1. The last Development Assistance Committee (DAC) Review of Canada's development co-operation, held in January 1998, highlighted Canada's special ability to help lead the international community towards action which pushes out the frontiers of international co-operation. At the same time it noted that, in the context of a fundamental fiscal adjustment to respond to its domestic public debt burden, Canada's aid budget had been cut by 29% over six years, more than in any other area of Canadian public spending. As a result, Canada's official development assistance effort (as measured by the ODA/GNI ratio) had declined steeply from 0.45% at the beginning of the 1990s and was projected to fall below 0.30% by the end of the decade. (In fact, partly reflecting fast growth in Canada's gross national income (GNI), the ODA/GNI ratio fell to 0.25% in 2000 and 0.22% in 2001). The DAC pointed out that these trends had created a paradox at the heart of Canada's internationalism, given the continuing determination to be involved in a very wide range of issues and with as wide a range of partners as possible. This paradox raised concerns about Canada's ability to meet expectations, both at home and abroad, for its role in the world.
2. An impressive series of major funding and policy decisions by the Canadian government in 2002 allows the DAC in this Review to acknowledge and assess the effort now underway to address this paradox:
The International Assistance Envelope (IAE), of which ODA comprises 80%, is to be increased by 8% per year until the end of the decade, with the goal of doubling the volume of ODA and raising the ODA/GNI ratio to somewhere near 0.35%, with the ultimate aim of reaching the United Nations target of 0.7%.
Canada has announced a wide-ranging set of measures to support African development, including a CAD 100 million investment fund to support private sector development in Africa (See Annex I of the Secretariat Report). Half of the increase in ODA is to go to Africa, to which the special CAD 500 million allocation announced last year for Africa is to be added. The Canadian authorities calculate that about CAD 6 billion in existing and new aid flows financed by Canada in the next five years, will go to Africa.
On the trade liberalisation front, Least Developed Countries (LDCs) are to have free access to the Canadian market (with exceptions in a few areas of agricultural trade).
Adopting the DAC Recommendation on Untying of ODA to LDCs, Canada is to untie a significant part of its financial and project assistance.
3. A further feature of 2002 has been Canada's leadership of the G8 Summit, held in Kananaskis, and chaired by the Prime Minister of Canada. In particular the G8 Action Plan for Africa, and the participation for the first time of five African Heads of State, representing the New Partnership for Africa's Development (NEPAD) in the Summit meeting itself, owes much to Canadian efforts. These included Prime Ministerial visits to Africa and consultations throughout Canada. The G8 Education Action Plan also was an outcome from the Summit which reflected special leadership from Canada.
4. Along with these major policy breakthroughs in aid volume and on the wider policy coherence front, the Canadian International Development Agency (CIDA), has been broadening and deepening the organisational change process which was in an early phase at the time of the 1998 review. CIDA is now fully engaged in a thorough-going renewal of its business model, aiming to transform itself from a project-oriented organisation contracting with many "executing agencies", mainly Canadian, to a programme and country focused organisation operating within the framework of developing country driven development strategies, aimed notably at poverty reduction and the achievement of the Millennium Development Goals.
5. Canada's development co-operation thus has a strong new wind in its sails. The political impulse that has been generated at the highest level will need to continue as Canada confronts the challenges involved in carrying its new programme forward. These challenges, which are well recognised by the Canadian authorities, include:
Engaging and maintaining public support as Canada's aid becomes less identifiably Canadian but more focused on overall country level results emerging from collaborative efforts with developing country partners and other donors.
Integrating the new development co-operation orientations into Canadian foreign policy and reinforcing co-ordination across the government system in international assistance activities and policy coherence.
Reconciling the programme and country focus in aid policy with the current wide dispersion of Canada's aid and with the longstanding role of "Canadian partners" in aid delivery.
The implications for CIDA's organisational style, including the role and responsibilities of field missions vis-à-vis Ottawa, the skills and qualities of its staff, and the way in which its results-based management system and other information systems operate.
