Picture: THINKSTOCK
Picture: THINKSTOCK

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CHINA provided a major new financing instrument for Africa on Thursday, partially answering criticisms that its previous aid to the continent had been overly opaque and self-interested.

The agreement creating a $2bn Africa-China Growing Together Fund was signed in Rwanda between Zhou Xiaochuan, the governor of China’s central bank, the People’s Bank of China and African Development Bank (AfDB) president Donald Kaberuka.

"We have strong confidence in Africa and we believe that for the next 10 years we are going to see strong growth," Mr Zhou said at the ceremony on the opening day of the AfDB’s annual meeting.

China is already Africa’s leading trade partner and its share of the current spending on infrastructure projects across the continent is estimated by leading economists at between 30% and 45%.

"China is a friend of Africa," Mr Kaberuka said. "We will make sure the money is well used."

Underlining the key significance of the fund, he said it would have exactly the same conditions, procedures and "rigour of analysis" as other AfDB funds.

In other words, future disbursements under the fund will not be restricted to bilateral government-to-government deals and projects like China’s traditional financial and in-kind support.

"It means that Chinese companies will compete on the same terms as any others" when bidding for tenders financed by the Africa-China Growing Together Fund, the AfDB’s general counsel Kalidou Gadio told reporters.

The bank will receive fees for managing the fund which was effectively operational immediately. China’s central bank has signed a promissory note for the $2bn.

Mr Zhou acknowledged the shift from China’s bilateral aid model to the fund’s multilateral role. He said Beijing’s foreign ministry was used to dealing with foreign governments individually whereas the central bank and other economic institutions had a broader approach.

"Different entities may behave differently," he said. China joined the AfDB as a nonregional member in 1985, long after it started building close political and co-operation ties with some African countries but before its trade and investment surge into the continent.

Mr Kaberuka, a Rwandese who has brought the annual meeting to his homeland, has entered the last year of his 10-year mandate as AfDB president. He is due to host the 50th anniversary meeting next year in Abidjan, Cote d’Ivoire, before stepping down.

Africa’s premier financial institution will be coming home from temporary exile in Tunisia where it decamped during Cote d’Ivoire’s disastrous decade of civil disturbance and full-blown civil war.

The race to succeed Mr Kaberuka, who is due to move his office back to Abidjan next month, has already begun and will pick up speed later this year when candidates must declare their intentions. But the annual meeting’s official daily magazine published portraits on Thursday of six "possibles", including one woman.