New Focus Countries not about Effective Aid

In February 2009, Bev Oda, Minister of International Cooperation, announced 20 countries in which the former CIDA aimed to concentrate 80% of Canada’s bilateral aid. This list of focus countries was intended to reflect Canadian interests, country need, and the potential for Canadian aid to make a difference.  In most cases, these were countries where Canada had been an active player in the aid game for decades and many had long been top recipients of Canadian aid.  In a few, the intensity of the relationship had been more recent and acute (Afghanistan).

Overall, the aim was to focus Canada’s aid to make it more effective. Rather than disperse its meagre aid dollars over too many recipients, Canada aimed to concentrate its efforts in fewer countries to increase its impact on poverty.

At the end of June, Canada’s Department of Foreign Affairs, Trade, and Development (DFATD) announced it was changing this list for the first time since 2009.  Adding seven new countries to the list (Benin, Burkina Faso, Burma, Democratic Republic of Congo, Jordan, Mongolia, and the Philippines) and removing two (Bolivia and Pakistan) to arrive at a new total of 25 countries.  What’s more, Canada will now concentrate 90% of its bilateral aid budget in these countries.

Why these countries?  Most observers agree: commercial interests appear to have played a significant role in their selection. Indeed, last year’s Global Market Action Plan had laid out the commercial opportunities the Canadian government perceived in many emerging markets.  It is not surprising, therefore, to see several of those emerging markets (Burma, Burkina Faso, and Mongolia) added to the list of focus countries to bolster Canadian commercial interests. Other reasons also played a role.  Jordan and Philippines were reportedly added to the list to further enable Canadian humanitarian responses in the wake of the Syrian refugee crisis and Typhoon Haiyan.  The Democratic Republic of Congo, though resource rich, has low levels of human development in the wake of its prolonged and ongoing conflict since the 1990s. Benin and Burkina Faso might indicate renewed attention to Francophone Africa.

Clearly, a variety of reasons motivated the inclusion of countries as additions to the list, though DFATD characterized the selection of focus countries as “based on their real needs, their capacity to benefit from aid, and their alignment with Canadian foreign policy priorities.”  Lost in this is the original motivation for focusing Canada’s aid – to make it more effective.

Effective aid, in this context, is not simply aid done another way, or delivered by or to benefit the private sector.  Global norms established in the past decade suggest that to be effective, aid should be substantial, predictable, and long-term. By revising the list of focus countries after only five years and in response to our own commercial and foreign policy interests rather than compelling cases for development effectiveness, the government has demonstrated that effectiveness is not its primary concern.

Figure 1: Average Annual Total Canadian ODA to Focus Countries, 2004-2012

Figure 1.

New focus countries in green.
Source: OECD Creditor Reporting System

To be sure, several of the countries added to the list are classified as low income economies and have low levels of human development (Benin, Burma, Burkina Faso, and DRC) meeting the criteria of ‘real needs’, but, as Figure 1 shows, in only two of these (Burkina Faso and DRC) has Canada been providing significant amounts of total net aid in the recent past (>$25 million USD annually averaged between 2004 and 2012).  Furthermore, in none of the middle-income countries has Canada provided on average more than $20 million USD annually in the 2004-2012 period. Mongolia, for instance received on average only $2.6 million annually in that period. Low levels of aid committed previously to these countries make an argument for effectiveness based on a substantial aid relationship difficult to believe.

Likewise, the fact that Canada is revising its focus countries adding new countries and dropping two former focus countries from the list for apparent political reasons, also raises issues about predictability and long-term nature of Canada’s aid commitment to such countries.  Five years in the aid business is shorter than it sounds given that it typically takes years between planning an aid program and actually implementing it on the ground.  Apart from short-term humanitarian programming or other quick-in initiatives, it is unlikely than any of Canada’s major bilateral projects planned in Pakistan or Bolivia since they were named focus countries in 2009 would have yet concluded, let alone be evaluated for their effectiveness or impact. Regardless of any internal analysis undertaken by DFATD, the decisions to drop these countries can be based on little more than a preliminary sense of what effect being focus countries had on either Pakistan or Bolivia, let alone the effectiveness of Canada’s aid in either country. Even if this preliminary sense is negative (there is no public indication this is the case), cutting and running from a commitment to focus, in this instance, flies directly in the face of the aid effectiveness aims under which focus countries were first introduced for Canada’s aid.

