While IFC is strengthening its involvement in India, China is deepening its economic ties in Africa.
In his opening speech at this week's Forum on China-Africa Cooperation in Egypt, Chinese Prime Minister Wen Jiabao announced Beijing's latest commitment to its African trading partners, which includes $10bn in fresh loans (on top of $5bn already pledged in 2006):
We will help Africa build up its financing capabilities...we will provide 10 billion US dollars for Africa in concessional loans... China is ready to deepen practical cooperation in Africa.
China will also set up over 100 clean energy programs, and relieve or cancel the debt of 31 countries. Chinese direct investment in Africa has increased from nearly $500m in 2003 to $7.8bn in 2008.
Wen claims that this latest round of assistance comes with no strings attached:
Africa is fully capable of solving its own problems, in an African way
There is one story floating around the blogosphere that seems to highlight an African economy solving its own problems. The Telegraph is reporting an economic turnaround in Zimbabwe, which has been buoyed by the dollarization of the local economy:
The hyperinflation crisis has in a sense solved itself. The Zimbabwe dollar faded away as the army and then everybody else refused to accept it. The US dollar is now the coin of daily life. Prices have been stable for months. "Forget about a local currency," said Mr Biti.
Zimbabwe's central bank – an arm of state terror under Zanu PF enforcer Gideon Gono – has lost its cash cow. It is no longer able to skim profits from exchange rate arbitrage.
Harare's stock exchange is humming again. Volume has increased 20-fold, all now in US dollars. The mobile phone firm Econet – again able to import kit from China – has paid its first dollar dividend. Delta Beverages has installed a new bottling line after a surge in beer demand, a telltale sign of returning prosperity. The MDC has begun to lift exchange controls. It plans to privatise chunks of the economy, embarking on the most radical free market policies seen in Zimbabwe for half a century.
"It is extremely investor-friendly," said Elton Mangoma, the economic planning minister.
I wonder if the carrot of increased Chinese aid and investment helped Zimbabwe solve some of its own problems. Alas, one can only speculate.
Update: Philip Karp from the World Bank Institute gives his take over at our East Asia blog. In general, he is supportive of China's growing African involvement:
My own view is that China’s growing engagement is good for Africa, is good for China, and indeed is also good for traditional development partners like the World Bank. In addition to providing badly needed sources of financing, trade, and investment, China offers a number of development lessons that are quite relevant to African countries.
The emergence of China as a major player in African development offers African countries a choice.
However, in order for African countries to take full advantage of that choice, and to be fully in the driver’s seat in their relations with the Chinese Government and investors, it will be important for them to have more complete information about what is on offer in terms of levels and conditions of assistance, and on the real terms of the various commercial deals that China is bringing to the Table. This is one area where China can perhaps do a better job in translating the lessons it has learned as a recipient of international assistance into its own engagements with other developing countries.
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