aid for trade

‘Trade not aid’ as I mentioned in the last post I insist to trade with African countries instead of purely giving development aid, pure aids like development organizations are good and really do improvements to change of the quality life of the African social life, but I concern about whether this development aid will decline labor initiative, creativeness and independent thinking abilities of the local population or not. And there have been some news showing the Africans loss their indecency gradually. So I consider trade is the best way in the future to help African countries.

‘Recently international organizations such as the United Nations, International Monetary Fund, or the World Trade Organization (WTO) take similar approach because they assume participation in international trade plays an essential role in economic development and poverty reduction.’ This part news I found from the research report of BEÁTA UDVARI.

But from the recent data shows the preferential market access granted for the developing (least developed) countries was not sufficient: the African countries’ share from world trade declined significantly between 1970 and 2007. So I think the trade forms in Africa should be different from the traditional way of business. Then I look up a new word in the websites ‘aid for trade’.

In my mind the reason why this phenomenon taking place is that these countries are hindered by their underdeveloped supply-side capacity. To solve this problem, the WTO launched the Aid for Trade initiative in 2005 at the Hong Kong Ministerial Conference. The main objective is to develop the supply-side capacity of these countries to be able to take part in international trade more effectively.

I support this form of optimistic

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Some brief successful experience of China-Africa cooperation

In the past 50 years, the main types of China-Africa cooperation are in the policy and economic fields.

In the 50’s and 60’s of last century, Chinese assistances applied to Africa are mostly in the policy area, because the Regional peace and independence is the prerequisite for social development, the cooperation normally concentrates on the Operation of national independence.

After China opens its door to the whole world, cooperation is in intended to economic assistance and focuses on mutual economic development.

At the very beginning methods are used on aid are simple fund aid and goods supply, but from the results we know this is the worst way to do aid, because this method only can solve the present problem, if the rescue supply stopped the local population gets into the trouble again.

Since then Chinese government put more efforts on transfer the modern technologies to Africa to teach Africans how to face their own problem by themselves, and this strategy gets successful effects, especially in the public hygiene and agriculture, but because of the fund limits of the government, assistance can’t be involved in some important area of life, for instance, industry and energy development which costs a lot.

In order to further promote Sino-African exchanges, Chinese government is aware of necessity of enterprises, instead of government attend to the projects directly, enterprises can refer to their own advantages to take part into the area they are interested in and do the investments, then only thing government should do is to provide and guarantee a platform for cooperation and exchange. For large project such as infrastructure construction, Chinese government takes strategy as co-financing and risk share, by doing this on Chinese government side the financial pressure is much smaller and meanwhile the local population can learn not only technologies but also management experience from China.

http://et.china-embassy.org/eng/zgxx/t626494.htm on this website it is the ‘FORUM ON CHINA-AFRICA COOPERATION SHARM EL SHEIKH ACTION PLAN (2010-2012)

In my personal view, I consider as the premise of the assistance under the government organizations, the companies have more advantages than development aid agencies and I think in the future aid should be replaced by economic trade and exchange due to there is no equalization in an aid relationship.

The reasons why I think of this are :

First, in a specific field there are more specialists in the companies than in the aid agencies. Second, compared with non-profit organization the people are more motivate in the companies due to the better working environment, basic income and better insurance…etc. . Third, the chain of fund of development aid agencies is normally has a lot of uncertainties so there will be always some concern of the continuity of the project. Forth, during the cooperating time Africans can have a clearly view of how a companies is running and it is valuable experience for them to run their own companies in the future. Fifth, by being involved into management level the local people have more opportunities to contact with outside world. Sixth, local people have more rights of speak due to share risks and profit together with the foreign companies.

 

 

 

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China is the strategy partner of Africa not invader

In the last post I talk about whether the investments from China are good for Africa or not. This causes me to think about another question: why in some people’s eyes, the main purpose of China pushing into Africa is ‘plunder this black continent rich in energy resources’.

 

Because in my view I consider China is a developing country as well as the developing countries in Africa, although I have to say some parts of China have already been developed, like Shanghai and Beijing, and the present situation of China is much better than Africa, but China still far away from some western developed countries. And I also believe as a developing country, China should be more sensitive to the Africans need and much easier to understand what they want, because China has just gone through this section of track to self-developing.

 

I think the main concerns should come from two points, one is China-Africa Cooperation mostly concentrated in the areas of energy resources; the other one is Chinese using  “greedy anything to grab “method to access.

 

American scholar Bu Luoyi Tiga Farm in her book “Dragon’s Gift: The True Story of China in Africa, ” makes response to the first concern. Her survey shows that China has almost every country in Africa, investment and aid, not only for the resource-rich country. 5 years of China’s manufacturing investment in Africa over to mining investment. And she also express her own view on the second proposition, this is what she said ‘it is an obvious assumption and paranoia with color, distort of the facts, it can be said to be “demonizing China” under the emotional catharsis of thinking.

