Table of Contents

Corruption, Grabbing and Development

Corruption, Grabbing and Development

Real World Challenges

Edited by Tina Søreide and Aled Williams

All societies develop their own norms about what is fair behaviour and what is not. Violations of these norms, including acts of corruption, can collectively be described as forms of ‘grabbing’. This unique volume addresses how grabbing hinders development at the sector level and in state administration. The contributors – researchers and practitioners who work on the ground in developing countries – present empirical data on the mechanisms at play and describe different types of unethical practices.

Chapter 12: Monopolising reconstruction: Angolan elites and Chinese credit lines

Lucy Corkin

Subjects: development studies, development studies, economics and finance, development economics, economic crime and corruption, law - academic, corruption and economic crime, politics and public policy, public policy

Extract

In 2004, China ExportñImport (China Exim) Bank extended a USD†2†billion oil-backed loan to the Angolan government for the purpose of post-war national reconstruction. This dismayed the international donor community, which viewed the loan agreement as having allowed the Angolan government to have escaped the stringent conditionalities regarding transparency and macroeconomic policy that would have been attached to an International Monetary Fund (IMF) loan, the negotiations for which had collapsed just prior to the China Exim Bank agreement (Brautigam, 2009: 275; Global Witness, 2011). The China Exim Bank loan facility has been extended several times and as of 2012 total pledges reportedly stood at USD†10.5†billion. The loan is repayable at 3-month Libor2†+†1.5 per cent over 17†years, including a grace period of 5†years.3 According to Alves (2010: 12) the interest was reduced to Libor†+†1.25 per cent for successive tranches after the first USD†4.5†billion in credit lines. In the Angolan case, added to these terms is the management fee of 0.3†per cent of the loan amount, and a 0.3 per cent ëcommitment feeí (Dubosse, 2010: 75). The Angolan government must provide a down-payment of 10 per cent of the project value of each financed project.Such an arrangement has been the centre of controversy for a number of years, for two main reasons. First, the nature of the mechanism; being a bilateral transaction reduces its transparency.

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