network EC : European Commission
ECA: Economic Commission for Africa ECDPM: European Centre for Development Policy Management ECOSOC: Economic and Social Council ECOWAS: Economic Community of West African States EITI: Extractive Industries Transparency Initiative EPAs: Economic partnership agreements EU: European Union FDI: Foreign Direct Investment FOCAC: Forum for China-Africa Cooperation G20: Group of Twenty G5: Group of Five G77: Group of Seventy-seven G8: Group of Eight GDP: Gross Domestic Product GDP: Gross Domestic Product GESP: Growth and Employment Strategy Paper GFAC : Groupement des Femmes d’Affaires du Cameroun GNI: Gross National Income GNI: Gross National Income GREMPCO: Graduate Emporium Consortium HIPC: Highly Indebted Poor Countries IBSA: India-Brazil-South Africa Dialogue Forum IBSA: India, Brazil, South Africa ICCR: Indian Council for Cultural Relations IFI: International Financial Institutions IMF: International Monetary Fund ITC: International Tax Compact ITEC: Indian Technical and Economic Co-operation JAES: Joint Africa-EU Strategy LDCs: Least Developed Countries MDGs: Millennium Development Goals MDRI: Multilateral Debt Relief Initiative MFA: Multi-fibre Agreement MINEPAT: Ministry of Economy, Planning and Regional Development MINESEP: Ministry of Sports and Physical Education MINREX: Ministry of External Relations MINSANTE: Ministry of Public Health MOU: Memorandum of Understanding NCPD: National Committee on Public Debt NEPAD: New Economic Partnership for the Development of Africa NGO: Non-Governmental Organization NSA: Non state actors
NSPGE : National Strategic Paper for Growth and Employment ODA: Official Development Assistance OECD: Organization for Economic Cooperation and Development OECD-DAC: Development Assistance Committee of the Organization for Economic Cooperation and Development PCD: Policy Coherence for Development PCRB: Public Contract Regulation Board PNDIS : Projet National de Développement des Infrastructure PPP: Purchasing Power Parity PRSP: Poverty Reduction Strategy Paper RECs: regional economic communities SADC: Southern African Development Community SAIIA: South Africa Institute for International Affairs SAP: Structural Adjustment Plan SAPs: Structural Adjustment Programmes SCAAP: Special Commonwealth Assistance for Africa Programme SDR : Special Drawing Rights SNI : Société Nationale des Investissements SSC: South-South cooperation SSDC: South-South development cooperation TEAM: Techno Economic Approach for Africa India Movement UK: United Kingdom UN: United Nations UNCTAD: UN Conference on Trade and Development UNDP: United Nations for Development Program US: United States WB: World Bank WTO: World Trade Organization
LIST OF TABLES, FIGURES, GRAPHS AND PICTURES
A- TABLES Table 1: Net ODA Disbursement by all donors, 2000-2008 Table 2: Major Recipients of Southern Aid in Africa, 2008 Table 3: Sectoral Focus of Southern Official Flows Table 4: Chinese-Financed infrastructure projects in Africa backed be natural resources, 2001-2007 Table 5: Financial Crises and the Growth of Southern Economies Table 6: Chinese Assistance to Cameroon (1996-2009) Table 7: Total Public Debts in millions of US$ (2006-2009)
B- FIGURES Figure 1: Key Strategic Interest of Selected Partners Figure 2: Patterns of South-South Cooperation Figure 3: Share of recipients in reported non-DAC aid to Africa, 2008 Figure 4: The triple mandate linking SSC and aid effectiveness principles Figure 5: The Yaoundé Multipurpose Sport Complex. Figure 6: Direct and Indirect impact of Chinese Aid to Cameroon Source: Adopted and modified from Kaplinsky et al, 2006 Figure 7: External Debt as a Share of Export from and Remittance to Selected Countries in Sub-Saharan Africa. Figure 8: Stability of Various Sources of Resource Flows to Africa, 1990-2008. Figure 9: Percentage of Remittance in Top Two Consumption Quintiles in Selected African Countries, by Source of Remittances.
C- GRAPHS Graph 1: Net ODA Disbursement by non-DAC partners reported to OECD Graph 2: Remittances and Other Resource Flows to Africa (1990-2010)
D- PICTURES Picture 1: Yaoundé Multipurpose Sport Complex Picture 2: The Yaoundé Gynaecological-Obstetrical and Paediatric Hospital
LIST OF ANNEXES Annex 1: Sub-Saharan African Map with Average Rates per Capital, 1996-2008 Annex 2: Major Projects in Africa with assistance from China’s EX-IM Bank and China Annex 3: Lines of Credit extended through the Export Import Bank of India to African Annex 4: Table on Brazil’s Development Assistance to Africa (various years) Annex 5: Schematic Overview of new and traditional partner’s engagement in Africa Annex 6: Chinese Infrastructural Commitments in SSA 2001-2007 Annex 7: African Projects Undertaken with Indian Assistance Annex 8: Selected Features of Support Provided by Africa’s Development Partner’ Annex 9: Estimated Aid from BRICS 2003-2009 (USD billion) Annex 10: Aid Receipt by Southern Partners in 2008 ($ millions) Annex 11: The Pursuit of “Aid Effectiveness in global governance, 2002-2012 Annex 12: Paris Declaration: Indicators of Progress. To be measured nationally and monitored internationally Annex 13: Adapting the aid effectiveness principles, Enriching the aid effectiveness agenda, Identifying complementarities between South-South and North-South. Annex 14: Construction Contract of the Yaoundé Multipurpose Sport Complex signed between Martin OKOUDA (Ministre Des Investissements Publics et de l’Aménagement du Territoire) and H.E HE XIAOWEI (Ministre Assistant du Ministre du Commerce Extérieur et de la Coopération Economique de la République Populaire de Chine) Annex 15: Accord Relative to the loan given by the Chinese Government to the Cameroonian Government. Annex 16: Accord of Economic and Technical Cooperation between the Chinese Government and the Cameroonian Government.
TABLE OF CONTENTS DEDICATION..........................................................................................................................................ii AKNOWLEDGMENT ...........................................................................................................................iii ABBREVIATIONS ................................................................................................................................. iv LIST OF TABLES, FIGURES, GRAPHS AND PICTURES ............................................................vii ABSTRACT ……………………………………………………………………………………….... xvi RESUME ................................................................................................................................................xii
INTRODUCTION.................................................................................................................................... 1 I-
BACKGROUND OF THE STUDY ................................................................................................ 2
II- CARIFICATION OF KEY CONCEPTS ...................................................................................... 5 III- INTEREST OF THE SUBJECT ................................................................................................... 7 IV- OBJECTIVES OF THE STUDY ................................................................................................... 9 V- LITERATURE REVIEW ................................................................................................................ 9 VI- STATEMENT OF RESEARCH QUESTION ............................................................................ 13 VII- HYPOTHESES OF THE RESEARCH ....................................................................................... 14 VIII- THEORETICAL EXPLANATION AND METHODOLOGY .............................................. 15 A-
THEORETICAL EXPLANATION .......................................................................................... 15
The Realist Paradigm .................................................................................................................... 15
Globalism and Liberalism ............................................................................................................ 17
iii- The Trans-nationalist Paradigm ................................................................................................... 18 iv- Theories of Foreign Aid and Economic Growth.......................................................................... 19 RESEARCH METHODOLOGY AND DATA SOURCES ............................................................... 20
NKWAH Akongnwi NGWA: South-South Development Cooperation: The impact of Emerging Donors’ Aid on African Countries (The Case of Sino-Cameroonian Aid Relations) IX-
SCOPE AND DELIMITATION OF THE FIELD OF STUDY............................................... 23
A- Geographical Delimitation ………………………………………………………………………..22 Historical delimitation (Time Frame) ................................................................................................... 23 X- PLAN OF WORK ........................................................................................................................... 24 PART ONE ............................................................................................................................................. 25 SOUTH-SOUTH DEVELOPMENT COOPERATION: PHILOSOPHIES, MODALITIES AND AID ARCHITECTURE OF DONORS AND RECIPIENTS. ............................................................ 25 SECTION I: ............................................................................................................................................ 27 SOUTH-SOUTH DEVELOPMENT COOPERATIION: A CHANGING GLOBAL LANDSCAPE ......................................................................................................................................... 27 CHAPTER ONE: ................................................................................................................................... 27 SOUTH-SOUTH DEVELOPMENT COOPERATION: A MAJOR FORCE IN THE PROMOTION OF DEVELOPMENT IN AFRICAN COUNTRIES ............................................... 27 Paragraph I: Global SSDC Changes in a Historical Perspective ..................................................... 28 A- Contextual Changes in South-South Cooperation ....................................................................... 28 i)
Economic Interdependence........................................................................................................... 29
Rise of the Information Society .................................................................................................... 29
iii) Non-State Actors ........................................................................................................................... 30 iv)
Southern Diasporas ...................................................................................................................... 30
Structural and Domestic Changes in South-South Cooperation .......................................... 31
Emergence of New Economic Powers ....................................................................................... 31
Resurgence of South-South Regionalism .................................................................................. 32
Rise of the Market Economy and the Private Sector ................................................................ 33
iv) Industrialization and Urbanization .............................................................................................. 34
NKWAH Akongnwi NGWA: South-South Development Cooperation: The impact of Emerging Donors’ Aid on African Countries (The Case of Sino-Cameroonian Aid Relations) Paragraph II: Stakeholders’ Perception and Expectation from the New Landscape of SouthSouth Development Cooperation .......................................................................................................... 34 A- Philosophies and Modalities of Emerging Countries in the context of SSDC ........................... 34 i-
Philosophies of Emerging Donors in the context SSDC ............................................................... 35
a) Priority sectors and projects .......................................................................................................... 35 b) Conditionality …………………………………………………………………………………...... 35 c) Dept Sustainability and Concessionality........................................................................................ 36 ii - Modalities and Procedures for Emerging donors financing ....................................................... 37 a) Modalities .......................................................................................................................................... 37 b) Procedures ......................................................................................................................................... 38 B- Perception, Expectation and Drivers of Partners in SSDC......................................................... 39 i- Perception, Expectation and Drivers of CIBs as Emerging Donors ............................................ 39 SECTION II ........................................................................................................................................... 43 Paragraph I: Emerging Donors and ODA to Africa .......................................................................... 43 A- Bilateral and Trilateral Initiatives .................................................................................................. 44 i- China–Africa partnership.................................................................................................................. 44 ii- India–Africa partnership .................................................................................................................. 45 iii- Brazil-Africa Partnership ................................................................................................................ 46 B - Inter-regional Initiatives ................................................................................................................. 47 i- The New Asian–African Strategic Partnership ............................................................................... 47 ii- Africa–South America Partnership ................................................................................................. 47 Paragraph II: Africa–South partnerships and relations with traditional partners ....................... 48 A- The Existence of distinctive features ............................................................................................... 48 B- The increase engagement of Southern partners in Africa ............................................................ 49 C- Increased competition ..................................................................................................................... 49
NKWAH Akongnwi NGWA: South-South Development Cooperation: The impact of Emerging Donors’ Aid on African Countries (The Case of Sino-Cameroonian Aid Relations) CONCLUSION OF CHAPTER ONE .................................................................................................. 49 CHAPTER TWO ................................................................................................................................... 51 AID ARCHITECTURE: AN OVERVIEW OF THE MAIN TRENDS, FEATURES AND THE AID-DEVELOPMENT EFFECTIVENESS DEBATE IN THE CONTEXT OF SSDC ................. 51 SECTION I: ............................................................................................................................................ 52 Paragraph I: Quantitative Estimates of aid flows to Africa .............................................................. 52 A- Aggregate Aid Flows in Volume from both Traditional and Emerging Donors ........................ 52 i- Official Development Assistance flows from OECD ....................................................................... 53 ii- Non-DAC Development Assistance Flows ....................................................................................... 54 B- Features of Aid flows to Africa from Emerging Donors ............................................................. 58 i- Emerging Donors’ use official flows to promote trade and investment activities ....................... 58 ii- ODA provided by Emerging Donors’ also go to countries often not targeted by traditional donors ...................................................................................................................................................... 59 iii- Emerging Donors’ are playing active roles as providers of debt relief ....................................... 58 iv- Concessional loans are the instrument of support by Emerging Donors’................................... 59 v- Project support. is the dominant method of ODA delivery by Emerging Donors’ ..................... 59 vi- Emerging Donors’ do not impose policy conditions but often tie official flows to non-policy conditions. ............................................................................................................................................... 61 vii- Technical cooperation is an important component of support by Emerging Donors. .............. 62 viii- Emerging Donors’ receive aid as well as provide official flows. ................................................ 62 Paragraph II: The Growing Complexities of Global Aid Architecture ............................................ 63 A- Emerging issues on activities of Southern partners....................................................................... 63 i- Governance and policy reforms ........................................................................................................ 63 ii- Quality of investment ........................................................................................................................ 64
NKWAH Akongnwi NGWA: South-South Development Cooperation: The impact of Emerging Donors’ Aid on African Countries (The Case of Sino-Cameroonian Aid Relations) iii- Debt sustainability ........................................................................................................................... 64 iv- Natural resource access: .................................................................................................................. 65 B- Financial Crises and official flows from southern partners......................................................... 66 SECTION II ........................................................................................................................................... 68 AID AND DEVELOPMENT EFFECTIVENESS DEBATE IN THE CONTEXT OF SSDC ....... 68 Paragraph I: An Analysis of SSDC in the context of Aid effectiveness ............................................ 68 A- Synergies between AE and SSC: Meeting the triple mandate of the AAA……………………..68 i- Adapting the aid effectiveness principles ........................................................................................ 68
ii- Enriching the aid effectiveness agenda............................................................................................ 69 iii- Identifying complementarities between SSC and NSC …………………………………………69
B- The Impact of Emerging Donors on Aid Effectiveness ................................................................ 72 i- Country ownership ............................................................................................................................ 72 ii- Aid predictability ............................................................................................................................... 73 iii- Aid fragmentation and coordination .............................................................................................. 73 Paragraph II: From Aid Effectiveness to Development Effectiveness: Towards a New Development Paradigm ......................................................................................................................... 74 A- Towards A Development Effectiveness Architecture .................................................................... 75 i) What’s wrong with the Paris Declaration on Aid Effectiveness .................................................... 75 ii) Development Effectiveness ............................................................................................................... 76 B- The Development Effectiveness Debate .......................................................................................... 77 i- Traditional Donors Perception .......................................................................................................... 77 ii- Emerging Donors Perception ........................................................................................................... 78 iii- Non-ODA flows, non-state actors and development effectiveness ............................................... 79
NKWAH Akongnwi NGWA: South-South Development Cooperation: The impact of Emerging Donors’ Aid on African Countries (The Case of Sino-Cameroonian Aid Relations) CONCLUSION OF CHAPTER TWO................................................................................................. 78 CONCLUSION OF PART ONE .......................................................................................................... 79 PART TWO ............................................................................................................................................ 82 THE IMPACT OF CHINA-AFRICA AID RELATIONS: ISSUES AND CHALENGES. (THE CASE STUDY OF CAMEROON ENGAGED ON ITS PATH TOWARDS EMERGENCE BY THE YEAR 2035) .................................................................................................................................. 82 CHAPTER THREE ............................................................................................................................... 84 MAPPING EMERGING DONORS DEVELOPMENT ASSISTANCE IN AFRICA: AN ANALYSIS OF THE EXPERIENCES OF SINO-CAMEROONIAN DEVELOPMENT COOPERATION ................................................................................................................................... 84 Section I: Emerging Donor’s Development Assistance to African Countries: The Case of SinoCameroonian Aid Relations .................................................................................................................. 84 Paragraph I: Review and analysis of Cameroon’s aid policy, structure and trends. ...................... 84 A- Cameroon and China in the Global SSDC Context ..................................................................... 85 i) Present economic status of Cameroon and China ........................................................................... 85 ii) Historical relationship between Cameroon and China .................................................................. 87 B- Development strategy of Cameroon ................................................................................................ 88 The original foundations ....................................................................................................................... 88 The new trend......................................................................................................................................... 89 Paragraph II: Nature and Scope of Chinese Development Assistance in Cameroon ...................... 90 Nature of the Chinese development assistance to Cameroon ............................................................ 90 The Architecture of Chinese Development Assistance ....................................................................... 91 Chinese assistance and national development priorities .................................................................... 92 Projects in which Chinese are involved in Cameroon ........................................................................ 92
NKWAH Akongnwi NGWA: South-South Development Cooperation: The impact of Emerging Donors’ Aid on African Countries (The Case of Sino-Cameroonian Aid Relations) General Context of Sino-Cameroonian Projects................................................................................. 92 Cameroon’s debt sustainability framework and Chinese loans ........................................................ 94 SECTION II ........................................................................................................................................... 96 IMPACT ASSESSMENT OF CHINESE DEVELOPMENT ASSISTANCE IN CAMEROON AND AID EFFECTIVENESS............................................................................................................... 96 Direct Impact .......................................................................................................................................... 97 Indirect Impact....................................................................................................................................... 97 Paragraph I: Socio-Economic Impact Assessment of China’s ODA to Cameroon and Aid Effectiveness ........................................................................................................................................... 98 Socio-Economic Impact ......................................................................................................................... 98 Economic Impact Assessment of China’s ODA to Cameroon ........................................................... 98 Social Impact Assessment of China’s ODA to Cameroon.................................................................. 99 Impact Assessment of cooperation with Traditional Donors ........................................................... 100 Paragraph II: Emergence by the year 2035: The Yaoundé Sports Complex and the Gynaecological-Obstetrical and Paediatric Hospital as fruit of the Sino-Cameroonian Development Cooperation. .................................................................................................................. 101 Field Study Analyzes of Infrastructures ............................................................................................ 101 Benefits and Challenges faced by the projects .................................................................................. 104 Benefits arising from the projects ...................................................................................................... 104 Challenges ............................................................................................................................................. 105 CONCLUSION OF CHAPTER THREE .......................................................................................... 106 CHAPTER FOUR ................................................................................................................................ 107 SOUTH-SOUTH DEVELOPMENT COOPERATION: CHALLENGES AND OPPORTUNITIES FOR ENHANCED OUTCOMES ..................................................................... 107
NKWAH Akongnwi NGWA: South-South Development Cooperation: The impact of Emerging Donorsâ€™ Aid on African Countries (The Case of Sino-Cameroonian Aid Relations) SECTION 1........................................................................................................................................... 107 MAKING SSDC WORK FOR AFRICA: MAIN FINDINGS AND CHALLENGES .................. 107 Paragraph I: Main Findings ............................................................................................................... 108 Main Findings on the African Continent ........................................................................................... 108 Main Findings from Emerging Donors .............................................................................................. 108 There has been an increase in official flows to Africa from developing countries. ....................... 108 Developing countries often use official flows to promote trade and investment activities in Africa. ................................................................................................................................................................ 109 Official flows from developing countries are increasingly channeled to the infrastructure and production sectors of African economies. .......................................................................................... 109 Emerging Issues from Traditional Donors ODA to Africa .............................................................. 109 Policy implications of Chinese aid and development assistance to Cameroon............................... 110 The increased volume of Chinese aid to Cameroon presents many opportunities for Cameroon. ................................................................................................................................................................ 110 Our interpretation of the main motives of Chinese aid policy to Cameroon is that the aid is motivated by strategic reasons, notably, the economic and commercial interests......................... 111 Chinaâ€™s debt cancellation initiative provides Cameroon with both opportunities and challenges. ................................................................................................................................................................ 112 Aid used for grandiose and prestigious projects offer opportunities and challenges for Cameroon. ................................................................................................................................................................ 112 Chinese aid is usually tied and thus provides opportunities and challenges for Cameroon. ........ 113 Little political conditions offer opportunities and challenges for Cameroon. ................................ 114 Paragraph II: Preparing for Improved Engagement with China .................................................. 114 Evaluation of issues for an objective standard .................................................................................. 114
NKWAH Akongnwi NGWA: South-South Development Cooperation: The impact of Emerging Donors’ Aid on African Countries (The Case of Sino-Cameroonian Aid Relations) Proposals for an objective standard of Cooperation with China .................................................... 116 SECTION II ......................................................................................................................................... 117 SOUTH-SOOUTH DEVELOPMENT COOPERATION: EXPANDING OPPORTUNITIES FOR INNOVATIVE SOLUTIONS ............................................................................................................. 117 Paragraph 1: Using Remittances from the global South to finance Africa’s Development.......... 117 Remittance in flow to Africa ............................................................................................................... 118 Remittance flows to Sub-Saharan Africa ........................................................................................... 118 Remittance Inflows and Sovereign Creditworthiness ....................................................................... 119 The Development Impact of remittances ........................................................................................... 120 Remittances within Africa ................................................................................................................... 121 Remittances from outside Africa ........................................................................................................ 122 Paragraph II: Proposals for policy and Advocacy work.................................................................. 122 At the continental level ........................................................................................................................ 123 At the national level ............................................................................................................................. 125 CONCLUSION FOR CHAPTER FOUR .......................................................................................... 126 CONCLUSION OF PART TWO ....................................................................................................... 126 GENEREAL CONCLUSION ............................................................................................................. 126 ANNEXES ............................................................................................................................................ 126 BIBLIOGRAPHY ................................................................................................................................ 126
ABSTRACT South-South Development Cooperation arena has witnessed changes since the 1990’s, marked by the emergence of the non-traditional donors who have substantially increased their aid to Africa and to Cameroon in particular. This has given an opportunity for Africa to evaluate the form and substance as well as identifying good practices within traditional and emerging donors. Thus what seems to emerge from this new landscape is a need for both donors and recipients to consider not only aid effectiveness but, more broadly, development effectiveness on the basis of ownership and agenda for Africa.
Against this back ground, this work explores the impact of ODA flows from emerging donors to Africa. Using available aid data from the various recipients and information from the Chinese Embassy in Cameroon, this work provides insights on how China’s aid has impacted on the economic and social welfare of the people in Cameroon. Hence it shows that infrastructural aid related projects have had a relatively positive impact. The work further analyses sector specific opportunities and challenges faced by Cameroon as a result of the impacts generated through the growth of this economic relationship with China. The findings indicate that, view the characteristics of the aid which China provides to Cameroon it has direct and indirect impact on peoples’ welfare in Cameroon. However, it may not be sustainable in the long-run. In view of these new developments, if Cameroon should be an emerging country by 2035, we propose that Africa utilizes remittances from its Diasporas as an alternative or a compliment to ODA as well as identify possible synergies and complementarities among partners towards a more comprehensive and coherent development effectiveness agenda. We also urge governments to re-strategize their position in order to benefit from their relations with emerging countries like China.
Keywords: South-South Development Cooperation, Emerging Donors, Official Development Assistance, Development.
RESUME L’arène de la Coopération au Développement Sud-Sud a connu des mutations depuis les années 1990, marquées par l’émergence de donateurs non traditionnels qui ont substantiellement augmenté leur aide à l’Afrique en général et au Cameroun en particulier. L’Afrique s’est ainsi vue offrir l’opportunité d’évaluer la forme et la consistance de cette aide de même qu’elle a pu comparer les avantages selon qu’il s’agissait de donateurs traditionnels ou de donateurs émergents. Ainsi, ce qui semble émerger de ce nouvel aménagement c’est la nécessité, à la fois pour les donateurs et les bénéficiaires, de tenir compte non seulement de l’efficacité de l'aide, mais de façon plus générale, de l'efficacité du développement sur la base d’un programme pour l’Afrique. Dans ce contexte, ce travail explore l'impact des flux d'APD des donateurs émergents vers l'Afrique. A l’aide de données fiables provenant des Etats bénéficiaires et des informations de l’Ambassade Chine au Cameroun, cette étude fournit un aperçu de l’impact de l’aide chinoise sur l’économie camerounaise et le bien-être de la population. Par conséquent, il s’agira de montre que l’aide aux projets structurants a eu, dans l’ensemble, un impact relativement positif sur le bien-être social et économique. Ce travail analyse en autres des opportunités sectorielles spécifiques et des difficultés rencontrées par le Cameroun en raison des impacts générés par la croissance de cette relation économique avec la Chine. Les résultats indiquent que vu les caractéristiques de l'aide Chine au Cameroun, il a un impact direct et indirect sur le bien-être des peuples du Cameroun. Toutefois, cet impact ne sera pas durable à long terme. Au regard de ces nouveaux développements, si le Cameroun aspire à devenir un continent et un pays émergents en 2035, nous proposons que l’Afrique tire parti des remise de fonds de sa diaspora comme alternative à l’aide publique au développement de même qu’elle doit identifier les synergies et les complémentarités entre partenaires pour un programme de développement plus complet et plus cohérent. Nous exhortons également les gouvernements à réélaborer leurs stratégies afin de bénéficier de leurs relations avec les pays émergents comme la Chine.
Mots-clés: La Coopération au Développement Sud-Sud, Les Nouveaux Donateurs, l’Aide Publique au Développement, et développement
NKWAH Akongnwi NGWA: South-South Development Cooperation: The impact of Emerging Donorsâ€™ Aid on African Countries (The Case of Sino-Cameroonian Aid Relations)
NKWAH Akongnwi NGWA: South-South Development Cooperation: The impact of Emerging Donorsâ€™ Aid on African Countries (The Case of Sino-Cameroonian Aid Relations)
I- BACKGROUND OF THE STUDY The world’s economic landscape is rapidly metamorphosing. The first decade of the 21st century has witnessed a rapid growth in the economies of emerging giants from the Global South, eclipsing the performance of the old industrial centers in the North. This recent dynamics of the global economy and the new scenarios of international relations, together with the growing trade, aid, investment and diplomatic engagement of emerging economies in Africa, are contributing to significant changes in the relationships between African countries and their external partners. With the advent of financial crises in the developed world and the consequent looming economic stagnation, poorer countries are increasingly looking towards other developing economies for greater trade, investments and development cooperation. Therefore, in the present international context, South-South Development Cooperation (SSDC) is an important complement to international development cooperation (IDC). SSDC has received greater attention lately as developing countries gain weight in the world economy. The so-called BRICS economies with 40% of the world’s population spread out over three continents, already account for 25% of global gross domestic product (GDP). Goldman Sachs1 reckons that these four emerging economies could collectively surpass the output of the Group of Seven wealthy nations by 2032, with China becoming the world’s largest economy before 2030.2 The expanding role of these emerging countries coupled with their rapid economic growth, has rekindled interest in SSC and stimulated debate on its implications for Africa’s development34. In terms of ODA, the developed countries belonging to the OECD Development Assistance Committee (DAC) continue to be the source of most international development assistance amounting to US$121.5 billion in 2008. However, the share of non-DAC contributors has risen, especially from middle-income developing countries such as China and India. Estimates from the ECOSOC place that at between US$9.5 billion and US$12.1 billion in 2006, or 7.8% to 9.8% of total ODA flows in that year, up from around 5% during the 1990s excluding Southern 1 The Goldman Sachs Group, Inc. (NYSE: GS) is an American multinational bulge bracket investment banking and securities firm that engages in global investment banking, securities, investment management, and other financial services primarily with institutional clients. Goldman Sachs was founded in 1869 and is headquartered at 200 West Street in the Lower Manhattan area of New York City, with additional offices in major international financial centers. The firm provides mergers and acquisitions advice, underwriting services, asset management, and prime brokerage to its clients, which include corporations, governments and individuals. The firm also engages in proprietary trading and private equity deals, and is a primary dealer in the United States Treasury security market. 2 Alan Beattie. BRICS: The changing faces of global power, Financial Times, January 17, 2010 accessed at http://www.ft.com/cms/s/0/95cea8b6-0399-11df-a601-00144feabdc0.html 3 Rapheal Kaplinsky and Farooki M..” Africa’s cooperation with new and emerging development partners: options for Africa’s development.” Report prepared for the Office of the Special Advisor on Africa, United Nations. New York 2009. 4 R. Kaplinsky R, et al, “The Impact of China on sub-Saharan Africa”, DFID funded paper, 2006, p.34.
NKWAH Akongnwi NGWA: South-South Development Cooperation: The impact of Emerging Donors’ Aid on African Countries (The Case of Sino-Cameroonian Aid Relations) contributions to multilateral agencies5. Despite the global economic and financial crisis since 2008, SSDC has continued to expand. As such in the age of globalization, developing countries like Cameroon are faced with both opportunities and challenges. In order to deal with the challenges and take advantage of the opportunities, there is the need to promote cooperation in all areas. While it is probably correct to assert that ODA will remain a central element in any broad-based approach to DC, the latter includes not only ODA but also other forms of transactions that facilitate international development. In recent years, the significance of ODA as a share of total financial flows to developing countries has diminished, although it remains a vital system of support of the poorer developing countries and especially Cameroon. ODA has so far been largely a North-South phenomenon, though there is a long history of assistance among developing countries.6 Notwithstanding, the fact that a substantial number of Southern countries (Emerging Donors) are currently accumulating large financial surpluses and mechanisms for channeling resources to productive ends within the South as a whole, calls for a systematic exploration. Against this back drop, this work focuses on donors’-aid relationship of three Southern countries with Africa: China, India, and Brazil. These donors were chosen because they share a number of similarities and thus are of particular interest to the study of SSDC. More precisely: they are emerging economies, they are regional powers, and they have a specific ‘dual’ position among developing countries as both donors and recipients.78 Their engagement in Africa is of particular importance as Africa has been economically and politically marginalized for two decades but for its aid relationship with traditional donors. Africa is shedding its unenviable reputation as a conflict and poverty ridden ‘dark’ continent and emerging as a large market with vast untapped natural resources. This new profile has reinforced interest in the continent globally and specifically among the Asian drivers, mainly India and China. The China-Africa summit (2006) and India-Africa Summit (2008) bear testimony to the ascendant significance of Africa and has given birth to what has been termed the “new scramble for Africa”. Chinese and Indian engagement on the African continent is seen as an alternative to Africa’s previous gloomy engagement with the West largely perceived as discriminatory and exploitative. In addition to the Asian presence, the involvement of the Latin American countries such as Brazil in Africa can facilitate the redefinition of the 5 UNESCO, “Trends in South-South and Triangular Development Cooperation”, Background Study for the Development Cooperation Forum: April 2008 p.15 6 Advisory Group for Southern Leaders’ Round Table (SLRT), New York October 2006 7 Rowlands, D. “Emerging donors in international development assistance: A synthesis report”. Ottawa: International Development Research Centre, Partnership & Business Development Division, 2008, p.10. 8 Grimm, S., J. Humphrey, E. Lundsgaarde, and S. –L. J de Souza “European development cooperation to 2020: Challenges by new actors in international development” (Working Paper) 2009 p.31.
NKWAH Akongnwi NGWA: South-South Development Cooperation: The impact of Emerging Donors’ Aid on African Countries (The Case of Sino-Cameroonian Aid Relations) SSC wherein Africa wields the potentials of emerging on the centre stage through bilateral co-operation strong enough to radiate on regional and eventually global issues of common concern such as NEPAD and the MDGs. Historically, SSDC is by no means a new phenomenon. In effect; in the 1950s, SSC emerged in the context of the common struggle of former colonies to attain genuine independence and development. The Bandung conference in 1955 brought together 29 countries from Asia and Africa to promote economic and cultural cooperation in the Asian-African region “on the basis of mutual interest and respect for national sovereignty.” This pioneering South-South conference paved the way for the rise of the NonAligned Movement (NAM) in 1961 and the Group of 77 in 1964.9 Indeed, after a decline in the 1970s and 1990s SSDC has regained momentum. During the late 1950s, Africa’s relation with Southern countries was mostly political. More recently, the focus of its engagement has tilted towards economic concerns. More countries in the region are showing keen interest in furthering relations with the South as a mechanism for enhancing growth, reducing poverty and integrating into the global economy. DA is by no means the principal ingredient in SSDC. Indeed, the latter is largely composed of trade and investment, tourism, and peace-keeping operations. Nonetheless, it is the most important element as it is used to facilitate the other flows. It is in this light that the Kananaskis Summit in 2002 adopted the African Action Plan which was aimed at supporting development in Africa through increased ODA modalities like aid and debt relief. With the growth of DA from “emerging donors” from the South, there is soaring interest in SSC especially within government circles.10 With specific regards to Cameroon, lessons from the implementation of its first poverty reduction strategy have informed the formulation of the very first long-term development Vision for the country. This Vision, which projects to 2035, aspires to make Cameroon a democratic emerging country, united in its diversity. Specifically, the 2035 Vision constitutes a framework for: reducing poverty to a socially acceptable level; reaching middle-income country status; becoming a newly industrialized country; consolidating the democratic process and strengthening national unity. These objectives have guided the orientations of the Growth and Employment Strategy Paper (GESP) for the 2010-2020 periods, covering the first ten years of the long-term Vision. The main issue
Final Communiqué of the Asian-African conference of Bandung, 24 April 1955, accessible at http://www.ena.lu/final_communique_asian-african_conference_bandung_24_april_1955-020000556.html 10 The Reality of Aid Special Report on South-South Cooperation 2010 “South-South Cooperation: A Challenge to the Aid System” , IBON Books Philippines p.2 or at www.realityofaid.org
NKWAH Akongnwi NGWA: South-South Development Cooperation: The impact of Emerging Donors’ Aid on African Countries (The Case of Sino-Cameroonian Aid Relations) concerning the implementation of GESP will be to focus on growth acceleration, the creation of formal jobs and poverty reduction. It is, therefore, planned to: increase growth to an annual average of 5.5% over the 2010-2020 periods; reduce under-employment from 75.8% to below 50% in 2020, with the creation of tens of thousands of formal jobs every year over the next ten years; and reduce the monetary poverty rate from 39.9% in 2007 to 28.7% in 202011. Against this background this study entitled “South-South Development Cooperation: The impact of Emerging Donor’s Aid on African Countries (The Case of SinoCameroonian Aid Relations)” seeks to analyze the SSDC drivers and the extent to which emerging donors from the South motivated by principles of solidarity and mutual benefit or driven by strategic interests have impacted the development of African Countries. It also examines the quality and developmental impact of aid and draws some lessons for improving IDC.
ARIFICATION OF KEY CONCEPTS
i) South-South Development Cooperation: This is mutual cooperation among developing countries (including those graduated from external assistance) aimed at fostering self-sustaining development, involving deepening relations among themselves while conducting technical and economic cooperation. It is a much broader and deeper concept than foreign aid.12 However, a comprehensive discussion in all its diverse and multi-faceted forms is beyond the scope of this study. This dissertation focuses on SSDC in the form of ODA from Southern governments to other Southern countries in order to narrow down the scope of the analysis and facilitate comparability (especially with ODA from OECD/DAC donors) at least in terms of orders of magnitude and quality issues.
ii) Emerging Donors: In the 2008 Emerging Economy Report, the Center for Knowledge Societies defines Emerging Economies as nations with social or business activity in the process of rapid growth and industrialization. Since the end of the Cold War, a good number of these countries have become important players within the aid architecture, not as recipients, but as donors. While these donors are often referred to as “new” or “emerging”, many such as China , Brazil, India(CIBs) e.t.c are in fact returning to the scene after a hiatus and are the most active donors. As such, “non-DAC donors” is a more suitable description for them13. 11
Cameroon Human Development Report, UNDP and MINEPAT; 2010. UNESCO, South-South and Triangular Cooperation: Improving Information and Data, 4 November 2009 p.23. 13 Manning R. “Will emerging donors change the face of international cooperation?” Development Policy Review 24 (4): 2006 p.371. 12
iii) Official Development Assistance (ODA): Also known to be development aid or development cooperation (development assistance, technical assistance, international aid, overseas aid, or foreign aid), it is aid given by governments and other agencies to support the economic, environmental, social and political development of developing countries. It is distinguished from humanitarian aid by focusing on alleviating poverty in the long term, rather than a short term response14. The term development cooperation, which is used, for example, by the World Health Organization (WHO)15 is used to express this idea. Furthermore, as defined by the DAC of OECD16, ODA comprises those flows to developing countries, territories and multilateral institutions provided by official national agencies mainly for the promotion of economic development and welfare. It includes technical cooperation assistance. ODA is concessional in nature with a grant element of 25% or more. ODA grants made by Governments or official agencies are transfers, in money or in kind, for which no repayment is required (unrequited official transfers). Flows meeting the above criteria but directed to countries with economies in transition, including more advanced developing countries, are considered to be official aid (OA)17. iv) Development: Mansell and Wehn18 state that development has been understood since the Second World War to involve economic growth, increased in per capita income, and an attainment of a standard of living equivalent to that of industrialized countries. Hence, it is the increase in the standard of living in a nation's population with sustained growth from a simple, low-income economy to a modern, high-income economy19. For François Perroux, he defines development as the combination of mental and social changes of a population that makes it suitable for the growth of its real global product cumulatively and permanently.20 In other words, development is the set of social and cultural changes that make possible the increase in production quantities in the long term (i.e economic growth). As such economic development 14
Crawford, Gordon. “Foreign Aid and Political Reform: A comparative Analyses of Democracy Assistance and Political Conditionality”. Palgrave,2001, p.13. 15 W.H.O. glossary of terms, "Development Cooperation" Accessed 25 January 2008 (and still there in 2009!) : idea that a partnership should exist between donor and recipient, rather than the traditional situation in which the relationship was dominated by the wealth and specialized knowledge of one side. 16 OECD ‘Resources for Development in Africa’ in OECD (ed.), “Financing Development: Aid and Beyond”. Paris: OECD Development Centre, 2007. 17 While this definition is generally accepted, there are of course many nuances to these criteria, and analysts do deviate from them as they need to. Thus Krueger, Michalopoulos and Ruttan (1989) include in their definition the non-concessional loans by the World Bank, and some include loans from the IMF (concessional or not) also in this category. 18 Mansell, R & and Wehn, U, « Knowledge Societies: Information Technology for Sustainable Development ». New York: Oxford University Press, 1998. 19 Lan Deardorff, "Economic development," Deardorff's Glossary of International Economics , or Hla Myint and Anne O. Krueger "Economic development," Encyclopædia Britannica. 2009. 20 François Perroux : “L'économie du XXè siècle,” PUG, 1991 p.26
NKWAH Akongnwi NGWA: South-South Development Cooperation: The impact of Emerging Donors’ Aid on African Countries (The Case of Sino-Cameroonian Aid Relations) refers to the combined processes of capital accumulation, rising per capital incomes (with consequent falling birth rates), increasing skills in the population, adoption of new technological styles, and other related social and economic changes21. Development is therefore a less quantifiable notion than economic growth and its measurement is therefore relatively difficult. The UN has built more qualitative indicators;
them is the HDI (Human development indicator). This is a composite indicator that takes into account the standard of living (measured by real GDP per capita), life expectancy (measured by life expectancy at birth), educational attainment (measured by two indicators: the gross enrolment rate of young and adult literacy rate of over 15 years). It also includes the HPI (human poverty index), which includes more elements than the HDI (access to drinking water, proportion of children below 5 years suffering from malnutrition, etc.). Very simply, one can say that economic growth is the increase over a long period of the quantities of goods and services produced within a country. This quantity of goods and services generally known as GDP (gross domestic product), is measured annually that is to say, roughly, the sum of value added, taking the growth in GDP per capita into account is much more significant than overall GDP.
