Why Competitive Politics Can Pull Development Finance Away from Need

By Keyi Tang

As development finance tightens, the most important question may not be who is lending, but how domestic politics shapes where the money goes.

When a foreign-financed road is opened, the picture is clear that this project will connect farmers to markets, lower transport costs and bring neglected communities closer to opportunity. But one question often goes unasked. Why was this road built here, and not somewhere else?

That question sits at the heart of my new book, Power Over Progress: How Politics Shape Development Finance in Africa, recently published by Cambridge University Press. It first took hold while I was a research assistant at the Johns Hopkins SAIS’s China-Africa Research Initiative in 2019, tracking Chinese development finance in five languages. Seven years of desk and fieldwork research then took me from financier capitals in Washington and Beijing to ministries and roads agencies in Ethiopia, Ghana, and Zambia.  Drawing on geocoded project data, original election results across 48 African countries and 175 interviews, I find that development finance often follows political logic as much as development need. Whether the money comes from China, the World Bank or Western bilateral donors, it flows to the places that matter most to incumbents.

This is where the book departs from earlier research. Many studies look for favoritism using clues, such as a leader’s birth region, a spouse’s home region or areas associated with the leader’s ethnic group. My book instead tracks actual regional election results and asks which places matter most to incumbents politically based on the most recent elections. That makes it possible to see not just one or a few regions where money goes, but the entire subnational map and the coalition politics behind it.

This is not the story many readers expect. China is often portrayed as the political lender, while the World Bank and other traditional donors are seen as more technocratic. My research suggests the contrast is real, but incomplete. Once money enters a recipient country, domestic politics can still bend it.

The key factor is political competition. When leaders face intense pressure to win the next election, hold together a fragile coalition or reward core supporters, roads, schools and other visible projects become political tools. In Ghana, for example, the slogan “no roads and no votes” has become a common refrain during election periods. The result is not random corruption. It is patterned allocation: resources are steered toward ruling-party strongholds, electorally competitive swing areas or regions that matter to regime survival (sometimes meaning to do performative governance in your opposition region).

Three countries, three political maps

Zambia shows how damaging this can become. Under the Patriotic Front (PF) government, road finance from multiple foreign sources is channeled heavily toward ruling-party strongholds. New roads are politically useful where they reinforce the president’s home base and coethnic coalition. Opposition regions, by contrast, are more likely to be left behind. For example, the lozi, who dominate the Western Province, a major opposition stronghold during the PF rule, often only gets received only “lousy” public goods. This is not just a fairness problem. It also increases the risk of poor project selection, inflated costs and debt-heavy spending with weak developmental returns.

Ghana reveals a different but equally political pattern. Because its elections are highly competitive and both major parties must build broad coalitions, development finance has often been directed less toward ethnic strongholds and more toward swing regions. In some ways, that is better than Zambia’s winner-take-most politics because stronger institutions constrain the most extreme forms of favoritism and force governments to distribute projects more broadly. But those constraints do not remove politics from allocation. They shape it. Political usefulness still plays a major role in determining where roads go first, which means the poorest regions do not automatically get what they need.

Ethiopia under the Ethiopian People’s Revolutionary Democratic Front (EPRDF) offers a third lesson. Lower electoral competition and more centralized control allow the government to align more infrastructure spending with long-term national plans, producing less obvious regional favoritism in road allocation. But this should not be romanticized. Ethiopia’s relative planning capacity rests on repression, weak political accountability and a brittle political settlement that eventually collapsed into violent conflict. The lesson is not that authoritarianism is better for development. It is that elections alone do not guarantee a fairer distribution of resources.

That is one of the book’s central findings. More political competition can actually intensify favoritism when institutions are weak. In some countries, leaders reward their home regions. In others, they pour money into swing areas that can decide the next election. In both cases, places with the greatest developmental need can still lose out.

Why this matters now

This matters even more at a time when many low- and middle-income countries face tighter budgets, heavier debt burdens and declining development finance from both China and traditional donors. When development finance was expanding, political misallocation was costly. Now when finance is scarcer, it becomes even more consequential.

The politics of who loses out become just as important as the politics of who gets funded. Regions seen as less strategically valuable to incumbents may be first in line for delays, cancellations or quiet withdrawal. A road built for electoral gain rather than economic need can leave more productive regions disconnected, deepen territorial grievances and add to debt without generating enough return.

The costs are not abstract. In Ghana, especially across the tightly contested election cycles from the late 2000s through 2020, intense electoral competition encouraged overpromising and overborrowing, contributing to a cycle in which too many projects are launched and too many remain unfinished. In Zambia, politically driven road building during the Patriotic Front government between 2011 and 2021 fed a model of spending that was highly visible but often poorly governed. These are not side effects. They are part of the way political systems convert external finance into domestic advantage.

This has an important implication for debates about China and Western donors. The most useful question is not simply which lender is better. It is how different lenders interact with domestic political incentives. Chinese finance is often more demand-driven and more exposed to contractor influence. Traditional donors usually have stronger safeguards, which can make project appraisals, procurement and monitoring more demanding. Those rules matter, but they do not fully determine where projects land.

So what should change?

First, subnational transparency should become standard practice. It is not enough to know how much money a country receives. Citizens, journalists and legislatures need to know which districts receive projects, in which sectors and on what timeline.

Second, financiers should take domestic political incentives more seriously at the project design stage. Technical feasibility is essential but not enough. A project can be technically sound and still be politically distorted. Development agencies should ask early whether a project’s location reflects national need, electoral strategy or elite bargaining.

Third, the strongest safeguard may not be another form at donor headquarters, but stronger institutions inside recipient countries. African stakeholders need to be part of the solution. Legislatures, audit agencies, journalists, civil society groups, and affected communities are often better placed to challenge skewed allocation in real time. They should push for subnational disclosure of project locations, financing terms and timelines. They are best placed to ask the hard question when finance tightens: who is being left behind?

For China, the challenge is especially urgent. Chinese development finance remains hampered by fragmented oversight and by a system in which state-owned contractors can help shape the same projects from which they profit. More independent feasibility review and stronger in-house capacity to assess political and financial risk would help. But traditional donors should also be humbler about their own limitations. Procedures on paper do not automatically survive contact with political reality.

My book argues that development finance is better understood as a political resource that enters ongoing struggles over power, coalition-building and survival. If we want roads, schools and clinics to reach the places that need them most, we have to design around that reality rather than deny it. In an era of shrinking finance, the danger is not only that there will be less money overall. It is that the places with the least political leverage may lose first.

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