Before heading out to the village of Chambasho in Tanzania where I would be working for the following ten days as part of a US assistance program, we had to check in at the county HQ in Kongwa. After doing some necessary paperwork there, we headed back to our SUV. As this was the county seat of a fairly large piece of Tanzania, all foreign business was handled through this office. Along one side of the parking lot, I spotted about twenty brand new walk-behind garden tractors, each with several attachments, and even a cart for hauling.
My father had once owned a tractor of that type, and I recognized it as a Gravely, and thought “that’s exactly what we American’s should be doing for Tanzania”. When I came closer, however, they turned out to be Gravely knock-offs from China. The next day in the village where I would be working, there was one Chinese tractor being shared by the villagers and two sunflower seed oil presses, also from China. In other words, the main technology supporting the economy of the village was from China … Nowhere was there any sign of US machinery or technology.
Here’s the way I think it works.
The US Agency for International Development, USAID, has allocated $464 million, or roughly a half billion dollars for Tanzania for FY 2010. These funds are distributed among 24 different categories or line items of assistance. One of those line items was HIV/AIDS which totaled $336 million, or 72% of the total (This was a legacy of President G. W. Bush, by the way, who was the first US President who set out to eliminate HIV/AIDS in Africa, and greatly increased US support in this area).
The category in which I worked was agriculture which, even though it was the second largest item after HIV/AIDS by a good margin, US assistance for agriculture, the basis for Tanzania’s economy, amounted to a paltry $63 million.
From here on is mainly speculation, speculation based on experience, however.
At least 10% of US assistance is siphoned off in the form of bribes, kickbacks and other forms of corruption (a popular scheme in Russia, for example, was for Russian officials to charge the Russian farms or companies a “fee” for the otherwise “free” services of American volunteers provided by the US government … nothing kick-starts black market economic activity like a valuable “gift”). In the case of Tanzania, the $ 500 million in US aid might therefore produce $50 million in bribes, kickbacks etc..
Half of the $50 million, say, remains in the pockets of local Tanzanians. The other half is put to legitimate use by, say, buying tractors from China. The Chengdu is a Gravely look-a-like for which no royalty is paid to Gravely, so all that is necessary is labor, materials and transportation costs in order for the Chengdus to make it to Tanzania. Domestic labor in China is paid for in the tongue-and-lip twisting Chinese currency, the Rimnimbi, a phony currency in terms of international trade that gives the workers a subsistence wage and a hard currency profit to the Chinese government. This tractor probably needed no imported materials or parts; as we know, under communism, all domestic raw materials and even energy are essentially free, being allocated on the basis of government’s estimated “need” (in this case, a need for hard currency plus political sway in Africa)
So the cost for the Chinese to make the Chengdu tractor is close to zero. Transportation is another expense, but then again, it is via Chinese ships for which the cost to build and staff is also close to zero for the same reasons as above, though fuel must increasingly be imported at world prices. Still, transportation costs would be a minor cost of a market-priced Gravely tractor, so the Chinese will have a huge cost/price advantage for a long time.
The bottom line is that the US provides “soft” aid in the form of volunteers for large sums of US taxpayer funds that pay for travel and local and US-based staff, and about 30% in overhead. US assistance (of all kinds, not just technical assistance) is then “monetized” by any number of possible shenanigans, which money is used to line some pockets and pay for a multitude of Chinese tractors and sunflower seed presses and the like … things the Tanzanians really need, thus giving the false impression that the “generous” Chinese are assisting the Tanzanians more than the US.
Technical assistance or consulting is basically invisible to the beneficiary country, at least that is the case the minute the advisor or consultant leaves. Therefore the US receives essentially no positive visibility compared to echelons of shiny new Chengdu tractors. China looks good, gets free advertising from the new equipment, earns real US pre-laundered dollars, makes a dollar profit, pays off its workers and manufacturers in Chinese checkers, and Tanzania is forever grateful.
Meanwhile, the US presence is best seen in the form of used American-provided condoms hanging in the trees along the roadside.