INTEREST OF THE SUBJECT Gordon MACE and François PETRY outline that “the importance or the political and social pertinence of a problem is the first element which serves as a justification of the choice of a subject”22 As such the success of a research often depends on the considerations which intervene when choosing a subject of study.23 The impact of ODA from emerging countries on the socio-economic development of African countries, justifies the interest of filling the gap in the research domain. One can therefore perceive the interest of this subject at three levels namely on a Scientific, Practical, Personal. On a scientific plan, this work constitutes a useful instrument and data for researchers seeking to understand the pertinence and role of Emerging Donors Aid to African countries south of the Sahara with particular interest on Cameroon. As such the study permits us to apprehend the projection strategy of Emerging countries in Sub-Saharan Africa not only as an altruistic concern, but as a veritable instrument of geo-politics and geo-strategy. It also adds to existing scientific literature on the subject; opens 21
Stiglitz, Joseph, and Gerald Meier. Frontiers in Development. Oxford, 2000. Stone, Diane Banking on Knowledge: The Genesis of Development Network, Routledge, 2001. 22 Gordon Mace et François Petry, Guide d’élaboration d’un projet de recherche en sciences sociales, Paris, De Boeck Université, 2003, p.9. 23 Idem
NKWAH Akongnwi NGWA: South-South Development Cooperation: The impact of Emerging Donors’ Aid on African Countries (The Case of Sino-Cameroonian Aid Relations) up avenues for further research on the subject in other countries and documents and examines the existing platforms, institutions and initiatives on Africa’s cooperation with emerging countries. On a practical plan, this study seeks to raise awareness in Cameroon on the stakes of cooperating with emerging donors such as China in context of SSDC. Hence, it offers the occasion to give feed backs on the achievements of the Cameroon Government, as fruits of previous session of the Brazil, China, India-Cameroon mixed commissions respectively. Proving in this thesis, the evolution and determinant role ODA in the development process seems indispensable for developing countries. With the notion in mind that, the evolution and determinant role ODA in the development process seems indispensable for developing countries, we will have an ambition to carry out as a case study, ChinaCameroon development cooperation as a sample of SSDC. This will serve as a model to other developing countries in their relations with other emerging countries. In this regards, this thesis has a contribution in the study of a SSA development diplomacy since it is true that today, with regards on the new dynamics of the international system, the defence of national interest and the quest for sustainable development constitute the objectives of the foreign policy of any country as well outlined by Jean Paul AYINA (2010), “National Interest defines the orientation of a policy and merges with its objectives”24. The Personal or Professional interest of this work is drawn from an academic internship of four months carried out at the Cameroon High Commission in London, from August to October 2011, period during which the UK Department for International Development (DFID) decided to suspend its bilateral Aid program towards Cameroon and other African countries. This raised questions on the deep reasons behind the recent drop in North-South Cooperation in terms ODA. Thus, isn’t it time for SSDC to be valorized? As such, the interest of carrying out an autonomous intellectual research on SSDC is of immense importance. In effect, it will deepen our knowledge on the pertinence and impact of ODA emanating for Emerging countries as well as delimiting the problem, discover and assemble data on the subject, there-by permitting us to express our selves by writing or communicating the result of this research to the general public.
Jean Paul AYINA, « Diplomatie et stratégie : un binôme indissociable en politique étrangère dans les Etats modernes », in Repères (hebdomadaire camerounais), n° 176, of Wednesday 9th June 2010, p.8-9.
OBJECTIVES OF THE STUDY The main objective of this study is to evaluate the nature, scale, and effectiveness of aid flows emanating from emerging donors to African countries in the context of SSDC. To attain this ambition, four sub objectives are envisaged: Firstly, this study examines the philosophies, modalities and aid architecture of both emerging donors and recipients in the context of SSDC. Thus, looking at the expectations of both parties in so far as DC is concerned will be very interesting. Secondly, demonstrates how the ODA received from emerging donors’ has been used in Africa and how trends in international development cooperation have shifted the aid debate from aid effectiveness to development effectiveness. Thirdly, establishing the effectiveness of aid and assessing the impact of emerging donors aid on Cameroon with high emphases on the socio-economic sector. Fourthly, the quality of SSDC focusing inter alia on the advantages and disadvantages of southern assistance as it relates to conditionality, channels of assistance, predictability, flexibility as well as alignment with program country priorities for sectors, projects, policies and procedures, including tying of procurement.
LITERATURE REVIEW According to the literature surveyed, one of the most referenced analyses by Kaplinsky et al,25 titled “The impact of China on Sub-Saharan Africa” points out many key issues relating to the three primary channels through which China can impact Sub-Saharan Africa (SSA). They identified trade, FDI & production, and aid. To measure China’s impact through the channels, they categorized the impacts to either be competitive or complementary, which can also either be direct or indirect. They concluded that direct impacts can easily be evidenced compared to indirect ones and that data is available for the trade component but very little on investment and aid. They also pointed out that there is no available methodology for providing a “net outcome”, even for individual countries and regions. This is partly because some impacts are not-measurable, and partly because they involve trade-offs between winners. It was quite difficult to generalize across countries and sectors as they might experience the impacts in each of these channels in 25
Kaplinsky R, et al, “The Impact of China on sub-Saharan Africa”, op.cit.
NKWAH Akongnwi NGWA: South-South Development Cooperation: The impact of Emerging Donors’ Aid on African Countries (The Case of Sino-Cameroonian Aid Relations) different ways. Various examples were provided in their paper explaining the forms of impacts. Given that the authors also acknowledged that the impacts were generic, this study would adopt a country specific analysis along the same lines with focus on the China’s aid impact in Cameroon. Also, Peter Kragelund,26 in an issue paper challenges the perception that non-traditional aid lacks transparency and contains little or any conditionality thereby undermining the development efforts of ‘traditional’ donors, examines the implications of the re-emergence of China, India, Brazil and South Africa as important ‘non-traditional’ donors to Africa on sustainable development and aid flows and governance. He further argues that, a significant increase in SSC will result in more development assistance for African countries, given their need for additional external financial resources to meet the MDGs and foster sustainable development objectives in an effective manner. Hence, this constitutes an opportunity for Africa. However, increased financial flows could also create problems of absorption capacity for some African countries and tempt highly indebted countries to increase their debt to potentially unsustainable levels. Therefore, maximizing the development potential of SSC and ensuring policy coherence and effectiveness coordination between both traditional and non-traditional donors will be crucial. Moreover, African ownership of development assistance (traditional or non-traditional) is an imperative. Furthermore, following the 2010 Economic Development in Africa Report entitled “SouthSouth Cooperation: Africa and the new forms of development partnership”27, it is argued that SSC has the potential to enhance Africa’s capacity to deal with the challenges of poverty, poor infrastructure, development of productive capacity and emerging threats associated with climate change as well as the food, energy, financial and economic crises. These potential benefits of cooperation are however not automatic. They accrue to countries that have taken adequate and proactive steps to exploit them. In this regard, there is the need for African countries to mainstream SSC into their development strategies to ensure that it furthers rather than hinders the achievement of national and regional development goals. An effective strategy on SSC requires African countries to exploit the complementarities between Southern trade, investment and official flows.
Peter Kragelund is an assistant Professor at the Department of Society and Globalization of Roskilde University in Denmark, and his Issue Paper (No. 11) is entitled “The Potential Role of Non-Traditional Donors’ Aid in Africa”. 27 Economic Development in Africa Report “South-South Cooperation: Africa and the new forms of development partnership”. 2010.
NKWAH Akongnwi NGWA: South-South Development Cooperation: The impact of Emerging Donors’ Aid on African Countries (The Case of Sino-Cameroonian Aid Relations) As concerns the empirical framework on the impact of aid on growth, one of the best-known attempts to assess this impact is by Broadman28. Preliminary estimates compiled from public sources by the World Bank staff suggest that total China Ex-Im loans to Sub-Saharan Africa, that is, non-concessional as well as concessional loans amounted to over US$12.5 billion as of mid-2006 in the infrastructure sector. These loans finance projects in power, telecom, transport, water and sewerage sectors but exclude projects in the petroleum and mining sectors. These loans are highly concentrated in five countries namely: Angola, Nigeria, Mozambique, Sudan and Zimbabwe, which account for over 80 percent of the total. Moreover, support to the power sector makes up for about 40% of total commitments, followed by “general” or multiple sector commitments (24%), transport (20%), telecom (12%) and lastly water (14%). However, without knowing what proportion of these loans is made on concessional versus non-concessional terms, let alone the duration and interest rates for these loans, it is difficult to meaningfully compare these China ExIm Bank financing commitments to Sub-Saharan Africa’s infrastructure to more traditional forms of such aid. ODA from OECD countries to Sub-Saharan Africa’s infrastructure which is generally made on concessional terms-amounted to just over US$4billion in 2004, the most recent date for which data is available. Stavolta, et al., (2006)29 in their study on OECD policy dialogue with non-members on aid for trade: from policy to practice used a gravity approach to aid and trade nexus suggest that General Budget Support (GBS) tends to favour donor countries somewhat but received GBS does not increase Ugandan exports to donors. They also found that the money equivalent of technical assistance provided does not seem to influence exports. This might be expected since the bulk of the cost for technical assistance provided probably never enters the trade balance. On the other hand, it was expected that technical assistance would have a positive effect on exports if donor country representatives in Uganda acted as “donor country ambassadors”, actively promoting business from their home country. This did not seem to be the case. Instead, types of aid other than technical assistance drove this relation. Focusing on aid received, a form of aid that is not technical assistance did not seem to influence Ugandan exports. Collier and Reinikka in their paper entitled “What are the effects of aid to Uganda?” in 200130 estimate the contribution of aid to amount to 30% of the realized per capita GDP growth rate and of the fall in the incidence of poverty. They regard this to be a conservative estimate considering the positive effect 28
Broadman, G. H,“Africa’s Silk Road: China and India’s New Economic Frontier”, World Bank Book Publication. 2007. Stavlota,U et al, “ OECD Policy Dialogue with Non-Members on Aid for Trade: From Policy to Practice, Uganda”, OECD & Gulf Organization for Industrial Consulting. 2006. 30 Collier and Reinikka, “what are the effects of aid to Uganda?” 2001. 29
NKWAH Akongnwi NGWA: South-South Development Cooperation: The impact of Emerging Donors’ Aid on African Countries (The Case of Sino-Cameroonian Aid Relations) that aid has had on policy reforms and the overall economic performance of the Ugandan economy. A drawback with this study, shared with the bulk of aid effectiveness literature, is that it does not disaggregate aid. Aid comes in many different forms and it is clear that it can potentially have very different impacts on growth and poverty reduction depending on the sector to which aid is directed and what modality is used. Mavrotas et al.,31 made an attempt to find out how different types of aid affect consumption, investment and growth during the period 1980-2000 using regression analysis. Comparing project aid, programme aid, technical assistance and food aid, they found that project aid and food aid had a negative impact on public investment, while programme aid and technical assistance had a positive impact. Project aid also impacted negatively on private investments while other forms of aid affected private investments positively. Domestic savings were estimated to be negatively affected by technical assistance. The effect of programme aid instead was positive, while no effect of project aid on domestic savings was found. The government reduced borrowing considerably when programme aid, food aid and technical assistance were increased, whereas additional project aid only had a minor effect on this dimension. Considering short run growth effects, project aid had a zero effect, while technical assistance and food aid had a negative effect. The long-run growth effects from technical assistance and food aid were however positive while, project aid had a negative impact in the longer run. Programme aid had a positive impact on growth in both the short and the long run. Inanga and Mandah32 analyzed the role of two foreign aid financing agencies, Enterprise Development Fund (EDF) and Export Development Programme (EDP), in promoting Zambia’s economic growth. They looked at sectoral distribution of external aid, agriculture, infrastructure, manufacturing, coffee, floriculture & Horticulture, health and education. They conclude that although it may be difficult to separate the effects of foreign aid finance from those of other growth-inducing factors, efficient and effective utilization of foreign aid finance can contribute to growth in a stable macroeconomic environment. Several cross-sectional studies have used simple regression models to establish a possible link between aid and growth. But the results have generally been negative33. At the same time, project evaluation
Mavrotas, et al, “Assessing aid effectiveness in Uganda: an aid-disaggregation approach”, report prepared for the Bank of Uganda. 2003. 32 Inanga, L. E, and E. Mandah, “Foreign Aid Finance and Economic Development: The Case of Two Foreign Aid Financing Agencies in Zambia”, International Research Journal of Finance and Economics, Issue 14, 2008. http://www.eurojournals.com/finance.htm 33 Mosley, P. “Oversees Aid: Its Defense and Reform”, Wheat sheaf Books, Brighton. 1987; Riddel R. “Foreign Aid reconsidered”, James Currey, London, 1997; White, H., "The macroeconomic impact of development aid: A critical survey", Journal of Development Studies 28 (2), p163-240 , 1992a; White, H., "What do we know about aid's macroeconomic impact? An overview of the aid effectiveness debate", Journal of International Development 4 (2), 121-137, 1992b; Mosley, P., J. Hudson, and S. Horrell, "Aid, the public sector and the market in less developed countries", Economic Journal 97, 1987, p 616-641.
NKWAH Akongnwi NGWA: South-South Development Cooperation: The impact of Emerging Donors’ Aid on African Countries (The Case of Sino-Cameroonian Aid Relations) studies have shown majority of foreign aid financed projects to be successful. Anderson et al.34 refer to this conflicting evidence as the macro-micro paradox, which could be explained by the fact that the direct effects of aid are positive, while indirect effects are negative. The direct effects alter production, incomes or consumption as a direct consequence of interventions, while the indirect effects are less easily identified. Aid to public sector projects, for example, releases resources, which can be used to cut taxes and borrowing, or increase expenditure. The private sector is indirectly affected, for example, via changes in relative prices. This thesis complements the existing literature on the evaluation of Africa-South Development cooperation in a variety of ways. In this regard, it complements studies of René DUMONT35, Samir Amin36 or again A.G.FRANK37 on the different aspect of SSDC and most recently the study by Kaplinsky and Farooki 38, which provides an interesting analysis of Africa’s relations with new and emerging development partners but does not discuss the evolving institutional framework for these partnerships. Other studies such as Davies et al.39, Besada et al.40 and the African Economic Research Consortium have also examined Africa’s cooperation with emerging countries41. However, they focused on the Asian drivers (China and India) and did not consider other developing country partners 42(South American drivers: Brazil).
STATEMENT OF RESEARCH QUESTION The mutations taking place in international relations notably the emergence of new actors such as CIB as well as the progress registered in New Technology of Information and Communication (NTIC), requires the adoption of a new form of cooperation which is more proactive and competitive, founded on a
Mosley, P., J. Hudson, and S. Horrell, "Aid, the public sector and the market in less developed countries: A return to the scene of the crime". Journal of International Development 4(2), p139-150 , 1992. 34 Anderson et al., “Foreign Aid, Debt and Growth in Zambia”, Nordiska Afrika Institute Research Report No.112, Motala Grafiska, Sweden, 2000. 35 René Dumont, L’Afrique noire est mal partie, Paris, Le Seuil, 1966. 36 Samir Amin, Le développement inégal, Paris, Ed. de Minuit, 1973. 37 A.G.Frank, Le développement du sous-développement, Paris, Maspéro, 1970. 38 Kaplinsky R and Farooki M (2009). “Africa’s cooperation with new and emerging development partners: options for Africa’s development”, op cit. 39 Davies M et al. “How China delivers development assistance to Africa”. Research paper by the Centre for Chinese Studies, University of Stellenbosch, South Africa, 2008. 40 Besada H et al. “China’s growing economic activity in Africa”. NBER working paper 14024 National Bureau of Economic Research, Cambridge, 2008. 41 Ajakaiye O. “China and Africa: opportunities and challenges.” African Economic Research Consortium Studies Paper No SSC_01.2006. 42 The AERC also has a series of country-level studies on the impact of China on Africa. For more information on these studies, please see the AERC website: www.aercafrica.org
NKWAH Akongnwi NGWA: South-South Development Cooperation: The impact of Emerging Donors’ Aid on African Countries (The Case of Sino-Cameroonian Aid Relations) new paradigm called “Economic Diplomacy”43 which has as ultimate objective economic growth and development through the attraction of ODA and other forms of economic cooperation. Economic progress and prosperity depends on beneficial relationship with other countries and each country wants to penetrate into other countries with its goods, services, labour and investment. In this light, if it is true that the pacification of international relations through ODA is one of the instruments used to measure the level of development of any country, our main preoccupation in this work is to question what is the impact of ODA emanating from Emerging Donors’ on the development of African Countries particularly that of Cameroon? This principal question can be broken down into the following sub questions: i)
How does SSDC contribute in the development of African Countries?
ii) Is ODA effective in the promotion of development of African Countries in the context of SSDC? iii) What is the impact of ODA from Emerging Countries on the socio-economic development of African Countries particularly, Cameroon? iv) What opportunities and Challenges are witnessed by both recipients and donors in the context of SSDC?
HYPOTHESES OF THE RESEARCH According to Madeleine GRAWITZ “A hypotheses is a proposition of an answer to a question posed”44. From this definition, it is possible to assign a precise role to the hypothesis which serves as a link between a theoretical construction framework of the object study, symbolizing to an extent the accomplishment and the verification work to which it furnishes a general orientation. This study therefore proposes to inquire that ODA from emerging countries has a positive impact on the economic and social development of African Countries in good policy environments (H1). With our main objective being the evaluation of the impact of ODA on development, it might also appear that in trying to challenge the perception that emerging donor’s aid lacks transparency and contains little or any conditionality, it will have disastrous effects on development (H2). 43
“….The term “economic diplomacy” is of recent origin. Economic diplomacy was earlier known as Trade Diplomacy. Trade diplomacy came with the nationalization of industries in many countries from the 50s to the 70s. This resulted in gradual involvement of diplomats in trade matters, that is to help sell products of nationalized industries…”. “… Economic diplomacy is concerned with the prediction of outcomes of future trade regimes and therefore it will need an understanding of market factors at work in a given global economic environment and in that process, a country will involve in making decisions in advancing economic interests. …..” Cmf Article of Mr. Rashid “Economic Diplomacy in South Asia” former Bangladesh High Commissioner to Australia (1982–84) and Ambassador to the UN, Geneva (1987–91). Among his published books are: International Relations & Bangladesh (2004); Indo-Bangladesh Relations (2002); Foreign Relations of Bangladesh (2001); and Peace and Conflict Studies (forthcoming) 44 Madeleine GRAWITZ, Méthode des Sciences Sociales, Paris, Dalloz, 1986, p.256.
THEORETICAL EXPLANATION AND METHODOLOGY The evolution of the theoretical and methodological framework of the analysis of development cooperation between CIBs and SSA Countries repose on one fundamental question: that of knowing how to apprehend the contours of SSDC in so far as ODA is concerned between these two parties? In other words, what should be the theoretical and methodological context or frame-work on which SSDC based itself?
Theoretical Explanation According to Marcel Merle, “a theory is intended to draw the boundary lines of investigations and studies to be undertaken in a given field”45. The materialization of this definition of a theory confirms the interest of the theoretical framework of this work. This study deals with Foreign Policy Analysis (FPA). James ROSENAU is probably with Charles KEGLEY and Charles HERMANN46, one of those who fought the most for a scientific approach. These authors describe foreign policy as "an instrument by which the state attempts to shape its international environment." Unlike the perspective studies often compared the inputs and outputs to the Public Policy dear to foreign policy; our approach is that which is closer to that of classical (traditional) researchers. As such, Alexander GEORGE and Gordon CRAIG47, describe foreign policy as diplomacy statecraft. To understand the overall development cooperation between CIBs and SSA countries, it seemed appropriate to convene as paradigms of international relations: realism, globalism, liberalism, trans-nationalism, and theories of DA and economic growth .We are going to discuss the assumptions, the trials and the relevance of these paradigms to justify our theoretical choice.
The Realist Paradigm The current literature raises its roots from antiquity. There is an emphasis in the 18th Century with HOBBES that focuses on the conflict dimension of the phenomena and international anarchy, characteristics of international society. According to the realist school, which heralds names like MACHIAVELLI, CLAUSEWITZ, MORGENTHAU and ARON, international phenomena are based on reality as it exists, not on some sort of ideal. These authors have always preferred lucidity and developed a cynical or pessimistic vision of human relationships. States are continuing to research their interests which 45
Marcel MERLE, Sociologie des Relations internationales, 3ème édition, Paris, Dalloz, 1982, p.68. HERMANN. C., KEGLEY. C. and J. ROSENAU, New directions in the study of foreign policy, Boston, Allen and Uniwin ,1987, p.21. 47 GEORGE.A. and G. CRAIG, Force and statecraft: diplomatic problems of our time, Oxford, Oxford University Press, 1983. 46
NKWAH Akongnwi NGWA: South-South Development Cooperation: The impact of Emerging Donors’ Aid on African Countries (The Case of Sino-Cameroonian Aid Relations) are realized in terms of power. They are considered as the only rational actors and their foreign policy decisions reflect the most satisfying ratio cost / benefit. Cooperation in international relations is synonymous with peace, that is to say lack of military confrontation. The reasons that lead states to opt for this relational mode are, on one hand, a sincere preference for peaceful relations and on the other hand, the sense of its own interests, peace is being more stable than war, and cooperation is more conducive to prosperity, more conducive than the exchange48. Cooperation is thus a kind of relationship that is characterized by somewhat temporary absence, of any severe tension likely to put an end to the existing equilibrium situation49.
According to the realist theory of international relations, the actions of states on the international scene are guided by the maximization of national interest. The power of a state is not determined in absolute terms, but through a relationship with other states and a meeting between several wills. It results first by the ability to command and coercion. This is what Joseph NYE calls "hard power" that is to say "the ability of a country to get others to do what they would not have done otherwise than by the threat of punishment or promise of reward"50. Power is not only the ability to command and constraint. It also includes a less tangible dimension, highlighted by many authors, and Joseph NYE has the better understanding through the concept of "soft power", which can be defined as "the ability to achieve the desired results because the others want what we want." 51 Soft power is based on seduction and persuasion rather than coercion, on "the power of attractive ideas, or the ability to set the political agenda and determine the debate in order to shape the preferences of others ".52 It therefore gives the State which has a form of moral authority and legitimacy. The economy may be a source of power of a state in that it is the source of wealth creation which promotes the well-being of the population, and offers the capacity of international negotiations. We can therefore consider that, cooperation between CIBs and SSA Countries is part of the principles of soft power as it is true that these Emerging Donors think soft power in different ways. In effect, there is no common vision of soft power by CIBs as our potential Emerging Donors in international development assistance, but several interpretations of this phenomenon.
R. AXELROD, Donnant- Donnant : théorie du comportement coopératif, Odile Jacob, 1992, p.32. Raymond ARON, Peace and War among nations, Paris, Calmann-Levy, 1968, p.454. 50 Joseph NYE, Soft power : the means to success in world politics, New York , Public affairs, 2004, p.191. 51 Joseph NYE, Robert KEOHANE, Power and interdependence, 3e ed, New York Longman, 2001, p. 124. 52 Joseph NYE, S. «Soft Power», Foreign Policy, automne 1990, n°80, pp.153-171. 49
Globalism and Liberalism The explanation of the development cooperation between CIB and SSA equally calls the exploration of the globalist theory of international relations, given that this notion puts an accent on the evolution of international context and reposes on economic liberalism, historical analyses and changes undergone within the international system53. In this light, globalism situates our study in the context of globalization and interdependence of economies since, international development cooperation between the CIBs and SSA is not isolated. In addition, it is influenced by the classical principles of economics which are the optimistic research of profits and economy of the market. The liberalist theory equally permits us to apprehend the cooperation between CIBs and SSA in the context of SSDC. For liberal authors such as MORAVSCIK, ANGELL, Adam SMTIH, and others, “International relations are relations of all nature between states, governmental organizations, nongovernmental organizations and individuals entirely amongst them in a bilateral or multilateral framework, be it formal or informal”54. These relations are characterized by competition. Inspiring ourselves from the “Invisible Hand”55 hypotheses of Adam SMITH, ODA can encourage international cooperation. It is thus estimated that with commercial liberalism, the interest of states on one hand and the interest of the international community, on the other hand, can converge. Free exchange encourages interdependence and the richness of every actor, and thus avoiding conflicts between states. This is not always the case; free trade can only be pacific and matched with cooperation if it is regulated by an international law system founded on the consideration of the specific interest of states, communities and other organizations.
The extension of democracy and exchanges is the main guarantee of attending this objective since in undermining the sovereignty of states and reinforcing their interdependence; they are forced to take into consideration the interest of their citizens and the civil society on the one hand, and to conclude harmonious and strategic cooperation alliances56, on the other hand. According Henry Kissinger, “Strategic alliances result essentially from the will of states, but can only exist amongst states whose economic,
With regards to the Globalist theory, read Joseph NYE Junior, Le leadership américain : Quand les règles du jeu changent, Nancy, Presse Universitaire de Nancy, coll « Nouveaux Horizons », 1992. 54 Read on this subject Amélie BLOM et Frédéric CHARILLON, Théories et concepts des relations internationales, Paris, Hachette, 2001, p.73. 55 Adam SMITH, cited by A. MORAVSCIK, « Taking preferences seriously: A liberal theory of international politics », international organization, 51(4), Autome 1997, p p.513-553. 56 « The first solution (at war) which in the spirit (of realists) consist of looking amongst the forces that be an equilibrium which serves as an obstacle to domination of the most powerful powers and which decreases the risk of arm warfare’s. To arrive at this state of equilibrium(…), states are incited not only to modify their ambitions but to as well conclude necessary alliances » see Marcel MERLE, op.cit, p.68
NKWAH Akongnwi NGWA: South-South Development Cooperation: The impact of Emerging Donors’ Aid on African Countries (The Case of Sino-Cameroonian Aid Relations) political and ideological systems are similar, convergent or compatible”57. Meanwhile, at the globalization era, Kissinger’s assertion is not always verified, since one observes the formation of strategic alliances e.g at the WTO between China and USA and some in domains such as that of international security. For liberals the competition amongst individuals generates equilibrium and progress. As such, States have to forget being egoistic and thus promote peace through exchanges. The society is possible as a sum of the individual egoistic interests since “Social relations are founded on the exchanges of symbolic material goods, possessed by one person and reclaimed by the others.” 58
The Trans-nationalist Paradigm The trans-nationalist theory, as a reaction against the realist theory of international relations, tries to explain and understand the international society through its internationalization59, knowing fully well that states are not the only actors of international relations, but other actors of the international system are included. Robert KEHOANE and Joseph NYE are, as such, the principal American authors who got interested in the study of the impact of non-state actors and their trans-nationalist relations on international policy. Their analyses receive favourable echoes in France with authors such as Bertrand BADIE and Marie Claude SMOOTS60. As such, this theory has as basic principle, the promotion of development and interdependence amongst the different entities of the international system. The movement of diplomacy towards the acts of international aid leads to the appearance of new actors. It is in this light that Central Banks, Trade and Finance Ministries at first under the shadows of Foreign Ministries, henceforth occupy the front positions on the international scene.
As regards private actors: transnational firms, investment
enterprises, operators on the exchange market, managers of speculative funds, banks formulating policies, and a communication conglomeration, all present the same influences as states. Hence, the new configuration of diplomacy has greatly reinforced international interdependence, and a “Third type”, diplomacy founded on the anticipation and the initiative with regard to the logic described above and theoretically less possible61.
See : Henry Kissinger, Pour une nouvelle politique étrangère américaine, Paris, Fayard, l970; same, Le chemin de la paix, Paris : Denoël, l972 58 André LIEBICH, Le libéralisme classique, Québec, Presses de l’Université du Québec, l985 p. 13 59 Read on this subject Robert KEHOANE, Joseph NYE; Transnational Relations and word Politics, Cambridge, Massachussets, Havard University Press, 1970. 60 Bertrand BADIE & Marie Claude SMOUTS, Le retournement du monde: sociologie de la scène internationale, 3ème édition, Paris, Presse de Science Po, 1999. 61 Read on this subject Jean TARDIF, « Comment gouverner le monde », et Inge KAUL, « Biens publics globaux, un concept révolutionnaire » respectively in Le Monde diplomatique d’avril et juin 2000.
NKWAH Akongnwi NGWA: South-South Development Cooperation: The impact of Emerging Donors’ Aid on African Countries (The Case of Sino-Cameroonian Aid Relations) It is based on this that trans-nationalist
principles can explain development cooperation
between CIBs and SSA, in the sense that this cooperation goes beyond cooperation as an exclusive and privileged activity of States so as to apprehend it as a “practice in which other actors of the international system intervene”. In this light, the common denominator of Trans-nationalist school theoreticians is the insufficiency of the static paradigm as the only explicative element and analyses of international relations. As such, we can table that cooperation between CIBs and SSA surpasses the rigid framework between states to include relations amongst individuals, multilateral firms, associations, international organizations. From the above, we can indicate that the trans-nationalist theory highlights the limits or even the insufficiencies of the Realist theory62 as the only “instrument of analyses of the DC between CIBs and SSA”.
Theories of Foreign Aid and Economic Growth One of the best-known attempts to assess the impact of aid on growth is by Burnside and Dollar (1997)63 who use a more sophisticated approach than other previous analysts and explicitly model the interactions among aid, policy and growth. They use a two stage least squares to simultaneously estimate equations for growth, aid and policy. The study showed that aid has positive effects on growth in a good policy environment, while it does not work in a distorted environment. Good policy environments, according to Burnside and Dollar, are those that are open to trade, have low inflation rates, good share of the budget surplus in relation to GDP and balanced government consumption in GDP. They further argue that there appears to be no systematic impact from aid on policy. For example, in Ghana, good policies were rewarded, while in the case of Zambia, aid increased between 1970 and 1993, while policies deteriorated throughout the period. Burnside and Dollar thus found that aid significantly increased growth in good policy environments as measured by a composite measure of macroeconomic policies, had no effect in average environments, and was actually damaging in bad policy environments. The study by Anderson et al. attempted to solve the problem that arises in attempting to measure the impact of aid on growth by using the Computable General Equilibrium (CGE) model64. The study attempted to analyze the impact of various strategies with regard to foreign aid. They compared the impacts of foreign loans or grants to the private and public sectors, and also simulated the impact of a turn-around of Zambia’s fortunes with regard to its external terms of trade. The results of their study showed the scope for growth to 62
On the realist theory, read Hans MORGENTHAU, Politics among nations: the struggle for power and peace, 6e edition, New York, Knopf, 1985. 63 Burnside, C. and D. Dollar, "Aid, policies and growth", Policy Research Working Paper 1777, The World Bank, Development Research Group, Washington, D. C. 1997. 64 This model illustrated the difficulties of controlling other relevant factors that influence growth while simulating the effects of change in aid and at the same time, keeping other variables constant.
NKWAH Akongnwi NGWA: South-South Development Cooperation: The impact of Emerging Donors’ Aid on African Countries (The Case of Sino-Cameroonian Aid Relations) be highly dependent on the tightness of the external resource constraint. Their study also showed that most aid that has been channeled into the economy has had the Dutch Disease effect that led to the appreciation of the exchange rate, making it more difficult to export goods and services.
Research methodology and data sources The methodological explanation poses the following question: how to evaluate the series of explicative hypotheses of development cooperation between CIBs and SSA in the context of SSDC? To this effect, it recalls two principal preoccupations which are: the methods used, on the one hand and the techniques of investigation, on the other65. In order to apprehend the “…international rational complex”66 under which the SSA and emerging donors cooperation emerges, it is important to adopt a multidisciplinary method that exists between a socio-historical approach, a legal-functionalist approach and an analytical approach without making one of them “… a close universe which is sufficient for itself, and which will be found if its substance, its finality and its justification is verified”.67 In fact, the use of the multi-disciplinary approach follows its belonging to the economic policy of development. This discipline integrates all the domains of reflection and makes reference to the study of economic and social problems which are found in the countries of the South. Thus putting in place their strategies of development, be it at the national or international level68. As such the multi-disciplinary approach is based on the complementarities that exist between the political and economic approach of international relations. Hence, the impact of emerging donors’ aid to SSA also depends on economic, strategic as well as political principles. Also, this study is a contribution to the study of an economic diplomacy whose facets, principles and objectives are in the domain of economics69.
The socio-historical approach: This approach comes to fill the legal gaps by situating DC in both the
depth of its field in its historical and contemporary issues. The contribution of history as a tool for investigation and analysis in the social sciences is essential, hence the interest shown by the science of
This definition of Methodology is that of Madeleine GRAWITZ, op.cit ; p.252. Pierre François GONIDEC, Relations internationales, Paris, Editions Montchrestien, 1977, p.17. 67 Jean Jacques CHEVALIER, Report for UNESCO Committee, The University teaching of International Relations, C.A.W. Manning, 1953, p.10. 68 Read on this subject Philippe HUGON, Economie de Développement, Paris, Dalloz, 1989, p.54 et Patrick GUILLAUMONT, Economie du Développement, Tome 3, Paris, Presse Universitaire de France, 1985, p.87. 69 With regards to economic diplomacy, see Christian CHAVAGNEUX, « La diplomatie économique : plus seulement une affaire d’États », op.cit p. 34. Equally read on this subject the article of Nicholas BAYNE and Stephen WOOLCOCK, « The New Economic Diplomacy : Decision-Making and Negotiation » in International Economic Relations, Aldershot, Ashgate, 2003. 66
NKWAH Akongnwi NGWA: South-South Development Cooperation: The impact of Emerging Donors’ Aid on African Countries (The Case of Sino-Cameroonian Aid Relations) international relations. Considered by Professor MEYNAUD as "... the royal road of political analysis,"70 the historical approach contributes to a better understanding of international politics because it "... focuses on the causal chain of different times social rivalry ".In this respect, through the diachronic and synchronic analyses, it allows not only to locate the dynamics of DC between CIBs and SSA in the current environment, but also to make its history at a double bilateral and multilateral level. It will also capture the causal and efficiency links between cooperation and development. Thus, thanks to the historical approach, this study will seek to understand the reason for DC between SSA and emerging donors. However, the explanation of the social facts makes it essential for the socio-historic combination according to GRAWITZ Madeleine, who also argues that "... history is the only competitor of sociology in the study of social phenomena in motion"71. In fact, the complete history of sociology is in the sense that "... history presents a succession of social phenomena, in what they have as unique and each in its irreplaceable kind." 72 ii- Legal and functionalist approach73: The study of DC between SSA and Emerging donors also uses this method. The lighting of the law is unique in focusing on the study of legal rules governing the cooperation. On this point, Philippe BRAILLARD observes that the normative dimension expressed in international law constitutes "... one of the factors that illuminate the behaviour of international actors, 74" and thus appears as "an important element in a theory, whether in foreign policy, or in the study of systemic interactions or at the level of development procedures for resolving international conflicts".75 But, analysis of legal texts (bilateral and multilateral cooperation) is insufficient in the analysis, interpretation or explanation of certain political and social data. The rule of law is not in accordance with the supposed situations which she is supposed to govern and hence the functionalist approach. Functionalism completes the legal approach and seeks to explain political phenomena through functions performed by each institution, each structure within the political society. As stated by Philippe BRAILLARD "the functionalist perspective tends not only to update the role of the various structures in relation to the body, but also to explain the diverse structures, notably the organs in light of the functions that fill it76". As such, functionalism provides a better understanding of the role or function of political, economic and ideological 70
J. MEYNAUD, « Sciences Politiques et science sociales », Genève, Institut des Hautes Etudes internationales, 1980, cited by Dieudonné OYONO, « L’apport de l’histoire dans l’enseignement des Relations internationales » in Revue Camerounaise de relations internationales, december 1982 p. 23. 71 See Madeleine Grawitz, op.cit, p.452. 72 idem 73 Fonctionnalism has become a privileged method in the works of Gabriel ALMONT cf. Philippe BRAILLARD, Théorie des systèmes en Relations Internationales, Bruxelles, Etablissement Emile Bruylant, 1977, p.82-83 74 Philippe BRAILLARD, Théories des Relations Internationales, Paris, Presse Universitaire de France, 1977, p.17. 75 idem 76 Philippe BRAILLARD, op.cit, p.83.
NKWAH Akongnwi NGWA: South-South Development Cooperation: The impact of Emerging Donorsâ€™ Aid on African Countries (The Case of Sino-Cameroonian Aid Relations) institutions responsible for implementation and monitoring of the DC between CIBs and SSA. Moreover, it helps to understand the function of cooperation in the development process of both entities. In this sense, and based on the principle that "the function expresses the dependence of a variable"77 with respect to one or more other variables, the functionalist method establishes the dependency relationship between cooperation and development, on the one hand, and between aid and development, on the other. iii- The analytical approach will be highlighted in this study, due to the complexity of the impact of emerging donorsâ€™ aid on SSA and related issues. It is based on the description and analysis of the framework (legal instruments, political, administrative and diplomatic) and the implementation of the DC between CIBs and SSA in the areas of financial cooperation, trade, investment, technical assistance, and others. Furthermore, this study introduces a discussion on a certain conception of diplomacy, according to which, diplomacy remains the preserved domain of politicians. The effectiveness of a policy of DC involves a relevant development diplomacy, which activates on the side of businesses and economic operators who work abroad. This development diplomacy, according to Guy CARRON DE LA CARRIERE, did not replace traditional diplomacy, but it has become an inseparable complement. It is even at the heart of the most burning policy, as it is left to organize and manage the globalization of the world economy78.
Finally, it is important to note that the methodology consists, on the one hand, of the collection of data and, secondly, processing and interpretation of these data. Information collection in this study was done using the following tools of investigation: documentary research (documents on Sino-Brazilian and Indo-African Economic Forums) field surveys (aid workers, diplomats, merchants), individual interviews (especially at the national level with the Embassies of China, Brazil and India to Cameroon, MINREX, MINESEP, MINEPAT, INS, MINCOMMERCE, CCIM, GICAM, SGC, UN specialized agencies, the content of the cooperation agreements). We will also have direct observations, the analyses of speeches, statements and decisions of foreign policy, the analyses of economic statistics which, from the qualification of certain facts, to assess their evolution and operation of theses, dissertations, reports and articles in trade and development journals. Processing and interpretations of data were made through the guide of the theories discussed above.
idem, p.82. See Guy Carron DE LA CARRIERE, op.cit, p.19.
SCOPE AND DELIMITATION OF THE FIELD OF STUDY A- geographical delimitation The choice of the evaluation of the DC impact between CIBs and SSA79 is the circumference of our reflection, specifically on the Cameroonian Economy. The choice of these entities is based on a number of explanations: •
CIBs are the main contributors towards Africa in terms of ODA from a SSDC perspective and are regional powers.
From a historical and analytical point of view, it is a matter for us to apprehend relations between emerging powers without any colonial history with Africa and especially with developing countries which have been receiving DA as appropriately defined in terms advocated by the OECD’s Development Assistance Committee.
