Proceedings of the Standing Senate Committee on
Foreign Affairs
Issue 7 - Evidence - Meeting of February 15, 2005
OTTAWA, Tuesday, February 15, 2005
The Standing Senate Committee on Foreign Affairs met this day at 5:04 p.m. to examine the development and security challenges facing Africa; the response of the international community to enhance that continent's development and political stability; and Canadian foreign policy as it relates to Africa.
Senator Peter A. Stollery (Chairman) in the Chair.
[English]
The Chairman: Honourable senators, I see a quorum and call the meeting to order.
On behalf of the members of the committee, I would like to welcome Mr. K.Y. Amoako, Executive Secretary of the United Nations Economic Commission for Africa. Mr. Amoako is the sixth executive secretary of that agency. He has led the regional arm of the United Nations in Africa at the rank of Under-Secretary-General of the United Nations since 1995.
Mr. Amoako's priorities as executive secretary have been to initiate and manage a process of wide-ranging reforms aimed at making the commission a more rigorous centre of excellence that is better equipped to deliver high quality services and products to meet the complex needs of Africa's governments and people.
Under his leadership, the organization has revamped its research and advocacy work to ensure it is policy relevant and at the cutting edge of Africa's development agenda.
Mr. Amoako, I invite you to make a presentation.
Mr. K.Y. Amoako, Executive Secretary, United Nations Economic Commission for Africa, and United Nations Under- SEcretary-General: Mr. Chairman, honourable senators, let me thank you for inviting me to appear before you as you undertake your study on Africa. Your focus on Africa this year is another clear sign of Canada's close engagement with Africa. That 2005 is becoming the year of Africa is partly due to the priority Canada gave our continent two years ago at the Kananaskis summit. Your public hearings and your final report have the great potential to add momentum to several initiatives toward a big push for Africa's development this year. These include Prime Minister Blair's Commission for Africa, on which I have the honour to serve, which will report in a few weeks. We will be pushing for urgent, significant action in critical areas including aid, trade and debt.
I understand that this committee is focusing on development and security challenges, on the international community's role in Africa and on how Canadian policy and action toward Africa should evolve.
Security is, of course, a major priority. There is no doubt that international engagement in areas related to conflict resolution, peacekeeping and peace enforcement in Africa is proving valuable.
Since I am sure you will hear from many experts in that field, I want to focus on the second vital area in which international partnership also has a major role to play: that of governance.
I am aware that there is a widespread view of Africa as a continent in perpetual crisis where corruption and chaotic governments reign, where states are close to failure and where despotism is the norm. Although no one would deny that these stereotypes have sometimes rung true during the years since independence, the reality is more varied and often more positive. However, it has often been difficult for positive reality to shine through the fog of negative perceptions about Africa.
A few years ago, we at the Economic Commission for Africa decided to launch a 28-country study on governance to get an accurate idea of how Africa is being run.
The resulting African governance report, to be published later this year, provides solid data and overwhelming evidence that many countries have made improvements in key areas of political and economic governance.
Democracy is being consolidated on a wide scale; elections and pluralistic political systems are now the norm in the majority of countries in the study. There is greater political inclusion of a broader range of voices and there is greater accountability. In short, there has been progress towards achieving ``capable states'' in Africa.
However, our report also showed us something else: African countries face serious deficits in institutional and human capacity that threatens to reverse this improved performance. Six key areas stand out. Parliaments need to be strengthened with training and resources to improve the quality and effectiveness of legislation and oversight. Judiciaries need more support and protection of their independence. Public sector management needs an injection of professional skills and the ICT tools to provide greater transparency and accountability. The public services need to improve delivery in vital areas, such as education and health. Conditions for the private sector need to improve, and media institutions need to become more credible and responsible in order to play their watchdog role in society.
Addressing such capacity deficits is a daunting challenge but the price will be worth having. There will be more transparency, less corruption, easier operations for business, better policy making, and more competent service delivery using efficient and effective procedures.