1.1. Consolidating Canada's development co-operation orientations
6. Canada's 1995 foreign policy statement Canada in the World, which remains the overall reference point for Canada's development co-operation policy, is currently being updated. Founded on an assessment of the changing world since the end of the Cold War and wide consultations with the Canadian public, it identified three key objectives: the promotion of prosperity and employment; the protection of Canadian security, within a stable global framework; and the projection of Canadian values and culture. It sets the mandates for Canada's ODA programme - first, to support sustainable development in developing countries in order to reduce poverty and to contribute to a more secure, equitable and prosperous world; and second, to support economic prosperity and economic liberalism in Central and Eastern Europe by building mutually beneficial partnerships (CIDA took over operational responsibility from the Department of Foreign Affairs and International Trade in 1996). Canada in the World placed poverty, inequality and lack of human rights high among the issues to be addressed. Bringing the developing world into the international economic system was listed as among the major priorities for Canadian policy on the international economic system. Written at a time of fiscal austerity, it stressed that international assistance was a vital instrument for the achievement of the three key foreign policy objectives, while at the same time indicating that the purposes of the programme and the manner of its delivery had been reassessed to ensure that it would serve clear and identifiable national interests and that the scarce resources dedicated to it were used with maximum efficiency. It set six programmes priorities for Canadian ODA: basic human needs, women in development, infrastructure services, human rights, democracy, good governance, private sector development and environment.
7. Since 1995, as signalled by the Millennium Development Goals adopted by Heads of State at the UN Millennium Summit, poverty reduction has emerged more clearly than before as the overarching goal of international development co-operation. This is reflected in CIDA's more recent policy documents, notably CIDA's Sustainable Development Strategy 2001-2003, which is based on the mandates included in Canada in the World described above and constitutes its business plan. The document sets two programme priorities and a core management goal, implementing CIDA's sustainable development mandate by applying a management-system approach based on continual improvement.
8. The Strategy has since been complemented by two further key documents. CIDA's Social Development Priorities: A Framework for Action, with explicit reference to the international consensus on development goals, sets out CIDA's plans to focus more of its resources on some key social priorities intimately related to poverty reduction. It establishes precise funding levels for 1999-2004 in four areas - basic health and nutrition, basic education, HIV/AIDS, and child protection. On the management goal, CIDA has published, after a wide consultation process, Strengthening Aid Effectiveness; New Approaches to Canada's International Assistance Program, which again refers to the international consensus on targets and principles, notably stronger partnerships/compacts between developing countries and their external partners, local ownership, improved donor co-ordination, results based approaches and greater policy coherence in non-aid areas. The document then explores the implications for programming approaches and management.
9. In addition, CIDA has continued to strengthen its emphasis on cross-cutting areas such as gender equality, environmental sustainability and capacity development. (In this latter area, Canada has created a "Partnership for International Co-operation in Governance and Public Sector Management" with participation from over 40 federal institutions).
10. The current updating of Canada in the World should afford an opportunity to place all these new reference points, notably on poverty reduction, within a coherent and compact statement of Canada's overall development priorities and strategies as a guide for the range of development-related policies and activities across the Canadian government system. It could also be an occasion to set out future orientations for development co-operation in Central and Eastern Europe, given that most of these countries are set to join the European Union as soon as 2004. It should also provide the opportunity for a new statement on how national objectives are to be reflected in Canadian development co-operation and be coherent with development objectives.
1.2. Focusing the increase in the International Assistance Envelope and maintaining public support.
11. The 8% per annum increase in the IAE will generate something like CAD 200 million in additional funding in the first year (and rising in subsequent years), to be allocated between ODA and non-ODA activities, between CIDA and other parts of the Canadian government, and between bilateral and multilateral aid. The allocation process for the IAE is managed by the Minister for International Co-operation, in consultation with other ministers involved, although the Minister's own accountability extends only to CIDA, the agency she is responsible for.