Historical delimitation (Time Frame) For analytical purposes, the chronological frame of this study started from the early 1990s, but will be segmented into two major periods from 1990-2000 and from 2000-2012. This time frame expresses the period where the legacy of the Buenos Aires Conference on Technical Cooperation among Developing Countries (TCDC), and considerations of its impact are been felt. The potential that held great promise as well as numerous risks for developing countries swirled the world into a period of rapid globalization in the early 1990s with the end of the cold war and the full of the Berlin Wall. Thus, 1990-2012 has been marked by the advent of globalization and emerging countries with the year 2000 seeing the re-emergence of Emerging donors and launch of the MDGs. This signalled the fact that SSA would need support to meet its ambitious poverty reduction targets by the year 2015. Leaders from the African continent were first invited to the G8 Summit at Okinawa in 2000, and the relationship was strengthened at Kananaskis in 2002, which saw the adoption of the Africa Action Plan aimed at supporting development in Africa in several ways, including through increased ODA using modalities such as aid and debt relief.
Cf. Annex 1: Map of Sub-Saharan Africa
NKWAH Akongnwi NGWA: South-South Development Cooperation: The impact of Emerging Donorsâ€™ Aid on African Countries (The Case of Sino-Cameroonian Aid Relations)
PLAN OF WORK Based on the hypothesis, this work is organised in two parts: A first part entitled: South-South Development Cooperation: Philosophies, Modalities and Aid Architecture of both Donors and Recipients, which will be divided into two chapters with the first dwelling on the philosophies and modalities of partners involved in SSDC (Chapter I) and the second analysing the patterns, trends and features of ODA in the context of SSDC (Chapter II)
A second part entitled: The Impact of China-Africa Aid Relations: Issues and Challenges (The case study of Cameroon engaged on its path towards Emergence by the year 2035), which includes two chapters as well: with the first providing a snapshot of the current state of engagement between emerging economies like China and sub-Saharan Africa and thus analysing its
Cameroon in the social and economic domain (Chapter III) and the second putting an accent on the challenges and proposals so as to better enhance outcomes (Chapter IV).
SOUTH-SOUTH DEVELOPMENT COOPERATION: PHILOSOPHIES, MODALITIES AND AID ARCHITECTURE OF DONORS AND RECIPIENTS.
Development cooperation has a relatively long history dating as far back as the days of the League of Nations. How it has evolved over the years and especially since the end of the Second World War in 1945, is an important issue when current trends in SSDC are examined. It is also a product of evolving global circumstances, and it should be seen in this context. The rise of post-colonial States in Africa and Asia overlapped with another significant global phenomenon, the Cold War, which unleashed a global East-West struggle to win the hearts and minds of peoples and governments of developing countries. ODA flows were largely determined by the exigencies of this struggle. Although much less important now, strategic political and security considerations are still influencing the shape, form and content of DC.
An important ODA trend of the last few years may have been an inadvertent by-product of the MDGs adopted by the United Nations General Assembly in 2000. One result: ODA began to be seen as more of an important contributor to social investment, and both multilateral aid agencies and bilateral flows shifted attention to human development and environmental issues, resulting, until very recently, in the relative neglect of aid and investment in physical infrastructure for economic development. This needs to be corrected, and possibly SSC could contribute to the required rebalancing.
A variety of sources and modalities of financing will be required to bridge related financing gaps and ODA will need to be complemented to this end by non-concessionary financing, private foreign investment, and mechanisms such as public-private partnerships. More broad-based SSDC could be an important part of the answer. Consequently, changes in SSC as a major force in the promotion of development in African countries (Chapter 1) as well as an overview of the main trends, features and challenges (Chapter 2) will facilitate the understanding of the philosophies, modalities, and architecture of both donors and recipients of ODA in the context of SSDC, which is the objective of this part.
CHAPTER ONE: SOUTH-SOUTH DEVELOPMENT COOPERATION: A MAJOR FORCE History is most often written by the victors. The concept of “the South” was born after the Second World War, with the break-up of colonial empires, the expansion in the number of sovereign countries and the consolidation of the United Nations. The South was largely a post-colonial concept, at least at its inception, but much of the colonial baggage of the past has been discarded with the gradual emergence of a newly self-confident, global South. Many developing countries are now very much in the mainstream of globalization, and some are even more important players in trade and finance than the smaller countries of the North. This changing context, with the end of the Cold War, newly emergent centres of power and increasing technological innovation, has changed the global landscape, with major farreaching implications for the South. The fast growth of huge economies like that of CIBs has resulted in a new-found interest in the economic and political consequences for the developed economies. However, the global rise and re-emergence of these three important non-traditional donors also affects the potentials of SSC. These emerging economies invest and trade with partners in the South, and they use DA to facilitate these economic flows. This chapter examines the contextual, structural and domestic changes in SSC, by viewing the perception and expectations of Emerging donors and Africa in the global aid and development architecture (Section I) as well as analyzes the institutional framework or initiatives and patterns guiding Africa’s cooperation with emerging countries in the context of SSDC (Section II).
SECTION I: SOUTH-SOUTH DEVELOPMENT COOPERATIION: A CHANGING GLOBAL LANDSCAPE Over the past 50 to 60 years, much of the colonial baggage has been discarded and a newly selfconfident, global South has emerged. In effect, cooperation which was yesterday manifested through political support for nationalist movements will now be mostly carried out through diplomatic and economic relations with the main objective of development against the backdrop of solidarity and friendship among peoples throughout the 1970s. However, the economic crisis of the 1980s, the fall of the Berlin Wall and the collapse of the Soviet bloc while operating the redistribution of cards on the international scene will lead to stagnation in the SSC. With the emergence of the new category called "emerging countries" this cooperation will experience a new dynamic from the 2000s. Thus the growth in the economies of CIBs has
NKWAH Akongnwi NGWA: South-South Development Cooperation: The impact of Emerging Donors’ Aid on African Countries (The Case of Sino-Cameroonian Aid Relations) resulted in a new-found interest (internally as well as externally) in the economic and political potentials of SSC. India and Brazil now see southern votes as essential in gaining a seat in an enlarged UN Security Council (if their quest to reform the UN system is successful), China perceives political and economic connections to the South as a way to fight the US hegemony, and all the big countries of the South “share a belief in their entitlement to a more influential role in world affairs”80. Thus, the purpose of this section is not to add any new information to the abundance that is already available on failed efforts to bring about economic cooperation in the South in the past. It is rather to describe the contextual, structural and domestic changes which have taken place within the south for the past two decades (Paragraph 1) as well as the perception, expectations, modalities of recipients and donors in the contemporary context of SSDC (Paragraph 2).
Paragraph I: Global SSDC Changes in a Historical Perspective SSC has existed for at least six decades. It received international attention in 1955 when African and Asian nations held a conference in Bandung, Indonesia, to promote economic and cultural cooperation. The Buenos Aires Plan of Action (BAPOA) of 1978, as outcome of the United Nations Conference on Technical Cooperation among Developing Countries, for the first time provided a strategic framework for SSC. However, SSC has become much more prominent in international discussions in the last decade, as rapid economic growth by major Southern economies has led to a greater role in international economic affairs. Their successful development experiences have also increased the potential for Southern providers to offer a wider range of technical development expertise, goods and services, and therefore a huge expansion of financial and technical cooperation. We are going to study these changes from a contextual view point (A) as well as from a structural and domestic view point (B) which will enable us to realize that one thing remains clear: the creative economy sector represents a huge area of opportunity for SSDC.
Contextual Changes in South-South Cooperation We are going to examine these changes from various perspectives within the global south. This will allow us to apprehend the evolution of SSC from a historical perspective. For analytical purpose, looking at these changes within the South, we need to consider four main dimensions: Economic interdependence, the rise of information society, non-state actors, and southern Diasporas.
Hurrell , A.” Hegemony, liberalism and global order: what space for would-be great powers?” International Affairs, 82(1): 119. 2006
Economic Interdependence The economic interdependence between the North and the South during the colonial era was actually a relationship of economic dependence, with the South essentially selling primary commodities to the North and obtaining manufactured goods at a much greater cost from the latter. This gave rise to a longrunning controversy on terms of trade that dominated North-South negotiations throughout the 1960s and 1970s. This pattern has since changed, as Southern countries, especially those in Asia, have emerged as important industrial powers. Dependency has been increasingly replaced by an interdependent North-South relationship. Investors from the North are bringing their resources to the South no longer on the unilateral terms of the past but on terms negotiated by both Northern and Southern corporations and groups operating as equal partners. These investors are seeking in the South not only sources of supply for commodities and lower-cost of labour for manufacturing but also large and fast-growing markets. The quality of foreign investment has radically changed in recent years. Multinational corporations are now welcomed, unlike in the 1960s and 1970s when they were largely shunned, and companies themselves are morphing into more truly global organizations.
Rise of the Information Society Rapid advances in Information and Communication Technologies (ICTs) have led to major transformations in the quality and number of relationships between persons, enterprises, civil society organizations (CSOs), professional bodies and governments within the South and between the North and the South. It might be argued, in fact, that information technology has begun to blur the North-South divide. Its effects are felt in international and domestic trade, and it has been an important factor in stimulating the market economy at all levels of society. There are increasing linkages between suppliers and buyers, and there are more opportunities for those who were once considered to be on the global periphery. Educational processes as a whole are undergoing change, and mobile telephones have become popular in even the remotest parts of the world. There is still an important digital divide between the North and the South, however, and bridging this gap remains an essential task. Having said this, growing political, economic and social connections between the North and the South have been made feasible with the rapid development of information technology. In this respect, one exciting outcome has been the emergence of a global civil society with connected networks and a significant capacity to influence global policymakers.
Non-State Actors Another development that is changing the global scene is the rise of a new generation of nonState actors. There have been important non-State actors in the past (such as the International Committee of the Red Cross), but the numbers of non-State actors and the opportunities open to them have rapidly expanded in recent years. One of the reasons for this is that they have more flexibility to operate in a mode of informality that is not available to State actors, and they have been used for many types of international negotiating processes as well as for international development activities. In both development cooperation and humanitarian assistance, NGOs continue to play a crucial role. Non-State actors often provide a vital lifeline, especially in â€œfailed Statesâ€?. At another level, there are bodies such as the World Economic Forum, which has evolved into an important international organization bringing together the private-sector and government leaders, as well as CSOs over the past 20 years. The World Economic Forum has now become an influential instrument for debate and consensus-building on critical global issues. Mention must also be made of the World Social Forum, which has provided space for CSOs and social movements to promote alternative visions of development.
Southern Diasporas A remarkable trend in recent years has been the rapid rise of Southern Diasporas in the North. These Diasporas can be categorized into two broad types. The first is an elite Diaspora comprised largely of Southern professionals and entrepreneurs who have found well-placed employment opportunities or established successful businesses in Northern countries. These were the people who were seen some years ago as constituting a brain drain from the South. In the 1970s, the UNCTAD made proposals to reverse the brain drain and even pay compensation to developing countries for the loss of their brainpower. What was then considered to be a loss to developing countries has now emerged as a positive factor for the South, with Diasporas consolidating themselves in the North while retaining strong economic and social connections with the South. This has led to mutual benefits for both the North and the South. In the Silicon Valley in the United States, for example, about 20 per cent of the professional population is estimated to be from South Asia. Nearly half the medical personnel of the United Kingdom National Health Service are from abroad, with the majority being from developing countries. The other category of Diaspora consists of less qualified people from the South seeking lower-paying jobs. There are large numbers of such people in Europe, North America and the Middle East who have become important sources of revenue and remittances for many Southern countries. Today, remittances bring to Southern countries more foreign revenue than the total export of actual commodities combined.
Structural and Domestic Changes in South-South Cooperation Dramatic changes in the institutional and power structures of the South have occurred in the past two to three decades. The South as a whole is now not only richer in absolute terms; its economic weight relative to the global economy has also substantially increased. With increasing globalization, linkages between external and domestic policies have become stronger and more intensive. External events and forces are influencing domestic policies to a degree that continues to remain unparalleled today. How domestic and external factors interact at the country level in developing countries is a topic that merits further study. In contrast to the developed world, this aspect of international political economy has yet to receive adequate scrutiny in the South. Today, the economies of Botswana and Ghana are growing at a fast rate. To be sure, performance across the range of African countries continues to remain uneven, and the region’s pockets of success are not yet numerous enough to put Africa as a whole on the path to sustainable growth. A special focus on Africa should, therefore, be one of the defining cornerstones of concerted SSC. As such, the structural and domestic changes within the south will be analysed in the following domains:
Emergence of New Economic Powers During the past two decades, CIBs who account for nearly 40% of the world’s population and more than half the population of the South have all undergone a dramatic economic transformation. From 1980 to 2006, the Chinese economy grew annually at a rate of 8 to 9%, while that of India grew annually at 6%.81 By virtue of the size of the two countries and “the fact that, together, they account for about two fifths of the world population and one fifth of global income (measured in terms of purchasing power parity, PPP), their economic performance already has a sizeable impact on international trade patterns, global output growth and the economic prospects of other developing countries, including their progress towards achieving the MDGs.”82 China has accumulated large foreign exchange reserves, now exceeding $1 trillion; India has also built up significant balance of payment surpluses. Both countries have eliminated any dependence they might have previously had on bilateral aid flows and financial assistance from multilateral financing institutions.
During the July-September 2006 quarter,the country’s economy expanded by 9.2per prospects increase as growth hits 9.2%” , Financial Times, 1 December 2006. 82 UNCTAD, Trade and Development Report,“New Features of Global (http://www.unctad.org/en/docs/tdr2005_en.pdf ).
NKWAH Akongnwi NGWA: South-South Development Cooperation: The impact of Emerging Donorsâ€™ Aid on African Countries (The Case of Sino-Cameroonian Aid Relations) Above all this, these countries continue to remain poor, however, with large populations well below the poverty line and, indeed, all these countries still account for most of the worldâ€™s poorest of the poor. What they now possess, though, are autonomous financial and technical capacities to address their respective problems with poverty and development. For them, a main priority as well as a main challenge is the establishment of a dynamic link between the rapid creation of wealth and the use of this wealth to reduce poverty. These countries are developing policies to address this issue of inequitable distribution on their own and, although they are receiving technical advice from various multilateral financial institutions, they are doing so without entering into a client relationship with the latter. Here are three countries, then, with significant financial and technological capacities, determining their own policies in accordance with their own respective goals and priorities and doing so without being dependent on external financial support on concessional terms. This should be viewed as a major historical development in recent times. Furthermore, while CIB are not yet a part of the Group of Eight (G-8)83, they are developing a close consultative status with this body, along with a few other Southern countries. They are thus on the cusp of emerging as global economic powers. The rise of CIB has far reaching implications for the South as a whole. These countries have already emerged as growing importers of primary commodities, especially metals and minerals, and of energy supplies. Commodity and energy producers in the South are looking more and more to both countries for their markets and for economic and trade relationships. The rise of the three economies has created significant opportunities for the expansion of trade throughout the global South.
Resurgence of South-South Regionalism Until about two decades ago, many Southern countries continued to maintain their traditional colonial linkages with the North. As previously noted, these relationships have diminished in importance as expanding connections at the regional and sub-regional levels have slowly replaced them. Regional trade agreements are increasing in number and at times appear to be a substitute for multilateral agreements under the WTO. The emergence of regionalism is also, in many ways, a step back into pre-colonial history when regional and sub-regional connections were of particular significance. One of the more promising regional developments in recent years has been the creation of the African Union, encompassing, as it does, a range of political, economic and social issues and bringing together around this agenda over 50 countries in an ambitious effort to achieve regional integration. The AU is confronted with myriad tasks, but the creation of a transport infrastructure linking countries in the region and the establishment of common standards and systems in commerce and trade are critical priorities. 83
Canada, France, Germany, Italy, Japan, Russian Federation, United Kingdom and United States
NKWAH Akongnwi NGWA: South-South Development Cooperation: The impact of Emerging Donorsâ€™ Aid on African Countries (The Case of Sino-Cameroonian Aid Relations) The building blocks for African Union strategies are sub-regional organizations in Africa: COMESA, ECOWAS, SADC, and CEMAC among many others and these institutions have now become valuable in their own right. By enhancing their activities, they have contributed to effective regional coordination, particularly in the form of collaboration during international trade negotiations. Another key AU building block is NEPAD, which consists of a vision and strategic framework for Africaâ€™s renewal, specifically aimed at eradicating poverty, placing Africa on a path to sustainable growth and development, halting the marginalization of Africa in the context of globalization and accelerating the empowerment of women. Whether it is a political, economic, peacekeeping or failed-State issue concerning Africa, the AU has now become a key interlocutor in international affairs.
Rise of the Market Economy and the Private Sector A fundamental change in the last two to three decades in Southern countries is their transition from State-controlled economies towards more market-oriented economies (some have, of course, advanced more steadily in this direction than others). Linked to this transformation has been the opening up of economies to external trade and investment, as well as the liberalization of foreign exchange. The shift to market economies has necessitated the creation of more flexible institutional mechanisms along with new legal and regulatory frameworks, a process of change and reform that continues today. Countries have also privatized State assets, thereby creating new opportunities for both domestic and foreign investors. Financial markets, stock exchanges, bond markets, commodity exchanges and the like have grown in number and importance. All these changes have created a need for new forms of inter-country cooperation, eroding the centrality of established patterns of State-to-State interaction. With the rise of non-State actors in economic and commercial arenas, the agendas of SSC have profoundly shifted. Trade liberalization has also meant that there are new issues on the current agendas of the South, revolving less around UNCTAD than previous generations and focusing more on WTO although the Southâ€™s relationship with the latter has become increasingly fraught and problematic. The private sector in many developing countries has organized itself through powerful institutions, such as chambers of commerce and industry, which are creating inter country networks of their own at regional and global levels. The African Union has a panAfrican business counterpart; the ASEAN and SAARC regions, similarly, have private-sector inter-country bodies as well. Institutions such as these are necessarily changing intergovernmental agendas. Today, SSC agendas are no longer dominated by inter-governmental priorities and, because of such private-sector bodies, non-governmental channels have become legitimate and widely used forms of communication and networking.
Industrialization and Urbanization In contrast to the prevalent industrial context a mere four decades ago, the rapid development of substantial and sophisticated industrial sectors has signalled a dramatic change in the South. Many developing countries can no longer be described as agricultural economies dependent on primary commodities for their export earnings. An increasing number have emerged as major exporters of manufactured goods; today, international trade in clothing and textiles is heavily dominated by developing countries. As a consequence of industrialization, a newly expanding class of labour dependent on work in factories has emerged in urban areas. Interestingly enough, large numbers of women belong to this industrial working class. Within the next few years, it is expected that the bulk of developing country populations will not be living in rural areas but in urban centres. Urbanization has accelerated at a very fast pace, and there are now a rising number of Third-World cities (mega-cities) with burgeoning populations. Urbanization has created a severe strain on metropolitan communities and on government services. Improving infrastructure roads, water supply, power, slum clearance and housing in the urban areas of developing countries has now become an urgent priority.
Paragraph II: Stakeholders’ Perception and Expectation from the New Landscape of South-South Development Cooperation SSDC is a product of evolving global circumstances, and it should be seen in this context. This paragraph contributes to the SSDC literature by examining the principles and modalities of emerging countries (CIBs) financing, contrasting this with the main OECD-Development Assistance Committee (DAC) framework (A) and the typology and expectations of both partners in the context of SSDC (B).
Philosophies and Modalities of Emerging Countries in the context of SSDC The financing of Emerging countries towards African countries is growing rapidly, driven mainly by China. In contrast with many industrial countries, which are facing large fiscal consolidation and consequent challenges to meet their aid commitments, CIBs are in a strong position to continue increasing development financing. CIBs’ philosophies for development financing differ from those of “traditional donors” (OECD-DAC members) in three significant ways: CIB engagement is founded on a model of mutual benefits. Most of the financing has been concentrated in the infrastructure sector to support productive activities.
NKWAH Akongnwi NGWA: South-South Development Cooperation: The impact of Emerging Donors’ Aid on African Countries (The Case of Sino-Cameroonian Aid Relations) Some emerging donors, particularly China, tend to provide non-cash financing for projects without attachment of policy conditionality. They view this as part of the principle of non-interference in internal affairs and as a means of circumventing corruption. In contrast, traditional donors view policy conditionality on institution building and governance as central to ensuring efficient use of aid. Concepts of debt sustainability differ, with CIBs tending to focus on micro-sustainability of individual projects while traditional donors pay greater attention to long-run debt sustainability by taking into account macroeconomic linkages.
Philosophies of Emerging Donors in the context SSDC Although CIBs are usually referred to as emerging development partners, they have provided financial support to African Countries since the 1950s, even at the time when some of them had lower GDP per capita than many African Countries. Historically, they have provided assistance as part of SSC. Most of the CIBs’ philosophies related to development financing can be traced back to the SSC discussions, which emphasize principles of equality, solidarity, and mutual development and complementarities.84 As such, analyzing the philosophies of CIBs in so far as SSDC is concerned, warrants that we view this from the following three angles.
Priority sectors and projects While Northern donors have focused more on social sector funding, Southern contributors, notably China, India, Kuwait, Saudi Arabia and the multilateral institutions (BADEA, IsDB and OPEC Fund), have been able to better support programme countries’ priorities for infrastructure development and productive sector investments founded on the principle of mutual benefits. However, development assistance from the same Southern contributors has also been allocated to the health and education sectors (MDGs 2 and 4-6) 85. China and India also support health and education spending which, in the case of the former, focuses on the construction of health and education facilities86. In addition, Brazil, Cuba and Venezuela are very prominent in the provision of teachers and doctors to other developing countries. Some Southern contributors, such as China, India, Kuwait, Republic of Korea, Saudi Arabia, United Arab Emirates and Venezuela, have financed programme country government priority ‘prestige’ projects, 84
For the South-South Cooperation principles see http://www.g77.org/doc/Declaration2009.htm ,para. 70, as reaffirmed in the Ministerial Declaration of the 33rd Annual Meeting of the Ministers of Foreign Affairs of the Member States of the Group of 77 and China, 25 September 2009, New York, USA. 85 Sectoral data are not available for China and India. 86 Southern contributors do not usually include scholarships or student costs in their assistance, whereas OECD/DAC donors do, which inflates the percentage of OECD/DAC donor aid to education.
NKWAH Akongnwi NGWA: South-South Development Cooperation: The impact of Emerging Donors’ Aid on African Countries (The Case of Sino-Cameroonian Aid Relations) including sport stadiums, presidential residences and conference facilities, as have Northern donors in times past. It appears that the stronger the political motivation for development assistance, the more likely it is that the contributor (Southern or Northern) is to fund prestige projects regardless of development priorities. However, due to the lack of detailed data, it is not clear if such facilities have been financed mainly by Southern non-concessional lines of credit, rather than development assistance. a) Conditionality CIBs argue that conditionality would undermine the principle of respecting “national sovereignty” and promoting “solidarity”.87 China, in particular, emphasizes the respect of the national sovereignty (broadly defined to include national economic policies) of the recipient country. Partly reflecting China’s own recent development history and its policy of non-interference, it believes that the long-term development of a country is ultimately the responsibility of the recipient and not the development partners’88.Talking about policy conditionality; it is therefore not surprising that programme countries prefer such assistance which comes without macroeconomic or governance conditionality’s. Southern multilateral institutions also do not usually impose any macroeconomic conditionality, and disbursements are only suspended if a beneficiary falls into arrears with debt servicing. This paucity of conditionality’s enhances programme countries’ ownership, as governments have ‘to jump through far fewer hoops’ to access Southern assistance. Some Southern contributors89, including those aspiring to become DAC members in the medium term have signed the Paris Declaration on Aid Effectiveness and indicated willingness to mainstream this agenda, which includes moving towards a more programme-based approach (PBA) in the delivery of assistance, into relevant development cooperation policies. However, there are few indications so far, as to whether these Southern contributors intend to attach macroeconomic/governance conditionality’s to PBA support.
Dept Sustainability and Concessionality Some Southern contributors provide entirely grants, and almost all provide technical cooperation in such form, programme and project assistance is primarily provided as loans. Southern contributors also offer highly concessional loans to the poorest countries, and to a lesser extent, to middle and higher income level countries. Furthermore, the concessionality of the loan terms90 provided to the 87
Brautigam .D “Africa s Eastern promise: what the West can learn from Chinese investment in Africa.” Foreign Affairs, 2010. or www.foreignaffairs.com 88 Schlager C ,”New powers for global change? Challenges for international development”, 2007. 89 For example Republic of Korea and Turkey 90 Calculated using the IMF methodology and CIRR rates as discount rates
NKWAH Akongnwi NGWA: South-South Development Cooperation: The impact of Emerging Donors’ Aid on African Countries (The Case of Sino-Cameroonian Aid Relations) poorest beneficiaries by most Southern contributors are above the more usual 35 per cent floor set in IMF adjustment programmes. However, if programme country governments set a 45 to 50 per cent minimum concessionality level, then loans on the most generous terms from India, Taiwan Province of China, Thailand and Venezuela (Petro Caribe) may no longer be eligible borrowings for programme country governments. Also Southern contributors have been flexible in changing loan terms to ensure that they do not breach the concessionality ceilings in IMF programmes. Also, the concessionality of Southern multilateral institutions is generally lower than that of the major multilateral institutions, such as the AfDB (African Development Bank) and World Bank. As Southern development assistance is not necessarily less concessional than Northern donor assistance, it is not considered to carry increased risks of making lowincome countries debt unsustainable.
i- Modalities and Procedures for Emerging donors financing CIB development assistance programs are implemented through a range of different agencies. This appears to reflect the evolving nature of their programs. The key characteristics and modalities of CIB financing, along with various agencies that are responsible for policies and program implementation, are summarized in table 191. (Annex 1)
Modalities China has three central institutions that are involved in development assistance the Ministry of Commerce (MoFCoM), China Exim Bank, and the Ministry of Foreign Affairs.92 MoFCoM, in general, takes the lead on China’s official assistance policy. China’s EXIM bank and the China Development Bank (CDB) provide preferential/concessional loans and export credits for the purchase of Chinese goods and services.93 The Ministry of Finance allocates donations to multilateral organizations and manages debt cancellation. Over 20 line ministries, state-owned banks, and other agencies are also involved in administering development assistance activities often without central coordination.94 91
Cf. Annex 1 The State Council (China’s cabinet, headed by the premier) has an oversight role for development assistance. It approves the annual development assistance budget, any grants of cash above US$1.5 million, all aid projects above 100 million RMB (about US$12.5 million), assistance to “politically sensitive countries” and any requests to exceed the annual plan for foreign assistance (Brautigam, 2010). 93 EXIM bank is the dominant lender. CDB accounts for only 21 percent of total loans to developing countries (Gu, 2007). 94 The Forum on China-Africa Cooperation, for example, is driven by the MoFCoM—which is in charge of facilitating grants and loans to African countries—and is supported by the Ministries of Finance and Foreign Affairs and embassies in African countries. 92
The Indian government announced, in 2007, that it would set up a lead agency to coordinate development cooperation: the India International Development Cooperation (IIDC). From an organizational perspective, the Ministry of External Affairs (MEA) no longer has monopoly on all instruments of aid policy whilst the influence of the Ministry of Commerce in aid allocation has grown (Chaturvedi, 2008). Various ministries and institutions would also be represented in the IIDC, including the Ministry of External Affairs (MEA).95
Brazil has a dedicated agency (the Brazilian Cooperation Agency (ABC)) for development cooperation that is housed in the Ministry of External Relations (MRE). The MRE is responsible for articulating the actions of the ministries engaged in development assistance (in particular, the Ministries of Education, Health, Agriculture, and Science and Technology) to ensure they are in line with foreign policy priorities. The role of the ABC is to negotiate, promote, and monitor the Brazilian government’s technical cooperation projects and programs.96 The ABC controls three forms of international cooperation: programs for technical cooperation in developing countries (TCDC), bilateral, and multilateral technical cooperation. Several Brazilian organizations are engaged in TCDC as project implementers.
Procedures Donors’ procedures regarding aid disbursement and procurement can have a considerable impact on the effectiveness and timeliness of DA. In general, programme country governments prefer development assistance which is disbursed faster (that is disbursed directly to them and/or directly to suppliers, rather than requiring reimbursement of expenditures) and procurement procedures which allow for competitive bidding, preferably including local suppliers.97 As far as the disbursement procedures are concerned, since Southern contributors’ assistance is primarily project assistance, it tends to be disbursed via direct payments to suppliers. While this may promote faster disbursement of funds, programme country governments are not always informed that such transactions have occurred, thereby hampering debt and development assistance data recording and monitoring. Some contributors (BADEA, India, Taiwan 95
MEA still has various institutional arrangements under its wings, such as the Indian Technical and Economic Cooperation (ITEC), Aid to African countries through Special Commonwealth Assistance Program for Africa (SCAAP), Bilateral Aid to neighboring and other developing countries (Vijava et al., 2009). 96 While the agency is guided by core principles, it does not always adhere to foreign policy priorities (Vas and Inoue, 2007). 97 Van Waeyenberge, Elisa, Hannah Bargawi and Terry McKinley “Standing in the Way of Development? A critical survey of the IMF’s crisis response to low income countries”, commissioned by Eurodad, Third World Network and Heinrich Boll Foundation, April 2010 accessed at http://www.eurodad.org/uploadedFiles/Whats_New/Reports/Standing%20in%20the%20wa y%20of%20development%281%29.pdf?n=3573
NKWAH Akongnwi NGWA: South-South Development Cooperation: The impact of Emerging Donors’ Aid on African Countries (The Case of Sino-Cameroonian Aid Relations) Province of China and Venezuela) disburse via cash advances to programme country governments and others via reimbursement claims (India, IsDB, KFAED, OPEC Fund and SFD). Overall disbursement procedures of Southern contributors are seen by HIPC governments as causing fewer significant delays than those of Northern donors. One beneficiary country indicates that administrative procedures applied by Southern contributors are generally found to be simpler in comparison to Northern donors, but this procedural simplicity alone does not necessarily guarantee a desirable rate of assistance delivery at the project level.
Perception, Expectation and Drivers of Partners in SSDC CIBs and other providers of SSC see themselves as peers in mutually beneficial relationships with their partner countries, and claim not to attach to their cooperation any policy conditions on what type of development model Africa should adopt. This, accordingly, would undermine the principles of “mutual respect for national sovereignty”, “non-interference in each other's internal affairs” and “solidarity” at the basis of the NAM and the struggle for independence from colonialism that characterized the common past of many Asian, African and Latin American countries. Having known the typology of actors involved in SSDC (i.e. CIBs and African Countries), it is a question for us to analyze the expectations and drivers of both CIBS as emerging donors (i) and those of African Countries (ii) within the context of SSDC.
Perception, Expectation and Drivers of CIBs as Emerging Donors Over the last decade, the relationship between CIBs and Africa has been reenergized. The relationship is not new: their dialogue is a continuation of engagement through the Non-Aligned Movement (NAM) and the struggle for independence from colonialism. Their cooperation, including technical assistance, goes back to the 1950s. What is new is the growing intensity of their relations, especially economic and strategic, and the relative weight of emerging economies in the global economy and geopolitical scenarios.98 Indeed, as the recent literature on emerging economies in Africa have shown,99 making the most of the development opportunities presented by the growing trade, investment and diplomatic engagement in Africa of emerging global players seems to be a key priority for the continent in the 21st century. The recent phenomenal economic growth of countries like CIBs serves as a source of inspiration for Africa: progress on development can be made relatively quickly. Moreover, it is clear that the growing presence of these emerging countries on the continent is beneficial in terms of trade (as 98
See for instance chapters in Part 2 of Cheru and Obi eds (2010). Alden, C., and M. A. Vieira, “The new diplomacy of the South: South Africa, Brazil, India and Trilateralism”. Third World Quarterly, 26(7): 1077 - 1095. 2005. 99
NKWAH Akongnwi NGWA: South-South Development Cooperation: The impact of Emerging Donors’ Aid on African Countries (The Case of Sino-Cameroonian Aid Relations) illustrated in Figures 1 and 2); massive investment in infrastructure100 and resource development opportunities for Africa to be more assertive on the world stage as well as increased development aid and technical assistance.101 Such strong economic links are set to increase further by 2015, thereby allowing the share of BRIC in Africa’s total trade to increase from one fifth to an estimated one third. However, there remain concerns as to the developmental impact that these emerging economies have on Africa, although several authors would argue it is on balanced positive.102 Figure 1: Key Strategic interest of selected partners Figure 1
SSDC has been institutionalized in all CIBs and turns out to be an important challenge for international development strategies of the EU since South-South dynamics seem to be out of reach. But, if awareness of SSDC is improved, it can also be reflected in EU relations with CIBs. From the CIBs’ perspective, SSDC has three important dimensions: Political dimension: to create spaces for autonomous discussion, independent of OECD-countries; Economic dimension: Trade, financing and ODA; Technical dimension: exchange of expertise and technology know-how103. Overall, China is by far the most important 'new' partner of Africa in terms of political, trade, investment, and assistance relations. Its primary interests relate to the need to secure oil for its fast-growing economy. 100
Foster V et al. “Building Bridges: China’s Growing Role as Infrastructure Financier for Africa”. Washington DC, World Bank. 2008. 101 See for instance UNCTAD (2010). 102 See for instance Wenping (2010) and the comments by UNCTAD economist Janvier Nkurunziza who argues that China has in fact has a positive impact on social and economic development www.engineeringnews.co.za/article/china-emerging-as-key-african-trade-partner-report-shows-2010-06-18 103 Mwase, N, “Determinants of Development financing flows from Brazil, Russia, India, and China to Low-Income Countries,” IMF Working Paper 11/255 (Washington: IMF), 2011.
NKWAH Akongnwi NGWA: South-South Development Cooperation: The impact of Emerging Donors’ Aid on African Countries (The Case of Sino-Cameroonian Aid Relations) Africa, with its established and new oil fields, and relative openness to foreign investment is an obvious place to do business. The same goes for other raw materials (e.g. copper and timber) as well as land, with immense room for growth in agricultural productivity. Moreover, tied foreign aid to Africa helps to employ young Chinese abroad, as the labour for large infrastructure projects is mostly imported. Africa has also become a migration destination for many Chinese looking for new economic opportunities.104 Finally, Africa is an important political partner for China, with its 53 votes at the UN and a voice of the world's poor at global summits. India's economic interests and investment in Africa are also substantial, but so far seem narrower and more concentrated than those of China. Despite the fact that Indian assistance may also be perceived as being increasingly linked to access to natural resources, India’s democratic system sometimes facilitates its relations with African democracies and traditional donor countries. Therefore, India may, to some degree, be exposed to Western criticism than China. Brazil's presence in Africa is also increasing steadily, with very large investment in energy, infrastructure, food and mining. Trade as well is on the rise: since 2000, Brazil's imports from Africa have risen more than six fold and its exports have grown eightfold. Brazil seems to aim in particular at positioning itself as a provider of the technical assistance and manufactured goods Africa requires to shift up the agricultural value chain. With food likely to become the ‘new oil’ in the 21st century, cooperation with Brazil offers Africa greater power in managing foreign land acquisitions and negotiating more equitable global climate change and trade agreements. Figure 2 shows the 3 types of partnership Africa has.
i- Perception and Expectations of African Countries as recipients of ODA There is a clear opportunity for Africa to grab now, since both traditional and 'new' players are in an important phase of reforming (e.g. Europe) and designing (e.g. CIBs) their development policies towards Africa. How is the development paradigm perceived in Africa? Different partners entail different business and development support models and receive different degrees of appreciation. The emerging trend is a multi-facet one, where Africa can engage various partners based on their respective strengths. The resulting picture is a mixed one though. One of the advantages of the new wave of partnerships is the choice of donors to choose for Africa, with CIB and traditional donors. It is not possible to conclude that 'one approach is best'. It also depends on the sector of cooperation. There are thematic areas where the EU is still seen as the favoured partner (peace and security) and others where it is China (e.g. infrastructure), Brazil (social protection) or India (telecommunications). 104
See for instance Park (2009)
NKWAH Akongnwi NGWA: South-South Development Cooperation: The impact of Emerging Donors’ Aid on African Countries (The Case of Sino-Cameroonian Aid Relations) African Countries’ views on China differ depending on who the interlocutor is. While the population of many African countries (notably labour) have expressed concerns over the human rights records of Chinese companies, African governments are more prone to seeing engagement with China as mainly positive. Indeed, SSC is popular among African governments due to the seemingly “softer side” of how CIBs do business in Africa, mainly the “respect” shown in their dialogue with Africa, always having people at the same political or diplomatic level in any policy dialogue (e.g. Europe doesn’t respect this and this sours the relationship), and the similarity of approaches and experiences (many emerging economies are both donors and recipients of aid, giving them a unique perspective on the development process).
What countries like China are perceived to be offering Africa is quick and easy solutions to many of its problems. The Asian approach seems to be that of “building what is needed now”, which is the case for infrastructure. Many African government officials, together with actors, are particularly sceptical about the role of traditional partners like Europe, which naturally compares this project-based assistance with the partial failure of international development programmes for many years. Nonetheless, the successes of this new approach are still to be measured, and certainly China has not fully replaced traditional Western donors; China is much appreciated for its flexible and pragmatic engagement with Africa, far away from a mentality of “take it or leave it” often ascribed to some traditional donors. Moreover, the emerging economies are positively associated with high speed of delivery of the assistance, its growing volumes (some rough calculations show China is close to the EC or a large EU donor in terms of aid pledges), less reporting requirements and strings attached, the ability of the government to 'speak with one voice' and to follow a 'can-do/optimistic' attitude towards Africa, let alone the cost effectiveness of projects.105
On the other hand, criticism is also on the rise. Some African actors emphasize that often emerging economies' assistance is not delivered via a cooperation agency but through concessional loans of its public banking system. This approach is known in the case of China as ‘the Angola mode’, basically a risk management tool: packaging infrastructure development with arrangements to access natural resources, as guarantee in countries with bad credit and stability records (which drive out other investors despite the abundant resources). In addition, African Non-State Actors and businesses criticize the fact that: CIB's approach involves mainly tied assistance; The multilayered institutional framework regulating China's relations with Africa, involving ministries, provincial governments, and the Forum for China-Africa
A figure quoted by African officials is telling: a European engineer on a project for 1 year costs around USD 150,000, a Chinese one doing the same job only USD 19,000.
NKWAH Akongnwi NGWA: South-South Development Cooperation: The impact of Emerging Donors’ Aid on African Countries (The Case of Sino-Cameroonian Aid Relations) Cooperation (FOCAC)106 has no permanent structure and real multilateral process; Unlike traditional donors, CIB's cooperation lacks assistance categories, definitions, data on flows. Unlike traditional donors, CIBs mainly focuses on bilateral relations and tend to neglect the African vision of regional integration.
