FROM AID CONDITIONALITY TO DEVELOPMENT PARTNERSHIP: INDIA’S LINES OF CREDIT IN EAST AFRICA AND THE POLITICS OF SOUTH-SOUTH COOPERATION

Abstract

Development finance within the post-Second World War international order has been largely shaped by Western donor-led aid regimes characterized by policy conditionality, structural adjustment, and governance prescriptions. These approaches have been widely criticized for constraining national policy autonomy and reproducing dependency in African states. Against this backdrop, India‟s development engagement with East Africa represents a historically grounded and normatively distinct alternative rooted in post colonial solidarity, South-South cooperation, and the rejection of hierarchical donor-recipient relations. This study examines India‟s Lines of Credit (LoCs) in East Africa to analyze how they operationalize a development partnership model and provide an alternative to Western conditional aid frameworks. Anchored in the conceptual framework of the Development Compact, articulated by Arjun Sengupta and further elaborated by Milind Chakrabarti. This paper portrays India‟s development finance within the political economy of South-South cooperation. It argues that India‟s LoCs reflect a long standing post-colonial development philosophy that prioritizes sovereignty, national ownership, and demand-driven cooperation. Extended under the Indian Development and Economic Assistance Scheme (IDEAS) and implemented by the Export-Import Bank of India, LoCs are concessional loans, project-based instruments directed primarily toward productive sectors such as infrastructure, energy, transport, agriculture, and industrial development. Focusing on East African countries including Ethiopia, Tanzania, Kenya, Uganda, Rwanda, and Burundi, the study demonstrates that India has emerged as a significant development partner and an alternative in the region. Substantial LoC commitments aligned with national development strategies such as Ethiopia‟s Growth and Transformation Plans and Kenya‟s Vision 2030-underscore recipient-state agency in project selection and implementation. The study also underscores the importance of capacity building initiatives, particularly the Indian Technical and Economic Cooperation (ITEC) programme, which strengthens development partnerships by focusing on human resource development in tandem with financial engagement.