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POLICY brief


  • pg 1
                                                                                         brief          ISSUE NUMBER 1 | NOVEMBER 2010

The Impact of China-Africa Aid
Relations: The Case of Angola
                                                                                                       Angola over specified time
                                                                                                   •   Identifying and analysing the
                                                                                                       sector-specific opportunities
                                                                                                       and challenges faced by Angola
                                                                                                       as a result of the impacts
                                                                                                       generated through the growth
                                                                                                       of the economic relationship
                                                                                                       with China;
                                                                                                   •   Articulating and analysing
                                                                                                       Angola’s national and sector-
                                                                                                       specific policy responses and
                                                                                                       overall development strategies
                                                                                                       for maximising the benefits
                                                                                                       and confronting the challenges
                                                                                                       emanating from the economic
Benguela, Complexo da Sr. da Graca being constructed through chinese assistance                        relationship with China.

By Carina Kiala                                       The primary purpose of this
                                                                                              Method of Analysis
                                                research project is to undertake a
Problem Statement                               comprehensive analysis of the key
                                                                                                   his study makes use of both

                                                                                                   quantitative and qualitative methods
     ilateral relations between China and       features and patterns of the past, current
                                                                                              of analysis, employing theories of
     African countries have intensified         and future evolution of the economic
                                                                                              international political economy and social
exponentially of late. Their cooperation        relations between China and African
                                                                                              studies to assess the impact of China-
has fuelled much contention over                countries. The study allows a more
                                                                                              Angola aid relations on Angola’s political
the potential ramifications of China’s          comprehensive understanding of the
                                                                                              system and its socio-economy. The paper
emerging economy for its African                impact of China-Angola aid relations, the
                                                                                              utilises a holistic body of data sources
partners. While the respective parties          associated opportunities and challenges
                                                                                              comprising personal interviews, primary
insist their engagement is founded on a         for Angola’s development prospects, as
                                                                                              sources, official documentation, policy
win-win model of mutual benefit, critics        well as articulates the overall and sector-
                                                                                              documents, theoretical literature, as well
warn that the trend emulates a potential        specific policy measures that Angola may
                                                                                              as critiques and discussion papers from
re-colonisation of Africa for its mineral       wish to undertake in order to advance its
                                                                                              the media.
resources.                                      national interests in light of the impact
                                                                                                    The author conducted field
      Angola increasingly finds itself          experienced and the challenges faced.
                                                                                              research in Luanda between March 2 –
at the centre of debate surrounding                   The objectives of this research
                                                                                              13, 2009, during which she interviewed
Chinese activity on the African                 include:
                                                                                              representatives from various entities
continent. Although Angola is the                     • Identifying and analysing
                                                                                              including the Angolan ministries of
continent’s second largest oil exporting                   key features, patterns and
                                                                                              Planning, of Agriculture and Rural
country, poverty remains rampant. Its                      developments in the main
                                                                                              Development, and of External Relations,
economic growth is dependent on oil                        channels through which the
                                                                                              the National Private Investment Agency,
exports, which have in turn made it                        impacts of the growth of China
                                                                                              the National Institute for Scholarships,
China’s largest African trade partner                      are transmitted in Angola;
                                                                                              the Chinese Embassy, the Chinese
and the second largest source of                      • Providing a qualitative and
                                                                                              Economic Counsel’s Office, China
China’s oil imports after Saudi Arabia.                    quantitative evaluation of
                                                                                              Railway 20, and CITIC Construction.
Adjacent to this is China’s emerging                       the nature, dimensions and
                                                                                              Field research was also performed
role as a development partner in the                       magnitudes of the sector-
                                                                                              in Beijing between April 22 – May 2,
reconstruction and development of post-                    specific and overall incidence
                                                                                              2009 where the author met various
conflict Angola.                                           of the impacts transmitted to
stakeholders, including the Africa           parties could address human resource         security by 2012. There are prospects for
Department of the Chinese Ministry of        development in order to build capacity       using China’s experience of involving
Foreign Affairs (MOFA), the Chinese          and encourage technology transfer.           the subsistence farmers into the formal
Academy of International Trade and                  The second contribution is a          sector. Angola has been importing
Economic Cooperation (CAITEC) in             quantitative estimation of the impact of     agricultural tools and machinery
the Department of Aid Studies of the         China-Angola aid relations. There is a       through the credit line, but the recent
Ministry of Commerce (MOFCOM), and           lot of approximate figures and ‘guess-       pledge of US$ 1 billion for agricultural
the China-Africa Development Fund.           timations’ in the media on Angola’s          development offers much potential in the
                                             accumulated debt to China and the size       area of human resource development.
Key Findings                                 of its credit line. Some articles report