SECTION II AFRICA’S COOPERATION WITH NEW AND EMERGING DEVELOPMENT PARTNERS IN THE DOMAIN OF ODA African countries have been active participants in South–South alliances designed to enhance cooperation with other developing countries, but it was not until the new millennium that such cooperation began to play a significant role in the economic and social development of the region. In the past, development cooperation between Africa and Southern countries focused more on political rather than economic issues. Since 2000, African countries have entered into new partnerships and arrangements with the South, driven primarily by economic rather than political considerations. The new partnerships also differ from the old in the sense that they are often based on formal frameworks with dialogue forums and action plans. This section provides an overview of the new initiatives and frameworks for collaboration between Africa and emerging countries (Paragraph I). It also examines the similarities and differences between these partnerships and identifies their novel features relative to partnerships with developed countries (Paragraph II). Although there are differences across the initiatives and arrangements that Africa has with Southern partners, they also share certain features.
Paragraph I: Emerging Donors and ODA to Africa Africa’s cooperation with the South is generally of three types (figure 2). The first form of cooperation arrangement is bilateral, between African countries and a developing country in another region. For example, it includes, among others, bilateral partnerships between Africa and developing countries such as China, India, the Republic of Korea and Turkey. The second form of cooperation is trilateral in the sense that it is between an African country and two developing countries in different regions. (A) The main cooperation framework in this category is the India–Brazil–South Africa (IBSA) partnership. The third form of cooperation is at the regional level between Africa and other developing country regions. There are three main cooperation arrangements in this category but for analytical purposes we are going to examine the New Asian–African Strategic Partnership, the Africa–South America Initiative. (B) 106
Figure 2: Patterns of South-South Cooperation
Bilateral and Trilateral Initiatives Several Southern partners have cooperation arrangements with Africa. Some of these cooperation arrangements are based on strategic frameworks with well-developed dialogue platforms while others do not have any formal dialogue platforms. For example, China, India, the Republic of Korea and Turkey have established new initiatives and platforms for engagement with Africa while countries such as the Bolivarian Republic of Venezuela and Cuba do not have any formal bilateral dialogue platforms for their engagement with the region.
China–Africa partnership Since the founding of the People’s Republic of China in 1949, Africa has been an important component of its foreign policy. China has always had close political ties with African countries. It also has a long history of provision of financial support to the region. This began with a visit to the region by Chinese President Jiang Zemin in 1996 where he unveiled plans to create the Forum on China–Africa Cooperation (FOCAC). The launching of FOCAC in Beijing in 2000 ushered in a new era of relations between China and Africa, driven mostly by commercial and economic interests rather than political
NKWAH Akongnwi NGWA: South-South Development Cooperation: The impact of Emerging Donors’ Aid on African Countries (The Case of Sino-Cameroonian Aid Relations) ideology as in the past107. The new relationship is also marked by the intensification of high-level visits to Africa by Chinese officials as well as an increase in trade, finance and investment. The broad priority areas of cooperation identified by China and African countries include: political affairs; international affairs, economic and development issues; peace and security; and cultural and people-to-people exchanges. FOCAC has become the platform for coordination of China–Africa relations and for dialogue between African countries and China.
There are several interesting and novel features of China’s engagement with Africa that are worth emphasizing. First, is that it uses FOCAC as a platform for making pledges and commitments to the region. These are usually multi-year commitments and their forward-looking nature makes Chinese financial support increasingly predictable. Second, FOCAC meetings are used to monitor progress in the implementation of existing commitments to Africa. This inbuilt monitoring mechanism increases the likelihood that commitments will be fulfilled and has become a model for other Southern partners. Third, China has made addressing climate change an important area of its support to the region. Fourth, China is increasingly making efforts to integrate the private sector into its Africa relations, although the latter is still a passive participant in the FOCAC process. China’s growing engagement in Africa has generated interest and debate on its contribution to economic and social development in the region. In general, the new partnership with Africa has led to closer political and cultural ties between China and Africa. Both sides have had frequent exchanges of high-level visits in recent years and provide support for each other in multilateral affairs. China has also made contributions to maintenance of peace and security in the region.
India–Africa partnership India has also had close relations with African countries since their independence in the 1960s. It is also one of the Southern countries with a very large and vibrant diaspora community in the region: about 11% of its global diaspora of 26 million people lives in Africa108. Until recently, India’s relations with Africa focused more on the provision of technical assistance and capacity-building and there was no formal dialogue platform for cooperation with the region. In 2008, the Indian Government decided to create a new architecture for its engagement with Africa and this led to the convening of the First India–Africa Forum
Brown K and Chun Z “China in Africa: preparing for the next Forum for China–Africa Cooperation”. Asia Programme Briefing Note ASP2009/02. Chatham House, London. 2009, p.16. 108 Freemantle S and Stevens J: “BRIC and Africa: Tectonic Shifts Tie BRIC and Africa’s Economic Destinies”. South Africa, Standard Bank. 2009.
NKWAH Akongnwi NGWA: South-South Development Cooperation: The impact of Emerging Donors’ Aid on African Countries (The Case of Sino-Cameroonian Aid Relations) Summit in New Delhi from 8–9 April 2008109. At the summit, India and Africa agreed to enhance cooperation in the following broad areas: economics, politics, science, research and technology, social development and capacity-building, tourism, infrastructure, energy and environment and, media and communication. The summit is held every three years at the level of heads of state and government.
As with China, the partnership agreement adopted at the India–Africa Summit is guided by expressions of fundamental principles of equality, mutual respect, mutual benefit, respect for state sovereignty and a desire to deepen the process of African integration. A very interesting aspect of the new partnership is the emphasis on strengthening Africa’s regional integration110. India and Africa agreed to provide support to mutually agreed regional programmes of the African Union and African regional economic communities. They also agreed to develop a joint action plan at the continental level as well as a follow-up mechanism to implement the new framework for cooperation. India’s cooperation with Africa has had a positive impact in Africa. There has been a significant increase in the volume of trade and investment flows between India and Africa. For example, trade between the two groups increased from $7.3 billion in 2000 to $31 billion in 2008. India has also contributed to Africa’s development through loans, debt relief, technical assistance, peacekeeping and infrastructure finance.
Brazil-Africa Partnership Brazil has a unique partnership arrangement with India and South Africa that has attracted international attention. The IBSA partnership is a trilateral alliance between Brazil, India and South Africa aimed at boosting their bargaining power and clout on global issues and strengthening economic and political ties amongst the three countries. Since its inception in 2003, it has become a powerful force in setting the agenda and pace of multilateral negotiations. It also plays an important role in ensuring that the concerns and interests of developing countries are taken into account in global responses to the financial crisis and the reform of the international financial architecture.
African leaders from the following countries attended the summit: Burkina Faso, Democratic Republic of the Congo, Ethiopia, Ghana, Senegal, South Africa, Uganda and the United Republic of Tanzania. 110 African countries are increasingly concerned that relations with Southern countries take place mostly at the bilateral level without appropriate safeguards to ensure that the outcomes are consistent with the regional integration agenda. In this context, the emphasis on regional integration in the framework of India–Africa cooperation is welcome
B - Inter-regional Initiatives As earlier said, at the regional level, there are three existing initiatives on Africa’s cooperation with the South but we are going to examine two: the New Asian–African Strategic Partnership (i) and the Africa–South America Partnership (ii).
The New Asian–African Strategic Partnership As indicated earlier, Africa’s cooperation with Asia dates back to the 1955 Bandung Conference. At the time, political issues were the main drivers of cooperation between both regions. In April 2005, leaders of Asian and African countries gathered in Jakarta to celebrate the fiftieth anniversary of the Bandung Conference and identify ways to boost cooperation between both regions. They decided to establish a New Asian–African Strategic Partnership (NAASP) and use it as the main framework for cooperation between both regions. The partnership covers three broad areas, namely political solidarity, economic cooperation and socio-cultural relations. The core principles guiding this relationship include solidarity, friendship and cooperation. The NAASP emphasizes the need for a multilateral approach to international relations as well as the importance of complementing and building upon existing initiatives that link the two continents such as the Tokyo International Conference on African Development, the India– Africa Forum and FOCAC. In addition, the new partnership acknowledges the need to use the New Partnership for Africa’s Development (NEPAD) as the framework for engagement with Africa. The NAASP requires convening a heads of state and government summit every four years and a ministerial meeting every two years. It also requires the convening of a business summit every four years.
Africa–South America Partnership The second interregional cooperation initiative with Africa is the Africa–South America (ASA) Partnership. Although South America has strong historic and cultural ties with Africa, especially the Portuguese-speaking countries, there was no formal interregional platform for interaction and cooperation until the first Africa–South America summit was held in Abuja from 26–30 November 2006. The meeting was convened to establish a mechanism for intensifying cooperation between Africa and South America for mutual benefit and to promote multilateralism as well as address the challenges associated with it. The ASA Partnership requires the convening of a heads of state and government summit every two years. However, the second summit was held in September 2009 in Nueva Esparta State, Bolivarian Republic of Venezuela. The priority areas of cooperation include: multilateral affairs, legal affairs, peace and security, democracy
NKWAH Akongnwi NGWA: South-South Development Cooperation: The impact of Emerging Donors’ Aid on African Countries (The Case of Sino-Cameroonian Aid Relations) and political issues, agriculture, water resources, trade and investment, combating hunger and poverty, infrastructure development, energy and minerals, social issues, tourism and sports, science and information and communication technology (ICT), health, education, environment, gender and, institutional development and information exchange. The ASA Partnership recognizes the role of the private sector in reaping the benefits of cooperation. Consequently, it calls for the establishment of an Africa–South America Business Association and an Africa–South America Bank.
In recent years, South American companies have increased their activities in Africa, particularly in the energy, infrastructure and agriculture sectors. For example, in the energy sector, the Brazilian state company Petrobrás is engaged in oil exploration in countries such as Angola and Nigeria. It is also involved in the construction of processing facilities creating opportunities for oil-producing countries in Africa to add value to their products. In agriculture, the establishment of an office of the Brazilian Agricultural Research Company (EMBRAPA) in Accra in 2008 is facilitating the transfer of agricultural technology from Brazil to Africa, thereby contributing to food security in the region. Despite the growing interest in Africa–South America cooperation, it is interesting to note that the region currently has neither high trade nor high investment relations with South America. Africa’s trade and investment are still concentrated in Europe, North America and Asia. There is the need for concerted efforts by African and South American countries to boost economic cooperation and lay a solid foundation for more fruitful and mutual cooperation.
Paragraph II: Africa–South partnerships and relations with traditional partners The stated aim of these partnerships is to promote Africa–South cooperation so as to achieve common development goals. Governments are the main stakeholders in the process, although efforts are increasingly being made by some of the partners to enhance private sector participation. The plethora of new initiatives aimed at strengthening Southern partners’ engagement in Africa has generated interest and debate on three issues: the existence of distinctive features (A), the increase engagement of Southern partners in Africa (B), and increase competition (C).
The Existence of distinctive features The first is the distinctive or novel features of these new partnerships relative to relations with traditional partners. For example, in contrast to Africa’s relationship with traditional partners, the new
NKWAH Akongnwi NGWA: South-South Development Cooperation: The impact of Emerging Donors’ Aid on African Countries (The Case of Sino-Cameroonian Aid Relations) partnerships often have established forums and dialogue platforms and are generally supported by frequent high-level official visits. Furthermore, they are based on the principle of non-interference in the internal affairs of partner countries. Consequently, they are not associated with policy conditionality as has been the case in relations with traditional partners. Another distinctive feature of these partnerships relative to relations with traditional partners is that the big Southern partners generally use official flows to promote trade and investment activities in Africa. Furthermore, Southern partners do not consider their financial contributions to other developing countries as aid. Rather they describe them as “expressions of solidarity and cooperation borne out of shared experiences and sympathies”.
The increase engagement of Southern partners in Africa The second issue that has arisen as a result of the increasing engagement of Southern partners in Africa is the implications of these partnerships for relations with traditional partners. In recent years, concerns have been expressed about the growing role and influence of Southern partners in Africa111. There is the recognition that Africa’s growing cooperation with the South presents challenges for its traditional partners. Politically, it threatens to alter the balance of power between developed and developing countries with implications for decision-making on global issues. For example, the formation of alliances between Africa and Southern countries in ongoing multilateral trade and climate change discussions has changed the pace and dynamics of the negotiations and it is now evident that important decisions on these and other global issues cannot be taken without the consent of developing countries. Furthermore, the fact that Southern partners’ engagements are based on the principle of non-interference in the internal affairs of partner countries has given African countries some policy space and reduced the influence of traditional partners on domestic and regional issues112.
Increased competition The new partnerships also have economic implications for Africa’s relations with traditional partners. Traditional partners rely on Africa as a source of energy and natural resources and are increasingly facing competition from big developing countries that need resources to sustain growth. To the extent that the new partnerships lead to the diversification of export markets for Africa and a decrease in the share of 111
Besada H et al. China’s growing economic activity in Africa. NBER working paper 14024. National Bureau of Economic Research. Cambridge, 2008. 112 Traditional partners are concerned that the new approach of Southern partners undermines established norms and standards of democracy, human rights and good governance (Manning, 2006; Paulo and Reisen, 2009).
NKWAH Akongnwi NGWA: South-South Development Cooperation: The impact of Emerging Donors’ Aid on African Countries (The Case of Sino-Cameroonian Aid Relations) traditional partners in Africa’s trade, they will reduce dependence on developed countries. Despite these challenges, the new partnerships could also strengthen Africa’s relations with traditional partners if as a result of increasing competition they are compelled to fulfil existing commitments made to the region, and also increasingly see African countries as serious economic partners rather than simply as aid recipients. Such a change in perception is likely to set the stage for a more durable and mutually beneficial relationship with the region. While there are some aspects of Africa’s relations with the South that increase competition between Southern and traditional partners, it is important to stress that there need not be tension between Africa–South and Africa–developed country cooperation. For one, the development challenges facing Africa are so enormous that cooperation with developed countries alone cannot address them effectively. In this regard, additional assistance from developing countries should be welcome and supported by traditional partners. Furthermore, despite the growing role of Southern partners in Africa, developed countries are and will remain important development partners. Consequently, African countries should see their partnership with the South as complementary rather than a substitute for relations with traditional partners. Southern partners should also create an incentive for traditional partners to support their engagement in Africa by increasing transparency in their development cooperation activities in the region. They should also put in place appropriate measures to ensure that their activities do not have adverse effects on debt sustainability and environmental quality in Africa.
CONCLUSION OF CHAPTER ONE To better understand how SSDC has contributed in the development of African Countries, it was the goal of this chapter to show that, contextual, structural and domestic changes in SSC in a historical perspective have contributed in re-shaping this cooperation in Africa’s favour, thereby creating different perceptions and expectations for both partners. These perceptions and expectations have thus modelled Africa’s cooperation with CIBs in the domain of ODA, thus by increasing their engagement in Africa. This increased engagement has resulted in more development assistance for African countries given their need for additional external financial resources to meet the MDGs and foster sustainable development objectives in an effective manner. However, how effective is this ODA in so far as the attainments of development objectives are concerned will be the goal of our next chapter.
CHAPTER TWO AID ARCHITECTURE: AN OVERVIEW OF THE MAIN TRENDS, FEATURES AND THE AID-DEVELOPMENT EFFECTIVENESS DEBATE IN THE CONTEXT OF SSDC
Aid architecture can be defined as the set of rules and institutions governing aid flows to developing countries. While aid has an architecture, it has no single architect.113 It has evolved over time much of it without a pre-defined blueprint. Most of today’s aid principles and institutions are the result of over half a century of debate and joint decision-making. Broadly speaking, two aid “architectures” can be distinguished: the “Cold War Architecture”, which lasted from the end of World War II to the fall of the Berlin Wall in 1989; and the “Post Cold War Aid Architecture”, which started in 1990 and is still prevalent today. In recent years, Africa has received significant amounts of financial contributions from both developed and developing countries. While Africa’s traditional partners generally refer to their contributions as aid or ODA, Southern partners do not consider their financial contributions to other developing countries as aid or ODA. Rather they describe these as “expressions of solidarity and cooperation borne out of shared experiences and sympathies”.
This chapter is organized as follows. Section 1 presents and discusses quantitative estimates of aid flows to Africa from both traditional and Southern partners and identifies the features of official flows from Southern partners, where possible pointing out important differences between the practices of traditional and Southern partners as well as discusses emerging issues arising from the activities of Southern partners, and examines the impact of the financial and economic crisis on official flows from Southern partners. Section 2 discusses the concept of Aid Effectiveness (AE) in the Context of SSDC which enables us to understand the interaction between SSDC and AE and how the provision of support by emerging countries affects aid effectiveness with the new multi polar landscape contributing to a shifting focus from aid effectiveness to development effectiveness. 113
A discussion of possible roles for an aid “architect” can be found in Burall, s. and s. Maxwell, with A.R. Menocal, “Reforming the International Aid Architecture: Options and Ways Forward”. Overseas Development Institute Working Paper 278, October, 2006.
SECTION I: AN OVERVIEW OF TRENDS AND FEATURES IN DEVELOPMENT ASSISTANCE TO AFRICA FROM EMERGING COUNTRIES AND THE COMPLEXITIES IN THE GLOBAL AID ARCHITECTURE A closer examination of major trends in ODA can facilitate a better understanding of the key issues affecting the existing global aid architecture. The figures reported in this section come from the OECD’s DAC database, as well as from the Creditor Reporting system (CRs).114 In what follows, Paragraph I looks into some of the main trends in ODA flows and how it has been distributed across recipient countries as well as its features, while Paragraph II focuses on the growing complexities of global aid architecture.
Paragraph I: Quantitative Estimates of aid flows to Africa Numerous non-traditional donors are re-emerging on the development arena. According to Kragelund 2008 and the 2008 ECOSOC report, they calculate the total development assistance of these emerging donors as having made up between 7.8 and 9.8% of total development assistance flows in 2006115. Southern multinationals are investing massively not only in developed economies but also in developing economies, and South-South trade is intensifying116. In this light, it is a question in this paragraph to analyze the aggregate flows from traditional as well as emerging donors to African countries (A) so as to better apprehend the features of this aid in the context of SSDC (B).
Aggregate Aid Flows in Volume from both Traditional and Emerging Donors After a protracted decline during the 1990s, net ODA disbursements grew steadily between 1997 and 2005, but slipped in 2006 and 2007117. Thus since the early 2008 Africa has witnessed an increase inflow of ODA from traditional donors so as to meet development as agreed in Kananaskis (i). But with the recent development in the global aid architecture emerging countries have also increase their aid packages
Invaluable contributions from DAC staff are gratefully acknowledged. Peter Kragelund. op.cit0 p.10 116 UNCTAD: “FDI from Developing and Transition Economies: Implications for Development.” World Investment Report, United Nations publication. Sales No E.06.II.D.11, New York and Geneva 2006. 117 The rising importance of non-DAC donors is not fully captured in DAC data: “Data on so-called south-south assistance are incomplete, however, making it difficult to obtain comprehensive information on south-south aid volumes and prospects”. IMF and World Bank .Global Monitoring Report, 2006, p. 75. 115
NKWAH Akongnwi NGWA: South-South Development Cooperation: The impact of Emerging Donorsâ€™ Aid on African Countries (The Case of Sino-Cameroonian Aid Relations) towards the African continent even though it is still small when compared to that of traditional donors; it is of significant importance (ii).
Official Development Assistance flows from OECD Since the beginning of the new millennium, there has been an increase in the volume of aid flows to Africa as well as in the role of developing countries in providing support to the region. Available data in the OECD database indicates that net ODA to Africa increased from $15.6 billion in 2000 to $44 billion in 2008 and Africaâ€™s share of ODA flows to developing countries rose from 31 to 34 % over the same period (cf. Table below).118In 2008, net ODA flows to Africa from members of the Development Assistance Committee (DAC) of the OECD amounted to $27.2 billion, representing 61.8% of total reported flows to the region. Flows from multilateral agencies and non-DAC partners accounted for 36.8 and 1.4 % respectively. With regard to bilateral aid, in 2008 DAC countries accounted for 97.8% while non-DAC partners accounted for 2.2% of reported flows to the region. Figure 3: Net ODA disbursement by all donors, 2000-2008 (in millioTableau 1ns US$)
However, an analysis of DAC members
budget proposals for 2010 showed a range of
prospects. Countries such as Finland, Spain, the United Kingdom and the United States, continued budgeting to meet their commitments. Denmark, Luxembourg, the Netherlands, Norway and Sweden continued to allocate at least 0.7% of their gross national income to ODA, in line with the long-standing UN target. Australia, Canada and New Zealand appeared to be on track to double their aid by 2010. Switzerland
Note that the reported figures include country programmable and non-country programmable aid. The former refers to aid available to recipient countries for financing development projects and programmes, while the latter refers to support in the form of debt relief, food aid, humanitarian aid and technical cooperation. In 2008, net debt relief to the region was about $2 billion, food aid $1.3 billion, humanitarian aid $5.5 billion and technical cooperation $5.4 billion. Taken together, non-country programmable aid accounted for about 32 per cent of total flows to the region in 2008.
NKWAH Akongnwi NGWA: South-South Development Cooperation: The impact of Emerging Donorsâ€™ Aid on African Countries (The Case of Sino-Cameroonian Aid Relations) was planning to give 0.47%, exceeding its previous commitment of 0.4%. Ireland has cut its forward ODA estimate, but still expected to meet an ODA/GNI ratio of 0.52%. Meeting its target of 0.7% ODA/GNI in 2010 constitutes a significant challenge for Belgium, whose ODA volume in 2008 was US$ 2.39 billion (0.48% of GNI). However, in 2009, it surpassed the EU country target of 0.51%, and the government has secured the necessary resources for its 2010 budget to reach the 0.7% target.
Non-DAC Development Assistance Flows While DAC countries still account for a large part of reported ODA flows to Africa, support from non-DAC partners recorded in the OECD database has grown since 2000 (cf. graph 1 below). For example, reported ODA flows from non-DAC partners to Africa increased from $300 million in 2000 to $604 million in 2008. Despite the positive trend, it should be noted that Africaâ€™s share of reported non-DAC aid fell from 38 % in 2000 to 7.3% in 2008. A large part of the decline is due to an increase in aid flows to countries in the Middle East by Arab partners who are important providers of non-DAC aid. For example, in 2008, Kuwait, Saudi Arabia and the United Arab Emirates provided 63%of reported aid flows by non-DAC partners. Graph 1: Net ODA disbursement by non-Graphique 1Dac partners reported to OEDC ($millions)
In terms of beneficiaries, reported non-DAC aid to Africa is highly concentrated in a few countries. Algeria, Egypt and Sudan received 75% of reported non-DAC aid to the region in 2000 and Egypt, Morocco and Sudan accounted for 50% of these flows in 2008 as shown in figure 3 below.
Figure 4 : Share of recipients in reported non-DAC aid in Africa, 2008
Although reported aid from non-DAC partners looks small relative to those of DAC donors, it should be noted that it does not include support by Southern partners such as the Bolivarian, Venezuela, Brazil, China, Cuba, and India because these countries do not generally disclose information on aid disbursements, thereby making it very difficult to obtain comprehensive and reliable data on their aid flows and practices. Indeed, as noted earlier, most Southern partners do not think of themselves as providing aid. Among the Southern partners, China119, India120and Brazil121, provide significant amounts of development assistance to Africa122. Consequently, the analyses in this chapter will focus mainly on the three Southern partners identified above. A major consequence of the fact that many Southern countries do not provide information on aid flows is that analyses and description of their support are generally based on estimates by researchers as well as information published in newspapers. Consequently, estimates of aid flows from these countries to Africa vary considerably and are often contradictory. They should therefore be interpreted with caution. Notwithstanding this caveat, there is the recognition that Southern partners are increasingly important providers of aid to Africa123. Their growing willingness and ability to provide grants and concessional finance has increased the resources available for development as well as diversified the
Cf. Annexe 2 Cf. Annexe 3 121 Cf. Annexe 4 122 Kaplinsky R and Farooki M ; op.cit p.16. 123 Peter Kragelund, op.cit. p.28. 120
NKWAH Akongnwi NGWA: South-South Development Cooperation: The impact of Emerging Donors’ Aid on African Countries (The Case of Sino-Cameroonian Aid Relations) financing options open to countries in the region. Available data indicates that in 2006 they provided approximately $2.8 billion as ODA to Africa, representing 6% of total aid flows to the region and 9 per cent of bilateral aid.
China is the main source of Southern aid to the region, accounting for 83% of estimated flows. While we do not have enough information to provide reliable estimates of flows for more recent years, it is likely that the aid figures for 2007 and 2008 are much higher, because since 2006 several pledges have been made by Southern partners to scale up support to the region. For example, at the FOCAC held in 2006, China pledged to double its assistance to Africa by 2009. Furthermore, at the India–Africa Forum held in 2008, India pledged to increase its Aid to Africa budget by $500 million over the next five to six years. It is interesting to note that Africa’s share of its aid and loan budget has already increased from 1.5% in 2006 to 3.6% in 2008. In general, countries endowed with natural resources124 as well as large and politically strategic countries125receive the bulk of aid provided to Africa by Southern partners. However, some small countries with neither resources nor economic and political clout are increasingly receiving significant support (cf table 2 below). In this regard, one of the challenges facing Southern partners, and also traditional donors, is how to improve aid allocation to ensure that countries in need get more access to aid envelopes. This requires the adoption of aid allocation criteria that focuses more on need rather than geography, endowments or ideology. Table 2: Major recipients of Southern aid in Africa,Tableau 2 2008
E.g: Angola, Nigeria and Sudan e.t.c E.g: Egypt, Ethiopia and South Africa e.t.c
NKWAH Akongnwi NGWA: South-South Development Cooperation: The impact of Emerging Donors’ Aid on African Countries (The Case of Sino-Cameroonian Aid Relations) Source: UNCTAD 2010 Although support by Southern partners covers a wide range of activities, they tend to focus more on the infrastructure and production sectors compared with traditional donors who increasingly target the social sectors126. Table 3: sectorial focus of southern official flows
The above table presents information on the sectoral focus of Southern partners. Brazil provides assistance to the production sectors, with particular focus on agriculture. China127 is also making significant contributions in the area of infrastructure.128.The average annual support provided by India for infrastructure finance in sub-Saharan Africa was $500 million. It should be noted that Nigeria and Sudan are the main beneficiaries of Indian infrastructure finance, although Angola and Mozambique have also received support for the development of their rail systems. China and India have the practice of channelling their infrastructure finance through their export-import banks and the loans are generally linked to natural resource revenue (a phenomenon often referred to as “the Angola mode”). The southern donors also focus on technical cooperation. This contrasts with DAC countries where technical assistance represented 16% of gross aid disbursement in 2008. India is one of the Southern partners that are very active in the provision of technical assistance to Africa. It provides training to African countries through the Indian Technical and Economic Cooperation programme established in 1964 and the Special Commonwealth Assistance for Africa Programme.129 Furthermore, through the Indian Pan-African e-Network project, it is enhancing the capacity of African countries to provide quality services in education and health. 126
Cf. Annex 5 Cf. Annexe 6 128 Lum et al. “China’s foreign aid activities in Africa, Latin America and Southeast Asia,” United States Congressional Research Service Report for Congress, 2009, p.32. 129 Cf. Annexe 7 127
Features of Aid flows to Africa from Emerging Donors It is difficult to provide a comprehensive and reliable estimate of the scale of official flows from Southern partners to Africa because they generally do not provide detailed information on their contributions. Consequently, this section does not attempt to provide an estimate of total official flows by Southern partners. Rather, it presents certain features of official flows to Africa from Southern partners that can be identified based on available information and thus we have eight distinctive features130.
Emerging Donorsâ€™ use official flows to promote trade and investment activities A distinctive feature of official flows from several Southern partners is that they are intertwined with trade and investment activities131. For example, official flows from China and India have been used to support and promote trade and investment relations with African countries. Both countries use their exportimport banks as channels for providing finance and promoting commercial interests in trade and investment. This contrasts with the practice of traditional donors who channel their funds through development agencies and are reluctant to mix official flows with investment activities.(See Table 4 above) .The link between official flows and commercial activities by large Southern partners can be explained by the fact that as developing countries they believe that their support should be of mutual benefit to both the contributor and the recipient. One consequence of the link between official flows and the commercial activities of Southern partners is that African recipients tend to be countries with close trade and investment relations or those with significant potential and opportunities for trade and investment. Another consequence of this link is that the development impact of Southern official flows cannot be assessed adequately without taking into account its catalytic effect on trade and investment flows in recipient countries.
To the extent that Southern official flows stimulate trade and investment in Africa, they could boost growth as well as domestic savings, thereby creating a favourable condition for reducing dependence on such flows in the long run. In this regard, there is the need for African countries to put in place appropriate measures to seize the opportunities created by the complementary linkages between Southern
Cf. Annex 8 Woods N, Whose aid? Whose influence? China, emerging donors and the silent revolution in development assistance. International Affairs. 84 (6): p.1â€“17. 2008. 131
NKWAH Akongnwi NGWA: South-South Development Cooperation: The impact of Emerging Donors’ Aid on African Countries (The Case of Sino-Cameroonian Aid Relations) official flows, trade and investment. Southern partners tend to provide more support to the infrastructure and production sectors. Although support by Southern partners covers a wide range of activities, they tend to focus more on the infrastructure and production sectors compared with traditional donors who increasingly target the social sectors. (See table 3 above on sectoral focus)
ODA provided by Emerging Donors’ also go to countries often not targeted by traditional donors One of the features of support by Southern partners is that they are increasingly providing support to fragile and conflict-affected states. China has supported countries such as Angola, Sudan and Zimbabwe. India is known to have provided support to Angola, Djibouti, Côte d’Ivoire and Niger. Furthermore, Comoros, Djibouti, Mauritania, Somalia and Sudan have benefitted from support by Arab countries132. An interesting feature of flows to fragile and conflict-affected states is that they tend to have access to a very limited number of donors. By extending support to fragile and conflict-affected states, Southern partners are filling important financing gaps in the region. It should be noted however that some of the fragile and conflict-affected states may have been targeted by Southern partners because they are also resource-rich countries.133(See Graph 1 above)
Emerging Donors’ are playing active roles as providers of debt relief One of the factors inhibiting growth and development in Africa has been the heavy debt burden carried by many countries in the region. The HIPC Programme and the Multilateral Debt Relief Initiative were introduced to address the debt problem. In the early years of the HIPC initiative, debt relief was mostly provided by the traditional donors. In recent years, however, there has been an increase in the number of Southern partners providing debt relief to Africa. For example, China has had three successive rounds of debt relief for Africa. Over the period 2000–2002 it cancelled about $1.3 billion in overdue debt owed by African countries134. Furthermore, at the 2006 FOCAC Summit in Beijing, it promised to cancel debt, on interest-free government loans that matured at the end of 2005, owed by HIPCs and LDCs in Africa that have diplomatic relations with China. It is estimated that this debt write-off is worth about $1.3 billion. Finally, at the 2009 FOCAC Conference, the Chinese premier stated that China will cancel debt owed by African HIPCs and LDCs that are due to mature by the end of 2009. Brazil has also offered debt 132
OECD Annual Report: “Resource Flows to Fragile and Conflict-Affected States” Paris, OECD, 2008a. Cf. Annex 9 134 Wang J and Bio-Tchane A. “Africa’s burgeoning ties with China, Finance and Development”, 45 (1): 2008, p44–47 133
NKWAH Akongnwi NGWA: South-South Development Cooperation: The impact of Emerging Donors’ Aid on African Countries (The Case of Sino-Cameroonian Aid Relations) relief to African countries under the HIPC initiative. It has cancelled $369 million in debt owed by Mozambique, $10 million owed by the United Republic of Tanzania, $9 million owed by Mauritania and $5 million owed by Guinea-Bissau135. India has offered significant debt relief to African countries. For example, Ghana, Mozambique, Uganda, the United Republic of Tanzania and Zambia have benefited from $24 million in debt relief under the Indian Development Initiative unveiled by the Finance Minister in 2003.
Concessional loans are the instrument of support by Emerging Donors’ Unlike traditional donors, Southern partners to Africa provide more support in the form of concessional loans rather than grants. China is one of the Southern partners that make extensive use of concessional loans as an instrument of support to Africa. Over the period 2001–2007, 50% of its infrastructure finance to sub-Saharan Africa was in the form of loans, 44% in the form of export credits, 5% in the form of FDI and 1% in the form of grants136. As a follow-up to the promises made during the 2006 FOCAC Conference in Beijing, China has provided $3 billion of preferential loans and $2 billion of preferential export buyers’ credit to Africa. Furthermore, in 2006 it promised to set up a China–Africa Development Fund with up to $5 billion to encourage Chinese companies to invest in the region. This fund has been established with initial funding of about $1 billion. As is the case with China, India also provides support to the region mostly in the form of concessional loans and trade credit. Recent pledges by Southern partners suggest that the use of concessional loans rather than grants will increase in future years. For example, at the 2009 FOCAC Conference held in Egypt, the Chinese Premier stated that China will provide $10 billion in concessional loans to Africa. At the India–Africa Forum Summit held in 2008, India also pledged to enhance available lines of credit to Africa by $5.4 billion over five years. Between 2003 and 2008, it also extended$2.2 billion in concessional lines of credit to the region. One of the reasons why some Southern partners provide most support in the form of concessional loans rather than grants is that it is often used to catalyze trade and investment activities expected to yield mutual benefits to the lender and borrower137.
Schlager C “New powers for global change? Challenges for international development” 2007. Foster V et al. “Building Bridges: China’s Growing Role as Infrastructure Financier for Africa”. Washington DC, World Bank. 2008 137 Wang J and Bio-Tchane A op.cit. p.47 136
Project support is the dominant method of ODA delivery by Emerging Donorsâ€™ A common feature of official flows from Southern partners to Africa is that they are generally provided in the form of projects rather than sector-wide approaches (SWAps) or general budget support. This contrasts with the practice of traditional donors, who increasingly provide support through SWAps or general budget support. The practices of the Republic of Korea and Turkey are interesting because although they are OECD members, they have not followed the traditional donor practice of providing support in the form of general budget support.
Emerging Donorsâ€™ do not impose policy conditions but often tie official flows to non-policy conditions. The most distinctive feature of official flows from Southern partners is the absence of policy conditions. This contrasts with traditional donors who, despite streamlining conditions and changing modalities, still continue to make use of policy conditions in aid delivery. These conditions generally reflect donor views and preferences on what constitutes good economic policy138. Traditional donors often justify the use of policy conditions on the grounds that aid works best in countries with good governance and economic policies. While this is understandable, there has been a tendency for donors to equate good policies with less government intervention and reforms such as trade and financial market liberalization. The recent economic and financial crises have shown that reducing the role of governments in critical areas of economic activity could be very costly. It has also shown that the appropriateness of financial market liberalization depends on country-specific circumstances. Although Southern partners do not impose policy conditions, they often tie disbursement of official flows to non-policy conditions such as access to natural resources or the purchase of goods and services provided by firms in the country providing support. These conditions impose costs on recipients and have consequences for the effectiveness of official flows. China and India are the main Southern partners that make extensive use of non-policy conditions in disbursement of official flows to the region.
Cf. Annex 8
Technical cooperation is an important component of support by Emerging Donors. Each of the three Southern partners considered in this work has technical assistance activities in Africa, although the importance of such activities in their budgets and programmes varies across countries. Brazil regards technology transfer through technical cooperation as a key component of its aid programme to Africa. In 2008, 43% of the resources for technical cooperation projects managed and implemented by the agency went to Africa. Historically, five Portuguese-speaking African countries139 have been the main beneficiaries of Brazil’s technical cooperation with Africa, accounting for about 74% of Brazilian resource allocation for technical cooperation in Africa. In recent years, however, Brazil has extended support to more African countries and currently has projects in 22 countries.
India is one of the Southern partners that are very active in the provision of technical assistance to Africa and thus enhancing the capacity of African countries to provide quality services in education and health. At the 2008 India–Africa Summit, the Indian Government increased the number of training slots for African countries in the Indian Technical and Economic Cooperation programme from 1,100 to 1,600. It also doubled the number of scholarships for African students to 500. China and the Arab countries also provide technical assistance to Africa, although it is a small percentage of their support to the region.
Emerging Donors’ receive aid as well as provide official flows. Most Southern partners provide support to Africa while also receiving aid from other donors. Annex 20 shows the volume of aid received in 2008 by four of the eight Southern partners of Africa for which there was data in the OECD database140. It shows that net ODA flows to the four Southern partners were positive in 2008, with India, Turkey and China receiving the bulk of these flows. The fact that Southern partners are also recipients of aid has been identified as one of the reasons why they are quite sensitive to the needs and concerns of developing country recipients141.
These countries are: Angola, Cape Verde, Guinea-Bissau, Mozambique and Sao Tome and Principe Cf. Annex 10 141 United Nations “Trends in South–South and triangular cooperation: Background study for the Development Cooperation Forum”. New York, 2008 140
Paragraph II: The Growing Complexities of Global Aid Architecture The growing complexities in the global aid architecture today, warrants that we analyze the emerging issues arising from the activities of Southern partners (A) and examine the impact of the contemporary financial and economic crisis on official flows from Southern partners (B).
Emerging issues on activities of Southern partners The growing role of Southern partners as providers of official flows to Africa has generated interest in their practices as well as the implications for sustained growth and development in the region. In this sub-paragraph, we provide an assessment of concerns that have been expressed in the literature about development finance by Southern partners. We have four emerging issues:
Governance and policy reforms As a matter of fact, there is the fear often expressed by traditional donors that the provision of low conditionality finance by Southern partners to developing countries threatens to reverse the hard-won progress made in governance and economic policy management142. The idea is that by making funds available to countries that traditional donors are hesitant to finance, perhaps due to lack of the implementation of policy conditions, Southern partners create an incentive for recipients to avoid or delay governance and economic policy reforms. Implicit in this view is the assumption that conditionality will lead to desired changes in economic policy or governance in recipient countries. However, available evidence indicates that the use of conditions in aid delivery has not always been effective in inducing reforms desired by donors in African countries143. A bigger problem with the use of policy conditions is that they limit the ability of recipients to adopt alternative development policy paths as well as take ownership of their development policies and outcomes144. Furthermore, they delay disbursements and increase the unpredictability of official flows with dire consequences for economic planning and management145. It should be noted, however, that traditional donors are increasingly making efforts to streamline conditions attached to aid delivery.
Wanner B: “ Focus on China’s aid policies intensifies as Congress considers foreign aid reform”. Washington Report, East– West Centre, United States Asia Pacific Council, Washington DC, 2009 143 Devarajan S et al. “Aid and Reform in Africa: Lessons from Ten Case Studies”. Washington DC, World Bank. 2001 144 Osakwe P “Aid predictability, ownership and development in Africa” Paper presented at the second annual plenary of the OECD Global Forum on Development. Paris. 20 May 2008 145 Recent assessments by researchers found no convincing evidence that the availability of Southern aid encourages poor governance in the region (Woods, 2008; Brautigam, 2008).
