Over the last six decades Canada has gained a strong reputation for its contributions to international development, multilateral organisations and the promotion of human rights. The strengths of Canada’s development co-operation include its well-respected field presence in its partner countries; its dedicated support for research for development via the International Development Research Centre (IDRC); its significant and strategic support for the multilateral system; its effective whole-of-government approach for disaster response and fragile states, particularly Afghanistan and Haiti; and its good track record as a constructive partner within the development co-operation and humanitarian communities.
Canada’s aid programme stood at USD 5.3 billion in 2011 (0.31% of its national income), making it the eighth largest DAC member. Since 2007 Canada has achieved the challenging targets it set itself for its international assistance volumes; in the decade between 2001 and 2010 it managed to double its aid in nominal terms (i.e., the money of the day). The DAC commends Canada for this achievement. However, some of these gains are likely to be reversed, given that Canada’s ODA volume shrank by more than 5% in real terms (i.e., after removal of the effect of inflation) between 2010 and 2011 and is set to fall further in 2012. Canada still needs to draw up a timetable for achieving the international commitment of giving 0.7% of its gross national income (GNI) as ODA.
Since its last peer review in 2007, Canada has strengthened the legal and strategic framework for its development co-operation in two ways. First, its 2008 ODA Accountability Act has improved the accountability of development co-operation and established poverty reduction and the promotion of human rights as the key aid criteria. Second, its new approach to development co-operation, introduced in 2009, concentrates Canada’s aid on fewer thematic and geographical priorities. The DAC welcomes Canada’s efforts to make its assistance more focused while improving accountability. It now recommends establishing a clear, simple and consistent vision for Canadian aid – one that is anchored sustainably within its foreign policy and that remains stable over the long term. The DAC also commends Canada for making progress towards untying its aid and encourages it to go further in line with Accra and Busan commitments. Canada still needs to make further progress in a number of areas, including policy coherence for development, streamlining its development co-operation system consistent with its business modernisation initiative and increasing the predictability of its aid.
Overall framework for development co-operation
Canada needs an overreaching vision for its development co-operation
Canada lacks a clear, top-level statement that sets out its vision for development co-operation. The new approach to Canadian aid is not yet supported by sufficient or transparent decision-making criteria, complicating its processes and public accountability and constraining discussions with key stakeholders, including parliament.
To provide a clear strategic vision within Canada’s foreign policy context, demonstrate application of its new approach to development co-operation and provide a transparent basis for accountability, Canada should:
Canada’s strengthened legal framework for its development co-operation, in the form of the ODA Accountability Act, emphasises the centrality of the Paris Declaration on Aid Effectiveness and the Millennium Development Goals (MDGs). Its main purpose is to strengthen accountability within Canada's development co-operation system and to establish three criteria that must be satisfied for international assistance to be reported to the Canadian parliament as ODA: it must (i) contribute to poverty reduction; (ii) take into account the perspectives of the poor; and (iii) be consistent with international human rights standards. These criteria have been disseminated across the government and have helped to raise the profile of ODA. They should be fully reflected in all of Canada’s development co-operation strategies and programmes.
Canada is now focusing its assistance on a smaller set of sectors, multilateral entities and countries. This new approach should be elaborated in Canada’s development co-operation strategy, and especially be set within the context of its foreign policy. There remains a need for a clear, simple and consistent vision for Canada’s aid along with details of how its new approach to development co-operation is to be translated into objectives, strategy and programmes. Canada’s five priority themes are wide-ranging; brief strategy documents have so far been written for the three themes led by the Canadian International Development Agency (CIDA): food security, children and youth, and sustainable economic growth. The Committee was informed that CIDA has recently developed performance management frameworks for these three thematic priorities, together with new strategic papers for three cross-cutting issues (gender equality and women’s empowerment, environmental sustainability and governance) and a civil society effectiveness strategy.
Engaging with the private sector
Canada’s new emphasis on sustainable economic growth is an opportunity for it to engage the private sector in development, particularly creating an enabling environment for business and supporting access to markets for developing countries. This is very much in line with the outcomes of the 2011 Fourth High Level Forum on Aid Effectiveness in Busan regarding public-private co-operation. Canada needs to ensure that development objectives and partner country ownership are paramount in the activities and programmes it supports. As the DAC has advised other members, there should be no confusion between development objectives and the promotion of commercial interests.
