Realities of Chinese Foreign Aid to Africa
—At the Terminal of Belt and Road Initiative—


Research Fellow of JFSS Hiromi Sato

The Position of Africa in the Chinese Foreign Aid
Today, Africa is an essential driving force for China because of the interwoven characters such as natural resources, increasing market scale, and a traditional cooperative relationship between China and Africa. However, a lot of critical opinions are raised by international society recently. In this paper, I try to figure the realities of Chinese foreign aid to Africa and describe the prospects and future course of actions of Japanese foreign aid to Africa.
In the very early stage of 21st century, Chinese foreign aid was increased explosively. As China- Africa initiative of SAIS notified, total amount of Chinese foreign aid has increased from 631 million U.S. dollars in 2003 to 3.3 billion U.S. dollars in 2018 (chart. 1). This number shows that the aid increased almost 5.23 times in 15 years and it can be counted about 177,930,000 U.S. dollars annual increasing.
However, it is necessary to be careful to understand Chinese foreign aid since Chinese foreign aid has been provided in different manner from the Western donors , namely Japan, U.S. and OECD-DAC countries. In this paper, I try to figure out the realities of Chinese foreign aid with reference to Naohiro Kitano, a Japanese leading scholar of Chinese foreign aid. According Kitanoʼs definition, Chinese foreign aid can be categorized into 7 kinds and approximate gross volume of it can be counted by summing up the numbers of these 6 categories.
Chinaʼs foreign aid is defined as the sum of (1) grants and interest-free loans by the Ministry of Commerce (MOFCOM) (RMB denominated, interest rate 0%, loan execution period 5 years, deferment period 5 years, repayment period 10 years), (2) grants managed by other ministries responsible for foreign aid, (3) scholarships provided by the Ministry of Education (MOE) to students from other developing countries, (4) interest subsidies on concessional loans, which are deducted from the total amount of aid, (5) concessional loans managed by the Export-Import Bank of China (China Exim bank) as bilateral foreign aid (RMB denominated, interest rate 2-3%, repayment period 15-20 years [deferred period 5-7 years]), and (6) subscriptions and contributions to ODA-eligible international organizations as multilateral foreign aid. In addition to those items, (7) the administration cost of the China International Development Cooperation Agency (CIDCA).
In addition to the above, the “Preferential Buyerʼs Credit” (in US dollars) provided by the China Exim bank is also an export credit but has the same conditions as the preferential loan, so it can be converted into foreign aid. The explosive increase of Chinese development aid is particularly remarkable in African continent where China has quested resources and market as their nourishments of their economic development. For instance, in Angola of the South western part of the continent, the government contracted loans for infrastructure construction with China and replaced their payment by long-term exportation of petroleum, the abundant production of Angola.