Quality of investment Another issue that has been raised in the literature regarding support by Southern partners is that pressure from domestic firms in these countries may encourage financing of unproductive capital projects in recipient countries, leading to resource waste146. The idea here is that such pressure often makes it difficult for governments to appraise proposed investment projects properly. While this may well be the case in some Southern partner countries, it is not clear why the same argument does not apply to support by traditional donors. Furthermore, the propensity for companies in lending countries to influence financing decisions is likely to be lower if financing is demand- rather than supply-driven and recent studies suggest that Southern partners tend to finance projects in priority areas identified by recipients147.
Debt sustainability Two key points have been made regarding Southern support and the debt problems of Africa. The first is that the increasing extension of loans by Southern partners will have a negative effect on debt sustainability and trigger a new debt crisis in the region148. The second, and related point, is that Southern partners providing loans to post-completion point African HIPCs are free-riding on debt relief paid for by traditional donors. The concern here is that traditional donors are implicitly providing cover for Southern loans to the extent that the recent debt relief provided by the former has enhanced the ability of African countries to borrow from, as well as repay, debt owed to the latter. On the first point, it is indeed the case that the availability of concessional loans has the potential to cause serious debt distress if they finance unproductive projects or are extended to countries that do not have the capacity to repay. However, a recent study149 that focused on loans by China found very little evidence of imprudent lending to African HIPCs. In particular, the authors found that the availability of concessional loans and export credits from China allowed recipients to boost exports and growth, resulting in a reduction in debt ratios. Other authors have also arrived at the conclusion that loans from Southern partners have not reduced debt sustainability in the region150. On the second point, while traditional donors continue to bear a large part of the cost of debt relief under the HIPC initiative and the Multilateral Debt Relief Initiative, Southern partners are increasingly 146
Richard Manning. Op.cit p12 UNDP “Enhancing South–South and triangular cooperation: Study of the Current Situation and Existing Good Practices” cited in .Policy, Institutions and Operations of South–South, 2009. 148 World Bank, “IDA Countries and Non-Concessional Debt: Dealing with the Free-rider Problem in IDA14 Grant-Recipient and Post-MDRI Countries”. Washington DC, World Bank. 2006. 149 Reisen H and Ndoye S: “Prudent versus imprudent lending to Africa: from debt relief to emerging lenders”. Working paper 268, OECD Development Centre, 2008. 150 Berthelemy J: “Impact of China’s engagement on the sectoral allocation of resources and aid effectiveness in Africa” Paper presented at the African Economic Conference. Addis Ababa. 11–13 November 2009. 147
NKWAH Akongnwi NGWA: South-South Development Cooperation: The impact of Emerging Donorsâ€™ Aid on African Countries (The Case of Sino-Cameroonian Aid Relations) providing significant amounts in debt relief to the region. For example, in recent years Brazil, China and India are known to have cancelled debts owed to African countries. Consequently, the claim that Southern partners are free-riding on debt relief provided by traditional donors is not supported by available evidence.
Natural resource access: There is the concern that the resurgence of interest in Africa by Southern partners has more to do with their growing need for natural resources rather than a desire to promote the economic development of recipient countries. It is well known that Southern partners, such as China and India, have an interest in sourcing natural resources in the region and that resource-rich countries are among the main beneficiaries of their support. For example, the bulk of Indiaâ€™s infrastructure finance commitments are in three resource-rich countries: Angola, Nigeria and Sudan151. With regard to China, about 70% of its infrastructure finance in Africa goes to Angola, Ethiopia, Nigeria and Sudan. In addition, its support is often backed by access to natural resources. However, although they provide more support to the resource-rich countries, small countries have also benefitted from their support152as shown in table 4 below. Table 4: Chinese-Financed Infrastructure progets in Africa backed by naturam resources, 2001-2007
A related concern that has been expressed is that the concessional loans provided by large Southern partners in African countries often finance investments in the natural resource sector, thereby perpetuating existing production structures with dire consequences for export diversification and the environment. As indicated earlier, there is evidence that the activities of China and India are heavily concentrated in African countries with natural resources, which tends to support the view that Southern finance may increase Africaâ€™s dependence on resource production and exports, with potentially adverse environmental implications. However, there is also evidence that Southern partners tend to finance 151 152
Foster V et al. op.cit p.32 Davies M et al. op. cit p.19
NKWAH Akongnwi NGWA: South-South Development Cooperation: The impact of Emerging Donors’ Aid on African Countries (The Case of Sino-Cameroonian Aid Relations) infrastructure development that contributes to reducing transaction costs and has implications for the region’s capacity to diversify into the production and export of manufactured goods.
Financial Crises and official flows from southern partners The ongoing financial and economic crisis has diminished growth prospects for the global economy and led to concerns that there might be a reduction in official flows to African countries by Southern partners. Why the concern? Africa has been severely affected by the crisis, with forecasts of growth rates for 2009 and beyond reduced by about 3 percentage points. The crisis is also widening Africa’s financing gap, with recent estimates suggesting that the region will need funding of approximately $50 billion to achieve pre-crisis growth rates and $117 billion to achieve the 7% growth rate deemed necessary to meet the MDGs153. Countercyclical financing is needed to cushion the impact of the shock in the region, but a large part of it would have to come from official flows given the low savings rates of African countries. However, aid flows from developed countries have historically been pro-cyclical. That is, they tend to increase during economic booms and fall during downturns. Furthermore, recent evidence suggests that aid flows tend to fall after a financial crisis and that it takes several years before they return to pre-crisis levels154. Consequently, there is the expectation that aid flows from traditional donors to Africa will either decrease or increase marginally. Traditional donors such as France, Ireland and Italy have already announced plans to cut aid budgets155. With diminished prospects for funding by traditional donors, a decrease in Southern support is likely to have serious consequences for growth and poverty reduction in the region. A major channel through which a decrease in funding by traditional donors could potentially affect Southern support is through its impact on triangular cooperation activities. In recent years, some traditional donors have entered into collaborative arrangements with Southern partners to implement projects in recipient countries a phenomenon referred to as “triangular cooperation”156. The projects are either co-financed by the traditional donors and Southern partners or are financed by the former with the latter providing human resources and technical assistance. Brazil is the main Southern partner operating in Africa that is actively involved in these collaborative arrangements with traditional donors. To the extent that the financial crisis leads to a reduction in traditional donors’ participation in these activities, it would reduce funding for these activities. 153
Kaberuka D: “Start this engine: Africa’s policymakers should prepare for global recovery by priming their private sectors”. Finance and Development June: 54–55, 2009 154 UNCTAD: “Keeping ODA afloat: no stone unturned”. UNCTAD Policy Briefs no. 7. Geneva. 2009a 155 Mold A et al. “Taking stock of the credit crunch: implications for development finance and global governance” Working paper 277, OECD Development Centre, 2009. 156 UNDP 2009, op.cit., p36.
Another channel through which the crisis is expected to have a potentially negative effect on Southern support is through its impact on economic growth. Since the onset of the crisis, there have been downward revisions of growth forecasts for emerging economies, with dire consequences for their capacity as well as willingness to scale up official flows to other developing countries. In 2009, four of the eight key Southern partners to Africa had negative growth rates as a result of the crisis as shown in table 5 below. Table 5: The Financial crises and growth of Southern Economies
Although China and India had positive growth rates, they were much lower than their average in the past five years. To the extent that Southern partners respond to the crisis by focusing more on domestic economic issues rather than external relations, there will be a substantial decline in support to Africa in the near to medium term. Recent developments suggest, however, that they may not respond to the crisis in this manner. For example, since the onset of the crisis, China has stepped up rather than reduced its economic engagement in African countries. In particular, it has promised to increase support to Africa. Brazil and India have also signaled their intention to provide more support to the region in the coming years.
Although the financial and economic crisis poses challenges for Africaâ€“South cooperation, it also presents opportunities for Africa and could have a positive effect on Southern support to the region through two channels. First, to the extent that it has reduced growth prospects, it may create an incentive for Southern partners to pay more attention to the effectiveness of their support and so maximize its development impact in the region. Second, the crisis could also increase Southern solidarity and the need to enhance economic and development cooperation as a mechanism for weathering the impact of the global slowdown in developing countries. The impact of a reduction in Southern official flows to individual African countries will depend on their degree of exposure as well as the magnitude and source of the decline. For example, with regard to China, most countries in the region are likely to suffer from any
NKWAH Akongnwi NGWA: South-South Development Cooperation: The impact of Emerging Donors’ Aid on African Countries (The Case of Sino-Cameroonian Aid Relations) decline in its support because of its scale as well as country coverage. However, resource-rich countries such as Angola, the Democratic Republic of Congo, Nigeria, Sudan and Zambia are likely to be more affected because of their higher exposure. Finally, Nigeria and Sudan are vulnerable to a decline in Indian support because of their high exposure to Indian infrastructure finance.
SECTION II AID AND DEVELOPMENT EFFECTIVENESS DEBATE IN THE CONTEXT OF SSDC The previous section has shown how the new landscape of coexistence in Africa of different partnerships, with their different development models, seems to lead both to a re-thinking of traditional donors' approaches to cooperation and to move towards new African strategies vis-à-vis traditional and new partners. This stimulus for change is also an opportunity for better aligning partnerships and international initiatives to African owned objectives and strategies, which requires dialogue among the parties. Since the adoption of the United Nations Millennium Declaration in 2000, there has been an increase both in the volume of ODA to Africa, and in Africa’s share of total ODA. There have also been renewed efforts by donors and recipients to improve aid effectiveness, as reflected in the Rome Declaration, the Paris Declaration and the Accra Agenda for Action. Against this background, this section reviews the concept of Aid Effectiveness in the Context of SSDC which permits us to understand the interaction between SSDC and AE and how the presence of emerging donors has affected aid effectiveness (Paragraph I). In this light, SSDC has also affect the overall international development debate, with a shifting focus from aid effectiveness to development effectiveness. In turn, a common understanding on what development effectiveness is and how to improve the effectiveness of different types of partnerships could support the overall strengthening of collaborative efforts for economic growth in developing countries, starting from Africa (Paragraph II).
Paragraph I: An Analysis of SSDC in the context of Aid effectiveness The global development community has already acknowledged that SSC can be of immense value for fighting poverty and achieving the MDGs. In September 2008, ministers and heads of government from more than 125 countries and 30 institutions gathered in Accra in order to deepen the aid effectiveness agenda, boosted by the Paris Declaration in 2005. As a result, the AAA encourages all development actors, including providers of SSC, to build more effective and inclusive partnerships for development. This strong
NKWAH Akongnwi NGWA: South-South Development Cooperation: The impact of Emerging Donorsâ€™ Aid on African Countries (The Case of Sino-Cameroonian Aid Relations) mandate of embedding SSC in the context of aid effectiveness inspired the launch of the Task Team on South-South Cooperation (TT-SSC) in mid-September 2009. The representatives agreed to engage in the mapping and analysis of evidences on the synergies between the AE principles and the practice of SSC during which a conceptual framework was endorsed addressing three main dynamics of the Accra mandate157. In the next pages, we will explore in detail how these two areas are linked to each other and can create synergies between two often still disconnected worlds of development cooperation. Against this background, why should partners in SSC care about aid effectiveness? What is the relevance of the commitments embodied in the PD on AE (2005) and the AAA (2008) to development actors? These are questions we frequently hear. This paragraph analysis SSC in the context of aid effectiveness by looking at the triple mandate of linking SSC and aid effectiveness (A) as well as major effects of SSC on Aid effectiveness.(B)
A- Synergies between AE and SSC :Meeting the triple mandate of the AAA Launched twelve months after the Accra HLF, the Task Team on SSC (TT-SSC) committed to implement paragraph 19 of the AAA. A conceptual approach was endorsed by the TT-SSC (see concept figure 4 below) that highlights the following triple mandate:
Figure 4: Graphically, the triple mandate of linking SSC and the aid effetiveness priciple
The following pages respond to this triple mandate by exploring how SSC, in particular SSDC, interacts with the context of aid effectiveness.
Adapting the aid effectiveness principles The case stories shed a strong light on the adaptability of the five principles enshrined in the Paris Declaration. In most cases, the submitting countries and organizations considered that these principles constitute a useful point of reference. Quite surprisingly, and with only a few exceptions, the case story tellers offered very detailed reflections on how these principles interact with SSC. Three global lessons can be extracted. First, the aid effectiveness principles and their actual content are widely known, despite the rather abstract high-level debates around these. Second, they
The Accra mandate (1) Adapting the aid effectiveness principles to South-South cooperation We encourage all development actors, including those engaged in South-South cooperation, to use the Paris Declaration principles as a point of reference in providing development cooperation (AAA para. 19a).
constitute a global public good that is recognized as valuable and relevant. Third, if one wonders how the principles could be implemented in different contexts and modalities, there is an easy answer: ask those who are actually involved in development activities. However, room for opening up the range of principles is also reclaimed.
Enriching the aid effectiveness agenda Within a mutual learning between SSC and the aid effectiveness agenda, countries and organizations involved in SSDC feel that there is much to contribute to the evolving global development policies. Acknowledging that lessons learned by traditional donors can help to improve the impact of SSC, there are also many opportunities to enrich the AE agenda with the experiences and practices, especially of middle-income countries as both providers and recipients of aid. Therefore, enriching this agenda constitutes also a starting point for partner countries from all over the world to engage with a practice-oriented and evidence-
The Accra mandate (2) Enriching the aid effectiveness agenda with the practices of South-South cooperation We acknowledge [â€Ś] in particular the role of middle-income countries as both providers and recipients of aid. We recognize the importance and particularities of South-South cooperation and acknowledge that we can learn from the experience of developing countries (AAA para. 19b)
based approach in the discussions on how to achieve better development results. The case stories include a rich menu of proposals of Southern contributions to the evolving partnership paradigm, in particular with a look into the next High Level Event, to be held in Seoul in late 2011. Some of these have already been touched upon in the previous section, such
NKWAH Akongnwi NGWA: South-South Development Cooperation: The impact of Emerging Donors’ Aid on African Countries (The Case of Sino-Cameroonian Aid Relations) as strong consideration of comparative advantages and the engagement in democratic ownership. The following pages will show how SSC contributes to strengthening three elements less attended in the conventional approach to aid effectiveness: first, a strong bid for horizontal partnership based on mutual trust, in which all partners learn; second, the capacity to mobilize regional dynamics and solutions for shared development challenges; and third, the case stories have generated valuable inputs to the discussion on good-fit technical cooperation, that is, a potentially more efficient, context-responsive support to capacity development, able to create strong incentives for policy and institutional change.
Identifying complementarities between SSC and NSC Over the last years, SSC has often happened in parallel to and even isolated from the more conventional development cooperation provided by DAC donors. During the HLF in Accra, donors, partner countries, and multilateral institutions recognized that this gap needs to be bridged, not only through mutual learning, but also through actual and concrete complementarities. In this sense, paragraph 19e of the AAA highlights that “SSC (…) is a valuable complement to NSC, while paragraph 19b “encourages further development of triangular cooperation,” especially with middle-income countries as both providers and recipients of aid. The collected evidence illustrates that this complementary aspect is already in full motion. Significant efforts have been invested in recent years. An encouraging picture emerges from the case stories, with interesting details of how the developed, the developing, and those that are in between could build gangways between SSC and NSC. Two main pillars can be identified. First, triangular cooperation is
The Accra mandate (3) Identifying complementarities between South-South and NorthSouth cooperation [SSC] plays an important role in international development cooperation and is a valuable complement to NorthSouth cooperation (AAA para. 19e).
a tool for mutual learning and venturing horizontal partnership, which entails some risks, but also huge opportunities. Second, mechanisms for promoting and funding SSC are often strongly backed by traditional donors and multilateral organizations, in particular the multilateral development banks. The case stories show that, while still needing to capitalize knowledge and feedback, these mechanisms are a critical contribution, even a condition sine qua non, for scaling up horizontal partnership within a flexible, sustainable, and demand-responsive logic.
The Impact of Emerging Donors on Aid Effectiveness The scaling up of aid flows to developing countries by traditional donors as well as an increase in support by emerging donors has renewed the debate on the effectiveness of development assistance.158 In the following lines, we discuss how the presence of emerging donors affects three key aspects of aid effectiveness: country ownership, aid predictability, and fragmentation and coordination
Country ownership Country ownership is seen as a necessary condition for improving aid quality and impact in recipient countries. It requires recipient countries to exercise effective leadership over aid-financed development plans, strategies and policies. If recipient countries can set their own priorities and use their local systems for aid delivery, they can increase the likelihood of reducing aid dependence in the long run. Traditional donors face significant challenges in promoting country ownership because it involves striking a balance between their need to ensure that aid is put to good use and recipient countries’ need for independent development policies159. Because of their experience as former or current recipients of aid, emerging donors generally do not interfere in the internal affairs of recipients. In particular, they do not tie disbursements of official flows to policy reforms. This flexibility by emerging donors increases the ability of recipients to own their development policies and outcomes and so has a positive impact on aid effectiveness in the region160. Another way in which emerging donors enhance ownership is by increasing the financing options available to recipients. It should be noted, however, that some practices of emerging donors may hinder rather than encourage effective country ownership. For example, CIBs impose non-policy conditions, thereby reducing country ownership. The provision of project finance by CIBs, as opposed to general budget support, could also reduce country ownership if the choice of projects is not made by the recipients, because it limits recipients’ control over allocation of resources. Nevertheless, the use of the project approach has allowed them to avoid addressing governance issues associated with general budget support. Increasing transparency and giving recipients more control over project management and delivery is one way to ensure that the practice of project finance is consistent with country ownership.
In response to these concerns, the international community adopted the Paris Declaration on Aid Effectiveness in March 2005 with quantifiable targets against which progress could be measured and monitored. This was followed by the adoption of the Accra Agenda for Action in September 2008. 159 OECD. “Financing Development 2008: Whose Ownership?” Paris, OECD Development Centre. 2008b. p19 160 OECD (2009). Aid Effectiveness: a Progress Report on Implementing the Paris Declaration. Paris, OECD.
Aid predictability Aid predictability refers to how confident a recipient country is about the amount and timing of aid disbursements. Experience and econometric evidence have shown that aid is unpredictable, making it difficult for recipient governments to plan or respond to domestic needs. The lack of aid predictability also increases macroeconomic volatility in the region, with dire consequences for growth161. On average only 45% of aid scheduled by donors arrives on time in a recipient country162. Furthermore, over the period 1990–2005 the gap between aid commitments and disbursements in sub-Saharan Africa was 3.4% of GDP163. There are no rigorous and systematic studies on the predictability of Southern official flows. However, recent information on their activities and practices suggests that they tend to provide more predictable support than traditional donors. For example, they impose fewer conditions and have a shorter time lag between financing commitments and delivery164. In addition, several partners make multi-year commitments, effectively reducing the uncertainty associated with recipients not knowing the amount of support they are likely to receive from development partners in the short to medium term. China has the practice of announcing its multiyear commitments to the region at FOCAC meetings, which usually begin with a report on progress in fulfilling and implementing existing commitments.
Aid fragmentation and coordination The lack of coordination among donors is one of the factors hindering aid effectiveness in recipient countries. The need for visibility often leads individual donors to design, maintain and implement their own programmes even if the scale of their assistance is small relative to the total aid flows to a recipient country. This has led to the fragmentation of aid, which increases transaction costs of aid delivery and puts enormous strain on local government systems and capacity in recipient countries165. Furthermore, aid fragmentation is higher in Africa compared to other developing country regions and the costs are quite substantial166. In recent years, traditional donors have taken various steps to address this issue but progress has been modest. For example, despite recent efforts to increase donor coordination, result of surveys suggests 161
Dupasquier C and Osakwe P. “Trade regimes, liberalization and macroeconomic instability”, In: Senghor J and Poku N, eds. Towards Africa’s Renewal. Ashgate Publishing Limited: 2007, p246 162 Deutscher E and Fyson S. “Improving the effectiveness of aid.” Finance and Development, 2008. p15–18 163 Celasun O and Walliser J. “Managing aid surprises”, Finance and Development, 2008, p34–37 164 United Nations 2008 op.cit., p 32 165 UNECA and OECD, “Mutual Review of Development Effectiveness” in Africa Report 2009: Promise and Performance. Paris, OECD. 2009 166 Kharas H. “Trends and issues in development aid”, Working paper 1, Wolfenson Centre for Development, Brookings Institution. Washington DC. 2007.
NKWAH Akongnwi NGWA: South-South Development Cooperation: The impact of Emerging Donorsâ€™ Aid on African Countries (The Case of Sino-Cameroonian Aid Relations) that there has been a decline in donor coordination of missions167. The increasing number and role of Southern partners has made development cooperation and coordination more complex and challenging, especially given the fact that most Southern partners do not provide full information on their support and are not part of existing aid coordination mechanisms such as the DAC. There is the need for dialogue between traditional donors and Southern partners to ensure that they support Africa in ways that reduce rather than increase fragmentation in recipient countries. Triangular cooperation has the potential to contribute to the achievement of this objective and efforts should be made by traditional donors and Southern partners to increase its use. In addition, Southern partners should consider joint financing of projects in recipient countries as well as division of labour amongst themselves to reduce duplication and waste.
Development Cooperation Forum (DCF) as a platform for triangular dialogue and coordination between Southern partners, traditional donors and recipients is welcome. To the extent that Southern partners see the DCF as a platform that allows all countries to protect their interests, it is likely to achieve its objective. Donor coordination can also enhance aid effectiveness by increasing the likelihood that aid will be allocated according to need rather than politics or philosophy of donors. Such an improvement in allocation is necessary to ensure that aid gets to poor countries that are neither rich in natural resources nor of political or strategic importance to donors.
Paragraph II: From Aid Effectiveness to Development Effectiveness: Towards a New Development Paradigm The quality and effectiveness of aid is a critical factor in achieving sustainable development and results with respect to the internationally agreed development goals. Concerns over traditional aid approach have contributed to refocus the attention towards more systemic factors of development and the engine for sustainable and equitable growth. Indeed, development effectiveness which in other words output and results of development policies and assistance, is gaining increasing attention internationally, somewhat at the expenses in a way to aid effectiveness, in other words input and management of aid. Hence an analysis of the emergence of a new development paradigm where attention broadens to development effectiveness, as away from the limited aid effectiveness focus is of prime importance (A). Against this background, this new development paradigm has got different perceptions by the various actors involved in the international aid business (B).
OECD, 2008 op.cit., p37
Towards A Development Effectiveness Architecture The first process has revolved around increasing the “effectiveness” of aid in achieving development results. It began with the Rome Declaration on Harmonization in 2003. The Paris Declaration of 2005, though drafted largely by DAC donors, was also endorsed by multilateral institutions and many developing countries. The Third High-Level Forum on Aid Effectiveness, in September 2008, resulted in the Accra Agenda for Action (AAA), which widened and deepened the Paris discussions, and focused more clearly on results168. But recently, traditional ODA has been questioned as primary tool for lifting the developing world out of poverty. Many stakeholders and practitioners rather emphasize the importance of locally-owned development strategies and efforts, with development partners adopting a holistic approach to their engagement; focusing on outputs rather than inputs and taking into account not only ODA but all international financial flows, other relevant policies and the role of private sector and civil society.169This challenges the prevailing Paris and Accra agendas, with development effectiveness (DE) (output and results of development assistance), gaining increasing attention internationally, at the expenses in a way to aid effectiveness (AE) (mainly input and management of aid).
What’s wrong with the Paris Declaration on Aid Effectiveness The PD on AE170grew out of a learning experience over several decades leading to the conclusion that development depends primarily on efforts at the country level, and that aid needs to focus on facilitating these efforts, not on trying to replace them.171This notion conveyed rather inadequately by the concept of ‘country-owned development programming’ is the right point of departure for thinking about how to make aid more effective. It remains one of the most solidly established propositions in the aid business, as well as an obvious lesson from the comparative history of the world. The first question we want to pose is whether from this starting point one can rationally derive the set of prescriptions for improving donor behaviour and the quality of aid that eventually became the ‘aid effectiveness agenda’. We argue that, with some limited exceptions, one cannot. The most pivotal issue is the meaning given to ‘aid alignment’, and we shall focus primarily on that, but there are also equivalent problems with donor harmonization, management for results and mutual accountability172. 168
Cf. Annex 11 For an early discussion, see Lockhart (2004), and for a recent discussion, see NEPAD (2010) and OECD (2010), among others. 170 OECD: “The Paris Declaration on Aid Effectiveness and the Accra Agenda for Action”. Paris: OECD, 2008a. 171 The evidence base was large and diverse but was captured in the literature of the period by, among others, van de Walleand Johnson (1996), Killick (1998), World Bank (1998), Booth (2003) and Koeberle et al. (2005). 172 Cf. Annex 12 169
Thus after looking at the process of Aid effectiveness, our argument has been that the ownership principle has not been properly addressed by international thinking about aid effectiveness173. We need to go back to basics and try to answer the fundamental question which has been hanging in the air since the 1990s: does aid have a role in building country ownership of development efforts, and if the answer is not entirely negative, what kinds of aid, delivered how? Hence a new development paradigm: Development effectiveness.
Development Effectiveness This is a new debate and development effectiveness means different things to different people. Everyone wants to speak about it but there is still confusion about what 'development effectiveness' is. Four interpretations seem to be used so far174. Given the emerging focus on non-ODA flows, non-state actors and development effectiveness, it is possible to conceive development effectiveness architecture to gradually replace, or rather absorb the existing aid effectiveness architecture premised on the Paris/Accra Agenda and Declarations, the DAC guidelines for aid management and the DAC peer review system for donors. Such a development effectiveness architecture could take the form of an agreed framework for supporting developing countries based on common objectives/principles (e.g. 'ownership' of DAC coincides with 'sovereignty' of SSC) and a common denominator in terms of acceptable practices (e.g. environmental assessment for infrastructure projects, or guidelines for non-concessional loans), with an attached process for policy dialogue. Such framework could take different formats, from a simple political declaration launching a dialogue process, to a 'soft law agreement' to a legal rule-based system. In this context, a particularly relevant aspect of development effectiveness will indeed be policy coherence for development,175 which despite many critiques will be important to guarantee a focus on development objectives. Many actors, especially in Africa, believe that the current processes for discussing policy coherence for development are driven by traditional donors, while the concept is unclear and overloaded with meanings. They suggest the concept should be approached pragmatically, i.e. to what extent a specific
Cf. Annex 11 (i)DE interchangeable with AE; (ii) DE as going beyond aid (hence looking at policy coherence for development); (iii)DE as paying attention to also NSA (non state actors) and their impact, and differentiating approach to specific countries (fragile, middle-income, etc.) - a term to call on donors to look beyond the results of their own individual interventions, focusing on impact at country level to see whether the collective work of donor-partner cooperation makes a difference;(iv)DE as looking beyond economic development, to target human development to underscore the need to reflect a multidimensional definition of poverty in how aid is given shape, while for many reasons it continues to be very focused on income poverty levels. 174 The June 2010 Development Cooperation Forum (www.un.org/en/ecosoc/newfunct/2010dcf0.shtml) and September 2010 MDG Summit outcome document (ww.un.org/en/mdg/summit2010/) include important (and concrete) references to PCD. 174
NKWAH Akongnwi NGWA: South-South Development Cooperation: The impact of Emerging Donors’ Aid on African Countries (The Case of Sino-Cameroonian Aid Relations) public policy/private sector action supports or hampers the objectives as identified by developing countries themselves. A majority of actors tend to believe in a shift in the long term from aid an architecture to a new development effectiveness architecture with a new development paradigm, though many think this is not the time yet. The two concepts can actually live and progress together, bearing in mind the importance, including for credibility, to fulfill existing ODA commitments, not only in terms of quantity, but also and perhaps mainly in terms of quality and effectiveness. According to several EU officials, for instance, being both 'development effective' and 'aid effective' in the long run could define which of the partners’ developing countries, including in Africa, will favour. Any future development effectiveness architecture and development paradigm, it is argued by others, will also have to account for differences within what today are called “developing countries”, since UN-based categories (including at the WTO, World Bank, etc.) do not reflect the economic development reality anymore. China for example continues to receive in many cases the same treatment, e.g. at the WTO, as very small developing countries.
The Development Effectiveness Debate Effectiveness is in the interest of all, African governments and citizens, traditional donors, aid managers and taxpayers, as well as emerging economies decision-makers. So, in general, the perception about the emergence of the development effectiveness concept depends on what instruments each partner or stakeholder favours and/or uses in its cooperation with Africa. Those who provide ODA mostly through government-to-government relations may have more difficulties in abandoning AE in favour of new DE principles and processes; others may be more open to this, especially those who advocate for a focus on trade and investment and a stronger role of non-state actors in development.
Traditional Donors Perception Most actors in traditional donor countries do not question the fact that the new landscape of multiple partnerships for development together with mixed results of traditional ODA will in the medium to long term lead to a stronger focus on DE rather than AE. However, some, particularly from EU institutions and member states, see AE and DE as parallel concepts and both should be used to improve impact of interventions on the ground; the improvements that can come from AE processes should be exploited to the fullest before moving to development effectiveness. Many officials who work on aid management and international aid processes, especially within the DAC, tend to believe that, given the problem of
NKWAH Akongnwi NGWA: South-South Development Cooperation: The impact of Emerging Donorsâ€™ Aid on African Countries (The Case of Sino-Cameroonian Aid Relations) definitions, measurement and other conceptual difficulties, it may be easier in the end to discuss between traditional donors and emerging economies about aid or assistance effectiveness rather than development effectiveness.
Emerging Donors Perception Emerging Economies like CIB do not see themselves as donors, hence never participated in aid effectiveness debates and processes in the first place. On the other hand, the emergence of these new actors as key partners of developing countries and the closer relationship between their commercial, diplomatic and assistance initiatives naturally bring countries such as CIB as de facto active players in any development effectiveness discussion. In many international fora (such as the UN) and when reporting on their relation with Africa, Chinese officials for instance often maintain that it is better to help developing countries build long-term sustainability than to resort to short-term interventions and be overly dependent on foreign aid. According to them, an integrated and holistic approach should therefore be adopted by incorporating trade, investment, technology transfer, capacity building and other elements into the development policies. Significantly, within the same country, preparedness to discuss and develop the concept and objectives of development effectiveness depends on different stakeholders and their roles. ODA and assistance managers tend to be more conservative, policy-makers more open, while politicians are sometimes more visionary. The private sector, on the other hand, tends to be less interested as most businesses tend to find formal high-level processes and policy frameworks rather unrelated to economic realities and thus of little direct relevance (e.g. the Paris Agenda, EPAs, JAES, EU-Africa Business Forum, etc). While CIB in many respects do not as yet have domestic constituencies which wield much influence over their development policies, in most traditional donor countries parliaments have a vision of what effective development is which may differ from that of officials working in that country's development agency; while civil society organizations (CSOs) often tend to have another approach as well. Many CSOs stress that focusing on development effectiveness should not be used as an indirect way to escape existing ODA commitments (Gleneagles, etc); on the contrary, many smaller, fragile and post-conflict developing countries for many years to come will still be relying on ODA as crucial contribution to public service delivery and development prospects in general.
Non-ODA flows, non-state actors and development effectiveness The development effectiveness debate has been picking up steam thanks to the increasingly widespread recognition that in the long-term non-ODA flows such as trade, investment, remittances and domestic resources mobilization through taxes are more important than official development assistance. Alternative sources of development finance, and related new approaches (including public-private interventions, grant/loan mix, new national/international taxes for development), are necessarily gaining centrality also for quantitative reasons, due to the size of non-ODA flows, which are much larger than ODA (e.g. in Africa ODA is only 3% of GDP). This is compounded by the likely downward trend of ODA in a time of economic crisis and sluggish growth in traditional donor countries, with subsequent difficulty to justify taxpayers' money going to development budgets. 176 More in general, moving towards development effectiveness will also imply dedicating more attention to non-typical development policy issues such as technology transfer and migration. Greater emphasis is also put on the question of policy coherence for development (PCD).177 It is easy to see from this why there is some reluctance in certain traditional donors' quarters to talk about development effectiveness, which is much less measurable and hence more difficult to manage and report on, when compared to ODA. Some donor countries' officials maintain that development effectiveness is impacted upon by too many intervening factors between input and outputs to be able to be measured and assessed through transparent and objective criteria, let alone based on agreements between different actors and countries. A more holistic approach will be an important part of a greater international focus on development effectiveness, and could be developed based on existing work and processes. The NEPADOECD Africa Investment Initiative for instance is aimed at raising the profile of Africa as an investment destination while facilitating regional cooperation and highlighting the African perspective in international dialogue on investment policies178.Business actors have also autonomously put in place several private sector-led initiatives around 'corporate social responsibility' or 'transparency initiatives' (EITI, Kimberly Process, etc). Finally, within the DAC, traditional donors have started a dialogue with businesses on their contribution to development in the context of aid effectiveness, especially on what can be done on the ground, since businesses are only interested in concrete work at sectoral and country level. Such 176
Keijzer, Niels, “EU Policy Coherence for Development: From moving the goalposts to result-based management?”, ECDPM Discussion Paper 101, Maastricht: European Centre for Development Policy Management, 2010. or www.ecdpm.org/dp101 177 OECD, “Building Blocks for Policy Coherence for Development”, Paris: OECD, 2009. p.36 www.oecd.org/dataoecd/14/53/44704030.pdf 178 www.oecd.org/document/51/0,3746,en_2649_34893_36167091_1_1_1_1,00.html 178 Adapting the aid effectiveness principles to South-South cooperation; enriching the aid effectiveness agenda with the practices and experiences of South-South cooperation; and Identifying complementarities between South-South and North-South cooperation.
NKWAH Akongnwi NGWA: South-South Development Cooperation: The impact of Emerging Donorsâ€™ Aid on African Countries (The Case of Sino-Cameroonian Aid Relations) engagement revolves around capacity of local actors, triangular cooperation, conducive environment and regulatory framework, and linking incentives with long-term development goals.
CONCLUSION OF CHAPTER TWO It was a question for us in this chapter to understand the general aid architecture. To do so, we examined the trends and features of ODA as well as the complexities therein which permitted us to question the effectiveness of aid as to its final objective of development. Thus in the context of aid effectiveness, SSC through the AAA triple mandated has contributed in enhancing effective development partnerships as well having an impact on aid effectiveness1. This impact has in turn affected the overall international development debate with a shifting focus from aid effectiveness to development effectiveness.
CONCLUSION OF PART ONE To conclude this first part of our work, it was a question for us to answer two principal questions: firstly how SSDC contributes in the development of African Countries and secondly is ODA effective in the promotion of development of African Countries in the context of SSDC. Thus as for now, we have understood that the contextual, structural and domestic changes in SSC in a historical perspective have contributed in re-shaping this cooperation to Africa’s favour there by creating different perceptions and expectations for both partners. These perceptions and expectations have thus modeled Africa’s cooperation with emerging countries thereby increasing their engagement in Africa through aid. The support provided by emerging countries has increased the resources available to the region as well as diversified its financing options.
The understanding of the general aid architecture through examination of the trends and features of ODA as well as the complexities therein which permitted us to question the effectiveness of aid as to its development objective. After understanding what is wrong with Aid effectiveness, our argument has been that the ownership principle has not been properly addressed by international thinking about aid effectiveness. We need to go back to basics and try to answer the fundamental question which has been hanging in the air since the 1990s: does aid have a role in building country ownership of development efforts, and if the answer is not entirely negative, what kinds of aid, delivered how? Thus in this context, SSC through the AAA triple mandated has contributed in enhancing effective development partnerships as well having an impact on aid effectiveness.
This impact has in turn affected the overall international development debate with a shifting focus from aid effectiveness to development effectiveness. This is a new debate and development effectiveness means different things to different people. Since emerging economies do not see themselves as donors, they have not participated in aid effectiveness debates and processes. So, intuitively, the emergence of new players and the closer relationship between their commercial, diplomatic and assistance interactions with developing countries naturally links with development effectiveness discussions. This can be seen as a move from a narrow agenda on development cooperation to broader development considerations. Yet, caution is necessary because simply comparing traditional aid with everything emerging economies do in all fields of their international cooperation with Africa should be avoided.
PART TWO THE IMPACT OF CHINA-AFRICA AID RELATIONS: ISSUES AND CHALENGES. (THE CASE STUDY OF CAMEROON ENGAGED ON ITS PATH TOWARDS EMERGENCE BY THE YEAR 2035)
NKWAH Akongnwi NGWA: South-South Development Cooperation: The impact of Emerging Donors’ Aid on African Countries (The Case of Sino-Cameroonian Aid Relations) In recent years, economic ties between China and Africa have grown steadily and this has seen the former’s aid to Africa increasing. The latest official disclosure of China’s aid indicated that it had provided about US$5.7 billion to Africa in 2006. However, most official aid is considered a state secret179. While the economy of Cameroon faces growing poverty as a result of a complex economic crisis, developed countries are still far from fulfilling their commitment to allocate 0.7 percent of their GNI to ODA. The IMF and WB SAPs in the period of 1987-1997 and subsequent implementation of a PRSP also failed to bring the country back to prosperity. As such, with ODA as one of main instruments of international cooperation, it is clear that it has become an important ingredient in financing national budgets of the economy. The Government is increasingly allocating a big portion of development assistance towards key sectors of development. Thus Cameroon is increasingly following a more “Look East” policy than a “Look West” policy, with China steadily becoming an alternative to the traditional western donors. As an emerging country, China has been more than willing to play the role of key development aid partner and investor in Africa. Cameroon on her part intends to use its bilateral cooperation with China to achieve the goals in its new development strategy, now embedded in the National GESP with a time frame vision of 2035, with the ambition to become “a united, emerging, diversified and truly democratic country.”180 Against this background, this part analyses the linkages between Emerging Countries involvement in Africa with particular emphases on China’s involvement in Cameroon in the domain of ODA. It gives a historical background of China’s aid relationship with Cameroon which dates back to the 90s. It describes in detail how Chinese development assistance in Cameroon fits into Cameroon’s development strategy especially with regard to meeting the fast approaching deadline for the MDGs. It analyses the nature and volumes of Chinese development assistance in structure and composition and lists the major projects that china is involved in Cameroon. It identifies the major areas of the economy that China is involved in and thus analyses the socio-economic impact of Chinese development cooperation on Cameroon (Chapter 3). Lastly and more importantly it concludes by analyzing the challenges faced by SSDC and gives actionable policy proposals to both African governments and civil society as to how best African Countries like Cameroon can equitably benefit and sustains its relationship with Emerging Countries like China in the future (Chapter 4). We therefore hope that other African stakeholders and the Cameroonian government in particular take the findings and proposals of this work seriously and address the issues raised there-in. 179
Brautigam, D, (2008), “China’s African Aid: Transatlantic Challenges”, International Development Program, School of International Service, American University, Washington, DC 180 Sunday Aninpah Khan and Francis Menjo Baye, China-Africa Economic Relations: The Case of Cameroon, University of Yaoundé II, Cameroon Report Submitted to the African Economic Research Consortium (AERC), 2008.