There is no time here today to set out the scale and wide-ranging nature of the task ahead. However, it is evident that there needs to be a systematic approach to tackling these deficits. That is why we say there is a need to find an international financial mechanism, perhaps in the form of a trust fund, to back a comprehensive action plan for capacity development in Africa.
Ladies and gentlemen, I have said that Africa has capacity shortages and that building capacity for better governance is a top priority. If that were all we had to do, it would already be a great challenge. However, we have HIV/AIDS, and when we add HIV/AIDS to the mix that challenge looks like a crisis. It is no exaggeration to say that today AIDS is the greatest threat to Africa's development.
We are used to HIV/AIDS being raised as a short-term health crisis issue and, of course, it is certainly that. I would urge you, however, as policy-makers to go further as you deliberate over the coming year to see this disease as a major capacity issue.
The Commission for HIV/AIDS and Governance in Africa, set up by Secretary General Kofi Annan, that I chair, will report in July. We have spent two years reviewing the possible impacts of the pandemic, looking beyond the harrowing, short-term tragedy to 10-15 years from now. Our findings show that we must find ways to deliver treatment that will keep more people alive, and for as long as possible.
Across Africa, HIV/AIDS is systematically eroding vital human resources in all sectors and at all levels. In the absence of comprehensive treatment and care programs, governments can expect to see a declining tax base, savings and productivity, while at the same time demands for services like welfare and health will increase.
For example, as employees become ill and leave government services their skills, training and acquired knowledge are lost. Existing service delivery constraints will be further affected, with productivity and efficiency impacts across all government agencies, private sector businesses and civil society groups.
The pandemic also puts at risk education, health and other development achievements of recent decades. Since this committee is also concerned with matters of security, let me just note that HIV/AIDS may also impact on national security. Although research is so far inadequate, it is already clear that conflict creates high-risk conditions for the virus to spread, and security forces themselves are made vulnerable by high infection rates, just as in the education and health sectors. All these trends will adversely affect capacity and governance in Africa.
Honourable senators, I have emphasized what I believe is a critical need for international financial support to build capacity for better governance. I have also stressed the need to keep those with HIV/AIDS alive in order to delay the loss of skilled personnel with all their experience and institutional memory.
Canada has already shown commitment in efforts to get antiretroviral treatment to ordinary Africans at affordable prices. African countries need all help they can get in planning how best to cope with the capacity deficits that AIDS is intensifying.
Let me also flag one other area where your support will pay dividends: In helping to develop Africa's private sector, an area where targeted intervention could reap multiple benefits. We do not have time to discuss this idea here today, but the United Nationals Economic Commission for Africa, ECA, will be glad to supply you with background documents on this issue.
Ladies and gentlemen, Canada has shown great leadership over the years in helping to resolve Africa's aid, trade and debt issues. I sincerely hope that that leadership will be sustained as we enter this exciting period.
The Chairman: I was reading the other day about a retired British cabinet minister who has had HIV for 17 years and functioned as a minister. It came as a great surprise to me. I had not thought of it; maybe I should have.
Does this mean that now a person does not have to die quickly from HIV/AIDS if he or she gets proper treatment?
I was really amazed at that.
Is this what we are talking about when we talk about antiretroviral treatments? Is there a real possibility that a lot of people could live for quite a long time if the world did what it is supposed to do?
Mr. Amoako: Senator, you are very correct. Today, we have in Africa 25 million people who are infected by the HIV/AIDS pandemic. Already, we have as many as 19 million people who have died on the continent. It clearly shows that in Africa people are dying of this disease. However, we also know that there are medications to keep people alive. You just mentioned someone living for 17 years with HIV.
The Chairman: HIV/AIDS apparently did not interfere with a British cabinet minister's ability to perform his duties. He came out publicly with this the other day.
Mr. Amoako: A person can be productive if they get the treatment. For many Africans, we do not have the treatment. Not many Africans can afford to get treatment. The health system capacities are weak, even when the drugs are available, in their ability to provide the services. We need to upscale treatment to ensure that as many people as possible can get access to medication and that the health service delivery systems will have the capacity to provide these services.
