What About Canada

 

Canada and the Millennium Goals
At the Millennium Summit in 2000, world leaders committed themselves to the achievement of 8 Millennium Development Goals (MDGs) by 2015. Read what record Canada has on aid, trade, debt and what the Canadians think about aid.

Canada and the Global Deal

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At the Millennium Summit in 2000, world leaders committed themselves to the achievement of 8 Millennium Development Goals (MDGs) by 2015.  Both rich and poor countries agreed to work towards the eradication of extreme poverty and hunger, the elimination of gender inequalities, the prevention of environmental degradation, the prevention and treatment of HIV/AIDS, and the provision of education, healthcare and clean water. Since then the MDGs have had a catalytic effect on global development, because of their simplicity, accessibility, and because progress against them is easily monitored.

The MDGs involve a Global Deal between rich and poor countries: poor countries pledged to reform policies, improve governance, and to channel resources to development objectives, as embodied by the first 7 Goals.  Rich countries, for their part, promised to deliver more and more effective aid, faster and deeper debt relief, and fairer trade rules. Rich country commitments are, in particular, outlined in the 8th Goal.

 

So how well is Canada doing in meeting its part of the Global Deal?

Canada’s record on aid

Aid volume

  • Canadian official development assistance (ODA) represented 0.34% of GNI in 2005.  This leaves Canada far behind the average OECD donor country effort in 2005 of 0.47%.
  • In absolute terms, the Canadian aid budget stood at $3.7 billion dollars in 2005.  The aid budget in 2005 was smaller than that of the Netherlands, which is not – like Canada – a G7 country.
  • Through the 2003 budget, Canada pledged to increase international assistance by 8% each year for the foreseeable future.  This would lead to a doubling of Canadian international assistance in nominal terms by 2010 over its 2001 level.  However, projections suggest that this would still leave Canadian ODA very far short of the 0.7% international ODA/GNI target in 2010.
  • When making its commitment to increase underlying aid levels by 8%, the Canadian government suggested that aid would increase more quickly if economic and budgetary conditions allowed.  In 2005, this resulted in a 30% increase in the aid budget in real terms over 2004, as a number of one-off ODA payments were made at the end of the Canadian 2004/05 fiscal year.  However unless there are similar one-off payments in 2006, aid levels are likely to slip back.
  • Canada is one of the OECD donor countries that committed, 30 years ago, to providing 0.7% of its GNI in ODA.   Canada is not only far from this target, but it has not set a schedule for its achievement.  Canada was among a small group of countries once again called to meet this international obligation, at the 2005 UN World Summit.

Canada should make its longstanding pledge to reach 0.7% ODA/GNI a reality, by setting a credible and realistic implementation schedule for its achievement in the near future.  It is unfortunate that Canada did not announce a target date for 0.7% in 2005 when it had two opportunities to do so: at the Gleneagles G8 Summit (where the Canadian government just restated its previous commitments) and at the UN World Summit in September.  Canada’s reluctance stands in contrast to the recommendations of the Africa Commission – of which former Canadian Minister of Finance Goodale was a member – which made a passionate plea for the setting of dates to meet the 0.7% commitment. This fact is all the more disappointing given that the 0.7% international target originated in 1969 with Lester Pearson, a former Canadian Prime Minister.  Moreover, the reluctance of both existing and former Canadian governments to reach this target stands in contrast to the cross-party consensus in the House of Commons: in June 2005, Members of Parliament unanimously adopted a resolution calling on the federal government to set a plan to reach 0.7% ODA/GNI by 2015.

Canada belongs to the group of OECD donor countries that would like to see a watering down of the official definition of ODA.  These countries would like to include anti-terrorism and other security expenditures included in ODA.  While such expenditures are important and justified, they should not be made by diverting resources from poverty-focused programs.

