Chinese aid, social outcomes and ethnic inequality: evidence from Nigeria

How does aid impact social cohesion and political attitudes in ethnically fragmented recipient countries? Utilizing geospatial data on Chinese aid projects combined with Afrobarometer survey responses, the study uses a spatial-temporal approach to create difference-in-differences (DID) and difference-in-difference-in-differences (DDD) liked models. By comparing individuals near ongoing aid projects to those near future projects, the research shows the following effects: Chinese aid significantly enhances local freedom to speak yet simultaneously reduces voting participation and increases ethnic group unfair treatment. Heterogeneous effects are also evident across ethnic and religious groups. Furthermore, the result for the president’s co-ethnic group shows exactly opposite trends with respondents from the president’s ethnic group. More voting behaviour, less perceptions of ethnic group unfair treatment and more satisfaction with democracy. While in co-religion test, only voting is significant. The findings highlight the complex mechanisms through which foreign aid interacts with local clientelist politics, underscoring the need to consider ethnic inequality and political favouritism when evaluating the broader social consequences of aid in fragmented emerging economies.