12. Public announcements have already indicated that the IAE allocations will enable ODA to be doubled over the decade, implying at least an 80% share for ODA. For CIDA, this will provide scope to focus increased ODA on a relatively small number of developing country partners. This would address a long recognised weak point in Canadian aid - the wide dispersion of aid among many small country programmes and Canadian partners. As a result, only 45% of Canada's bilateral aid can be traced through to particular developing country partners and regions (the lowest ratio in the DAC). Canada has almost no partner countries in which it has critical mass, given the highly projectised nature of its aid and the extensive role of Canadian executing agencies.
13. With the new emphasis on programme approaches, this dispersion is increasingly problematic, not least in terms of the difficulty of demonstrating clear linkages between Canadian aid and development results at the country level. Public opinion polls indicate that the Canadian public strongly supports the aid effort, while remaining sceptical about its effectiveness. Significant financial contributions to effective sector programmes and budget support, and a corresponding voice in the "mutual accountability" relationships that are emerging with countries where these modalities can be employed, will be an important way to show how Canada is contributing to collective action with clear impact. CIDA intends to focus its additional aid through enhanced partnerships with a limited number of developing countries, based on poverty levels and commitment to development effectiveness, and to move towards more sector concentration in all of its partner countries.
14. Maintaining public support over a whole decade will be critical for delivering on the announced increases in ODA. This will require an effective strategy for public engagement in the unfolding story of Canada's aid effort, covering the objectives, the modalities and the risks, and with more concrete emphasis on country-level results and challenges. The public consultations on Strengthening Aid Effectiveness and on the G8 Africa Plan were significant moves in this direction. But Canada does not yet have an effective communications tool for such engagement. The transformation of the annual report to Parliament on the IAE, currently produced by CIDA, into a public communications tool may be one way forward.
Canada's commitments to increase aid annually by 8%, to liberalise trade and further untie aid are welcomed, and Canada is encouraged to maintain the wide public support needed to carry these initiatives through to effective implementation.
In updating Canada in the World, Canada should integrate the central role of poverty reduction and its linkages with programme priorities and with non-aid foreign policy objectives.
CIDA is encouraged to implement its recently announced intention to focus the additional aid resources on a limited number of recipient countries with the aim of achieving greater impact.
The revival of an annual report by CIDA to the public and launching of a report on Canada's overall ODA effort could enhance transparency and accountability as well as help build public confidence in the results achieved through development co-operation.
2.1. Becoming more systematic in working for greater policy coherence
15. Canada's close association of national objectives and partners with its development co-operation efforts have created a number of policy coherence challenges. At the time of the previous Review, it was not possible to think that Canada might untie its aid and provide duty and quota free market access to LDCs. These two decisions taken in 2002 thus mark a major turnaround in Canadian policies, requiring political leadership from the top. Canada is congratulated on these moves and encouraged in carrying them through to implementation in ways that will provide the maximum opportunities to the LDCs. CIDA has, for example, sought and obtained authority to award service contracts to non-nationals. In accordance with the terms of the Recommendation to untie ODA to the LDCs on effort-sharing, Canada should undertake its best endeavours to identify and implement supplementary actions to untie its bilateral assistance. CIDA is encouraged to use its new authority to award contracts internationally in pursuing these supplementary efforts.
16. As the whole set of recent decisions on development policy illustrate, co-ordination and impetus on development issues are at their maximum at Cabinet level in Canada under the leadership of the Prime Minister and the Privy Council Office. Senior and working level officials are in constant touch on an ad hoc daily basis on a wide range of issues, and a strong interdepartmental culture supports this Cabinet level co-ordination. But there are signs that more structured approaches are being developed and that this trend needs to be taken further as some of the complex development-related issues in today's world require a more systematic and forward-looking approach and more active monitoring of relevant domestic policies. For elaborating Canada's response to the Doha Development Agenda, an interdepartmental group has been formed, which is supported by the DFAIT's Development and Trade Unit as well as CIDA, with a joint post created in Geneva. CIDA and DFAIT are also beginning to work together more systematically to identify and address country-specific human security issues that could generate conflict in the future. An interdepartmental Program Advisory Committee on Human Security (PAC) has been formed at a senior level, bringing in a relevant range of government departments, and meets at the beginning of DFAIT's business planning cycle and at other times during the year as circumstances require. This may provide a model for concertation in other policy areas.