Five or six years ago, the price was $5,000 to $6,000 per person per year. The price has dropped significantly since then.
The Chairman: What is the price now?
Mr. Amoako: Treatment for a year may cost about $200, and with generic drugs the cost can be even lower. However, the issue is to scale it up and also for African countries to have the ability to produce some of these medicines themselves. These are the issues that are very much on the agenda for medication and treatment.
Senator Andreychuk: Thank you for coming and sharing your thoughts with us. I hope that we will be able to get the African governance report because that information will be very helpful.
You said that six key areas stand out in your report, one being that parliaments need to be strengthened with training and resources to improve the quality and effectiveness of legislation.
From my own experience of working with parliamentarians in Africa, I think that training is taking place. I think that Canada and many other countries have played a role in that training. We have many associations, including the Francophonie and the Commonwealth, as well as bilateral associations, to work on training parliamentarians.
What I see as lacking is the training of parliamentarians in oversight. When NEPAD was set up, we all lauded that this was an African initiative. Yet, many of my colleagues in Africa were not aware of NEPAD and did not understand the peer evaluation and their role. In other words, it was government leaders in Africa putting this together and there was no role for parliamentarians.
When the IMF and the World Bank negotiate loans or credit, they negotiate with the governments. Parliamentarians in one African country said that they found notice of what was agreed to with their country in their mail slots. It was a fait accompli and they had to sign the legislation.
It seems to me that we have much yet to do with parliamentarians in Canada and Africa working together to strengthen the oversight role of parliamentarians to legitimize parliaments as part of governance.
Mr. Amoako: Senator, I agree. I made the point in my presentation that we need to strengthen parliaments. We need to improve the quality and effectiveness of legislation and oversight. The oversight responsibility is very important.
In our governance study, we looked at the perceptions of citizens about the role of parliament and its constraints. In countries where we have more free elections, parliamentarians have been very vocal in trying to hold governments to account. Yet, we find that the oversight responsibility is quite weak. They do not have the resources or training to understand the in depth issues of government. These are the issues we are talking about.
I mentioned NEPAD and you mentioned the IMF programs. These are clearly areas in which parliamentarians should be trained and be given resources to get involved.
In Africa, one of the major processes that governments use these days is the poverty reduction strategy. It is important that parliaments and parliamentarians get more involved in the process of setting priorities of African governments. I agree with you very much on that point.
Senator Andreychuk: In fact, many of the parliaments do not have their own resources.
Mr. Amoako: They do not have libraries.
Senator Andreychuk: They get their resources from the president's office. How do they exercise any control over the executive when the executive is the body that provides or withholds the resources?
It takes a long time to train someone. We have to go through a lot of education to get to the position we are in, be it life experience or otherwise. I have seen in Africa the decimation of the next generations of leaders by AIDS. The people who could have taken on a governance role will not be there. Coupled with that, the population of under-15- year-olds is growing immensely, exacerbating the orphan problem.
Will you touch on that in your studies? How do you overcome the deficit of leadership resulting from the devastation of HIV?
Mr. Amoako: That is why I mentioned the commission on HIV and governance, which I chair and which will report in July to the Secretary-General of the UN. We have some very eminent men and women from the international sphere who are part of this exercise, including the head of the UNAIDS, Dr. Peter Piot; the head of the Global Fund to Fight Aids, Tuberculosis, and Malaria, Mr. Richard Feachem; and 17 commissioners.
I think that the dimension of the HIV/AIDS problem is not yet fully appreciated, including the impact of it on GDP, on government budget, on savings and on institutions. In the education sector, for example, we are losing teachers faster than we can train them.
In some countries, they are losing some of their key people in key ministries like finance and planning. That is compounded across the board. When you look at the private sector in country after country, you begin to see the impact.