 

And here I also found some evidence to prove that the aid from China is not invasion:

 

The 2008 international financial crisis, multinational corporations have withdrawn from the copper industry in Zambia, leaving a pile of mess. Only Chinese companies don’t pull the plug, not discontinued, no layoffs, more than six thousand local miners are saved the jobs. Chinese energy resources companies in Angola, Sudan, Equatorial Guinea, Congo (Brazzaville) and other countries not only contribute to the local tax revenue, but also greatly satisfied the African countries most in need of roads, bridges, electricity, telecommunications, Water conservancy and other infrastructure, built hospitals, schools and social housing and other livelihood projects, only one in the oil business in Sudan provide local social welfare to more than 200 million people. In particular, the Chinese enterprises have also helped Sudan build a complete integration of upstream and downstream oil industry system to help Chad, Niger refineries construction, training of local technical team. These results are a lot of playing with the West African countries for decades failed to achieve dealings.

 

The reason I write this post is not to intended to show how many efforts China does for Africa, the only thing I want to express is the way of cooperation between China and Africa should be a good example for all the development organizations and companies, because as a developing country itself, Chinese are not that materialism as western developed country.

 

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China’s Investment in Africa to Increase to $50 Billion by 2015, Is Chinese Investment Good for Africa?

On the website below I see the investments from China to Africa are growing year by year. The China’s influence in Africa has become increasingly extensive and in-depth.

http://www.bloomberg.com/news/2011-02-22/china-s-investment-in-africa-to-increase-to-50-billion-by-2015-bank-says.html

China’s investment into Africa may rise by 70 percent to $50 billion by 2015 from 2009, as the Asian nation seeks to acquire resources, Standard Bank Group Ltd. said.

Bilateral trade between China and Africa will reach $300 billion by 2015, double the 2010 level, Africa’s largest lender said today in a report.

Companies including Aluminum Corp. of China Ltd. and China National Petroleum Corp. are seeking acquisitions in Africa, buying iron ore, oil and copper assets to feed a growing economy. Africa’s gross domestic product will expand by about 6 percent annually through 2015, Standard Bank said.

But at the time I have also seen some concerns come from local population and other countries, for instance, the Africans are afraid of the growing dependence of China’s aid and losing their traditional way of living due to culture invasion and globalizing, but more intense discussion is from Questioned the way the Chinese assistance to Africa, Africans and other governments or development organizations are wondering about whether the aid or cooperation between China-Africa is really good to improve the social states of African society.

 

http://www.cfr.org/china/chinese-investment-good-africa/p12622 this website briefly introduces a few concerns from different views.

— Adama’s concern that China is a new “imperial power” with a “colonialist project” who will “pretend to be the savior of Africa”. Once they get what they want, Adama fears, they are then likely to “forget about Africa.”

—China is only involved in infrastructural and industrial development in Africa for one reason: Such “sacrifices” serve its own national interests.

—Don’t forget that at the end of the 1970s when it decided to focus on its internal challenges, China’s leadership forgot about Africa.

—China does not realize that Africa has become a place where people yearn for democracy, good governance and economic development.
—By overemphasizing sovereignty and non-interference, the Chinese are running the risk of losing the support of the African population.

In my own opinion, I agree with the win-win strategy which is using in the cooperation between China and Africa now, because I really see both sides get promote and benefit from this strategy and it is really works better than the strategy we used before, of course, I accept there must be some other ways to do assistance even better, but I think we can’t stop helping Africans to improve their lives just because we can’t find out the best way.

 

Meanwhile from I am glad to see that for the most people hold a positive attitude to China’s assistance.

As African Development Bank Chief Economist Mthuli Ncube says ‘Africa welcomes investment from China, I think really largely the investments have been positive and I am happy to see China has long-standing political relationship with Africa’ (http://www.voanews.com/english/news/asia/Africa-Welcomes-China-Investment-114737179.html read more information on this website)

 


 

 

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government cooperation should be a good way of aid

In a recent interview on the China-Africa cooperation the Premier of china, Wen Jiabao, gives the following five recommendations to raise the level of cooperation:

First, expanding Sino-African trade.
Second, strengthening China-Africa investment and cooperation.
Third, increasing of assistance level.
Fourth, promoting China-Africa business cooperation.
Fifth, increasing the training of personnel.

When African Development Bank Chief Economist Mthuli Ncube is attending the World Economic Forum in Davos, Switzerland, he says ‘China’s long-standing political relationship with Africa is increasingly giving way to an economic relationship. And China has become a valuable partner in many ways and that China is willing to play a role in stimulating investment, which Africa sorely needs.  In addition, he says China is beginning to play a larger role in providing humanitarian aid to poor African countries.’

From the amplitude of the Chinese government and the reaction of Africa recipients, I consider the cooperation either between the Chinese and African governments or among the companies from both sides is not simply development aid.

