China is by far the largest new aid donor to some of the world’s poorer countries, a report by the Overseas Development Institute has found.
In an analysis of aid flows to nine lower income and lower-middle income countries, ODI researchers found governments still had access to traditional donors such as the UK and US, but the dominant new source of aid funding was from China.
In some cases finance from China, the current G20 President, amounted to more than 70% of the new aid funding that did not make up traditional Official Development Assistance (ODA).
Figures show however that countries which have experienced difficult relations with China, such as Viet Nam and Senegal, receive much less of its finance.
Report author Annalisa Prizzon, Research Fellow at the Overseas Development Institute, said: ‘China’s emergence as a dominant player in the new aid landscape could be key to helping poorer countries.
‘In most of the countries we looked at, China accounted for at least half of all non-traditional development finance.
'This does not mean that every developing country government can count on large amounts of money from China. Our research suggests funds from China go to those countries it favours at a geopolitical level, with those that have experienced tense diplomatic relations receiving much less.’
Analysis shows Chinese official financial accounted for an average of 50% of new aid funding across the nine countries studied. In Cambodia, Ghana and Lao PDR, this figure rose to more than 70%.
The report suggests the rise of China as a development finance provider has strengthened the negotiating power of some developing countries with traditional donors.
It also highlights how developing countries prioritise the volume, speed of negotiation and disbursement and a lack of conditions imposed on how it is spent.
The report suggests all donors can provide more effective development finance by supporting countries’ own strategies and policies, and providing the funds to do so quickly.
Notes to editors
- The findings in the report ‘An age of choice for development finance: Evidence from country case studies’ are based on studies of external development finance flows outside of Official Development Assistance in nine lower income and lower-middle income countries – Cambodia, Ethiopia, Ghana, Kenya, Lao PDR, Senegal, Uganda, Viet Nam and Zambia
- The case study countries have been chosen among stable low and lower-middle-income countries with a balance between African and Asia countries
- New aid funding refers to development finance which is not part of traditional Official Development Assistance (ODA) but is a source of external finance that could be available to governments to fund national development strategies
- China holds the presidency of the G20 for 2016, culminating in the G20 Leaders’ Summit in September
For more information, a full copy of the report or to arrange an interview with one of the researchers please contact James Rush on 07808 791265 or [email protected]