The Political and Economic Dynamics of Foreign Aid in Africa: A case study of United States and Chinese Aid to Sub -Sahara Africa

Working paper 594
Author(s): 
Kafayat Amusa, Nara Monkam, Nicola Viegi
Publication date: 
April, 2016
Classification-JEL: 

The foreign aid arena as it pertains to the African continent has traditionally been dominated by the Organization of Economic Co-operation and Development (OECD) countries, however over the last three decades non-traditional donors such as the China, South Africa and Brazil have emerged in the donor field. The increasing importance of non-traditional donors has meant that the economic and political stronghold of Western and OECD countries in sub-Sahara African (SSA) has gradually ebbed, due to increased competition amongst donors on the continent. Specifically, as the economic and political reach of the United States (USA), the second largest bilateral donor to SSA has diminished, amongst the group of emerging donors, China has become the largest contributor of aid to SSA countries. There appears to be a political - economic dynamic that points to the existence of two competing reasons underpinning the foreign aid trend in SSA. Using a comparative approach, this study examines the determinants of aid allocation by China and the United States to SSA countries. The study finds that both donor motives and recipient need are factors in US and Chinese aid allocation to SSA. Additionally, the study finds differences in US aid allocation determinants pre and post China’s entry into SSA’s aid field. Furthermore, evidence of income and population bias is observed for both donor countries.

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