Because From an economic point of view of trade, China is the world’s fourth largest economy, foreign trade volume ranks third in the world. Last 5 years to incomplete statistics, China has imported from around the world 24000-26000 billion worth of goods. As the world factory, the demand for primary products is very strong. This basis provides an objective condition for China-Africa further cooperation. In addition, China’s manufacturing industry has a surplus, also needs Africa such a huge potential market. Although the African market is dominated by the leading Western and Japanese companies, normally commodity prices are beyond the scope of the local residents can afford. So Cheap Chinese products have a competitive advantage.

From the interview of former vice minister of MOFTEC tong zhiguang who served as chairman of chairman of Export-Import Bank of China and was responsible for export credit transactions to Africa. I realized that China actually treat Africa as its forth investment region.

Based on the value from the figure and the material I read from this website: http://www.china.org.cn/english/features/focac/185857.htm the assistances from China are quite different from the western countries. After the money aid and technical supports at the very beginning of the cooperation, now the relationships turn into the communication in every aspect of the social life, and what I can predict is there will be a win-win further. So my conclusion is Chinese government and companies provide a more efficient way to help African countries to improve the quality of life.

 

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development aid cooperation should be government to government

Based on what dejene said in his article (Quality of life and Development aids) the quality of life consists of material wellbeing, health, political stability and security, family life, community life, climate and geography, job security, political freedom and gender equality.

But either of companies or development organization has its own defects, for instance, companies can only improve parts of the quality of life, such as working opportunity…etc., and behaviors of the development organization are sometimes limited by a lot of aspects, such as budget, local policy and religion and so on. So if the develop aid is done by each of them, the effect of improvement won’t be significant. So if we want to improve every part of the social life in African countries it is obliged to cooperate with the local government and go deep into their social life.

And the article of elienvanwinckel also reminds me of cooperation between the African local governments. But here I think the cooperation should be government to government.

http://www.focac.org/eng/mtsy/t772102.htm

Mohamed Ould Hannani, Mauritania’s ambassador to South Africa said in the interview:

people in Mauritania are grateful to Chinese people because China has helped their country a lot, especially in infrastructure construction closely related to people’s daily life.

He cited huge projects like expansion project of the harbour, drinking water project, airport construction in Nouakchott, capital of Mauritania, all of them got assistance from China.

“These projects have not only boosted our economy, but also directly improved our people’s lives,” he said.

In retrospect, the ambassador said the Africa-China relations have “progressed very well” in the past decade.

Looking ahead, he said he was “confident” in the progress of the relations between Africa and China in years to come.

Mbulawa, on his part, expressed his sincere hope that the FOCAC could maintain its momentum in the next decade.

From the interview we can see, under the help of the governments companies can contact more social field, not only limited in the economic field anymore, can do help in area of Infrastructure, Resources cooperation, Tourism cooperation, Debt reduction and relief, even in Education, science, culture, health and social aspects. The basic advantages of this idea are at least providing financial support and legal protection to the foreign companies and organizations. And also give chance to local companies to open their minds.


 

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how to aid in a effective way

like thomasrondou mentioned in his article: ‘Development aid = catalyst for private sector’, the effectiveness of aid needs to be improved.

Based on the news of China-Africa Cooperation Forum Beijing Summit,

I read it from this website:

http://world.people.com.cn/GB/8212/72927/4999813.html (unfortunately it is Chinese but I translate the part which I think is related to our topic)

China-aid projects in the past twenty years are turnkey form, that is, after completion of the project it is transferred to the recipient immediately. But since variety of reasons which come from every aspect of African situation, many projects only have poor profit or even at the verge of collapse.

In order to gain the efficiency of aid, nowadays, the cooperation between China and African countries turns into management cooperation, that is, China provide experts directly involved in the production, sales, management, management.  This is conducive to increase the production capacity of China-aided projects, but also help train African cadres at the management level, the effect is significant.

Here I have a good example to show clearly what this news mean:

http://en.wikipedia.org/wiki/TAZARA_Railway

After the Tanzania-Zambia Railway is handover in 1976, and until 1983, the project get into the trouble due to the accumulated losses is as high as 970 million Tanzanian shillings. Start from 1983, Chinese experts are involved in the management area, the project become s profitability in the next year, and only in 1988 it earned 1.45 billion Tanzanian shillings.

So in my opinion, the most efficiency way to do aid project is not the way of giving more and more money to the developing countries or only providing a lot of working opportunities or technical supports, it is the way both sides, companies and recipient, take part into management level and share the risk and profit together. The advantage of this form of cooperation is for Africa, can provide more employment opportunities, produce the productions based on the needs of the local population, reducing imports, increased foreign exchange earnings; for companies, it can effectively use Africa’s rich natural resources and cheap labor,  open up international markets.

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