Commercial motives and political expedience shaped these changes to Canada’s list of aid focus countries.  Focusing aid where Canada has had little aid presence and suddenly prioritizing others that have been characterized as ‘emerging market opportunities’ highlight the short-term, self-interested, and ill-conceived nature of these changes.  Aid, under this government, has become simply a tool of Canadian trade and foreign policy with no pretense to being primarily about fighting poverty.  There should be no illusion about the motives for these decisions. Focusing Canada’s aid in these countries may enhance other Canadian interests, but it is decidedly not about aid effectiveness.

 

Table 1: Select Indicators for New Focus Countries

Country Remittances from Canada, 2012 (est, millions USD)1 Imports to Canada, 2013 (millions CAD)2 FDI outflows, 2012 ( millions CAD)3 GDP per capita, PPP, 2013 (2011 const $)4 World Bank Income Group5 HDI Rank
Benin 0.39 0.17 0 1687 Low income 166
Burkina Faso 0.10 0.39 1528 Low income 183
Democratic Republic of Congo 3.79 685 Low income 186
Jordan 53.24 46.13 0 11,340 Upper middle income 100
Mongolia 1.53 129.95 605 8,297 Lower middle income 108
Myanmar 8.50 Low income 149
Philippines 2032.00 1137.13 0 6,005 Lower middle income 114

1 Source: World Bank Bilateral Remittance Matrix
2
Source: Industry Canada, Trade Data Online
3 Source: World Bank, World Development Indicators
4
Source: CIDP – Canada’s Development Footprint Beyond Aid: Interactive Data
5
Source: World Bank – Country and Lending Groups

A Remarkable Year for Canadian Foreign Aid

It is beyond clichéd to reflect back on the year just past when we reach the tail end of December.  In most years, Canada’s foreign aid programs would not merit the attention of a year-end review; however, looking back on 2013, such reflection seems warranted.  After all, we have gone from being up in arms about swanky hotels and $16 orange juice to eliminating Canada’s aid agency altogether.  Indeed, it was a year encompassing deep cuts, an ill-planned merger, naked commercial self-interest, and a worsening lack of vision for how Canada can best contribute to global development.  For all these reasons and despite the cliché, I want to take stock of what made 2013 such a remarkable and disappointing year for Canadian foreign aid.

Let’s start with the cuts. It was not long into 2013 that it became clear that announced budget cuts to Canada’s aid program were going to be deeper than anticipated.  Aside from announced cuts of 7.5 percent to the aid program in the 2012 budget, reports surfaced that CIDA was going to lapse hundreds of millions of aid dollars during the 2012-2013 fiscal year. Described as “cutting through inaction”, “cutting by other means”, or “massive cuts without any transparency” by various aid experts, the previously budgeted aid funds projected to lapse in FY2013 implied a much more significant funding cut to Canada’s aid than expected.  By November 2013, updated reports suggested that about $300 million had been lapsed in this manner, representing almost 10 percent of the CIDA aid budget in 2012-2013.

The lapsed funding issue is of concern because it reflects the loss of Canadian contribution to combating poverty, promoting human rights, and generally contributing to development internationally.  By not approving new initiatives, allowing proposed programs to pile up on the Minister’s desk, CIDA ended up doing less than was budgeted.  To some, this simply sounds like a cost savings.  To others, it looks like children missing vaccinations, less clean water for communities, or fewer girls in schools.  Had a domestically-focused social program simply decided not to spend nearly 10 percent of its budget in a given year over and above existing cutbacks without any public consultation, heads would roll.  Yet, because it was only foreign aid funding, a few development experts and reporters took notice, and the cuts continued.  The fact that the year-on-year cut to spending at CIDA from FY2012 to FY2013 was closer to 12 percent – nearly $500 million – suggests the strategy of cutting through other means was sadly efficient.