17. With the strengthening of its Policy Branch, CIDA is now much better placed to play a broader and more proactive role on policy coherence issues within the Canadian system and more generally, to help to pull together the various development co-operation activities across the federal agencies, working in conjunction with DFAIT, including its Global Issues Department.
2.2 Placing Canadian partnerships in the new international development policy context
18. While many DAC members see the active engagement of their own people, enterprises, universities and other institutions in their aid effort as a particularly valuable part of their foreign assistance, Canada has been one of the earliest and most thorough-going in this respect. A wide range of Canadian actors are thus involved in the implementation of the aid programme, with 15% of CIDA's budget going through its Partnership Branch and a strong reliance by regional and country programmes on Canadian "executing agents".
19. In terms of development impact, there are many instances where long-term twinning relationships or special Canadian expertise in the right place at the right time have produced remarkable capacity building results. Canada has a large number of institutions, large and small, with a development vocation. The IDRC, created to generate research partnerships in the developing world, has been at the frontiers of some notable successes in development co-operation. As mentioned above, Canada has created a new framework for development partnerships on public management issues, drawing on the skills and experience of a wide range of Federal institutions. On the less positive side, there has been a tendency for Canadian partners to see their funding from CIDA as an entitlement, for the Canadian Partnerships to drive programming decisions and at times to undermine rather than underpin institutional development in developing countries. And support for private sector involvement may end up as support for the Canadian enterprise rather than for private sector development in the developing countries. The diverse but strong Canadian NGO movement has for some time found itself in a dilemma as it tries to fulfil its role as both a critic and a supporter of Canada's development policies and programmes, while being itself among CIDA's main contractors.
20. With the shift to a development co-operation paradigm based on partnership with developing countries, with local ownership of nationally determined development strategies and programmes, there is a clear need for adaptation in the use of Canadian partners and in their roles. It is important that Canadian NGOs are in a position to act as independent assessors of the quality of the new "enhanced partnerships" with developing countries and of associated CIDA support. And other Canadian institutions must be harnessed in the context of a model which is based on developing country leadership - they must become "accompanying agencies" rather than "executing agencies". In developing countries where such partnership models are not possible (i.e. "difficult partnerships" or "low-income countries under stress", now the subject of much attention in the DAC, the World Bank and the United Nations Development Programme), non-governmental organisations and other civil society organisations will continue to be actors of choice, although strengthening the state will also be critical when circumstances permit.
21. CIDA is discussing these issues with its Canadian partners on the basis of a consultation document.
In order to maximise its impact on poverty reduction, Canada's commitment to policy coherence for development needs to be supported by a system for mobilising efforts across the government, including more structured collaboration between CIDA and DFAIT as well as other federal departments and agencies.
Canada should take a more proactive approach in analysing the impact on developing countries of non-aid policies such as trade, agriculture and immigration.
CIDA is encouraged to consider ways of increasing local ownership by reviewing the role of Canadian civil society entities and Canadian executing agencies against its intention to shift towards programme-based approaches. The contribution of various Canadian actors and their role in supporting country-led poverty reduction strategies should be more systematically assessed.
3.1. From projects to strategic objectives, programmes and policy analysis
22. CIDA has recognised for some years that it would need to change its way of doing business, but recently it has put this challenge at the centre of its objectives, engaging in a major self-critique. Essentially, the problem identified by CIDA management is that CIDA had become over the years a project-generating machine, using over 30 different business models. This created a process-intensive organisation heavily centred in head office and with high administrative costs (CIDA's administrative costs are 11% of the bilateral budget compared with an average of 6% for other DAC members). The skill base of the organisation had shifted to contract management, at the expense of strategy development and associated policy analysis and programming. Field staff had become political and administrative facilitators at the service of project holders in Ottawa and project counterparts at the country level.