Aid quality

  • In 2003-04, 28% of Canada’s ODA went to the least-developed countries (LDCs) and another 12% to other low-income countries.
  • One of the key problems with Canadian aid is its dispersion, supporting approximately 100 countries and many different sectors.  In fact, the Canadian aid program is the most widely dispersed donor program.  This is a weakness which reduces aid effectiveness, but it is one that the Canadian authorities are trying to tackle.
  • Sub-Saharan Africa is the region which receives the largest share of Canadian aid – some 28% – but Canada remains a small donor in this key region.  Canada has pledged to direct half of its future aid increases to this region, and has a special fund to support private sector development in the region.  Nevertheless, it remains a smaller donor to the region than countries such as Belgium and the Netherlands.  This is disappointing given Canada’s leadership role in developing the G8 plan for Africa.
  • Compared with other donors, Canada has a very high share of ‘tied’ aid, including food aid, although efforts are being made to untie aid particularly for LDCs.  In 2003, 19% of Canadian aid to the least-developed countries was tied.  Untying aid is key to improving value-for-money for recipients.  This is particularly important for food aid.  The OECD estimates that untied food aid reaches up to 50% more beneficiaries than tied food aid.
  • The OECD also notes that Canadian public-private aid partnerships need further scrutiny, as it is unclear to what extent the partnerships are genuinely supporting private sector development in developing countries, rather than simply benefiting Canadian firms.

 

In 2005, Canada adopted a new international policy statement which sets out a new framework for Canadian development cooperation with a view to strengthening its impact and effectiveness.  Notably the new statement lays out a plan to focus Canadian efforts and resources in five core sectors and in 25 ‘focus’ countries.  Canada is committed to providing two-thirds of its aid to these 25 predominantly African countries, but there is still a risk that these Canadian country programs lack critical mass.

The new international policy statement comes against a backdrop of existing efforts to improve the effectiveness of Canadian aid.  The main Canadian development agency has been engaged in a process of transformation from a project-oriented organization, contracting with many mostly-Canadian ‘executing agencies,’ to a program and country-focused organization operating within developing country driven development strategies.  This move should improve aid effectiveness as well as increasing the poverty-reduction and MDG focus of Canadian aid.

Canada’s record on debt relief

Canada supports multilateral debt relief through the HIPC initiative.  It has also provided bilateral debt relief in the context of Paris Club agreements with other official debtors.

Beyond these two initiatives there is the Canadian Debt Initiative.  This initiative promises to cancel all bilateral debts owed by countries reaching the ‘completion point’ of the HIPC initiative.  Further, even before completion point, those HIPC countries that prove themselves able to use the resources released by debt relief for poverty-reduction are given an immediate moratorium on all debt repayments.

Further, since ceasing its loan program in 1986, essentially all Canadian aid is provided in grant form.

Canada’s record on trade

Overall Canada’s trade policies are more development-friendly than those of some other rich countries such as those in the European Union.  A few years back, Canada put in place procedures to ensure the coherence of development and non-development policies, and this remains a priority under the new 2005 international policy statement.  Nevertheless, the OECD has suggested that Canada could be even more proactive in analyzing the impact of non-aid policies, like trade, on development.

One example of good Canadian trade policy is that on patents. Canada was the first developed country to change its patent laws to ensure the availability of generic drugs for poor countries.

At the beginning of 2003, Canada extended duty- and quota-free access for exports from LDCs, with the exception of dairy, poultry and eggs.  In extending this access, Canada took specific steps to ensure that this access was not hampered by excessively complicated rules of origin.

Canada also has a number of schemes for enhanced market access (through lower than usual tariff rates) for specific groups of developing countries, but these schemes have generally exempted the same three products above, as well as textiles and clothing.

Canadian public opinion

The Canadian public is relatively sceptical of its government’s aid efforts and it needs to be convinced that aid helps fight poverty. By continuing its efforts to improve the quality of aid, the government could change that impression. In addition more public development awareness raising and education is needed.