To guide its engagement with the private sector, Canada should:
Canada recognises the central role of the private sector in advancing innovation; creating wealth, income and jobs; mobilising domestic resources; and contributing to its thematic priority of sustainable economic growth and CIDA’s overall mission of poverty reduction. This is already an element of CIDA’s sustainable economic growth strategy. CIDA, the Department of Finance and the Department of Foreign Affairs and International Trade (DFAIT) are all engaging with the private sector in Canada and developing countries to explore ways in which private enterprises can participate in the design and implementation of development projects and programmes. As Canada implements these programmes, care needs to be taken to ensure that development objectives and partner country ownership are adequately reflected in the activities and programmes that are developed with the private sector. In addition, Canada should consider how the private sector projects it supports, as well as activities such as “aid for trade,” can more directly create a good climate for investment and business in partner countries.
Promoting development beyond aid
Strong political will must drive an government-wide approach to policy coherence for development
Canada has made progress towards establishing the building blocks for policy coherence for development, which are: political commitment; policy coordination mechanisms; and monitoring, analysis and reporting systems. But, like other DAC members, Canada has yet to show that development impacts (potential and actual) are being considered in relevant policies.
To give policy coherence for development sufficient weight in decision making, Canada should:
Canada’s approach to policy coherence for development has been successful in certain areas, such as trade policy, where Canada has increased access to its markets for exports from 48 least developed countries (Box 0.1). However, policy coherence for development could be improved by strengthening existing co-ordination mechanisms and bringing a broader range of government departments into the picture. This should, at the very least, enable a systematic screening of relevant existing laws and policies as well as new legislative or policy proposals for their impact on developing countries.
Good practice: increasing access to Canadian markets for 48 least developed countries
The Least Developed Country (LDC) Market Access Initiative extends duty-free and quota-free access to Canada's markets for imports from 48 least developed countries, with the exception of supply-managed agricultural products (dairy, poultry and eggs).
A higher level of political commitment to policy coherence for development would help Canada to ensure all government departments consider the impact of new policies on developing countries. To further improve policy coherence on priority development issues, strategic objectives could be developed in consultation with a range of relevant government departments. The understanding of development issues is strongest in those government offices that have been working with CIDA on global concerns, such as the Department of Environment. Greater understanding of development should be built in relevant government departments, along with greater capacity to act to prevent incoherent policies.
Investing resources to make whole-of-government approaches work
Canada shows good practice in implementing whole-of-government approaches in fragile states, particularly in Afghanistan. Its assistance in other partner countries would be more effective if it applied the relevant programme considerations emerging from Afghanistan in those contexts.
Apply relevant programme considerations emerging from Afghanistan and other fragile state contexts to strengthen whole of government approaches, including:
Canada has invested resources in strengthening development-oriented relations between relevant federal departments. In particular, Canada has strengthened inter-departmental co-operation in the field of conflict, security and fragility, both at the political level and in-country. This is especially evident in its civil-military co-operation in Afghanistan – one of the largest of Canada’s development programmes. Canada’s successful operations in Afghanistan have been facilitated by the highest levels of inter-departmental co-ordination led by the ministers of international trade, international co-operation, national defence, foreign affairs and public safety. Between 2008 and 2011 these ministers met every week to consider all issues related to Canada’s mission in Afghanistan. Canada also established a special Afghanistan taskforce that was housed in the Privy Council Office (PCO) and staffed with officials seconded from various government departments, including Foreign Affairs, CIDA and the Department of National Defence.
Canada’s engagement in Afghanistan highlights two key factors for successful whole-of-government approaches: (i) that the relevant federal departments are committed to the process, and make significant investments of time and energy to define and agree common objectives from the start; and (ii) that a strategy, resources and an integrated approach are all discussed, agreed and followed. In Afghanistan, and Haiti to a large extent, Canada has been able to match its capacity in-country with its ambitions (funds, human resources, tools, instruments); ensure field-based teams are delegated enough authority; and adapt its processes and protocols to facilitate effective operational delivery. These programme considerations should be applied to other fragile states in which Canada is working and all Canadian government contributions and development-related activities should generally be better integrated in partner countries.
The relevant federal departments can converge effectively when Canadian interests require a robust development assistance programme, as in Afghanistan and Haiti. In most cases, however, there is no clear whole-of-government, or even whole-of-CIDA, strategy for development co-operation in partner countries.
Aid volume and allocation
Ensure Canada's ODA volumes keeps growing
Between 2001 and 2010 Canada doubled its aid. These increases allowed Canada to give valuable additional support to low income countries, particularly in sub-Saharan Africa; to respond to global emergencies, such as the 2007 food crisis; and generally to strengthen its role in development co-operation. The reductions in Canada’s ODA since 2011 – combined with its plan to concentrate on fewer countries, many of which are middle income – may undermine the support it has given in recent years to poor countries with weak capacity, especially in sub-Saharan Africa.