23. CIDA management is keenly aware that this organisational style must be adapted to the new development co-operation model, in which developing countries produce their own strategies and donor agencies provide co-ordinated support within those strategies. Furthermore, the development problematic is now being defined in a much more sophisticated and comprehensive way. With the aid budget set now to expand rather than contract as it has done over the last decade, effective disbursement will not be feasible using project modalities. Accordingly, CIDA is now creating Country Development Programming Frameworks (CDPFs) as the key organising tool for its country-level activities, moving to reduce the number of sectors in which it works, and looking to shift from projects to programme approaches, including participation in multi-donor sector-wide programmes and budget support. It has created a Business Transformation Unit to pilot the change process, which it sees as taking at least five years, and moving the organisation towards just three business models. It has also formulated a new Human Resources strategy designed to re-skill CIDA with the kinds of policy analysts who can help develop comprehensive strategies and engage in dialogue with other Canadian departments and with developing country policymakers and donor counterparts at the country level.
24. The Treasury Board and other authorisations needed to provide financial support to budgets are currently under discussion, and CIDA is participating actively in the efforts in the DAC to harmonise donor practices to facilitate the strengthening of financial management and reporting systems in developing countries needed for such approaches.
3.2 Moving forward with Results-Based Management, evaluation and audit
25. CIDA has been one of the pioneers in results-based management (RBM) and supports the current international effort, centred around the MDGs, to apply RBM across the whole aid system, multilateral as well as bilateral. The Office of the Auditor General in Canada has been a source of encouragement and advice to CIDA in this endeavour and is fully behind CIDA's move from projects to programmes and to now assess agency results at this level.
26. In fact, RBM at the project level was proving difficult to operate on a number of fronts. Aggregating results from the large number of small projects in so many different countries to produce agency level results is highly complex and not productive in terms of providing strong management information at the agency level. Staff tended to see and use RBM as a control and reporting mechanism rather than as a strategic planning tool. Finding the right level for conducting evaluations that yield timely and useful management information has also been an issue, as it is for other donor agencies. CIDA's intention is to put the focus on country and institutional evaluations over the next five years, to support the introduction of Country Development Programming Frameworks. Meanwhile the internal audit system is shifting to a more results-oriented learning function, with an emphasis on best practices rather than compliance.
3.3 Rethinking the relationship with field offices
27. Working in the framework of the developing countries own strategies and in close co-ordination with other donors will require providing much more authority to the field level for both financial commitments and for policy dialogue. CIDA remains among the most centralised agencies in the DAC in these terms and is now looking at other models of field presence as part of its transformation process. Currently, there is a triangular relationship between Ottawa, CIDA staff seconded to Embassies in partner countries and Programme Support Units (PSUs) which are essentially staffed by local people to manage projects, and this produces a certain amount of redundancy and frequent missions from Ottawa to the field. Canada will need to resolve this problem, particularly for "enhanced partnership countries", in the context of a management system that is based on the CDPF as a common strategic reference point for a more concentrated assistance effort, with enhanced and shared flows of information and clearer assignments of tasks. CIDA, as other donors, should take care not to be over-reliant on recruiting local professionals to operate at the country level, which risks depleting the human resources needed by partner governments to upgrade their public management capacities.
Canada is encouraged in its efforts to shift towards programme-based approaches with greater local ownership where the policy and management environment are conducive, and to focus on fewer sectors in a selected number of recipient countries.
The parallel shift towards making RBM more strategic and selective in identifying the significant results to be measured is also encouraged as a requirement for generating key management information and tracking CIDA's contribution to collective donor efforts to help achieve the MDGs.
CIDA should clarify the respective roles of staff in headquarters, embassies and PSUs and envisage more delegated authority to the field in the context of the new business models it is developing, especially for programme-type approaches.