                                             exaggerated amounts, bundling the                  The credit lines made available to
      hina-Angola aid relations have
                                             aid from the Chinese government with         Angola by China (the PRC) and other
      experienced unprecedented
                                             that from CIF. Others insubstantially        actors (namely CIF) have certainly
growth since the end of the civil
                                             report dichotomous figures between US$       increased Angola’s debt. However, as
war. Both parties have been able
                                             4 – 10 billion. This paper has provided      long as Angola is borrowing funds,
to secure their national interests
                                             a narrative account of Chinese aid to        the country’s debt would increase
using very strategic and opportune
                                             Angola, as well as discussed the terms of    accordingly irrespective of the source.
mechanisms of diplomacy. China
                                             the financial agreements.                    While traditional donors perceived
has emerged in the new millennium
                                                    The third contribution of the         corruption as a deterrent to aid and
as an economic force to be reckoned
                                             study is the critical observation of what    loans, China has short-circuited the
with, now assuming the positions of
                                             China-Angola aid relations implies for       disbursement of funds and the credit
the world’s third largest economy.
                                             the global financial system and in the       line acts much like a current account.
Its own experience has prompted a
                                             international donor community. It seems      The funds do not go through Angola, but
paradigm shift in development theory,
                                             that ‘China Mode’ has had an influence       are actually channelled directly to the
which has penetrated its foreign policy
                                             on other countries, who are now more         Chinese firms contracted on projects.
towards other developing countries
                                             inclined to extending self-serving credit
and particularly those in Africa.
China’s diplomatic efforts in FOCAC
                                             lines instead of just signing fixed loan
                                                                                          Policy Implications
and bilaterally with African countries                                                         he concept of aid/ODA is itself a
                                                    The disciplinary focus of Chinese
demonstrate a new feature of the country,                                                      product of constructivism from the
                                             aid to Angola is varied. Infrastructure
one that is of a development partner.                                                     OECD. Now that a significant new player
                                             development is the main component,
      Once only considered an aid                                                         has emerged into the donor community
                                             consisting of projects in energy and
recipient, this report has demonstrated                                                   with its own preconceived ideas and
                                             water, transport, social communication
that China is also a significant aid                                                      mechanisms of disbursing funds, China
                                             and other public works. Chinese
donor. Its definitions, principles                                                        is challenging the parameters of aid.
                                             companies have been contracted to build
and mechanisms pertaining to aid                                                          The OECD players use aid to relieve
                                             school facilities and medical centres.
differ slightly from those of the more                                                    poverty and promote development, but
                                             Cooperation includes the dispatching
established donor community in the                                                        also to induce good governance. China
                                             of Chinese medical doctors and the
OECD. However, its intention is the                                                       seemingly imposes no conditionalities,
                                             provision of scholarships for tertiary
same. Since China’s economy and its                                                       which they believe undermines their
                                             studies at universities in China. With
socio-political fabric differ greatly from                                                efforts. This is especially contentious
                                             the construction sector experiencing a
the DAC countries, perhaps it should                                                      because up until now the effectiveness
                                             major boost, it would be opportune for
be expected that the country’s policy                                                     of aid has come under question, yet
                                             employment creation. However, the
towards aid would as well. Hence, China                                                   China’s efforts appear to be popular and
                                             import of Chinese services also includes
may be redefining the parameters of                                                       successful.
                                             a major Chinese expatriate labour force.
aid. There is limited research available                                                        The emergence of Angola Mode
                                             Concerns have been raised over the
on China-Angola aid relations and                                                         set a precedent, both in development
                                             sustainability of
even less that assesses the impact of
                                             this model and
the cooperation. The literature review
                                             the impediment
revealed a gap in existing knowledge,
                                             it causes on skills
which this paper has sought to fill.
                                             development and
      The first contribution made by
                                             technology transfer.
this study is an empirical analysis
of the impact of China-Angola aid
relations. The paper acknowledges
                                             sector has been
that the overwhelming bulk of China’s
                                             indentified as a
aid is directed towards infrastructure
                                             prime target for
development, but the disciplinary
                                             future cooperation,
focus of Chinese aid to Angola is far
                                             especially since
more diversified. This paper examined
                                             Angola plans
the other sectors of cooperation, with                                The Kilamba Kiaxi social housing in Luanda is being built by
                                             to attain food
particular emphasis on how both                                    the Chinese.