To maintain its strong role in development co-operation, Canada should:
Canada succeeded in doubling its aid in nominal terms between 2001 and 2010, and had an exemplary record in meeting its international commitments. It was the first donor to disburse its funds for the L’Aquila Food Security Initiative (a pledge worth USD 1.1 billion). It doubled its aid to Africa between 2005 and 2010 (reaching USD 2.1 billion in 2008/09 and again in 2009/10). And at the 2010 G-8 Summit in Muskoka, Canada committed USD 1.06 billion of new funding for maternal, newborn and child health – 80% of which will go to sub-Saharan African countries.
In 2011, Canada’s net ODA fell to USD 5.3 billion (which represented 0.31% of GNI); a reduction of 5.3% from 2010 levels (when ODA/GNI was 0.34%) at 2010 prices and exchange rates. Canada’s government is committed to balancing its budget by 2014/15 by reducing expenses in all federal departments. The savings planned in Canada’s International Assistance Envelope will be achieved by streamlining administrative services, ensuring more efficient programme delivery and further increasing the focus, efficiency and accountability of Canada’s aid programme. Canada’s 2012 federal budget reduces its International Assistance Envelope (95% of which is ODA) by 7% (USD 389 million) by 2014-2015 and beyond.
These cuts will affect Canada’s aid volumes. Given Canada’s expected healthy rate of economic growth over the medium term (2-3%), this reduction in aid volume is likely to lead to a further decline in ODA/GNI ratios and would reverse many of the gains of the last ten years. Any reductions should be achieved in a way that has the least impact on Canada’s partner countries and ensures the greatest degree of predictability. Canada’s aim is to make its development co-operation more efficient and effective. Improving the quality and value for money of Canada’s aid will certainly strengthen the case for scaling it back up when this becomes possible.
Canada has reduced the number of its country-to-country development partnerships from 77 at the time of its last peer review to 43 today, which include 20 “countries of focus” in which CIDA concentrates most of its bilateral country programmable aid. Canada as a whole focuses on five thematic priorities. The DAC commends these efforts to maximise impact, but two important issues must be managed carefully:
Organisation and management
Modernising CIDA: decentralising, streamlining and simplifying
CIDA has launched a business modernisation initiative to improve its performance, particularly for accountability, decentralisation, internal efficiency and approval processes. While considerable progress is being made, Canada’s partners and operational staff argue that CIDA’s procedures are still cumbersome and its decentralisation reforms have not yet been completed, slowing down implementation of programmes and putting a strain on low-capacity partners.
Building on progress already made with its business modernisation initiative, CIDA should further simplify and modernise its development co-operation by:
In response to criticisms of its performance, CIDA has been modernising its business practices in order to streamline its procedures and decentralise its operations. Delegated programme and financial authorities have not been revised for decades and this is leading to inefficient operations, with even small-scale decisions referred upwards for approval. Prior to 2009 CIDA’s project approval process involved 28 documents and 49 signatures and took about three and a half years. CIDA’s approval process was not only lengthy, it was also unpredictable; this caused problems for partnerships and made CIDA’s aid less effective. CIDA’s compliance requirements, information demands, parliamentary reporting and public communication efforts have expanded since 2007 and the burden of this on staff appear to be heavier than in some other DAC members.
The reforms proposed under CIDA’s business modernisation initiative, such as decentralisation and streamlining of procedures, should make a difference, but further work is required. The project approval process has now been streamlined to 10 documents and 20 signatures. Further streamlining and standardising is underway. A comprehensive electronic guide to CIDA’s rules and tools is now available to staff, both at headquarters and in the field. Decentralising and delegating authority to CIDA field teams in its priority partner countries is widely seen as a key step in modernising Canadian development co-operation and making it more effective. However, delegation reforms appear to have slowed in the last year. CIDA has shifted more of its people to the field and revised its systems to support local management. Three final steps are now needed to complete the reform: (i) post the necessary financial and contract officers (local and Canadian) to partner countries; (ii) finish adapting systems for local management; and (iii) delegate the necessary financial and programme authorities to the field. These steps should also result in increased efficiencies and a reduction in country programme staff in headquarters.