CHAPTER THREE MAPPING EMERGING DONORS DEVELOPMENT ASSISTANCE IN AFRICA: AN ANALYSIS OF THE EXPERIENCES OF SINOCAMEROONIAN DEVELOPMENT COOPERATION This chapter attempts to provide a snapshot of the current state of engagement between emerging economies and sub-Saharan Africa, so as to highlight the growing importance of these relationships. One has chosen to profile an exemplary emerging country: China, focusing on its activity and potential as a donor rather than examining the full breadth of its trade, investment and natural resource interests across the region especially in Cameroon (Section I). These intensifying relations between China and sub-Saharan Africa in the form of development assistance, loans, in recent years have become a key source of economic and development opportunities on the continent. The socio-economic impact of these financial flows has been the subject of intense debate in many development circles (Section II).
Section I: Emerging Donor’s Development Assistance to African Countries: The Case of Sino-Cameroonian Aid Relations Since the 1990’s, China has substantially increased its aid to Africa and to Cameroon in particular. Using available aid data from the various experts, ministries and information from the Chinese Embassy and consulate, this section describes in detail how Chinese development assistance in Cameroon fits into Cameroon’s development strategy especially with regard to meeting the fast approaching deadline for the MDGs (Paragraph I). It further analyses the nature and volumes of Chinese development assistance in structure and composition (Paragraph II).
Paragraph I: Review and analysis of Cameroon’s aid policy, structure and trends. The state of competition between Chinese and western assistance is a huge opportunity to be seized by Africa. Priority economic sectors such as agricultural, infrastructural and energy sectors in Cameroon are badly in need of funding. It is therefore a question in this sub-section for us to firstly analyze the Sino-Cameroonian development cooperation in a global context while taking into consideration the development strategy of Cameroon (A) which will permit us to understand the new trends of this
NKWAH Akongnwi NGWA: South-South Development Cooperation: The impact of Emerging Donors’ Aid on African Countries (The Case of Sino-Cameroonian Aid Relations) cooperation. Secondly we will seize this opportunity to analyze the development strategy of Cameroon, hence enabling us to apprehend details on the development arrangements between both countries (B).
Cameroon and China in the Global SSDC Context Although the rise of the emerging economies in Africa is no longer new, it has sparked debate in traditional donor countries on the comparison of respective cooperation approaches and impacts (in particular with China). The changed context for Cameroon’s partnerships relates to recent developments in the international aid debates, linked to the growing role of SSC and emerging NSS triangular cooperation, as well as increasing criticism over traditional aid, which could possibly lead to the emergence of a new development paradigm. “We in China always say that you’d better teach someone how to fish than give him fish. The purpose of China’s assistance to Africa is to enhance the self-reliance capability of African countries”181. As such this sub-paragraph provides a background of Cameroons’s economic status as well as that of China and a historical relationship between both countries in the field of development cooperation.
Present economic status of Cameroon and China Cameroon’s economy has always been based on agriculture which employs more than 60% of the national work force, within a continuously growing population estimated at about 20 million in 2005. The country is a small petroleum producer with an average of 81,720 barrels per day (in 2008)182, but crude oil overtook agriculture and forestry commodities as the country’s main export. The structure of the economy has changed with time. In 2005 about 43% of Cameroon’s GDP was accounted for by the tertiary (services) sector and 29% by the secondary (Industry) sector, of which 58% came from manufacturing. The primary sector (Agriculture and Forestry) contributed 19%, including forestry, but excluding mining which is considered to be part of the Industry sector, while indirect taxes net of subsidies represented 9% of GDP. The oil sector contributed 8.2% of GDP183. Official figures in the Growth and Employment Strategic Paper (GESP) indicate that from 2003 to 2007, different sectors contributed to GDP as follows: 0.78% for the primary sector; 0.02% for the secondary sector; 2.22% for the tertiary sector; 0.3% for net taxes on subsidies. Domestic demand has been the main economic growth driving force, since 2003 with an average contribution of 3.54% of which 3.12% was exclusively consumption related, whilst capital expenditure contributed just an average 0.44%. Net exports had a negative contribution (-0.22%). 181
Ministry of Foreign Affairs- China, 2007 CIA, World Fact book, February 2010, http://www.indexmundi.com/cameroon/oil_production.html, accessed on 26 August 2010 183 International Monetary Fund (IMF), “Cameroon: Statistical Appendix”, IMF Country, Report No. 07/286 182
NKWAH Akongnwi NGWA: South-South Development Cooperation: The impact of Emerging Donors’ Aid on African Countries (The Case of Sino-Cameroonian Aid Relations) This means that Cameroon’s economic growth continues to be fragile, essentially because of a low investment rate (17.8% from 2003-2007, 18.9% between 2000 and 2002 and in 2008). Prices have relatively been under control with an inflation rate varying from 1.9% to 5.3 % between 2003 and 2008, due to strict rules and their application in the Central African Franc (FCFA) zone. Over the period from 2003 to 2008, the average External Accounts Balance was about 44.1 billion CFAF (-207.5 billion from 2003 to 2005 and 295.87 billion CFAF from 2006 to 2008). The balance of current transactions was at an average of -391.3 billion CFAF before the attainment of the HIPC Completion Point in 2006 and -52,4 billion CFAF after. The non-oil trade balance has been showing recurrent deficits since 1996. The average deficit was -432 billion CFAF over the period running from 2003 to 2008184. Cameroon’s main trading partners and sources of both foreign investment and development assistance are France, Spain, Italy, Germany and the Netherlands, all members of the OECD. These countries are also the main export destinations for Cameroon. Other traditional export destinations are Nigeria and the United States. China is coming up strongly, both in terms of imports and export and as an economic and development partner.
China has integrated the world trading system in a remarkable way, after years of discrete domestic economic modernization. The Asian giant, since the beginning of the year 2000 is a new power to reckon with. The economy of China has grown by almost 10% per annum over the decade preceding the 2008-2009 global financial and economic crises. The OECD’s prediction that China would become the world’s fourth largest economy, by the year 2010 turned into a reality as China in 2009 was said to be the World’s third largest economy185 and is now believed to be the second.The Chinese economy has the potential of becoming the world’s top exporter, thanks to increasing Foreign Direct Investment (FDI)186, high domestic savings and improved productivity. China’s share in world goods trade increased from 1% in 1979 to 6.5% in 2005187. That same year, bilateral trade with African countries reached US$39.7 billion, almost four times that of 2000. China is the second largest trading nation and the largest exporter and second largest importer of goods. This is in consideration of a nominal GDP of $4.99 trillion and
Growth and employment strategy paper 2010/2020 Marie-Hélène Pozzar, “L’aidechinoise à l’Afrique : la difficulté à penser la notion d’aidechinoise au développement”, October 2009. 186 SundayAninpah Khan and LydieBamou, “An Analysis of Foreign Direct Investment Flows to Cameroon” in Ajayi (ed) FDI in Sub-Saharan Africa: Determinants, Origins, Targets, Impact and Potential. Nairobi: African Economic Research Consortium (AERC), 2006. 187 Sunday Aninpah Khan and Francis MenjoBaye, “China-Africa Economic Relations: The Case of Cameroon”, University of Yaounde II, Cameroon Report Submitted to the African Economic Research Consortium (AERC), 2008. 185
NKWAH Akongnwi NGWA: South-South Development Cooperation: The impact of Emerging Donors’ Aid on African Countries (The Case of Sino-Cameroonian Aid Relations) Purchasing Power Parity (PPP) of $8.77 trillion in 2009. The country’s per capita income was more than $6,500 in 2009188. At the Beijing Summit of the FOCAC in 2006, Chinese companies signed 14 commercial contracts and agreements worth US$1.9 billion with African nations, covering natural resources, infrastructure, finance, technology and communications. African countries and China then pledged that “in the new century, they would enhance their traditional friendship and expand mutually beneficial cooperation, to achieve common development and prosperity.”189 China in its new strategic vision for development sees Africa as a priority partner, with a clear intention to benefit from the continent’s numerous natural resources, including oil, other minerals and forestry. In the periods of 1990-1994 and 1999-2004, the annual average growth rate of African exports to China was 20% and 48% respectively190. China, which now accounts for about 20% of the world’s population but only 6% of trade, is a member of the World Trade Organization (WTO), has become an important player in the global economy and politics and has more and more influence on global institutions. China has gradually changed the status of international competition in almost all areas including Official Development Aid (ODA). As such it represents a new and significant cooperation challenge to the global economy, particularly for developing economies and Sub-Saharan African countries like Cameroon191.
Historical relationship between Cameroon and China Shifting from “diplomatic relations” with the Taiwan Authority, after 10years of cooperation, Cameroon established diplomatic ties with the People’s Republic of China on 26 March 1971 and was one of the African states enabling Mainland China to take over the UN Security Council seat from Taiwan. These relations have since developed steadily with friendly economic and social cooperation. Historically the key agreements signed since in 1971 when the People’s Republic of China and the Republic of Cameroon established diplomatic relations include:192 These agreements have enabled Chinese enterprises 188
IMF/World Bank evaluation reports, 2009. Final declaration, Beijung summit of the Forum on China-Africa Co-operation (FOCAC) in 2006 190 Sunday Aninpah Khan and Francis MenjoBaye, ibidem 191 For more see Broadman, H et al. “Africa’s Silk Road: China and India’s New Economic Frontier”. The World Bank, Washington, 2007 ; Hong, Kim Ji “Impact of China on Economies in East Asian Region” A Framework Paper for AERC Project on “The Impact of Asian Drivers on Sub-Saharan Africa” 2006. 192 A general trade agreement in 1972,An Agreement for the reciprocal protection and promotion of investments in 1997, An Agreement for Economic and Commercial Cooperation 2002,.A series of agreements in 2010 include: An agreement for a grant and an interest free loan for an open technical cooperation projects to be specified by Cameroon, A convention for the equipment of the Cameroon Road Construction Equipment Pool (MATGENIE), with preferential rate loan, A memorandum of understanding on global cooperation and the financing of future projects when they are designed, A framework convention to back up a initiative for investment in unspecified areas of the agricultural sector, A draft agreement for the provision of training by China in the area of new technology for the running of Cameroon postal network. 189
NKWAH Akongnwi NGWA: South-South Development Cooperation: The impact of Emerging Donors’ Aid on African Countries (The Case of Sino-Cameroonian Aid Relations) to participate in Cameroon’s socio-economic development, such as construction of roads and other infrastructure facilities. China had provided Cameroon with about US$100 million of economic aid in the two decades before 2005 and bilateral trade volume that year exceeded US$190 million193.
The history of the relationship between China and Cameroon fits into a general approach taken by China for Africa, following the Beijing Summit of the Forum on China-Africa Co-operation (FOCAC) in 2006194. It is a new strategic partnership featuring “political equality and mutual trust, economic win-win co-operation and cultural exchanges”. This means that China engages with African countries to serve mutual interests and for mutual gain. During that summit, an action plan was agreed upon between China and African countries, including Cameroon, to serve as a roadmap for bilateral co-operation in the years 2007, 2008 and 2009 in the political, economic and social sectors. The action plan also included development and economic assistance, debt reduction, training of professionals, culture, education, public health, environmental protection, and tourism. Although the Lome Agreement espoused the same win-win principle it arguably did not work as in this instance Africans failed to fully serve their own interests, while Europeans did just what they wanted. This should serve as a lesson to Africans to guide them in their negotiations with China.
Development strategy of Cameroon We are going to analyses this development strategy by looking at its original foundations as well as the new trend it has taken so far.
The original foundations After independence in 1960, Cameroon opted for a clear development strategy defined as “the Auto Centered Development”, or a self-reliant and endogenous development format, to be implemented by the people and for the people of Cameroon, “in order to avoid aggravation of social imbalances”. That development approach, which advocated for prudent and limited integration of foreign resources in national development, lasted till 1984 when a new line was taken and named “Community development”, based on the enhancement of the capacity of people at community level through participative processes.The strategy in all the cases was aimed at endowing Cameroon with basic infrastructure to facilitate smooth industrial development, while boosting agriculture, considered as the engine for the economy. It was implemented through a five year public planning, from Independence till 1986. Five such plans were 193
Xinhua, Interview Ephrem Inoni, Prime Minister of Cameroon on September 30, 2006, http://english.peopledaily.com, accessed on 20 August 2010 194 Final declaration of the Summit
NKWAH Akongnwi NGWA: South-South Development Cooperation: The impact of Emerging Donors’ Aid on African Countries (The Case of Sino-Cameroonian Aid Relations) completely executed and the sixth one was interrupted in 1986, due to the prevailing economic crisis and the subsequent World Bank and IMF SAPs that took over without success. In fact, after implementation of SAPs the level of poverty in Cameroon remained high and the country was still in great need of financial resources to achieve its economic investment goals, including basic infrastructure building195 as a priority. This lead to more openness to other sources of financing and encouraged the country to look for new partners like China in Asia.
The new trend The development strategy of Cameroon is now embedded in the National Growth and Employment Strategy Paper (GESP) with a time frame vision of 2025, which replaced the Poverty Reduction Strategy Paper (PRSP) in 2008, following its non-satisfactory critical participative evaluation. The country engaged into the PRSP process, within the HIPC’s scheme. That PRSP underlined the government’s strategic vision for poverty reduction, in line with the (MDGs). It was designed with the clear objective to be a tool for achieving the MDGs. The document, as was approved by the BWI in 2003, had seven main goals: Promoting a stable and growth-enhancing macroeconomic environment, Strengthening growth through economic diversification, Empowering the private sector as the main engine of growth and a partner in
delivering social services, Developing basic infrastructure and natural
resources in an environmentally sustainable manner, Accelerating regional integration within the CEMAC framework, Strengthening human resource development and boosting social services.
When Cameroon’s PRSP was prepared, four out of ten Cameroonians lived below poverty line, locally estimated at CFA Francs 232,547, the equivalent of US$ 465, annually in 2001. Any improvement resulting from PRSP implementation efforts seems to have been washed out by the recent economic hardships, characterized, in 2008 by a very high cost of living. Objectives set by the PRSP in 2003 have not been achieved, considering the 2009 MDGs evaluation. In fact, from 2003 to 2007, real GDP growth rate was 3.32%, below the 4.23% level recorded during the period running from 2000 o 2002 and far below the PRSP expected level of 5.3% in short term (2004-2007) and 6.8% in medium and long term (20082015)196. It is from capitalization on the weaknesses of the PRSP implementation process, that Cameroon designed a new strategic development vision for the coming three decades, as from 2010, with a view to becoming “a united, emerging, diversified and truly democratic country.” That overall goal is accompanied by a number of medium-term objectives, including: (1) poverty alleviation; (2) becoming a middle income 195 196
roads, ports, hospitals and power plants e.t.c IDA & IMF, Cameroon PRSP Joint Staff Assessment July 2003.
NKWAH Akongnwi NGWA: South-South Development Cooperation: The impact of Emerging Donorsâ€™ Aid on African Countries (The Case of Sino-Cameroonian Aid Relations) country, (3) becoming a newly industrialized country and (4) Consolidating democracy and national unity while respecting the countryâ€™s diversity. The three strategic lines to follow in order to achieve these results are: Increased investments in infrastructure and rapid modernization of production, by bringing about an improvement of the business climate and governance, Maintaining growth at high levels, in order to achieve the Millennium Development Goals and ensure that the population is entirely mobilized in the fight against climate change effects, Improvement of international cooperation by opening Cameroon more to the outside World and relying on its production and export pattern essentially based on industries, and facilitating a better financial system that can mobilize domestic and foreign funding as well as a promotion of the private sector.
Paragraph II: Nature and Scope of Chinese Development Assistance in Cameroon Here is it a question for us to analyze the nature and volumes of Chinese development assistance in structure and composition (A) and lists the major projects that china is involved in Cameroon (B).
Nature of the Chinese development assistance to Cameroon Bilateral cooperation between Cameroon and China follows the pattern defined by the Beijing Summit of the FOCAC in 2006197. It covers trade, construction, infrastructure, agriculture, education, culture and other areas such as investments, business co-operation, trade, finance, energy and exploitation of natural resources. Cameroon was one of the countries considered in 2006 by the Chinese Prime Minister Wen Jiabao, when he unveiled an ambitious target of raising Sino-African trade to US$100 billion by 2010.198 China then also pledged to offer US$5 billion in preferential loans and credits and double aid to Africa by 2009. As sure, it is a questions in this sub paragraph to properly analyze Chinese development assistance, and looking at how it shoots in the Cameroonâ€™s development priorities, which interns permit us to better apprehend the internal process involved in accepting such assistance from China.
Final declaration of the Summit Final declaration of the 2006 Beijing Summit of the Forum on China-Africa Co-operation (FOCAC)
The Architecture of Chinese Development Assistance The type of aid provided by China to Cameroon mainly relates to infrastructure development. Chinese intervention in infrastructure projects in Cameroon really began in 1977, with a grant for the construction of the Presidential Palace (Unity Palace) and the National Congress Hall in Yaoundé. From 2002, the China Geological Engineering Group Company and the China Hydro-power Foreign Project Company engaged in oil exploration, drilling and road-building projects as private contractors, using financial support received from the Chinese government, through the EXIM Bank China. The China Road and Bridge Corporation constructed 12.8 km road extensions in the main economic city, Douala, in September 2006 under a Chinese grant. China also constructed a number of hydroelectric dams and potable water infrastructure. The Lagdo Dam in the Northern Region of Cameroon is also a result of a concessional loan from China, as is the potable water production facility constructed by China in the village named Ayato, located on the outskirts of Douala, which will provide the main economic city with a 150 000 m3 additional water capacity199.
The Chinese assistance to Cameroon also goes to education, health, culture and tourism under a series of general cooperation agreements for concessional loans signed in 1997, 2000, 2001 and 2004 for a total amount of CNY Renminbi 140 million200 (US$21million) These general agreements were signed with open clauses, allowing Cameroon to choose specific projects for allocation of the corresponding financial resources. Under a technical cooperation agreement, Chinese medical workers have been working in Cameroon since 1975. Every year China provides a quota of 100 scholarships for students from Cameroon201, under a similar technical cooperation agreement signed in 1996, targeting the education sector. In that educational aid framework, a programme is presently in process for the construction of primary schools202 while a biological laboratory was set up in the University of Yaoundé. China’s Zhejiang Normal University created a Chinese language teaching center in Yaoundé in 1997. The center is seen by China as a bridge of friendship between China and Africa. It has provided training for more than 300 professionals, including Cameroonians from the diplomatic and foreign trade circles, and others from neighbouring African countries203.
Cameroon Tribune, 23 March 2010 Chinese Yuan – more often: RMB, Renminbi (1US$ = 6.6675 CNY), 201 Chinese Ambassador to Cameroon (Xue Jinwei) in an interview to Cameroon Tribune, 23 March 2010 202 Cameroon Tribute, 23 March 2010 203 Ibid 200
Chinese assistance and national development priorities The areas towards which China wishes to orient its cooperation with African countries coincide with the Cameroon national development priority lines. Chinese ODA is thus aligned with Cameroon’s priorities in terms of financing overarching projects identified in the GESP such as infrastructure, education, energy, transportation, health and telecommunication. The question now is about how effective this is and what impact does it have on poverty reduction. In 2010 some 1500 low-income housing units were expected to be built in Yaoundé, through Chinese loans under a concessional loan agreement with the Ministry of Urban Development and Housing amounting to around FCFA 23 billion. According to the Cameroonian Minister of Urban Development and Housing, Clobert Tchatat, this construction project will be part of the government’s Special Emergency Programme to build 10000 homes and develop 50000 plots of land. The project is funded by EXIM Bank China and executed by the Chinese company Shenyang. Work is set to begin by the end of year 2010204. This affirmation by the Cameroonian Minister gives an idea of the official stand in Cameroon about how the Chinese assistance matches national priorities. This stems from the fact that most of the funding packages received from China, come in a context where Cameroon had chosen a clear strategic line for investment allocation. That line was defined in the PRSP in 1997 as “a necessary infrastructural build-up”, at the very moment when the Chinese new strategy toward Africa started taking shape.
Projects in which Chinese are involved in Cameroon It is a question here to analyze these projects in a general context, which will permit us to measure China’s involvement in commodity production as well as analyze one of the mail areas in which China aids Cameroon, that is, in the domain of debt sustainability.
General Context of Sino-Cameroonian Projects The Chinese government’s strategic approach started with co-operation through joint venture projects between Chinese firms and private sector partners in Cameroon, with EXIM Bank China playing an important role for implementation. In 1997, EXIM Bank China accorded the government of Cameroon, represented by the National Investment Corporation (Société Nationale des Investissements - SNI), a loan worth US$14 million for the financing of two joint venture projects; the production of tractors costing US$2.32 million in Kribi and tyres recycling costing US$2.12 million. These projects eventually failed to 204
China.org.cn ;.Sunday, 20 July 2008
NKWAH Akongnwi NGWA: South-South Development Cooperation: The impact of Emerging Donors’ Aid on African Countries (The Case of Sino-Cameroonian Aid Relations) achieve the expected results205.In January 2007 after Cameroon got to the Completion Point of the HIPC Initiative, the country obtained a debt cancellation of 16 billion CFA francs from China206. Ten loans then remained in force for a total commitment of one trillion Yuan Renminbi (US$150 million). Since then, Cameroon’s commitments towards China increased by more than US$150 million and negotiations between the two countries for financial assistance focused on the following areas: Adjusting the size of the National Sports Infrastructure Development project (Projet National de Developpement des Infrastructure - PNDIS) of the Ministry of Sports and Physical Education, signed in 2009, which was initially reduced to the construction of the Limbe and Bafoussam stadia., from the initial program including construction of 04 multisports stadia, with 221 million euros representing 90% of total funding, Making funding available for the MEKIN dam construction project under the Ministry of Water and Energy in a view to increasing the energy supply of South Interconnected Network (RIS), the Road Construction Equipment Pool (MATGENIE) rehabilitation project under the Ministry of Public Works for an amount of about 10 million euros and the Backbone project for transmission by optical fiber for 52 million U.S. dollars, Signing three financial assistance agreements between Cameroon and China, including two grants for a total of 23.6 billion FCFA during the China-Cameroon joint commission held from 2-8 August 2009 in Beijing, to be dedicated to the two phases pf the “Black bone Project for transmission by optical fiber. Negotiations have also explored the possibilities of financing major infrastructure projects that Cameroon intends to achieve by 2015 including the construction of: a new bridge over the Wouri River in Douala; the hydroelectric dams of Lom Pangar and Memve’ele and the deep-sea port of Kribi. At the end of 2009, details and characteristics of Chinese loans or grants and related projects were as presented in the following table 6.
Sunday Aninpah Khan and Francis Menjo Baye, China-Africa Economic Relations: The Case of Cameroon, University of Yaoundé II, Cameroon Report Submitted to the African Economic Research Consortium (AERC), March 2008 206 “Caisse Autonome d’Amortissement (CAA)”, report June 2010
NKWAH Akongnwi NGWA: South-South Development Cooperation: The impact of Emerging Donors’ Aid on African Countries (The Case of Sino-Cameroonian Aid Relations) Table 6: Chinese Assistance to Cameroon (1996-2009)
Cameroon’s debt sustainability framework and Chinese loans Thanks to debt relief agreements with bilateral and most commercial creditors in the framework of HIPC and MDRJ in 2006 and prudent borrowing policies since then, Cameroon’s public debt-to-GDP ratio declined from 51.8 percent in 2005 to 9.8 percent in 2008 (US$2.28 billion). Cameroon’s debt situation has sharply improved in recent years since the HIPC Initiative and MDRI debt relief. The country was able to proceed with substantial repayments of domestic debt in 2008, using windfall gains from higher-than-expected oil prices in 2008. The public debt situation in Cameroon is managed and monitored
NKWAH Akongnwi NGWA: South-South Development Cooperation: The impact of Emerging Donors’ Aid on African Countries (The Case of Sino-Cameroonian Aid Relations) by the Autonomous Sinking Fund, which is the public debt management institution in Cameroon (Caisse Autonomed’Amortissement – CAA). It was created in August 1985 and since then had regularly informed on the debt sustainability framework and situation of the country. Latest information available at the CAA indicates that historically, in the first part of the 1980s, Cameroon’s public debt trend was on the increase. The debt stock level stood at about CFA F 1,500 billion, 35% of the GDP, including CFA F 1,100 billion foreign debt. Cameroon then obtained a debt rescheduling of nine months from the Paris Club in May 1989.Between 1992-1994 Cameroon’s debt stock was about CFA F 3,583 billion, more that the GDP (CFA F 3,474 billon) and the country accumulated CFA F 761 billion repayment arrears. Following the devaluation of the CFA franc in 1994 (which doubled the value of the foreign debt), Cameroon obtained a 50% cancellation of its debt from the Paris Club and a rescheduling of the balance on 23 years of which six were deferred for commercial debt and 30 years of which 12 were deferred for public assistance to development. In 1994-1995 the total debt stock was CFA F 5,763 billion including CFA F 4,343external debts, representing 129% and 97% of the GDP respectively. In 1995 the country benefited from another foreign debt rescheduling on 40 years 16 of which were deferred. The total debt stock then stood at CFA F 5,711 billion, representing 117% of the GDP. In 1997 during the implementation of the first three year IMF reform programme, the Paris Club allowed another rescheduling of the foreign debt of Cameroon and the public debt stock stood at CFA F 5,833 billion, 109% of the GDP. Cameroon attained the HIPC Decision Point in 2000 with a stock of public debt amounting to CFA F 6000 billion.
After the Completion Point of the HIPC Initiative, Cameroon adopted a new public debt management policy with the following features or constraints207. That policy is now part of the finance law in Cameroon. At the end of 2009, total public debt was about 13.1% of GDP and 75.5% of budgetary incomes. The following table gives an evolution of the public debt situation in Cameroon from 2006 to 2009.
(1) analysis of annual debt viability each year, before contracting any debt above 0.5% of GDP; (2) Carry out a detailed study on projects for which loans are needed; (3) Search for concessional financing in priority; (4) Fixing of a maximum annual borrowing line;(5) Regular analysis of cost and risk linked to the management of public debt portfolios (exchange rate and interest rate risks, servicing, macroeconomics etc.)
NKWAH Akongnwi NGWA: South-South Development Cooperation: The impact of Emerging Donors’ Aid on African Countries (The Case of Sino-Cameroonian Aid Relations) Table 7: Total Public Debts in millions of US$ (2006-2009)
Intensification of cooperation between Cameroon and China happened in a particular context of public debt restructuring and negotiation with traditional donors for debt relief into which the Chinese loan policy had to fit. In 2001, China had canceled up to US$ 34 million of Cameroon’s debt, in the framework of the enhanced HIPC Initiative. In 2007, the Government of Cameroon benefited again from Chinese debt cancellation amounting to US$ 32 million. This indicates that debt sustainability is a concern in the financial cooperation between the two countries. One of the main criticisms in existing literature of Chinese financial assistance policy in Africa is the fact that the total lack of conditionality is likely to lead to much more indebtedness and jeopardize their debt sustainability capacity. Cameroon’s current debt management strategy is a mitigating factor to this risk, as it leans on prudent borrowing. At the AfricaChina Forum in Sharm el Sheikh (Egypt), China committed an additional debt cancellation to African countries. In that respect, a memorandum of agreement for cancellation of debts was signed with Cameroon amounting to 30 million RMB on 13 August 2010208
SECTION II IMPACT ASSESSMENT OF CHINESE DEVELOPMENT ASSISTANCE IN CAMEROON AND AID EFFECTIVENESS A study carried out in this framework as indicated in Figure below where identification of the criteria relevant to the main issues, developed economic, social and infrastructure indicators and classified then into direct and indirect impacts, complementary and competitive impacts. The indicators selected for the assessment were divided into economic, social, and infrastructure indicators. The economic indicator was aid from China to Cameroon, the infrastructure indicators identified included soft and hard infrastructure and social indicators included employment, occupational health, skill formation and wages 208
Cameroon Tribune 14 August 2010
NKWAH Akongnwi NGWA: South-South Development Cooperation: The impact of Emerging Donors’ Aid on African Countries (The Case of Sino-Cameroonian Aid Relations) (Paragraph I). The qualitative and quantitative assessment of the trends, sectoral dimensions and magnitudes of the sectors, including how impacts are transmitted were investigated through a questionnaire and also gathered information on what the underlying objectives of the project were. Field visits were made to two specific project that were implemented by China to access whether the objectives were met and if there was continuity post China (Paragraph II).
For analytical and understanding purposes we assess our socio-economic impact summarily under direct and indirect impact.
Direct Impact a- Competitive: competition for projects among Chinese and local firms has resulted into efficiency and value for money on projects. Aid from OECD Vs China’s aid. The country stands to benefit by getting aid better terms. China has limited the transfer of technology on most projects. b- Complementary: Aid from OECD and China has helped to provide a larger pool of DA thereby closing any gaps. Local and Chinese firms share their expertise on the different activities sometimes- sub – contracting and government has a larger pool of contractors. This creates efficiency Chinese aid is largely in the form of grants and soft loans, and is additive to Western aid thus providing Cameroon with more and cheaper resources to finance its development process. Chinese assistance in the form of projects is seen by the common citizens as quite visible since it is typically in infrastructure, and lowers the possibility of it being swindled by some local bureaucrats, as is sometimes the case with Western aid.
Indirect Impact a- Competitive: Unemployment as a result of the extensive use of Chinese expatriates on projects. Stifling the transfer of learning because of the limited technology transfer Inhibition of local capacity development as there is no room for learning on the part of local firms as they are outcompeted on projects“crowding-out” local capacity development209. b- Complementarities: increased social, political and economic ties. Improvement in quality of life for beneficiary communities- employment, skills formation and poverty reduction
Interview with Mr Essoh Phillip E , Head of the planification studies and cooperation department, MINESEP
Figure 6: Impact Assessment of Chinese aid to Cameroon, Source: Adopted and modified from Kaplinsky et al, 2006
Aid from China to Cameroon
Direct Competitive -Aid from OECD, domestic firms
Complementary -Knowledge sharing, liquidity
Indirect Competitive -Technology transfer - Local capacity Building
Complementary -Welfare, socialeconomic ties
Impact (Wages, poverty, employment, market access, skill formation, technology transfer, no liquidity, efficiency, social-economic and political ties) to be measured over time/space/predictability
Paragraph I: Socio-Economic Impact Assessment of China’s ODA to Cameroon and Aid Effectiveness Socio-Economic Impact The Chinese assistance to Cameroon, despite some challenges, has ironically had a positive impact on socio-economic situation of the country which is direct and indirect with main characteristics as being complimentary and competitive (A) when compared with that of traditional donors (B).
Economic Impact Assessment of China’s ODA to Cameroon One of the results of China’s new expansion in Cameroon can be observed in the pattern of trade between the two countries. Trade deficit with China has become a significant part of Cameroon’s overall trade deficit over the past few years. It stood at about US$48 million over US$205 million (23.5%) in 2004 and moved to 82% in 2005, US$75 million out of US$91 million. This could be worse if goods imported from China through Dubai are taken into consideration. In fact, imports from the United Arab Emirates rose from about US$1.5 million in 2000 to more than US$12.4 million in 2005 whereas Cameroon exports virtually nothing to that country. There is obviously a great risk linked to this situation that may on the one
NKWAH Akongnwi NGWA: South-South Development Cooperation: The impact of Emerging Donors’ Aid on African Countries (The Case of Sino-Cameroonian Aid Relations) hand lock Cameroon in the primary sector because all Cameroonian exports to China are made up of primary commodities. On the other hand, the cheap imports from China are not likely to favor the development of a local industry in Cameroon. The primary sector of the Cameroonian economy is rather more likely to expand, in response to the rising Chinese demand210. But Cameroonians are also benefiting from increased Chinese aid, including debt relief that has led to more investments in human capital, with a potential impact on growth and poverty reduction. Chinese aid formula (grants and concessional loans) is advantageous and additive to other forms of traditional foreign assistance, as China can generally be willing to provide financial assistance for infrastructure projects that do not match traditional donor’s conditions. China provides Cameroon with more and cheaper Financing for Development (FfD) resources. Chinese infrastructure projects, thanks to their concreteness and visibility, are seen by the common Cameroonian citizens as a better assistance, safe from possible embezzlement by some bureaucrats as in the case of Western aid. In fact, China generally does not disburse funds to Cameroon to freely spend and build infrastructure. The infrastructure is built by China for the amount of loan or grant and delivered to Cameroon. In so doing, there is no way for the financial resources to be diverted in the course of project execution. Many traditional donors’ projects failed to attain their objectives and cases of mismanagement and embezzlement have always existed.
Social Impact Assessment of China’s ODA to Cameroon Benefits in the health sector are obvious and nationally admitted. Chinese assistance in that sector has significantly increased the quantity and quality of healthcare services in the country. This is especially the case with Chinese medics’ contracts between individual migrant workers and the Cameroon government or between governments in a number of hospitals in urban and rural areas. Chinese technical assistance thus appears to be socially beneficial, considering the work done by the teams of experts from China working in Cameroon, in the medical sector in particular.211Local contractors and labor suffer the toll of Chinese aid being accompanied by the procurement of Chinese equipment and services for projects executed by Chinese firms with Chinese labor. As earlier discussed, this corresponds to missed economic 210 Interview accorded to Telegramme Eco by H.E. M. WO Ruidi, Ambassadeur de Chine au Cameroun on 12 November 2012, http://www.telegrammeco.com/jupgrade/index.php/parole/214-interview-accordee-a-telegramme-eco-par-s-e-m-wo-ruidiambassadeur-de-chine-au-cameroun 211
Chinese Experts work in the Gynaecological-Obstetrical and Paediatric hospital in Yaounde (built by the Chinese) and at the Mbalmayo and Guider hospitals. Some have also been working at the Yaounde Conference Centre (built by the Chinese) for over twenty years now. All these teams are financed with grants from the Chinese government.
NKWAH Akongnwi NGWA: South-South Development Cooperation: The impact of Emerging Donors’ Aid on African Countries (The Case of Sino-Cameroonian Aid Relations) opportunities for Cameroonian Small and Medium size Enterprises that otherwise would have benefited from more business and generate additional revenues in terms of wages and consequently reduce poverty212.
Impact Assessment of cooperation with Traditional Donors This sub-paragraph gives highlights of the impact of ODA from the OECD to Africa, with particular focus on Cameroon. The economic and social impact of cooperation between Cameroon and traditional donors could in fact be measured by the observation of economic performances in time and the actual level of national welfare. The level of poverty in Cameroon, in 2010 at 40.9%213 would thus indicate that the overall impact is negative. The state of the infrastructure network in Cameroon has not improved much in relation with the real needs of the country after 50 years of cooperation with traditional donors. The country rather inherited an unsustainable level of debt and had to go through the HIPC process for recovery. Governance problems or mismanagement and corruption may be blamed for failure by Cameroon to yield benefit from cooperation with traditional donors, but as it is the problem probably mostly lies in the wrong political choices for allocation of assistance resources to investments. Investments resulting from the utilization of ODA have not always matched the real needs of the people, because before the PRSP era, national projects policy designing was not inclusive of the Civil Society to represent the people from the grassroots. In the rare cases where the choices were right, there still existed quantitative insufficiencies, due to narrow vision of some African leaders in some cases and most of the time to incompatibility between local needs and donors’ priorities. Generally, a suitable volume of assistance214 was not always obtained due to donors’ conditions, meaning that with regard to their judgment of the repayment capacity of the recipient they could allow less resources than applied for. As from 2006 for example when the French Co-operation started its debt relief initiative named Contrat Desendettement Developpement (CD2) framework, after 18 months of implementation in a five year programme, less than 30% of the funding scheduled for that period was disbursed215. Cameroon has also benefited from the European Development Fund processes, which among other things cover infrastructure and road construction. The country, however, is still badly in need of road facilities to properly connect with other countries of the region including Chad and Central African Republic, its two land-locked neighbours who depend on Cameroon for their access to the sea, and thus 212
Interview accorded to Telegramme Eco by H.E. M. WO Ruidi, Ambassadeur op.cit., Cameroon Human Development Report, UNDP and Ministry of Economy, Planning and Regional Development (MINEPAT) 214 Cf. Annex 7 215 Dynamique Citoyenne, Cameroon’s Public Budget In dependent follow-up report, 2009 213
NKWAH Akongnwi NGWA: South-South Development Cooperation: The impact of Emerging Donors’ Aid on African Countries (The Case of Sino-Cameroonian Aid Relations) represent market and economic opportunites for the country. The relationship with the BWI, despite positive outcomes for Cameroon with regard to the public debt management strategy, have not produced all the expected results either, from the SAPs through interim programmes within the HIPC and Multilateral Debt Relief Initiative (MDRI) formerly referred to as the G8 Proposal for Debt Relief) facilities.
In fact, with nearly half of its population living below the poverty line in 2009, Cameroon cannot be said to have concretely gained enough from the intervention of the BWI, though one should acknowledge the positive qualitative impact of this in fiscal policy and public resources management. There is a better fiscal discipline in Cameroon than before IMF and World Bank structural adjustment programmes. Overall though, the impact of the co-operation between Cameroon and the traditional donors, judged from concrete economic and social achievements, cannot be said to have been positive so far. This probably explains why the country turned toward other horizons for financial assistance and is hence seeing emerging countries like India, Brazil and more importantly China as good partners to rely on.
Paragraph II: Emergence by the year 2035: The Yaoundé Sports Complex and the Gynaecological-Obstetrical and Paediatric Hospital as fruit of the Sino-Cameroonian Development Cooperation. The qualitative and quantitative assessment of the trends, sectoral dimensions and magnitudes of the sectors, including how impacts are transmitted will be investigated through a questionnaire216 and also gathered information on what the underlying objectives of the project were. Field visits were made to one specific project that was implemented by China to access whether the objectives were met and if there was continuity post China
Field Study Analyzes of Infrastructures The 40years of Cooperation between Cameroon and China, has regularly been qualified by the HOS of Cameroon H.E Paul Biya as being “Exemplary”, and is expressed through the numerous strategic socio-economic infrastructures realized by the Chinese government and which agreeably metamorphoses most Cameroonian cities and towns. Two of these great symbols expressing the fidelity of this cooperation are the “Yaoundé Multipurpose Sport Complex” and “the Yaoundé Gynaecological-Obstetrical and Paediatric Hospital” as expressed in pictures below.