theory and in the international donor        Learning
community. The exchange of resources
for services is an ingenious model to
                                             from China’s
fast-track infrastructural development       agricultural
in African countries. The mechanisms
used to disburse the funds also lower
                                             Since agriculture
the risk of financial mismanagement
                                             sustains the
and the misappropriation of capital. As
                                             livelihoods of
a post-conflict country, the motivation
                                             85% of Angola’s
for aid to Angola is obvious. Socio-
                                             labour force, any
economic conditions are dire, institutions
                                             disregard for
are broken, the rule of law is frail and
                                             these farmers or
the political system has long been
riddled with corruption. Nevertheless,
Angola has made remarkable strides in                               Chinese workers paint lines onto a crosswalk outside the
                                             of subsistence
the last seven years. In addition to the                            November 11 stadium
                                             farming for
contributions of the traditional players,
China’s role as a development partner in
                                             farming will have a devastating effect       would be ideal for fish breeding. With the
Angola has really come to light.
                                             on more than six million people. Angola      right skills, technology, financial support
      The report presents policy
                                             could learn from China’s experience          and strategy, there is a lot of potential for
recommendations that aim to ensure
                                             in this sector. Chinese agriculture is       aquaculture in Angola. This would create
that China-Angola aid relations are not
                                             built from some 200 million small            professional employment and steer the
based on or determined by China’s own
                                             farmers, who each cultivate on just          artisan fishing industry into the formal
resource-seeking agenda, but rather
                                             about half a hectare of land. The            economy.
by partnership that is indeed mutually
                                             effectiveness of Chinese agricultural
beneficial and also reflective of Angola’s
                                             aid programmes remains questionable.
development agenda. The policy                                                            Fine-tuning the infrastructure
                                             However, the onus actually rests with
recommendations are as follows:
                                             the Ministry of Agricultural and Rural       development agreements
                                             Development (Ministério da Agricultura       A contentious subject of discussion is that
Stimulate the manufacturing                  e Desenvolvimento Rural – MINADER)           China’s current model for infrastructure
                                             to strategically co-opt Chinese aid in a     development in Angola provides
                                             manner that will efficiently maximise and minimal employment opportunities for
Angola needs a manufacturing sector
                                             sustain agricultural productivity. Using     locals and does very little to alleviate the
that will promote value-add production,
                                             the TVE model, subsistence farmers           country’s skills shortage. The Angolan
create professional employment and
                                             should be empowered with new skills          government recognises the importance of
develop industries. Considering
                                             and technology. All Chinese sponsored        employment equity, skills development
the paradigm shift on models of
                                             tools and programmes must be adapted         and technology transfer. However, it will
development, it not clear whether ODA
                                             to meet the requirements and satisfy the     only enforce them in policy according
can have any role to play in developing
                                             needs of each local community. Produce       to the roles that it envisages each actor
a country’s manufacturing sector since
                                             must be suitable for each region’s climate, to play. Even so, unless there is some
investment has immemorially been
                                             soil and market demand.                      indemnity clause for all the work done
considered the preferred strategy.
                                                                                          up until now, Angola would not want
However, China may have created a
                                                                                          a situation in the future where it would
loop-hole in this regard with its CAD        Aquaculture and the fishing                  need to recall Chinese companies on
Fund. The Fund was intentionally
                                             industry                                     maintenance contracts. It is therefore
set up to assist Chinese enterprises
                                             Upgrading a fleet of vessels of artisan      only sensible to refine the terms of
and entrepreneurs invest in Africa.
                                             fishermen does not necessarily increase      infrastructure development projects, in
Angola could use FDI in its industrial
                                             Angola’s fishing capacity. What is           order to foster employment equity, skills
development zones to stimulate the
                                             actually required is to empower the          development and technology transfer.
manufacturing sector. Angola has seven
                                             people with efficient fishing practices,
designated industrial development
                                             to maximise productivity and safeguard
zones across the country, which could                                                     Rigorous fiscalização (surveil-
                                             the environment. A fraction of the aid
be an opportunity to decentralising
                                             could be invested in setting up SMMEs.       lance and inspection) of infra-
manufacturing activity. However,
Angolans will still need capital
                                             After all, once production levels start to   structure projects
                                             rise there would be market opportunities     The ‘fiscalização’ (process of due
investment to jump-start new ventures
                                             for the processing and packaging of the      diligence) that is carried out on
and feasible business plans that will
                                             marine products. Such a shift would          construction contracts in Angola has
produce self-sustaining and income-
                                             reduce the risks of artisan fishing,         a patchy track record. While some
generating businesses.
                                             stimulate industrial activity and create     contractors attest to the stringency of the
                                             skilled employment. Also, there are many process, it has been described by others
                                             water pockets around the country that        as a rubber-stamp process that pays