CIDA: the challenge of developing, using and maintaining a satisfied workforce
CIDA faces challenges in managing its personnel. Staff turnover is an issue, particularly at senior levels; staff are dissatisfied with CIDA processes; and CIDA risks not having sufficient people with the right skills to support its programmes.
To achieve its aim to become one of the most effective development co-operation agencies, CIDA should:
The Minister and President of CIDA have remained the same for much of the period since the last peer review, providing some stability compared to the previous history of frequent changes at these levels. Nevertheless, the Agency has experienced turnover in its other senior grades (vice presidents, chief finance officer, directors general, and directors). The current level of turnover at these senior levels of the Agency constrains progress towards implementing reforms and achieving long-term objectives. A second challenge is that according to a recent public service employee survey carried out by the Treasury Board of Canada CIDA’s employees have raised serious concerns in a number of areas. Their main complaints included constantly changing priorities, lack of stability in the Agency, too many approval stages and unreasonable deadlines. There is also a concern that CIDA needs to do more to attract and develop the skills and expertise it requires to support its thematic priorities and cross-cutting issues. The Committee was informed that CIDA has recently put in place a management plan for specialists.
A related concern is that legal and security reasons are prompting CIDA to consider a new arrangement for hiring local advisers and administrative staff in its partner countries. The current arrangement, the Programme Support Unit (PSU), has been successful in establishing strong and well-respected field teams in Canada’s priority partner countries. However, the Committee was informed that this arrangement carries with it significant financial and legal risks as it is not fully compliant with the Government of Canada’s Financial Administration Act (FAA) and CIDA may be viewed as exceeding its authorities by creating perceived Government of Canada entities abroad. To address these risks, CIDA has developed a new approach involving a flexible menu of options which in some instances may involve outsourcing the PSU entirely to private entities. There are risks and opportunities associated with this change: it could threaten the quality of Canadian development co-operation and its comparative advantage through a loss of continuity, learning, knowledge sharing and local expertise in partner countries. Positive aspects include an opportunity to conduct business more cost-effectively using local services. Lastly, the changes experienced by staff during this period of reform and change will intensify as the impact of the 2012 federal budget is felt and CIDA makes savings by streamlining management and administrative services. During this period it will be necessary to offer extra support to staff and external partners and regularly update them about the changes that are happening.
Improving the impact of development co-operation
Translate Canada's committment to aid effectiveness into better practice
Canada has made progress on transparency and use of common and joint approaches. Surveys of donors’ progress towards meeting the Paris Declaration commitments since 2005 show that Canada (along with other DAC members) is lagging behind in implementing the aid effectiveness principles, particularly aid predictability. In Canada’s case, part of the reason for this is that CIDA’s Aid Effectiveness Action Plan combines domestic accountability and internal efficiency with implementing the Paris Declaration principles themselves. This lessens the emphasis on the principles. In addition, the approach taken to date is concerned only with the aid delivered by CIDA (68% of Canada’s total ODA in 2011).
In a continuation of its efforts to make its aid more effective, Canada should:
Good practice: Emphasising results, transparency and accountability
Canada is recognised for the emphasis it places on being result-orientated(1) and ensuring accountability. As host of the 2010 G8 Summit, it urged a focus on maternal and child health with the Muskoka Initiative for Maternal Newborn and Child Health designed to prevent 1.3 million deaths of children under the age of five and 64,000 maternal deaths over the next five years. In addition, the UN commission on Information and Accountability for Women’s and Children’s Health chaired by Canadian Prime Minister Stephen Harper and Tanzanian President Jakaya Kikwete is a concrete example of putting country ownership and accountability for results at the centre of a development priority.
Canada has made progress in some important aspects of effective aid, such as transparency, untying its aid, making more use of partner country systems and working with other partners on joint analysis and evaluations (Box 0.2). However, further progress is needed to meet its Paris / Accra commitments. A particular weakness is the unpredictability of Canada’s aid which can compromise its ability to align to partner countries’ planning and budgeting systems. Canada should publish its bilateral country programme estimates on an annual or medium term basis and ensure that its priority partner countries in particular are able to plan with confidence, at least based on CIDA’s contribution. One reason for Canada’s inconsistent performance on aid effectiveness is that, although CIDA put in place in 2009 an aid effectiveness action plan, this does not focus exclusively on implementing the Paris Declaration principles. The 2009 Aid Effectiveness Action Plan has two major weaknesses: first, it is only an action plan for CIDA and excludes other parts of Canada’s development co-operation system; and second, it combines organisational efficiency and domestic accountability with the Paris Declaration principles themselves.