Cf. Annex on the Questionnaire Guide
PICTURE 1: Yaoundé Multipurpose Sport Complex
The Yaoundé Multipurpose Sport Complex is located at the entrance of “La Briqueterie” a popular neighborhood, on the Warda crossroads site, in the center of the capital of Cameroon. It was belt on a total surface area of about 12,400 m2 for a 5400-seat capacity and a host to several disciplines including football, basketball, volleyball, handball, gymnastics, table tennis, boxing, wrestling, fencing and badminton competitions e.t.c Its construction resulted from a protocol of accord signed on the 23th November 2001 between China and Cameroon , by the then
Public Investments and Territorial
Development Minister, Martin Aristide Okouda representing the Government of Cameroon and the then Ambassador Xu Mengshu of the People's Republic of China, accredited to Cameroon representing China217. Its cost of construction is evaluated at 203million Chinese Yuan, thus 14.2 Billion CFA Frs. According to Chinese technicians, the Warda crossroads was chosen for its accessibility and the availability of water, electricity and telephone218. The marshy nature of the terrain posed no problem. Works of the edifice began in 2006 and ended on the 19th of December 2008 and then ingaurated on June 2009 by the HOS. Mr Henry Mappe Dibongue, a physical education teacher, was appointed by the then Sports and Physical Education Minister, Michel Zoah, as the head of the temporal management team of the sport complex.
Interview with Mr. Nkoth, CEA 1, Department of Cooperation, MINESEP Interview with an official from the Chinese Embassy in Yaoundé
NKWAH Akongnwi NGWA: South-South Development Cooperation: The impact of Emerging Donors’ Aid on African Countries (The Case of Sino-Cameroonian Aid Relations) The Yaoundé Gynaecological-Obstetrical and Paediatric Hospital (HGOPY) located in the Ngousso neighborhood is a fruit of both the cooperation between China and Cameroon in the Health domain aimed at significantly improving on the health care of women and children in Cameroon. The Institution was solemnly inaugurated by H.E President Paul Biya, in the presence of Chinese Vice-Minister of Health in March 28, 2002. Care activities began with outpatient in April 1, 2002. Today activities are on the increase with an average of five thousand (5000) consultations per month. The hospital which started some years ago is still low with an occupancy rate of beds by 30% and the average length of stay of five (05) days. The capacity is two hundred twenty (220) beds219. The emergency services are available (24 hours/24), Anesthesiology, Pediatrics and Specialties, Neonatology, Dermatology Venereology-, ENT, Ophthalmology, Odonto-Stomalogy (Dentist), Obstetrics (antenatal and maternity), Gynaecology and especially specialty Cancer-Gynecological Acupuncture, Pediatric Surgery, Pathology, Clinical Laboratories of Biology, Dietetics Nutrition, Cardiology (vacation), Radiology and Medical Imaging, Physiotherapy, a classical Western and Chinese,
Pharmacy and a
mortuary. PICTURE 2: The Yaoundé Gynaecological-Obstetrical and Paediatric Hospital
Benefits and Challenges faced by the projects Benefits arising from the projects It was however reported that despite these short comings, the development of these sites have led to the realization of a number of benefits. These include:
Cameroon being a sport loving nation, the Yaoundé Sport Center since its inauguration has witness an
increase in both national and international sporting competitions as well as hosted several disciplines including football, basketball, volleyball, handball, gymnastics, table tennis, boxing, wrestling, fencing and badminton competitions. It has brought relief as Yaoundé only has the Ahmadou Ahidjo Stadium, built in 1972. Thus a sporting impact with the amelioration of sporting performance marked by increase in the number of medals won by many Cameroonian athletes, during competitions and well as the birth of new talents. This has upgraded the reputation of Cameroon on the international sport arena.
The positive externalities induced by these projects are expressed by the increased revenue generated
from the rent to individuals for concerts, weddings, cultural, religious manifestations by the sport complex. Thus the site has become a fully-fledged business centre with the usual organization of trade fares; expositions e.t.c. events during which we have a handful of people from various professions, for example photographers, Security Company’s e.t.c. Hence business organizations find it easy and convenient to transact their business around the sporting complex.
With the completed structures, more office space & parking lot were generated. This has created more
jobs for the administrative staff such as secretaries, office attendants, security guards, and sanitary agent’s e.t.c. As a result, more individuals earning government salaries were brought on board, though salaries were not influenced at all by this Chinese contribution.
These magnificent structures have contributed in the urbanization of town as it is an addition to the
architectural patrimony of the capital city Yaoundé and having a touristic impact as well. It have also generated a political impact marked by the coming into Cameroon of very high personalities from china like the Chinese President and President of the Chinese People’s Political Consultative Conference220e.t.c
HGOPY human resource figures to six hundred workers and is characterized by the diversity of their
professional profiles and the presence of Chinese personnel. There is a strong Chinese medical team of sixteen (16) members and a technical team of Chinese eight (08) members. Among the Cameroonian contract staff, two hundred thirty (230) are from the competitive special recruitment of November, 22nd
Hu Jintao and Jia Quinglin
NKWAH Akongnwi NGWA: South-South Development Cooperation: The impact of Emerging Donorsâ€™ Aid on African Countries (The Case of Sino-Cameroonian Aid Relations) 2003 who actually took service on 24 February 2004. The Cameroonian and Chinese staff working together are in perfect harmony.221 Thus an increase in health facilities for both women and children.
Challenges All construction was undertaken by Chinese expatriates, including the largest portion of construction materials. This highlights some of the limitations of Chinese DA to Africa, with regard to employment creation, and technological transfer; including skills transfer. Local residents only provided labour on a marginal scale222. This specifically had to do with mixing the construction materials and lifting the loads of materials. Because of the limitations in skills transfer and technology transfer, it was found out that this had made the operation of the sporting center equipment very costly and a daunting task in the long-run let alone making some of the equipment to be operational223. A case in point is if, there was a breakdown in the equipment, however minor the breakdown would be, this would inevitably call for the need to contract a Chinese expatriate from Beijing to come up for the repair. This in the end may prove less beneficial to the country receiving Chinese aid in this case. It should, however, be noted that technology transfer is still insignificant in the process of Chinese assistance to Cameroon. Training of Cameroonian experts and engineers may be possible in a given project, but generally, repairs are done by Chinese experts. Note should be taken that as concerns the YaoundĂŠ Gynaecological-Obstetrical and Paediatric Hospital, technological proved somehow socially beneficial as Chinese and Cameroonian Doctors as called to work hand in hand. Nevertheless, the country can better absorb Chinese technology through training, which could be applied in non Chinese projects and insistence during negotiations with China on the association of more Cameroonian experts and other human resources during the execution phase of Chinese projects224. All this depends on the capacity of Cameroon to negotiate and get this rather than wait for China to deliberately offer it. Administrative bottle necks and other considerations on the part of Cameroon also constitute a heavy challenge in for far as the realization of the sport complex was concern. Example procedures during the selection of the construction site: choosing between Olembe and Warda.
http://www.cameroon-tribune.cm/index.php?option=com_content&view=article&id=62991:medecine-une-cooperationen-bonne-sante&catid=1:politique&Itemid=3 222 Interview with Dr. Emmanuel Wonyu, Secretary General, MINESEP 223 Interview with Mr Henry Mappe Dibongue, head of the temporal management team of the sport complex 224 On Tuesday September 25, 2012, the Minister of the Economy, Planning and Regional Development (MINEPAT), Emmanuel Nganou Djoumessi, in the company of His Excellency Wo Ruidi, Chinese Ambassador to Cameroon signed four (04) Cooperation agreements amongst which Two other grants documents were signed by both parties. One, worth about 558.9 million CFA Francs, is for the realization of the technical cooperation project for the training of nationals on the maintenance of facilities of the Yaounde Sports Complex; the other, worth about 324 million CFA Francs is a donation for the supply of antimalaria drugs.
CONCLUSION OF CHAPTER THREE To conclude this chapter our interest was to provide answers to two principal questions: what is the state of emerging Donor’s aid to African Countries with emphasizes on the Case of Sino-Cameroonian aid relations? and what is the impact of DA from Emerging Countries (China) on the socio-economic development of Cameroon?. This chapter revealed that Chinese DA is aligned with Cameroon’s priorities in terms of financing overarching projects. It includes, without political or governance related conditionality, long term public loans with low interest rates, grants and economic private loans through EXIM Bank China. This assistance was boosted by China’s general new intervention strategy in Africa.
Chinese DA to Cameroon is generally project related, but these projects are mostly executed by Chinese companies, with equipment imported from China, limiting opportunities for local Small Size Structures example from the field study analysis of the Yaoundé Multipurpose Sport Complex and the Yaoundé Gynaecological-Obstetrical and Paediatric Hospital. The Chinese DA to Cameroon, despite some challenges, has ironically had a positive impact on socio-economic situation of the country which is direct and indirect with main characteristics as being complimentary and competitive. It is not attached with strings of policy reform but is considered likely to undermine efforts to strengthen transparency. Technology transfer is still insignificant, but cooperation with China has opened a new route to Cameroonian private initiative.
CHAPTER FOUR SOUTH-SOUTH DEVELOPMENT COOPERATION: CHALLENGES AND OPPORTUNITIES FOR ENHANCED OUTCOMES Whether or not the re-emergence of non-traditional donors on the African continent will actually lead to long-term economic and social development in Africa depends to a large extent on whether it assists the process of structural transformation involving economic, political and social changes. Part of this structural transformation has to do with increasing the share of manufacturing in the economy and enhancing the ability to trade225.Against this background, this chapter analyses the opportunities and challenges faced by Africa as a result of the impacts generated through the growth of these economic relationships. A review of the ODA from the OECD indicates that most of the traditional donors have ensured to keep track of their commitments to the continent despite the disruptions which were caused by the financial crisis. But this cooperation faces a lot of challenges which serves as a limit to the positive impact it has generated so far (Section I). In view of these developments in the DC arena, the chapter proposes that Africa and Cameroon in particular utilizes remittances from the African Diaspora as an alternative to ODA and embark on some proposals for policy advocacy work as a means of expanding opportunities and to positively affect the overall international development debate, with a shift of focus from aid effectiveness to development effectiveness. (Section II).
SECTION 1 MAKING SSDC WORK FOR AFRICA: MAIN FINDINGS AND CHALLENGES Our previous findings have shown that the aid from the South is mainly been in the form of technical assistance, with emphasis on training in Chinese institutions; grants; infrastructure; interest-free loans; preferential loans that have an interest subsidy; and debt relief and trade related development assistance. Debts that have been cancelled which has reduced the burden for African countries, employment opportunities have been created through the various projects. Infrastructural aid related projects have had an overall positive impact on the social and economic welfare of the recipients on the 225
See McCormick (2008) for a discussion of the differences between China and India in terms of supporting Africaâ€™s manufacturing sector.
NKWAH Akongnwi NGWA: South-South Development Cooperation: The impact of Emerging Donorsâ€™ Aid on African Countries (The Case of Sino-Cameroonian Aid Relations) continent (Paragraph I). However, emerging donorâ€™s presence in African countries also poses various challenges. Although their rapid growth rates and the consequent increase in their demand for raw materials have led to tremendous economic growth in many African countries, the risk is that, as the extraction of raw materials usually proceeds without any major linkages or spillovers for the rest of the economy, enclave economies will emerge or become entrenched there by having a negative impact on such economies (Paragraph II).
Paragraph I: Main Findings There have been significant changes in the structure of the world economy and in the role of large developing countries. CIBs are increasingly playing important roles in global trade, finance, investment and governance. These changes have opened up opportunities for further cooperation between Africa and other developing country regions in general , as evidenced by the plethora of new initiatives aimed at fostering political, economic and social relations with the region (A) . There have also been policy implications of Emerging Donorâ€™s aid and development assistance to most African Countries particularly the Cameroonian economy outlining there the opportunities and challenges for Cameroon which warrants that most African countries to prepare for improve engagement with emerging donors (China) so as to better harness the proceeds of ODA (B).
Main Findings on the African Continent We have examined the nature as well as features of Africa-SSC in the domain of ODA and how African countries could manage them to address their development needs in the first part of our work. As such the main findings of SSDC are as follows and are better measured and understood when compared to the findings of traditional donors.
Main Findings from Emerging Donors There has been an increase in official flows to Africa from developing countries. Although data constraints do not permit a comprehensive and reliable estimate of the scale of official flows to Africa from developing countries, it is estimated that aid to the region from developing countries, based on the OECD-DAC definition, was about $2.8 billion in 2006. It should be noted however that since 2006 several developing countries have made financial commitments to the region and so it is likely that the figures for 2007 and 2008 are much higher. The support provided by developing countries has increased resources available to the region as well as diversified its financing options.
Developing countries often use official flows to promote trade and investment activities in Africa. For example, China and India use their export-import banks as channels for providing finance and promoting commercial interests in trade and investment. One consequence of the link between official flows and the commercial activities of large Southern partners is that the development impact of their support to the region cannot be assessed adequately without taking in to account its catalytic effect on trade and investment flows in recipient countries.
Official flows from developing countries are increasingly channeled to the infrastructure and production sectors of African economies. In terms of scale, China is the most significant source of support to Africa in the infrastructure and production sectors. Available evidence suggests that Chinese infrastructure finance commitments in sub-Saharan Africa rose from $470 million in 2001 to $4.5 billion in 2007. Furthermore, it is estimated that 54% of its support to Africa over the period 2002â€“2007 was in infrastructure and public works.
Emerging Issues from Traditional Donors ODA to Africa Institutional capacity for aid management requires that an aid management strategy. There needs to be a clear division of labor amongst line ministries/agencies dealing with aid (Foreign Affairs, Economy and Finance, Planning, etc). The "virtuous circle" between capacity development (at institutional, individual, system levels) and ownership is paramount. The key element is political support in order to sustain capacity at the institutional level. Support to strengthening national systems on the part of the donor community is therefore a pre-requisite. Efficient aid management can only exist if it is based on a solid aid information management system to provide evidence for policy dialogue. There should be an emphasis on developing competency and skills for good leadership (to plan and implement, to handle relations with development partners, to coordinate and set up SWAPs/PBAs). Emphasis should be put on developing Aid Management Information Systems as part of the capacity development of the aid coordination agencies. The use of such systems (to extract evidence for policy dialogue and better understanding of development partners activities) should be integrated into the workflow of aid management/coordination institutions in order to maximize the impact of ODA to the continent.
Policy implications of Chinese aid and development assistance to Cameroon Our results in the previous chapter imply that Chinese aid and development assistance caused mixed positive and negative impacts for Cameroon during 2000-2012. Our findings confirm the stylized fact that China’s aid policy toward Cameroon is a winning policy based on the principle of a win-win deal. The major policy implication from a win-win deal is that on the one hand, China seizes the opportunities and utilizes aid to achieve its strategic development objectives; on the other hand, Cameroon has the option to seize the opportunities and maximize the benefit from the Chinese aid. In addition China and Cameroon need to confront the challenges related to Chinese aid in order to achieve their strategic development objectives. Hence, based on our results discussed above, it is useful to extend our analysis presented above to explain the related opportunities and challenges for Cameroon and the several policy implications of Chinese aid to Cameroon.
The increased volume of Chinese aid to Cameroon presents many opportunities for Cameroon. One policy implication is that Cameroon has more policy options and has the opportunity and option to use the Chinese aid to replace or shift away from the traditional donors’ difficult conditionality. Cameroon’s policymakers have the opportunity to take advantage by utilizing the availability of additional complementary temporary resources offered by the Chinese to meet the growing need to engage in implementation of strategic development programmes that other traditional donors may hesitate to support. Our findings confirm that Cameroon has clearly benefited from the transmission of the Chinese aid in different forms of grants, loans, debt relief, capacity building technical assistance (scholarships and training), etc. Our results from the selected case or project226 indicate that China’s support has effectively benefited Cameroon and contributed to promotion of infrastructure. One implication from the selected cases or projects is that aid and assistance provide the opportunities for these projects to close the savinginvestment gap and can be seen as complementary to local resources to help infrastructure development.
Therefore, for the case of Cameroon, the shortage of domestic capital to implement the selected projects implies that the Chinese aid and loans have direct complementary impact to domestic capital and provide the means and motivation for Cameroon to utilize the aid to finance rebuilding of infrastructure and therefore, support Cameroon’s long-term public investment. Moreover, considering the economic 226
The Yaoundé Multipurpose Sport Complex
NKWAH Akongnwi NGWA: South-South Development Cooperation: The impact of Emerging Donors’ Aid on African Countries (The Case of Sino-Cameroonian Aid Relations) crises situation in Cameroon and her strive to be an emerging country by the horizon 2035, Chinese aid to Cameroon financing infrastructural rehabilitation is likely to have a competitive impact on western countries companies and institutions and their potential involvement to influence the economic activities in Cameroon. It is observed that China’s development aid to Cameroon over 2000-2012 was directed to the development of infrastructure in such areas as electricity, hospitals, transport and sport infrastructures e.t.c These projects would help in development of manufacturing and other sectors.
On the other hand, the increasing aid implies some challenges, for instance, the easy conditions of the Chinese aid, should not hide the potential risk to Cameroon’s economy. Notably, the low cost of the loans and its easy conditions motivated Cameroon to continue borrowing posing the challenges of potential increase and incidence of another high accumulation of new debt cycle to Cameroon without taking into account the need for future debt sustainability. Additional challenge is that Cameroon’s increasing borrowing from China might discourage donors from western countries to maintain the debt relief and heavily indebted poor countries (HIPC) initiative for Cameroon. Further, increasing reliance on Chinese aid implies that Cameroon need to prepare strategies to reduce its dependence on China. Such strategies are particularly required to deal with the potential risk of the drop in Chinese aid flow due to potential reduction in China’s demand for raw materials and strategic interest in Cameroon, in response to potential progress in China, and its move towards more technologically industrialized country.
Our interpretation of the main motives of Chinese aid policy to Cameroon is that the aid is motivated by strategic reasons, notably, the economic and commercial interests. The profile of China’s aid to Cameroon has risen over time, with aid increasingly utilized to achieve China’s strategic objectives. The rapid increase in Chinese economic growth and increasing demand for oil resources and raw materials motivated China to build strategic relation based on economic and commercial interests with Cameroon as an emerging rich natural resource economy. Such strategic economic relation is channeled through aid, investment and trade. So, China seems to be somewhat opportunistic in offering aid to Cameroon tied to strategic economic and commercial interests, notably, natural resources. China seems to have exploited Cameroon’s need for foreign capital and foreign aid to close the saving-investment gap, mainly due to decline in the inflow of foreign aid following the economic crises she witness. Certainly, Chinese aid to Cameroon helps finance infrastructure projects but it is
NKWAH Akongnwi NGWA: South-South Development Cooperation: The impact of Emerging Donors’ Aid on African Countries (The Case of Sino-Cameroonian Aid Relations) somewhat opportunistic as it is tied to implementation of infrastructure projects by Chinese companies, using Chinese labour, equipments and raw materials227.
The aid is somewhat opportunistic in giving commercial loans with interest rate tied to natural resource exploitation guarantee from the government of Cameroon. On the other hand, we find that Cameroon policy and aid relation with China is motivated by mixed political and economic strategic interests. For instance, China seeks political support from Cameroon on major international issues. Cameroon seeks Chinese aid, development and technical assistance to meet the growing needs for capital for building infrastructure, for capacity building and exploitation of Cameroonian natural resources. The flexibility and easy conditions of Chinese aid motivated Cameroon to consider Chinese aid as an important alternative to Western aid.
China’s debt cancellation initiative provides Cameroon with both opportunities and challenges. On the one hand, China’s initiative to cancel the debts owed by Cameroon offers Cameroon the opportunity to use and utilize the saved and released resources to invest in pro-poor strategic development programmes. These additional resources could be used and utilized in the context of the HIPC initiatives which implies the use of resources to improve and build basic social infrastructures, improve human capital through education and health services etc. While on the other hand, the major challenges related with this Chinese initiative is the potential risk of motivating Cameroon to continue contracting new Chinese loans without consideration of future sustainable debt level. Cameroon needs to ensure a win-win deal in China-Cameroon aid.
Aid used for grandiose and prestigious projects offer opportunities and challenges for Cameroon. On the one hand, the utilisation of Chinese aid for grandiose or prestigious projects offers Cameroon the opportunity to implement projects related to development of building and construction of grandiose or prestigious projects that are unsupported and perceived as “unproductive” investments by traditional donors. On the other hand, the challenge that some of these projects are implemented in isolation from Cameroon’s comprehensive strategic development programme; they come without transfer 227
Interview with Mr YETE Mbote Jaques, DPE, MINEPAT
NKWAH Akongnwi NGWA: South-South Development Cooperation: The impact of Emerging Donors’ Aid on African Countries (The Case of Sino-Cameroonian Aid Relations) of technology and capacity building, without appropriate benefit to Cameroon economy and with potential risk of shifting resources away from priority targeted objectives such as poverty reduction and building infrastructure.
Chinese aid is usually tied and thus provides opportunities and challenges for Cameroon. On the one hand, the major opportunity for Cameroon is that as China seeks diplomatic support from Cameroon through easy aid, Cameroon’s policymakers have the potential to seize the opportunity to maximize Cameroon’s benefits from China. For example, through facilitating Cameroon’s access to and acquisition of cheap Chinese capital goods for Cameroon local manufacturing sector, together with local human capital enhancement. On the other hand, the major challenges for Cameroon are that the Chinese aid to Cameroon is usually tied in the delivery of project, all inputs including labour come from China, and projects are executed by Chinese firms (e.g. Chinese doctors working in Chinese built hospitals in Cameroon). This undermines local capacity development. Cameroonian policymakers need to make sure that linking Chinese companies to domestic supply systems and outsourcing arrangements including subcontracting with local entrepreneurs are an integral part of the aid package or scheme and to encourage building local capacity.
Our analysis and findings from the selected project in Cameroon confirm the stylized fact that the Chinese aid is tied. This hampers the benefits of Cameroon economy from the implementation of macroeconomic policies of cutting purchases and domestic expenditures. From other perspective, the rapid rise in Chinese aid and its focus on infrastructure projects in Cameroon can be perceived as a way of promoting and facilitating the internationalization of the Chinese firms to access new markets. Given the recognition of the international community that the practice of tying aid is one of the main causes of its ineffectiveness, the international community through the Paris Declaration by all donors urged all donors to cease from tying aid. The Chinese tied aid to Cameroon implies lack of concern and commitment to Paris Declaration to all donors; this implies that China as emerging donors needs to confirm commitment to Paris Declaration. Cameroon should seize the opportunity to convince China to cease from offering tied aid so as to maximize benefits and minimize loses.
Little political conditions offer opportunities and challenges for Cameroon. On the one hand, the major opportunity for Cameroon is that Cameroon has the potential to take the advantage of China’s financial flows through aid only by respecting the “one China Policy”. Cameroon has the opportunity to get the technical assistance as well as the additional resources needed to implement its strategic development programme that are not offered and supported through other multilateral and even bilateral development partners. Furthermore, Cameroon has the potential opportunity to use the Chinese aid as alternative if not as a compliment to aid from traditional western donors to overcome the negative impacts of shortage of foreign capital inflow. On the other hand, the main challenges for Cameroon are that in the future with the end of “One China Policy era” and the end of threat of Taiwan to China’s sovereignty, Cameroon may loss the preferential treatment as a reward for respecting the “One China Policy”, moreover, Cameroon may face the challenge of responding to new Chinese political conditionality in other areas.
Paragraph II: Preparing for Improved Engagement with China The Cameroon government and public institutions or committees involved in SinoCameroonian cooperation have to be constantly questioned on how the relationship is managed. African Union institutions and traditional donors are an important target with regard to the need for harmonization and coherence of all ODA including Chinese aid. The government of China is an indirect target to aim at, using Chinese CSOs. Finally, people at community level in Cameroon should also be targeted with information and sensitization on the advantages and the inconveniences of cooperation with China. Hence two ideas stand out as ways through which the engagement with emerging countries particularly China can be improved to as to better harness the proceeds of this cooperation. They are on one hand the evaluation of issues for an objective standard (A) and on the other hand proposals for an objective standard of Cooperation with China (B).
Evaluation of issues for an objective standard Measuring issues related to Chinese development assistance to Cameroon, so that there is an objective standard, is a real challenge in terms of aid effectiveness. The best known reference standard today is the Paris Declaration, though not accepted by China, which above all underlines increased cooperation amongst all donors. The main problems to solve in measuring and monitoring the effectiveness of Chinese aid are related to:
NKWAH Akongnwi NGWA: South-South Development Cooperation: The impact of Emerging Donors’ Aid on African Countries (The Case of Sino-Cameroonian Aid Relations) i) The availability of information both on aid pledges, criteria and volumes as well as on how aid matches Cameroon’s development priorities, ii) The information sharing mechanism with other donors, which should take into account any possible reluctance or caution on the part of China, iii) The complementarily of Chinese assistance with other donors’ in bringing real change for development, iv)Evaluation of impact of Chinese assistance on the people at all levels including the grassroots, which is entailed in the degree of inclusiveness of the Civil Society in the process. To solve these four categories of problems, efforts and actions have to be made by both Governments of China and Cameroon, the Cameroonian civil society and traditional donors. In fact, as concerns information availability, China and Cameroon should adopt a better format for agreement negotiation, one that gives room for accessibility of all related information, through publication towards the general public. A specific Chinese aid coordinating structure could take charge of this. With regard to information sharing, considering the fact that the official discourse in China on the issue is rather positive and promising, Chinese officials have to be taken on their word and held accountable for their pledge to put a Chinese assistance information disclosure mechanism in place228. China should also be asked specifically about such promises as those made at the FOCAC, in 2006 to double assistance by 2009. In this respect, Cameroon and other African countries should make FOCAC a venue where to hold China accountable on its promises. To do this effectively projects to be submitted for Chinese funding should be designed with the real needs of the people in consideration who would then later be able to give feedback on the impact.
Civil Society participation both in the project designing process and in monitoring and evaluation of impact is crucial. Political will is needed from governments to ensure this, but CSOs too must push for it and take independent initiatives, using whatever information is available. Appraisal of Chinese assistance could then be done in light of the Paris Declaration principles and ideally in full collaboration with the two governments. But in order to avoid reluctance on the part of the Chinese government, they should not be presented the issue as an obligatory call for alignment to Western principles imposed upon China, but rather as a universal need for aid effectiveness. Sophisticated mechanisms could then be put in place for measuring social benefits of Chinese aid, in which all 228
China’s Premier Wen Jiabao at the AfDB annual meeting in Shanghai in May 2007 said: “We will fully deliver on our statements and we are working with African countries to implement those measures.
NKWAH Akongnwi NGWA: South-South Development Cooperation: The impact of Emerging Donors’ Aid on African Countries (The Case of Sino-Cameroonian Aid Relations) stakeholders including CSOs would have a role to play. This could even deal with the issue of tying that aid to the purchase of Chinese goods and services, by allowing independent and transparent audit and reporting at the receiving end. Government’s statements could then be submitted to verification and be measured in terms of effects on the population of Cameroon. The outcome of the analysis would eventually help attune policies so that aid actually benefits those who need it most.
Proposals for an objective standard of Cooperation with China In light of the Paris Declaration, ownership is crucial and African countries need to behave more confidently in their relationship with China or any other donor. The problem with Africans’ mindset with regard to ODA is that they have always tended to consider and believe that they graciously receive aid or assistance. This traditional vocabulary has to be struck from African cooperation language. Chinese cooperation approach, which clearly stated that things should be done according to mutual interest, gives a sound opportunity for this change of mindset. African Governments should capitalize on the role of the Civil Society here, as CSOs as they are closely attuned to people’s problems and generally understand them better. At a certain point in the cooperation with China, the Cameroonian Government would attain better negotiation results by working hand in hand with the Civil Society and the private sector. Three main stages should be considered for this, including: i) The needs assessment phase to make sure that in areas where China is willing to provide assistance, the most suitable and the best fitting is applied for; ii) The negotiation phase by allowing Civil Society Organizations and representatives of ordinary people to be part of national delegations during official visits and ensuring that these visits are prepared long in advance in order to avoid initiatives that serve only political propaganda; iii) The project implementation phase during which the government must give space for independent monitoring and evaluation by civil society constituencies and private sector actors, making sure that their findings are taken into account. With regard to national planning and strategy, it would be good to combine different types of assistance requested from China. The idea is to make sure that in packages that are prepared for Chinese funding; economically profitable projects always go along side purely social ones. In the area of infrastructure for example, Cameroon has a very strong case to defend, considering the strategic location of the country in the Central African Sub Region. Building modern highways to connect Cameroon to Chad, the Central African Republic and Northern Congo is potentially directly income generating for the State of Cameroon, through toll gates in addition to the fact that it could boost the other sectors of the economy. The same
NKWAH Akongnwi NGWA: South-South Development Cooperation: The impact of Emerging Donors’ Aid on African Countries (The Case of Sino-Cameroonian Aid Relations) applies to constructing a gigantic Central African Port Hub along the coastal line that stretches from Kribi to Limbe, through Douala rather than just envisaging small port facilities in each city, as is the case now229.Such a rational conception of the allocation of Chinese assistance resources to development would safeguard compliance with Equator Principles or Paris Declaration, because Cameroon and its peers would be in control of their own interests. They would thus be in a position to defend these interests better and make sure, at the same time that international standards are respected.
SECTION II SOUTH-SOOUTH DEVELOPMENT COOPERATION: EXPANDING OPPORTUNITIES FOR INNOVATIVE SOLUTIONS As it is, ODA is not for free and national resources have always gone in return for it, meaning that donors generally also follow their economic, commercial or strategic interests, in their engagement with developing countries. When dealing with China, Cameroon and other African countries should put the interests of their people at the fore front. To do this, a good identification of needs at community level is necessary and goes through community participative and inclusive assessment. To better expand opportunities for innovative solutions, African Governments should capitalize on the role remittances from the African Diaspora as an alternative source it not a compliment for ODA (Paragraph I) and embark on some proposals for policy and Advocacy work (Paragraph II) as a means of expanding opportunities so as to better harness DC and mobilize African domestic resources for its development as a sure long-term guarantee for development effectiveness.
Paragraph 1: Using Remittances from the global South to finance Africa’s Development Remittance receipts generate considerable gains for emigrants’ countries of origin. At the macro level, remittances tend to be more stable than other sources of foreign exchange; their variation is often countercyclical, helping sustain consumption and investment during downturns; and they improve sovereign creditworthiness, by increasing the level and stability of foreign exchange receipts (A). At the micro level, both country studies and cross-country analyses have shown that remittances reduce poverty. 229
There are two Deep See Port construction projects presently in Cameroon, one in Kribi where, the Chadian crude oil arrives through the Chad-Cameroon pipeline from Doba, for export and another one in Limbe some 20 km from Douala along the coast. Douala is located in between Kribi and Limbe
NKWAH Akongnwi NGWA: South-South Development Cooperation: The impact of Emerging Donors’ Aid on African Countries (The Case of Sino-Cameroonian Aid Relations) They also spur spending on health and education, as a result of both higher household incomes and according to some study the devotion of a larger share of remittances than other income sources to these services (B)
Remittance in ﬂow to Africa Remittances are the central and most tangible link between migration and development230. Remittance in flows to Africa quadrupled between 1990 and 2010, reaching nearly $40 billion in 2010, equivalent to 2.6% of Africa’s gross domestic product (GDP) in 2009231. After FDI, remittances are the continent’s largest source of foreign inflows.
Remittance ﬂows to Sub-Saharan Africa Migrant remittances contribute to international reserves, help finance imports, and improve the current account position of recipient countries. They are associated with reductions in poverty, improved health and education outcomes, and increased business investments as in seen in the graph 2 below. Graph 2: Remittances and other Resources Flows to Africa, 1990-2010
Although the limited reach of intermediaries in rural areas, lack of effective competition, and inadequate financial and regulatory infrastructure contribute to high remittance costs and the prevalence of informal channels (especially for intra-African remittances), the rapid adoption of innovative money transfer and branchless banking technologies are increasing access to remittances and broader financial services for the poor.232Data on the sources of remittance flows to Sub-Saharan Africa are not available. However, estimates based on bilateral migration stocks, incomes in destination countries, and incomes in 230
Russell, Sharon S. “Remittances from International Migration: A Review in Perspective.” World Development 14 (6), 1992, p677–96. - Ratha, Dilip, and William Shaw. “South-South Migration and Remittances.” Development Prospects Group Working Paper 102, World Bank, Washington, DC, 2007. 231 Cf. Annex figure 7 232 Cf. Annex figure 8
NKWAH Akongnwi NGWA: South-South Development Cooperation: The impact of Emerging Donors’ Aid on African Countries (The Case of Sino-Cameroonian Aid Relations) countries of origin indicate that the top sources of remittances for Sub-Saharan Africa are the EU15 countries (41% of inflows) and the United States (28%)233. The remaining sources are other developing countries, primarily in Africa (13%); the Gulf Cooperation Council (GCC) countries (9%), and other highincome countries (8%). North African countries are even more dependent on remittances from Western Europe (54%) and the GCC countries (27 %), receiving only 5% of remittances from the United States.
Remittance Inﬂows and Sovereign Creditworthiness Remittance inflows can improve sovereign creditworthiness by increasing the level and stability of foreign exchange receipts234. Given their size, in the absence of remittance receipts, several African countries would have had access to a much lower level of imports or would have run much larger current account deficits. Remittances also help stabilize the current account by reducing the volatility of overall capital flows235. Remittances can reduce the probability of current account reversals, especially when they exceed 3% of GDP236. Appropriately accounting for remittances can improve evaluations of African countries’ external debt sustainability and creditworthiness. The ratio of external debt to exports would be significantly lower in many African countries if remittances were included in the denominator as soon in figure 7 below. Figure 7: External Debt as a Share of Export from and Remittance to Selected Countries in Sub-Saharan Africa
World Bank, “Migration and Remittances Fact book 2011”, Washington, DC: World Bank, 2011. Avendaño, Rolando, Norbert Gaillard, and Sebastián Nieto-Parra. “Are Workers’ Remittances Relevant for Credit Rating Agencies?” OECD Development Centre Working Paper 282, OECD, Paris, 2009. 235 Chami, Ralph, Adolfo Barajas, Thomas Cosimano, Connel Fullenkamp, Michael Gapen, and Peter Montiel.“Macroeconomic Consequences of Remittances.” IMF Occasional Paper 259, IMF, Washington, DC 2008 236 Bugamelli, Matteo, and Francesco Paterno. “Do Workers’ Remittances Reduce the Probability of Current Account Reversals?” World Development 37 (12): 1821–38. 2009 234
NKWAH Akongnwi NGWA: South-South Development Cooperation: The impact of Emerging Donors’ Aid on African Countries (The Case of Sino-Cameroonian Aid Relations) Remittances are now being factored into sovereign ratings in middle-income countries and debt sustainability analysis in low-income countries237. In several remittance-recipient countries, country creditworthiness analyzes by the major rating agencies often cite remittances as a factor in their rating decisions238 as in figure 8 below. Figure 8: Stability of Various Sources of Resource Flows to Africa, 1990-2008
The Development Impact of remittances Development impact of remittances at the microeconomic level can help reduce poverty, raise household investment, and increase access to health and education services. Remittances can reduce the level of poverty by directly augmenting the incomes of poor recipient households and increasing aggregate demand, thereby increasing employment and wages of the poor. Cross country regressions generally find that remittances have reduced the share of poor people in the population239.Econometric analyses suggest that remittances have reduced poverty in Africa. There is a 10% increase in official international remittances as a share of GDP led to a 2.9% decline in the share of people living in poverty in a sample of 33 African countries for 1990–2005, with declines also observed for the depth and severity of poverty240.
IMF,“Staff Guidance Note on the Application of the Joint Bank-Fund Debt Sustainability Framework for Low-Income Countries.” Prepared by the staffs of the IMF and the World Bank, January 22, 2010, p4 238 Ibid, p5 239 Adams, Richard H., and John Page, “International Migration, Remittances and Poverty in Developing Countries.” Policy Research Working Paper 3179, World Bank, Washington, DC, 2003. - Adams, Richard H., and John Page.. “Do International Migration and Remittances Reduce Poverty in Developing Countries?” World Development 33 (10): 1645–69. Afreximbank (African Export-Import Bank). 2005. Annual Report. http://www.afreximbank.com. 240 Anyanwu, John C., and Andrew E. O. Erhijakpor. “Do International Remittances Affect Poverty in Africa?” African Development Review 22 (1): 2010. p51–91
Remittances within Africa We also found out that the impact of remittances on poverty in Africa, although positive, was smaller than for other developing countries, a result they attribute to the possibility that poverty can itself cause increased migration and hence larger remittances241. Studies of Burkina Faso242, Ghana243, Morocco244, and Nigeria245, conclude that remittances are associated with a reduction in the share of people in poverty and in some case the depth and severity of poverty as well. A substantial part of remittances in Mali is saved for unexpected events, thus serving as insurance for entire households246. Food security in rural areas of Nigeria improved considerably with an increase in remittances247 as shown figure 9. Figure 9: Percentage of Remittance in Top Two Consumption Quintiles in Selected African Countries, by Source of Remittances
Recent household surveys conducted as a part of the Africa Migration Project and an earlier survey in Ghana find that more than half of households in Burkina Faso, Ghana, and Nigeria and 30% of house-holds in Senegal receiving remittances from outside Africa are in the top two consumption quintiles (see figure 9). Remittances from outside Africa tend to be much larger on average than remittances248 from other African countries or domestic sources249.
Gupta, Sanjeev, Catherine A. Pattillo, and Smita Wag. “Impact of Remittances on Poverty and Financial Development in Sub-Saharan Africa.” World Development 37 (1): 2009. p104–15 242 Lachaud, Jean-Pierre. “Envoi de fonds, inégalité et pauvreté au Burkina Faso.” Document de travail 40, Groupe d’Economie du Développement de l’Université Montesquieu Bordeaux IV. 1999 243 Quartey, Peter, and Theresa Blankson. “Do Migrant Remittances Minimize the Impact of Macro-volatility on the Poor in Ghana.” Report prepared for the Global Development Network, University of Ghana, Legon. 2004. 244 Sorensen, Ninna Nyberg. “Migrant Remittances as a Development Tool: The Case of Morocco.” IOM Working Paper 2, IOM, Geneva. 2004, http://www.belgium.iom.int/pan-europeandialogue/documents/remittances_morocco.pdf 245 Odozia, John C., Timothy T. Awoyemia, and Bolarin T. Omonona. “Household Poverty and Inequality: The Implication of Migrants’ Remittances in Nigeria.” Journal of Economic Policy Reform 13 (2): 2010, p191–99 246 Ponsot, Frédéric, and Bruno Obegi. “Etude de capitalisation des initiatives et mécanismes en matière de transferts de fonds au Mali.” Study conducted for the Centre d’Information et de Gestion des Migrations (CIGEM), Mali. 2010 247 Babatunde, Raphael O., and Enrica C. Martinetti. “Impact of Remittances on Food Security and Nutrition in Rural Nigeria.”, Centre for International Cooperation and Development, University of Pavia, Italy. 2010 248 Cf. Annex figure 9 249 Bollard, Albert, David McKenzie, and Melanie Morten. “The Remitting Patterns of African Migrants in the OECD.” Journal of African Economies 19 (5): 2010, p605–34.