lip-service to its function of auditing and    towards empowering its professionals         Capitalising on Chinese spon-
overseeing the successful execution of the     with medicinal expertise. Therefore,
project. The employment of independent         instead of continual donations, there
                                                                                            sored scholarships
                                                                                            China’s contribution in education also
engineering contractors to oversee the         could be domestic manufacturing of the
                                                                                            involves the financing of university
projects is of vital importance to ensuring    drugs and antiseptics.
                                                                                            scholarships. Angola must review the
the standard of the work carried out.
                                                                                            management of the Chinese government-
Where independent contractors have
                                               Equipping education and                      sponsored scholarships. It should lobby
been employed in the past in Angola, the
results have been highly successful. This      medical facilities with human                for the fields of study to project its
                                                                                            national strategic plan. Upon completion
process should thus be encouraged on           resources                                    of their studies, the graduates should
projects contracted to Chinese companies       Angola’s education and medical sectors
                                                                                            return to Angola and be channelled into
as well.                                       are receiving a major boost in new
                                                                                            strategic positions where their newly-
                                               and renovated facilities that are co-
                                                                                            acquired professional expertise could
Sustaining healthcare and em-                  funded by the state and loans from the
                                                                                            be used but also their proficiency in
                                               Chinese government. With the physical
powering Angola with medici-                   infrastructure in place, Angola is a few
                                                                                            Mandarin Chinese.
                                                                                                  Angola faces many political,
nal expertise                                  steps closer to achieving its Millennium
                                                                                            economic and social challenges at a
The dispatching of Chinese medical             Development Goals. Civilians have
                                                                                            national level that it is addressing, but
doctors to Angola is a positive initiative     greater access to medical care and the
                                                                                            the aid efforts of its partners must be
that enables mutual learning amongst           public health system. Also, scholars
                                                                                            synchronised with its own agenda.
the medical practitioners. Patients,           have a conducive environment for their
                                                                                            China-Angola aid relations appear to be
especially, would benefit more from the        studies. However, the key to sustaining
                                                                                            benefiting the country, as the output is
exchange programme if the Angolan              the medical and education facilities
                                                                                            tangible and extremely visible around
government encouraged the Chinese              is to invest in a dedicated team of
                                                                                            the country. However, the long-standing
medical team to learn Portuguese               professionals and educators. Considering
                                                                                            impact of China-Angola aid relations will
(medical terms and casual conversation).       the skills shortage in Angola and China’s
                                                                                            only truly reveal itself in the long-term
The donation of anti-malaria medication        linguistic limitations, Angola will
                                                                                            once the projects are complete and the
is valuable programme for Angola, but          need to recruit the services of qualified
                                                                                            Chinese contractors have left the country.
it is unsustainable. Malaria is a tropical     Portuguese-speaking expatriates
                                                                                            Therefore, it is imperative to place a
disease and until there is a vaccine it will   and personnel. Furthermore, skills
                                                                                            stronger emphasis on human resource
remain an enduring one in Angola. To           development is an ongoing process – e.g.
go beyond the anti-malaria treatment           outreach programmes, teacher training
centre in Luanda’s Central Hospital,           courses and degrees, and exchange
Angola should guide China’s cooperation        programme.

                                   AFRICAN ECONOMIC RESEARCH CONSORTIUM (AERC)

      The African Economic Research Consortium (AERC), established in 1988, is a public not-for-profit organization devoted
      to advanced policy research and training. The principal objective is to strengthen local capacity for conducting independent,
      rigorous inquiry into problems pertinent to the management of economies in sub-Saharan Africa. In response to special
      needs of the region, the AERC Research Programme has adopted a flexible approach to improve the technical skills of local
      researchers, allow for regional determination of research priorities, strengthen national institutions concerned with economic
      policy research, and facilitate closer ties between researchers and policy makers. The Training Programme augments the
      pool of economic researchers in sub-Saharan Africa by supporting graduate studies in economics, as well as improving
      the capacities of departments of economics in local public universities. AERC is supported by donor governments, private
      foundations and international organizations. Further information concerning AERC and its programmes can be obtained

                                                        The execuTive DirecTor
                                                AfricAn economic reseArch consorTium
                                                 miDDle eAsT BAnk Towers, 3rD floor
                                                             milimAni roAD
                                     Tel: (254-20) 273-4150 (piloT line) / 273-4157 / 273-4163
                                                      fAx: (254-20) 273-4173
                                                    emAil: exec.Dir@AercAfricA.org
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