Sustain the significant progress in untying aid
Canada has made progress towards untying its aid. This has resulted in better value for money in key areas of Canada’s development co-operation – particularly its food aid, which it untied in 2008. The proportion of Canada’s total aid that is untied was 80% in 2010.
To provide even better value for money Canada should:
The DAC commends Canada for the promise it has made to untie all of its aid by 2013, and for the progress it is making towards that aim, particularly for entirely untying its food aid (Box 0.3). Canada’s share of untied aid covered by the OECD DAC Recommendation on Untying ODA to the Least Developed Countries (LDCs) increased from 94% in 2007 to just over 99% in 2010, much higher than the DAC average of 88% for 2010. When total aid to all developing countries (not just LDCs) is taken into account, Canada’s proportion of total aid untied was 80% in 2010. Given the commitments agreed in Accra and Busan to untie aid to the maximum extent, Canada is encouraged to go further in its efforts to untie its aid. The DAC also encourages Canada to continue its active and constructive participation in the DAC Working Party on Statistics’ thinking on defining and reporting tied aid.
Good practice: untying Canada's food aid
Canada untied all its food aid in April 2008 and now puts an emphasis on purchasing food aid in developing countries. Prior to April 2008, 50% of Canada's food aid had to be purchased in Canada. In making this change, Canada stated that it has been demonstrated that tying aid often leads to inefficiencies and does not always benefit the intended recipients. Canada is therefore working with the World Food Programme (WFP) to explore the impact of untying food aid on the timeliness and flexibility of response. Canada is playing a leading role in the renegotiation of the Food Aid Convention, which – by measuring only tonnages supplied – hampers cash-based approaches, works against high nutrient (but low weight) foods, and does not reward twinning or joint approaches with new donors. Canada has asked WFP to explore the impact of untying on the timeliness and flexibility of responses.
Towards better humanitarian donorship
A consistent humanitarian donor despite lacking a clear public strategy
Canada has several strengths as a humanitarian donor, such as cross-government co-ordination and an extensive rapid response toolbox; however, decision-making criteria should be more transparent, including for its “matching fund” mechanism, so as to demonstrate compliance with key humanitarian principles. Canada has also not communicated the results it expects its humanitarian programme to achieve, limiting public accountability and constraining discussions with key stakeholders, including parliament.
To provide clear strategic vision, demonstrate application of humanitarian principles and provide a transparent basis for accountability in the humanitarian programme, Canada should:
Canada’s strengths as a humanitarian donor include its excellent cross-government co-ordination mechanism in response to catastrophic disasters, its extensive rapid response toolbox and its strong track record as a constructive partner within the humanitarian community. Since the last peer review, Canada has fully untied its food aid (Box 0.3), providing a commendable example for other DAC donors to follow. Canada’s approach to civil military co-ordination also follows good practice.
A more focused programme could improve the predictability of Canada’s humanitarian funding and strengthen accountability. To do this Canada will now need to disseminate its long-awaited cross-government strategy. This should be based on Canada’s comparative advantage and outline the results it expects to achieve. Canada also needs to improve the speed of disbursement to NGOs. Furthermore, Canada will need to establish clearer funding criteria and to make its decision process more transparent, otherwise it will remain vulnerable to misunderstanding and criticism that funding is not always guided by humanitarian principles. This also applies to the government’s mechanism to “match” public fundraising efforts by some Canadian charities dollar for dollar. The use of this tool has unfortunately raised a number of questions about whether humanitarian principles are being respected.
Canada’s lack of an overarching, publicly-available strategy with measurable objectives complicates the reporting of consolidated humanitarian results to taxpayers. Nevertheless, Canada does play an active and constructive role in monitoring its partners.
Canada should also consider relying more on CIDA’s humanitarian systems and delegating more decision-making authority to the humanitarian team, in order to improve the timeliness and effectiveness of its humanitarian assistance.
From political will to effective programming: the challenges of resilience and recovery
Canada recently made strong political commitments to strengthen its disaster risk reduction and resilience programming which should now be translated into practice.
Supporting post-crisis recovery is a challenge for many donors, and Canada is no exception. There are some examples of humanitarian and development links, but Canada needs to strengthen its approach in supporting recovery and resilience building, especially in countries where it does not have a development presence. Recent experiences in Haiti, where the Director General of the Haiti bilateral programme was consulted on all projects being undertaken in the country, may provide a good model for forging stronger links between Canada’s different programmes. Stronger links through the thematic priority of food security may also offer opportunities.