In retrospect, these deep cuts to CIDA foreshadowed that the Agency’s days were numbered.  It was not much further into 2013 that we learned about the merger of CIDA and DFAIT into the new Department of Foreign Affairs, Trade, and Development (DFATD).  With little notice to senior CIDA management, and seemingly less advanced planning about how the merger would play out, the government announced its plans to remodel how Canada’s diplomacy, trade, and development efforts would look moving forward.  Rather than a relatively autonomous and specialized aid agency like it had since 1968, Canada’s aid will now be delivered by various pieces of an unwieldy DFATD, with the Minister for International Development simply one of three within the new mega-department.  The merger was announced with accolades for how it would make Canadian aid more efficient, more coherent, and more in keeping with Canadian interests.  With a new Minister and Deputy Minister for International Development appointed soon after the amalgamation, the dust has yet to settle on the merger almost six months since DFATD was created in law.  Only a few leaks of information have shed any light on how the merger has proceeded (or stalled) to this point – including the controversial appointment of a Canadian mining industry CEO to the “External Advisory Group” working to shape the new department’s vision and structure.  What is clear is that the integration of the aid function into a common department with trade and diplomacy has spelled out the direction in which the current government is steering our aid efforts: towards Canadian self-interest.

Aside from the use of aid to achieve diplomatic objectives (sharp focused upticks and subsequent reductions in aid to Afghanistan, Iraq, or Pakistan in the past decade when it was deemed politically expedient to achieve Canadian security objectives), we have also seen Canadian aid used in the past to bolster our trade and investment interests. The difference in the current context is how explicit this naked commercial self-interest has become.  Apart from the much maligned NGO/private sector pilot initiatives featuring three Canadian mining sector heavyweights (Rio Tinto Alcan, Barrick Gold, and IAMGOLD) under the guise of supporting greater corporate social responsibility, we have since witnessed a sharp turn towards Canadian aid being used as a tool to promote our commercial interests abroad.  The November 2013 release of the Global Markets Action Plan as a new direction for ‘economic diplomacy’ in Canadian foreign policy cements this aid-trade linkage further arguing that DFATD will “leverage development programming to advance Canada’s trade interests” (p. 14).  Aiming to use aid as just another tool to promote our own commercial gain, it is not surprising that CIDA was disappeared so rapidly following the merger.

There are no reasons why our aid cannot support benefits for Canada.  The entire notion of enlightened self-interest in the developing assistance context suggests that donor countries also benefit from fighting poverty and promoting peace and security elsewhere.  Still, the blatant linking of our aid programs to directly building Canada’s trade and investment profits goes far beyond this and smacks of a new era of ‘tied aid’ where the donor benefits just as much or more so than the aid recipient.  If under this new economic diplomacy aid becomes more about ensuring that Canadian private sector firms have better access to world markets than it is about fighting poverty globally, then Canadians will lose no matter the profits or jobs that come to us because of increased trade.

With the deeper than expected cuts, the ill-planned merger, and the commercial self-interest that has emerged as the new core of Canada’s foreign policy, 2013 was truly remarkable in terms of the evolution of our foreign aid programs.  Only a few short years ago, Canadian aid was trending upwards in both absolute and relative terms, Canada had a standalone aid agency with a strong legal mandate derived from the ODA Accountability Act, and commercial interests were at the periphery rather than the core of our aid policy.

As 2013 draws to a close, those among us with firm belief that Canada has the potential, and indeed the duty, to do more to promote development globally must surely be disappointed by the developments of the past twelve months.  The most disappointing fact about it all is that – for once – aid is receiving significant government and public attention, as many dollars and more hours are spent trying to mold the existing aid program into something new.  Yet, despite all these efforts, the results appear quite bleak.

Aid critics and supporters of the merger may disagree, but rather than an aid program to take pride in – governed by principles of accountability, transparency, and rigor – Canadians now find themselves having to stomach an approach to aid and development driven by ad hoc planning, Ministerial whim, and blatant self-interest.   2013 has, indeed, been a remarkable year as far as Canadian foreign aid is concerned.  It is hard to imagine that 2014 could bring more momentous developments in this respect, but then again, at the end of 2012 we were still recovering from the shock of $16 orange juice.

This post originally appeared on the Ottawa Citizen Aid & Development Blog on 2013/12/27.