Remittances from outside Africa In contrast to remittances from outside Africa, remittances from African countries may reduce inequality250. Households receiving remittances from other African countries or domestic sources tend to be more evenly distributed across consumption expenditure quintiles. Similar analysis for the distribution of wealth using an asset index broadly mirrors these findings251.Utilizing remittances is a major source of development finance across the global, totally amounts to about US $416 billion in 2009. Although the exact amount of remittances to Africa is not known, the International Fund for Agricultural Development (IFAD) estimates that some 30 million African workers outside their home countries send home about US $40 billion annually to the continent. For the years for which data is available, remittances constitute less than 1% of GDP. However, in 15 African countries, including Nigeria, Sierra Leone, Guinea Bissau, Senegal, Morocco, Egypt, Tunisia, Sudan and Uganda, remittances-GDP ratio is 4% and above.252These points to the potential of remittances as a resource of development finance. And with the shifting global economic power to developing countries, it is likely that they are going to be source of development finance for the continent. Migration in Cameroon has an impact on the national economy. Indeed, the transfer of funds by Cameroonian emigrants helps fight poverty. According to the World Bank, the amount of remittances from Cameroonian migrants was estimated at USD 103 million in 2005, which is 2.5 per cent of official development aid. The amount of funds transferred is constantly increasing. Estimated at USD 11 million in 2000, it rose to USD 103 million in 2004 and USD 167 million in 2008. This amount represents 0.8 per cent of the countryâ€™s GDP (World Bank, 2009). However, for remittances from the global South to become a major source of development finance will require the reform of the banking sector on the continent. Among others, this should entail the closing of parallel markets for foreign exchange.
Paragraph II: Proposals for policy and Advocacy work The growing relationships between Africa and Southern partners have increased resources available for development in the region, enhanced its bargaining power in multilateral negotiations and diversified export markets, thereby reducing vulnerability to country-specific external shocks. But there 250
Acosta, Fajnzylber, and LĂłpez (2007) found that remittances to Latin America reduce inequality on average, but the extent of the reduction in inequality is relatively small, with variation across countries 251 An asset index composed of land, quality of housing, access to electricity, and household amenities was used as a proxy for consumption expenditure (Filmer and Pritchett 2001). 252 IMF, See Barajas et al., 2010Balance of Payment Statistic Year Book
NKWAH Akongnwi NGWA: South-South Development Cooperation: The impact of Emerging Donorsâ€™ Aid on African Countries (The Case of Sino-Cameroonian Aid Relations) are also potential risks for Africa from the new partnerships. Against this backdrop, the study makes the following policy proposal both at the continental level (A) as well as at the national level (B) for consideration:
At the continental level Mainstream SSC into national development strategies Africa's cooperation with developing countries opens new options and these can be opportunities that need to be seized. Cooperation with other developing countries has the potential to enhance Africa's capacity to deal with the challenges of poverty, poor infrastructure, development of productive capacity and emerging threats associated with climate change as well as the food, energy, financial and economic crises. These potential benefits of cooperation are however not automatic. They accrue to countries that have taken adequate and proactive steps to exploit them. In this regard, African countries should adopt a well-defined strategy for SSC to ensure that it furthers rather than hinders the achievement of national and regional development goals. This means that SSC should be mainstreamed into national development strategies as well as efforts to promote regional cooperation within Africa.
i- Take a proactive approach to the partnership process. The main challenge facing African countries is how to harness and use these partnerships more effectively to further their long-term development goals. Addressing this challenge requires that African countries be more proactive in the partnership process and use the leverage they have with developing country partners to persuade them to strike a balance between their strategic interests
and Africa's development needs. The scale and scope of
interaction between African countries and developing country partners has expanded rapidly in the last decade. A proactive approach by African governments and sharing of experiences with developing country partners will accelerate mutual policy learning, which should enhance the effectiveness of interactions for both parties.
ii- In addition, effective coordination at the regional level is needed to reconcile national interest and ensure that they do not jeopardize the achievement of the broad development objectives of the region. In this context, the continental bodies like the African Union Commission (AUC) and the regional economic communities have important roles to play in coordinating the region's relations with CIBs to avoid a race to the bottom. Furthermore, the AUC should be more assertive in negotiations with CIBs to focus attention on regional priorities and ensure a wider spread of the benefits of these partnerships; Ensure that cooperation with developing countries complements existing partnerships with developed
NKWAH Akongnwi NGWA: South-South Development Cooperation: The impact of Emerging Donorsâ€™ Aid on African Countries (The Case of Sino-Cameroonian Aid Relations) countries. Developed countries have been and will continue to be important development partners for Africa. Consequently, it is important that the regions' engagement with developing countries complements rather than substitutes for relations with traditional partners. In this context, it is interesting to note that one consequence of Africa's growing partnership with developing countries is that areas neglected by traditional partners are now being addressed. These include protecting the interests of African countries in the international economic, financial and trading systems, and infrastructure development. Involve more local stakeholders in partnerships with the South. To ensure effective national ownership of the process and outcomes of the evolving partnerships between Africa and developing countries, African governments should make efforts to get parliaments, the private sector and civil society more involved in the process. For example, when negotiating partnership agreements with developing country partners, they should ensure that parliament and other relevant stakeholders are represented. This will increase transparency and accountability and increase the likelihood that resources will be used in pursuit of national development goals and priorities. It will also reduce public scepticism and give more credibility to the partnerships.
African countries should reverse this export pattern and transform the structure of their economies. This requires improving the business environment, addressing the problem of poor infrastructure, enhancing access to credit and transfer of skills and technology by, for example, providing targeted incentives to encourage foreign firms to train local employees. It also requires encouraging developing country partners to redirect part of their official flows to the development of productive capacities in the region. iii- Avoid accumulation of unsustainable debt. The availability of concessional loans from developing country partners has increased access to finance for several countries in the region and should be welcomed. However, African countries should ensure that new borrowing from developing country partners is used to finance projects that enhance domestic capacity to repay. There is also the need to pay more attention to the structure as well as management of external debt to avoid a debt crisis. There are suggestions about doing things together as North-South-South with potentially good outcomes. For example, sharing of lessons and practices in order to avoid past mistakes (e.g. quick aid disbursements without real absorption capacity put in place, technical assistance that does not build capacity and management skills, etc.), or better reporting and monitoring cooperation inputs and results (which will also be increasingly demanded of non-traditional donors, both by their own citizens and African
NKWAH Akongnwi NGWA: South-South Development Cooperation: The impact of Emerging Donors’ Aid on African Countries (The Case of Sino-Cameroonian Aid Relations) stakeholders). Mixing traditional donors
substantial resources with emerging economies
support, drawing on their own experiences, may generate substantial positive spillovers.
iv-There is a need to act more in line with developing countries citizens
values, expectations and
needs (e.g. supporting regional integration in Africa through both policy frameworks support by the EU and rapid upgrading of regional infrastructure by China). Given current trends, and in particular the interests of emerging economies and Africa, a realistic objective of triangular dialogue could be to identify possible collaborations at country level, starting from specific sectors, to then draw preliminary conclusions on „what works and what does not . Only then would the parties be in a position to move (if possible) towards triangular policy discussions. Hence, in the new global landscape Africa could utilize triangular dialogue to improve the effectiveness of one partner’s approach by sharing lessons learnt as part of other partnerships as well as identify possible synergies and complementarities among partners towards a more comprehensive and coherent development effectiveness agenda. v- Better alignment to Africa’s objectives and more coherent strategies by Africa and its partners could positively affect the overall international development debate, with a shift of focus from aid effectiveness to development effectiveness. Given the emerging focus on non-ODA flows, non-state actors and development effectiveness, it is possible to conceive a development effectiveness framework to gradually replace, or rather absorb the existing aid effectiveness framework premised on the Paris/Accra Agenda and Declarations, the DAC guidelines for aid management and the DAC peer review system for donors. In this context, a particularly relevant aspect of development effectiveness will indeed be policy coherence for development.
At the national level Projects should be fully agreed upon by both the Cameroonian Government and China prior to implementation. Hence the projects should not be about maintenance and who provides what but about government ownership and working in the interest of the Cameroonian development framework which is geared towards poverty eradication. We need to develop our own capacities to sustain the infrastructure otherwise China will continue to provide highly skilled man power to do so. The challenge is to focus on capacity, use China’s aid to build our own capacity. Internal capacity should be further developed in particular on how to negotiate and supervise in order for Cameroon to have skills & resource endowment. China’s technology can be assessed more easily that western technology. The issue is how we can strategize ourselves to benefit from the technology.
NKWAH Akongnwi NGWA: South-South Development Cooperation: The impact of Emerging Donors’ Aid on African Countries (The Case of Sino-Cameroonian Aid Relations) China’s aid to Cameroon is not bad but Cameroon should have a better strategy in order to benefit meaningfully in its relations with China. Put differently, Cameroon has to re-strategize and negotiate to benefit the economy. China is organized; the south-south relationship China uses can be used by Uganda to benefit from it. At the moment as is documented in literature, only countries that are resource rich are having a bigger stake/intensive relationship with China and thus benefit. It should be noted that what China brings is mainly competition with the other traditional donors thus it has made other donors more competitive when providing support to developing countries including Cameroon. At the moment traditional donors are looking at their systems otherwise, they are going to be outcompeted. Now they are finding ways of making aid faster to speed up delivery without too much bureaucracy as China is currently providing assistance. A continued build up of China-Cameroon relationship is expected in the long run. Resource rich countries have been using oil resources to guarantee some investments and loans from China. Thus, given that Cameroon in the near future will be mining its own oil, future relationships with China are most likely to change in this direction. The way forward is to develop our own capacities to sustain the infrastructure otherwise China will continue to provide highly skilled man power to do so. The challenge is to focus on capacity, use China’s aid to build our own capacity. Issues of environment, human rights and so forth should be further looked into. As China’s economic strategy continues to grow, Cameroon needs to find a way to benefit. If Cameroon is to start mining oil, China will come in as we have seen from other economies that are resource rich like Angola and Sudan. Thus we need to look into this before time to restrategize ourselves and learn from other countries that have similar relations with China given their resource endowments. Overall, in light of the above recommendations, there are a number of key and obvious advocacy targets by Cameroonian Civil Society. The Cameroon government, in general, and all public institutions or committees involved in Sino-Cameroonian cooperation have to be questioned on a constant basis on how the relationship with China is managed. African Union institutions and traditional donors are an important target with regard to the need for harmonization and coherence of all aid, including Chinese economic cooperation, at least in terms of the goals to achieve considering that Chinese aid is different. The government of China is an indirect target to aim at, using Chinese CSOs. Finally people at grassroots level in Cameroon must also be targeted for information and sensitization on the advantages and the inconveniences of the Cooperation with China.
CONCLUSION FOR CHAPTER FOUR In this chapter we were interested in revealing the ospportunities and Challenges witnessed by both recipients and donors in the context of SSDC. Thus, proposing that Africa and Cameroon in particular can utilize remittances from the African Diaspora as a compliment if not an alternative to ODA since it is clear that remittances are personalized and used for medical care, school fees, rent payments or the purchase of consumer goods. These transfers stimulate the countryâ€™s economic activity by replacing credit and other financing methods and facilitating the initiation of projects and other income-generating activities.
We also embarked on some
proposals for policy advocacy work. All this as a means of expanding opportunities and positively affect the overall international development debate.
CONCLUSION OF PART TWO In summary, this is part set out to understand the impact of china’s aid on the development of African economies particularly that of Cameroon as well as revealing the opportunities and Challenges witnessed by both recipients and donors in the context of SSDC and proposing that Africa and Cameroon in particular can utilize remittances from the African Diaspora as a compliment if not as an alternative to ODA or embark on some proposals for policy advocacy work as a means of expanding opportunities and to positively affect the overall international development debate . We looked at China’s assistance vis-à-vis international assistance, trends and nature of their assistance to Cameroon and undertook two case studies to further provide input on whether China’s aid mainly through projects has had any impact on Cameroon’s welfare and to what extent the impact is being felt. Hence, the question of who the beneficiary is, in the Cameroon-China aid relations needs a closer assessment of the ultimate outcome of these economic relations as has been highlighted in the foregoing contained in the case study.
The cases in point are the Yaoundé Sport Complex and the Yaoundé GynaecologicalObstetrical and Paediatric Hospital projects which China has given Cameroon but a substantial component of the workforce is Chinese even though the technical assistance appears to be social beneficial in the health sector. This has been one of the major criticisms of China’s involvement with Africa in that they tend to replace Cameroonian workers with their own and leaving very little room in terms of capacity building, skills training and technology transfer. This has greatly hindered capacity building for the already existing experts within Cameroon given that it is a conditionality by China to provide its own inputs ranging from experts to raw materials. Debts that have been cancelled have reduced a burden on the Cameroon’s economy and have created room for government to channel resources that would have been diverted to cater for debt repayment into poverty reduction ventures such as improvement in infrastructure.
Finally, there is a tendency for Government to not contribute meaningfully to development projects by donors. This in the end proves counterproductive. It should be noted and realized that the sustainability of projects largely depends on the support which such projects receive from Government long after the donor has handed them over. Hence, there is need for government to provide the necessary support to projects like these to ensure sustainability as well as give meaning to the host community. Thus, the limitation of technology and skills transfer by China’s DA leads to questions of sustainability and how meaningful some of this DA may be to the recipient communities.
In response to the question of knowing the impact ODA from emerging donors on the development African countries SSA especially Cameroon, we found out that effectively there is a positive impact on the socio-economic development be it direct or indirect, and competitive or complimentary but it is a relative impact because it has got some negative effects as well. Even though the answers to the research questions asked in this work may be far from being exhaustive and many other issues could also be evoked on the topic, it however illustrates the extensiveness of the topic under study.
With the notion in mind that the increase in SSC has sparked a debate about the motives, strategies and effects thereof, emerging donors DA is not only mixed with trade and investments, but also includes migration, tourism, and peace-keeping operations. Nonetheless, it is the most important one as it is used to facilitate the other (interwoven) flows. Thus an analysis of the contextual, structural and domestic changes in SSC in a historical perspective have contributed in re-shaping this cooperation to Africa’s favour there by creating different perceptions and expectations for both partners. These perceptions and expectations have thus modeled Africa’s cooperation with CIBs in the domain of ODA thereby by increasing their engagement in Africa. This increase engagement has resulted in more DA for African countries given their need for additional external financial resources to meet the MDGs and foster sustainable development objectives in an effective manner.
The close examination of the current trends in DA may also provide us with answers regarding how the flows impact on the economy. But with the effects of the financial crisis still present, ODA from traditional donors will also be affected negatively as they strive to undertake austerity measures253. However, the situation is somewhat different for the CIBs and in particular for China. There are contends that, it is less likely that the financial crisis will significantly jeopardize China’s economic and strategic interests in Africa. In fact, China is being banked on to play a role in cushioning the impact of global recession for some low income economies as its heavily infrastructure-biased domestic stimulus package may shore up demand and thus the price for some resources254. Put simply, the emerging donor’s presence in Africa is more important than ever in the wake of this crisis.
Roodman, D. “History says financial crisis will suppress aid”. 2008 http://blogs.cgdev.org/global development/2008/10/history-says-financial-crisis.php. 254 Cook, S. and J. Gu. (2009) The global financial crisis: Implications for China s South–South Cooperation. IDS Bulletin, 40(5): 38-46.
NKWAH Akongnwi NGWA: South-South Development Cooperation: The impact of Emerging Donorsâ€™ Aid on African Countries (The Case of Sino-Cameroonian Aid Relations) The motives and strategies of course differ among the emerging donorâ€™s, but they all centre on 255
and economics256. The big question is how it affects development outcomes for African and for
Cameroon in particular as well as how it alters the current aid architecture. Understanding the general aid architecture through examination of the trends and features of ODA as well as the complexities therein, permitted us to also question the effectiveness of aid as to its development objective, through the examination of what is wrong with the Paris Declaration on Aid effectiveness.
This made us to find out that ownership principle has not been properly addressed by international thinking about aid effectiveness. Hence the need to go back to basics and try to answer the fundamental question which has been hanging in the air since the 1990s: does aid have a role in building country ownership of development efforts, and if the answer is not entirely negative, what kinds of aid, delivered how? Project aid or program Aid? In this context, SSC through the AAA triple mandated has contributed in enhancing effective development partnerships as well having an impact on aid effectiveness. This impact has in turn affected the overall international development debate with a shifting focus from aid effectiveness to development effectiveness. This new debate on development effectiveness means different things to different people.
It is very important and urgent to get to a common understanding, if not definition, of the concept of development effectiveness, since different definitions and measures can lead to very different assessment about the effectiveness of an approach. For instance, an assistance programme can be very cost effective in building hardware (a road) but without achieving any improvement in terms of software (sustainable management capacity, which also is a contribution to development), and vice versa. The uncertainties surrounding this debate relate also to the origins of the discussion on development effectiveness. Some stakeholders think the debate emerges out of the pressure on traditional donors from the increasing role of the emerging economies in international development, and the supposed higher interest by developing countries in development effectiveness rather than aid effectiveness. Others believe that development effectiveness is the latest stage of the imperative to show results (results-based management), including to domestic taxpayers, especially in a time of economic crisis and decreasing government budgets in traditional donor countries.
restructuring global governance to obtain international political power corresponding to their increasing economic power and securing access to valuable resources 256 access to markets and investment opportunities
NKWAH Akongnwi NGWA: South-South Development Cooperation: The impact of Emerging Donorsâ€™ Aid on African Countries (The Case of Sino-Cameroonian Aid Relations) With China becoming an emerging economic power, since 2006, following the first summit of the FOCAC, which marked the history of Sino-African relations, she is implementing a new cooperation strategy towards Africa. Her approach for DA to and cooperation with Africa, based on a declared policy of non-interference and mutual benefit, in a win-win format is changing the rules of the ODA game and imposing unexpected competition to traditional donors. Chinese assistance to Africa in general and Cameroon in particular gives priority to infrastructure and is achieved through highly concessional loans and grants without conditionality except the recognition of the one China principle by the recipient country.
Cameroon thus had to stop relations with Taiwan before starting diplomatic relations with China in 1971. In return for its assistance China generally engages in the exploitation of natural resources such as timber, oil and other minerals. She is generally blamed for doing this in violation of international standards and without consideration for environmental risks. The Chinese DA to Cameroon, despite some challenges, has ironically had a positive impact on socio-economic situation of the country which is direct and indirect with main characteristics as being complimentary and competitive. It is not attached with strings of policy reform but is considered likely to undermine efforts to strengthen transparency. Technology transfer is still insignificant, but cooperation with China has opened a new route to Cameroonian private initiative.
Notwithstanding, it also represents an opportunity for Cameroon and other African countries, as it imposes competition to traditional donors and could probably lead to some changes and push western governments to practice what they preach or keep their ODA promises. It is, above all, a window of development opportunity for Cameroon, provided that the Cameroonian government does what is needed to engage in advantageous negotiation with China, in respect of Chinese commercial interests and based on the real needs of the people. A strategic approach for negotiation with China, including the protection of sub regional interests and search for synergies within the CEMAC could seriously boost the Cameroonian economy and ensure sustainable growth and development. There are concerns about the possibility of a new debt build-up in Cameroon due to the rapid increase in aid from China, based on the argument that debt relief was granted on the basis that Cameroon was too poor to bear any debt.
If Cameroon starts borrowing again, then some Western countries might view the debt relief to Cameroon as indirectly subsidizing new Chinese lending. This paradigm is not that helpful for Africa, because the insinuation could be that countries of the continent are not mature enough to understand where
NKWAH Akongnwi NGWA: South-South Development Cooperation: The impact of Emerging Donors’ Aid on African Countries (The Case of Sino-Cameroonian Aid Relations) their interests are. It is about time this be firmly rejected. Africa in general and Cameroon in particular must look forward and take their destiny in hand, because governments, institutions and organizations that do not act strategically with regard to the new Chinese rise may be left by the wayside.
Above all, on the flip side though, the re-emergence of emerging donor’s which has seen an increase in financial flows may create challenges of absorption capacity for some African countries which are receiving substantial support from both traditional and emerging donors. Where such support is provided in the form of projects, there are manifestations of increased proliferation and fragmentation of such assistance, putting pressure on African bureaucracies. The final consequence is the risk to undermine transparency on the side of those who are charged with its implementation “the elite”.
But on a brighter note, SSC may help engender sovereignty and ownership on the part of the African countries something that the Paris Declaration is noted to having not yet achieved257. However, it may on the other hand perpetuate bad governance as non-traditional donors do not employ economic and political conditionality’s. The effects of SSC are not only confined to the African counterparts; they also shape the international aid architecture. Thus, there may be pressure on the part of the traditional donors to refine policies and adapt to new roles as SSC grows stronger. As noted out by Cook & Gu (2009), traditional donors have already stated to follow the lead by engaging in infrastructure projects in Africa again. There are measures to engage in trilateral cooperation with some (but not all) emerging donors in Africa258.
Against this back ground, actionable policy proposals have been suggested to both African governments, Emerging Donors, Traditional Donors and civil society as to how best African Countries like Cameroon can equitably benefit and sustains its relationship with Emerging donors like China in the future and also embarking on the importance of remittances as the most tangible link between migration and development259; as a possible alternative or as a compliment to ODA.
Whitfield, L., ed. “The politics of aid: African strategies for dealing with donors”. Oxford: Oxford University Press. 2008, p.16. 258 Cook, S. and J. Gu, “The global financial crisis: Implications for China’s South–South Cooperation”. IDS Bulletin, 40(5): 2009; p.38-46. 259 Dilip Ratha, Sanket Mohapatra,Caglar Özden, Sonia Plaza, William Shaw, Abebe Shimeles, "Leveraging Migration for Africa: Remittances, Skills, and Investments" World Bank, Washington, DC, 2011, p.49-85.
Annex 1: Sub-Saharan African Map with Average Rates per Capital, 1996-2008
Annex 2: Major Projects in Africa with assistance from China’s EX-IM Bank and China
NKWAH Akongnwi NGWA: South-South Development Cooperation: The impact of Emerging CaseImport of Sino-Cameroonian Aid Relations) on African Countries AnnexDonorsâ€™ 3: LinesAid of Credit extended through (The the Export Bank of India to African countries in recent years. Africa Development Fund
NKWAH Akongnwi NGWA: South-South Development Cooperation: The impact of Emerging Donors’ Aid on African Countries (The Case of Sino-Cameroonian Aid Relations) Annex 4: Table on Brazil’s Development Assistance to Africa (various years)
Annex 5: Schematic Overview of new and traditional partnerâ€™s engagement in Africa recent years.
Annex 6: Chinese Infrastructural Commitments in SSA 2001-2007
Annex 7: African Projects Undertaken with Indian Assistance countries in recent years.
Annex 8: Selected Features of Support Provided by Africa’s Development Partner’s countries
Annex 9: Estimated Aid from BRICS 2003-2009 (USD billion)
Annex 10: Aid Receipt by Southern Partners in 2008 ($ millions)
Annex 11: The Pursuit of “Aid Effectiveness in global governance, 2002-2012
Source: Daniel Esser260
Daniel Esser, “Aid Effectiveness: A Contribution to Development Goals Fundamentals”, School of International Service, American University ,March 12,2012.
NKWAH Akongnwi NGWA: South-South Development Cooperation: The impact of Emerging Donorsâ€™ Aid on African Countries (The Case of Sino-Cameroonian Aid Relations) Annex 12: Paris Declaration: Indicators of Progress. To be measured nationally and monitored internationally
Annex 13: From this vibrant process, the following following key messages have emerged: Adapting the aid effectiveness principles , Enriching the aid effectiveness agenda , Identifying complementarities between South-South and North-South 1.
Adapting the aid effectiveness principles to South-South cooperation is a challenge welcomed by almost all case storytellers. Ownership (and its democratic quality) seems to be one of the strengths, together with the use of specific comparative advantages, especially in difficult contexts. Three main tasks are pending for actors involved in South-South learning and knowledge exchange:
Information systems need to be boosted in order to generate quantitative and qualitative data for measuring, assessing, and accounting for the inputs in a transparent, regular, and timely way;
Sound result management may enable actors to show the scope, relevance, and impact of South-South knowledge exchange and learning;
Mutual accountability is closely related to the previous two tasks and needs to be attended more consistently in the future, especially at the country level.
Enriching the aid effectiveness agenda with the practices and experiences of South-South cooperation will continue to be on the top of the agenda of those developing countries that desire to contribute clear-cut contents to global development policies. Regional platforms have a critical role to play to facilitate these contributions. Three main pillars can be used for deepening the agenda toward the Seoul HLF in 2011: is closely related to the previous two tasks and needs to be attended more consistently in the future, especially at the country level.
Horizontal partnership is a key element for mutual learning among diverse development actors and is based
Efficiency in South-South knowledge exchange appears to outbid traditional technical cooperation, using not
on trust, mutual benefit, and equity;
only cheaper, but also more adapted human resources. Yet, this thesis needs to be backed with accurate research on inputs and impacts;
Incentives for policy and institutional reform are at the heart of South-South dynamics, especially in difficult contexts. Deeper analysis should explore the role of South-South incentives as a powerful tool for policy and institutional change and capacity development.
Identifying complementarities between South-South and North-South cooperation is not difficult in face of the increasing interest of traditional donors to become â€œemerging triangular donorsâ€?, on the one hand, and the growing family of mechanisms, on the other. However, bringing diverse development actors together refers to very recent processes, reflecting also the new need for innovative collective action between different actors:
Triangular cooperation Several appears as a still recent gangway with great potential for horizontal partnership and win-win-win situations. Learning from existing risks, such as transaction costs and fragile recipient ownership, should ultimately lead to stronger foundations for triangular efforts;
Several mechanisms for promoting South-South cooperation are available and it is now time to build an architecture connecting national, regional, and global platforms where innovation, lessons, experiences, and forms of coordination can be captured and systematized
UNIVERSITE DE YAOUNDE II THE UNIVERSITY OF YAOUNDE II Institut des Relations Internationales du Cameroun B.P.: 1637 Yaoundé Tél.: 22 31 03 05 Fax: (237) 22 31 89 99 www.iricuy2.net
International Relations Institute of Cameroon P.O Box: 1637 Yaoundé Tel: 22 31 03 05 Fax: (237) 22 31 89 99 E-Mail: email@example.com
QUESTIONNAIRE QUESTIONNAIRE GUIDE A study on the Impact of Emerging Donors Aid on the Development of African African Economies: The Case of Sino-Cameroon Aid Relations Issues to feature in our micro survey questionnaire to track the impact of China’s aid on Cameroon (Questions à figurer dans notre questionnaire micro pour suivre l'impact de l'aide de la Chine sur le Cameroun)
1. **China’s aid and what is Cameroon’s position in this? (La position du Cameroun au sujet de L’aide Chinoise) 2. **Identify projects that have been as a result of China’s aid and the actual disbursements to the project. (Identifier les projets qui ont été à la suite de l'aide de la Chine et les décaissements réels au projet)
3. **What were the project’s objectives? (Quels étaient les objectifs du projet?) 4. Was the project timely or by the time it was put in place the need no longer existed. (Le projet a t-il été réalisé à temps ou au moment où il a été mis sur pied le besoin n'existait plus.)
5. *Formulate a matrix on how the project objectives been achieved vis-a-vis Cameroon’s objectives in poverty eradication action plan (Formuler une matrice sur la façon dont les objectifs du projet sont atteints les objectifs vis-à-vis du Cameroun dans le plan d'action éradication de la pauvreté)
6. *What has been the major output and impact of the project say the Yaoundé Sport Complex to the community and the country in terms of employment, incomes and emergency of forward linkages. (Quel a été le principal résultat et l'impact du projet e.g Palais de Sport de Yaoundé à la communauté et du pays en termes d'emploi, de revenus et d'urgence de liens en aval.)
7. **Who have been the major beneficiaries or losers of the project set up by the Chinese government for the Cameroonian people in that area? (Quels ont été les principaux bénéficiaires ou perdants du projet mis en place par le gouvernement chinois pour le peuple camerounais dans ce domaine?)
8. *In a wider perspective how does China’s aid in Cameroon’s case through projects relate to economic development and Poverty reduction mandate of the country? (Dans une perspective plus large comment l'aide de la Chine dans le cas du Cameroun à travers des projets concernent le développement économique et le mandat de réduction de la pauvreté du pays?)
NKWAH Akongnwi NGWA: South-South Development Cooperation: The impact of Emerging Donors’ Aid on African Countries (The Case of Sino-Cameroonian Aid Relations) 9. *Ask the community if they would have preferred an alternative project other than what the Chinese government set up for them and what project would it be? (Demandez à la communauté s'ils auraient préféré un projet alternatif autre que ce que le gouvernement chinois a mis en place pour eux et ce projet serait-il?)
10. **Has the Global Financial Crisis in any way affected your activities such as investments, trade and aid to Cameroon or worldwide? (Est-que la crise financière mondiale en d’une façon ou une autre affectée vos activités comme les investissements, le commerce et l'aide au Cameroun ou dans le monde?)
11.**How does China’s Aid fit in the Cameroon strategic development plan? (En quoi l'aide étrangère de la Chine tient dans le plan stratégique de développement du Cameroun?)
12. **How does China’s Aid impact Cameroon’s capacity building efforts? “Do a sectoral analysis to see whether Cameroon in its relation with China has benefitted from any capacity building or not, and how, if any, the capacity built is in conformity with Cameroon’s strategic development plan?” (Comment est -que l'aide de la Chine impact sur le renforcement des capacités du Cameroun? "Faire une analyse sectorielle pour voir si le Cameroun dans sa relation avec la Chine a bénéficié d'un renforcement des capacités ou non, et comment, le cas échéant, la capacité de construction est en conformité avec le plan stratégique de développement du Cameroun?")
13. **Is there any debt cancellation from China? If so, is the debt cancellation tied to some obligations on the Cameroonian side? (Y a t-il d’annulation de la dette venant de la Chine? Si oui, est l'annulation de la dette liée à certaines obligations sur le côté camerounais?)
14. *Could it be possible that China’s Aid to Cameroon might be a threat to regional integration? (Serait-il possible que l'aide de la Chine au Cameroun pourrait être une menace pour l'intégration régionale?)
15. **Find out the initiator of the process that leads to Aid. Is it the Cameroon Government the initiator or it is the Chinese? (Découvrez l'initiateur du processus qui mène à l'aide. Est-ce le gouvernement du Cameroun l'initiateur ou ce sont les Chinois?) **: Answer to be given by Chinese and Cameroonian Aid Experts *: Answer to be given by Cameroonian Aid Experts Thanks very much for your time
By: Nkwah Akongnwi Ngwa (Student Diplomat) International Relations Institute of Cameroon (IRIC) Tel: 75 07 49 84 & 95 48 48 16 E-mail:firstname.lastname@example.org
NKWAH Akongnwi NGWA: South-South Development Cooperation: The impact of Emerging Donors’ Aid on African Countries (The Case of Sino-Cameroonian Aid Relations) Annex 14: Construction Contract of the Yaoundé Multipurpose Sport Complex signed between Martin OKOUDA (Ministre Des Investissements Publics et de l’Aménagement du Territoire) and H.E HE XIAOWEI (Ministre Assistant du Ministre du Commerce Extérieur et de la Coopération Economique de la République Populaire de Chine)
NKWAH Akongnwi NGWA: South-South Development Cooperation: The impact of Emerging Donorsâ€™ Aid on African Countries (The Case of Sino-Cameroonian Aid Relations) Annex 15: Accord Relative to the loan given by the Chinese Government to the Cameroonian Government
NKWAH Akongnwi NGWA: South-South Development Cooperation: The impact of Emerging Donorsâ€™ Aid on African Countries (The Case of Sino-Cameroonian Aid Relations) Annex 16: Accord of Economic and Technical Cooperation between the Chinese Government and the Cameroonian Government
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THESIS, REPPORTS AND DICTIONARIES
A- THESIS -
Mvelle Guy Minfenda, « Aide au Développement et Coopération Décentralisée :Esquisse d’une désétatisation de l’Aide française Les cas du Cameroun, Congo, Gabon, RCA, Tchad et Rwanda », Paris, Université Jean Moulin Lyon 3, 2005. Wonyu Emmanuel Samuel, « La politique Française de coopération en Afrique subsaharienne face aux contraintes de la Construction Européenne » Universite de Rene Descartes, Paris, 2005
B- REPORTS -
Adams, Richard H., and John Page, “Do International Migration and Remittances Reduce Poverty in Developing Countries?” World Development 33(10): 2005; p.1645–69. Afreximbank (African Export-Import Bank), Annual Report. Per-Åke Anderson et al., “Foreign Aid, Debt and Growth in Zambia”, Nordiska Afrika Institute Research Report No.112, Motala Grafiska, Sweden 2000. Cabinet Civil de la Présidence de la République du Cameroun, "Le Temps Des Réalisations", Bulletin mensuel bilingue d’informations N°5 Octobre 2012. Cabinet Civil de la Présidence de la République du Cameroun, "Le Temps Des Réalisations", Bulletin mensuel bilingue d’informations N°6 November 2012. Caisse Autonome d’Amortissement (CAA), report June 2010. Economic Development in Africa Report “South-South Cooperation: Africa and the new forms of development partnership”. 2010. International Monetary Fund (IMF), “Cameroon: Statistical Appendix”, IMF Country, Report No. 07/286. 2008 Jean Jacques CHEVALIER, Report for UNESCO Committee, “The University teaching of International Relations”, C.A.W. Manning, 1953. Lum Thomas et al. “China s foreign aid activities in Africa, Latin America and Southeast Asia.” United States Congressional Research Service Report for Congress, 2009. Mavrotas George et al, “Assessing aid effectiveness in Uganda: an aid-disaggregation approach”, report prepared for the Bank of Uganda, 2003. OECD “Resources for Development in Africa” in OECD (ed.), “Financing Development: Aid and Beyond”. Paris: OECD Development Centre. 2007 OECD Annual Report: “Resource Flows to Fragile and Conflict-Affected States.” Paris, OECD, 2008a.
OECD, “Aid Effectiveness: a Progress Report on Implementing the Paris Declaration”. Paris, OECD, 2009. OECD, “Building Blocks for Policy Coherence for Development”, Paris: OECD, 2009. OECD, “Financing Development 2008: Who’s Ownership?” Paris, OECD Development Centre. 2008b. OECD, “The Paris Declaration on Aid Effectiveness and the Accra Agenda for Action”, Paris, OECD, 2008a. Quartey, Peter, and Theresa Blankson. “Do Migrant Remittances Minimize the Impact of Macrovolatility on the Poor in Ghana,” Report prepared for the Global Development Network, University of Ghana, Legon. 2004. Kaplinsky Raphael and Masuma Farooki.” Africa’s cooperation with new and emerging development partners: options for Africa’s development.” Report prepared for the Office of the Special Advisor on Africa, United Nations, New York, 2009. Aninpah Khan Sunday and Francis Menjo Baye, “China-Africa Economic Relations: The Case of Cameroon”, University of Yaoundé II, Cameroon Report Submitted to the African Economic Research Consortium (AERC), 2008. The Reality of Aid Special Report on South-South Cooperation: “South-South Cooperation: A Challenge to the Aid System” , IBON Books Philippines, 2010. UNCTAD, Trade and Development Report, “New Features of Global Interdependence”, 2005. UNCTAD: “FDI from Developing and Transition Economies: Implications for Development.” World Investment Report, United Nations publication, Sales No E.06.II.D.11, New York and Geneva 2006. UNCTAD: “Keeping ODA afloat: no stone unturned”. UNCTAD Policy Briefs no. 7. Geneva. 2009a. UNDP “Enhancing South–South and triangular cooperation: Study of the Current Situation and Existing Good Practices”, 2009. UNECA and OECD, “Mutual Review of Development Effectiveness” in Africa Report 2009: Promise and Performance. Paris, OECD. 2009. UNESCO, “South-South and Triangular Cooperation: Improving Information and Data”, 4 November 2009. UNESCO, “Trends in South-South and Triangular Development Cooperation”, Background Study for the Development Cooperation Forum, April 2008. Wanner B, “Focus on China’s aid policies intensifies as Congress considers foreign aid reform”, Washington Report, East–West Centre, United States Asia Pacific Council, Washington DC, 2009. World Bank, “IDA Countries and Non-Concessional Debt: Dealing with the Free-rider Problem in IDA 14 Grant-Recipient and Post-MDRI Countries”. Washington DC, World Bank. 2006. Rapport MINEPAT, Evaluation de la coopération entre le Cameroun et les pays émergents » Yaoundé Cameroon, 18-20 December 2012.
C- DICTIONARIES -
Chaigneau Pascal (sous la direction):«Dictionnaire des relations internationales», Economica, 1998. Hla Myint and Anne O. Krueger “Encyclopædia Britannica”. 2009. Lan Deardorff, “Deardorff's Glossary of International Economics”, 2009. Smouth Marie Claude, Dario Battistela et Venesson Pascal: «Dictionnaire des relations internationales», Dalloz, 2003.
SPEACHES, INTERVIEWS AND PRESETATIONS
- SPEACHES -
Head of State’s message to the Nation on the occasion of the inauguration of the Yaoundé Multipurpose Sport Complex, Yaoundé 19th June 2009. Head of State’s message to the Nation on the occasion of the end of year 2012 and the New Year 2013 Yaoundé, 31 December 2012.
A- INTERVIEWS -
Chinese Ambassador to Cameroon (Xue Jinwei) in an interview to Cameroon Tribune, 23 March 2011 Interview accorded to Telegramme Eco by H.E. M. WO Ruidi, Ambassadeur de Chine au Cameroun on 12 November 2012, Interview at the Chinese consulate, with the Third Secretary on Economic Affairs, Mr. Zheng Wei, 8th June, 2012 Interview with an official from the Chinese Embassy in Yaoundé, April 2012. Interview with Dr. Emmanuel Wonyu, Secretary General, MINESEP October 2012. Interview with Mr Essoh Phillip E , Head of the planification studies and cooperation department, MINESEP, December 2012 Interview with Mr Henry Mappe Dibongue, head of the temporal management team of the sport complex, November 2012. Interview with Mr YETE Mbote Jaques, DPE, MINEPAT, December 2012. Interview with Mr. Nkoth, CEA 1, Department of Cooperation, MINESEP, December 2012. Xinhua, Interview Ephrem Inoni, Prime Minister of Cameroon on September 30, 2006.
B- PRESENTATION -
Berthelemy J: “Impact of China’s engagement on the sectoral allocation of resources and aid effectiveness in Africa” Paper presented at the African Economic Conference. Addis Ababa. 11–13 November 2009. Osakwe P “Aid predictability, ownership and development in Africa” Paper presented at the second annual plenary of the OECD Global Forum on Development, Paris, 2008. Avom Désiré "La Gouvernance Financiere Mondiale apres la crise: Quelle place pour l’Afrique?", presented at the "Financing for Development Mobilizing Resources of Economic Transformation in Africa", Addis-Ababa, 18-20 Mai 2011.
- WEBOGRAPHY -
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South-South Development Cooperation arena has witnessed changes since the 1990’s, marked by the emergence of the non-traditional donors who...
Published on Apr 10, 2014
South-South Development Cooperation arena has witnessed changes since the 1990’s, marked by the emergence of the non-traditional donors who...