The question is twofold. First, what does this mean for societies in the long run? The chairperson of the HIV/AIDS organization said that people can live for 15 to 17 years with the right medication. We have to recognize that the HIV/ AIDS crisis is going to be with us for a long time and we need to factor this into our planning, into our countries' strategies for poverty reduction and everything else.
The average life expectancy in sub-Saharan African countries is 47 years. In the absence of HIV/AIDS, the life expectancy would be 62 years. HIV/AIDS catches people in the prime of their lives, between the ages of 19 and 49 in particular, and that is where the next generation will come from.
The answer, therefore, is better prevention and education, but also keeping people alive so that we will not lose their skills, and the report we are preparing will address all these issues.
We are also trying to identify what we call ``best practices,'' what is working where and how we can replicate some of these practices. The first dimension is to ensure that the magnitude of the issue and its repercussions are fully appreciated and understood by African policy-makers and our government partners.
Senator Corbin: How did you choose the 28 countries for your study on governance? Who is in; who is out and why?
Mr. Amoako: This process started two years ago. We first had to identify the methodological issues. We put a team together to identify the indicators and the approach. It was a very comprehensive, objective study. We conducted surveys in 28 African countries.
In each of these countries, we interviewed about 2,000 people. We brought in experts in various areas, so it was a very thorough study in terms of the countries that we picked. We picked countries from western Africa, central Africa, northern Africa and southern Africa. The idea was to cover all 53 African countries, or as many of them as possible. This was just the first phase of the interviews.
We have completed the work for 28 countries. We will soon start work on another 12 countries. We hope that by the end of next year we will have covered as many as 40 countries. The intention is to cover as many countries as possible in this exercise.
Senator Corbin: I made good note of the comments you made about preconceived ideas about Africa. You seem quite optimistic in your approach with us today that the situation is nuanced and it is not as bad as perceived or as projected to us by the media.
In this first batch of 28 countries, could I be so bold as to inquire if you have some of the worst situations as well as some of the best?
Mr. Amoako: Senator, it is a very thorough study. We actually did ranking using various categories. We did not only study countries, but compared countries. There are countries that are very much at the top of certain issues and some on the bottom. For example, in the area of media and the role of the judiciary, at least in the perception of its citizens and also from the experts we interviewed, some countries are doing better than others. Some countries also consistently scored badly across a whole range of indicators.
Senator Di Nino: Mr. Amoako, yesterday we had a very interesting witness and a gentleman whom I sure you know, Lieutenant-General Roméo Dallaire. I would like to touch upon a couple of things that he discussed with us and then I would like to deal briefly with an economic question.
General Dallaire, in response to a question I asked him, seemed to be frustrated by the inability of the UN to play its role. I think we used the word ``dysfunctional,'' probably my word rather than his, to describe some of the problems that exist there.
Could you give us your thoughts on that subject?
Mr. Amoako: The UN is a very important organization. I have been in the system for 10 years now. Before I joined the UN, I worked for the World Bank for about 20 years, so I know something about the international system.
Over the past several years, the UN has systematically tried to introduce certain reforms in budgeting and planning. When the chairman introduced me, he indicated that I have been a reformer, trying to get my organization to be the best it can in terms of policy analysis and putting forth the development agenda for Africa. I think we have made some progress.
From my point of view, the organization that I represent today, over the last 10 years has come a long way. There are many parts of the system where you can see that, especially in the developmental area. A major effort has been made by the UN at the country level to bring better cohesion and coherence.
The United Nations Development Programme or UNDP and UNICEF are trying to work more. We have made quite a bit of progress in specific areas. Having said that, I think the UN, as we all know, is a sum total of the member states, 198 countries. Making decisions and agreeing by consensus are things that are sometimes very difficult.
The recent scandals that we have faced such as oil for food, and certain peacekeepers raping women are terrible issues. The spotlight is on the UN right now in that context. As the chief of staff of the Secretary General recognized, we are not looking very good right now, however, the UN response of humanitarian assistance to the tsunami victims has done much to balance the perception of the UN. There is the good, the bad and the ugly. It depends where you sit. The Secretary-General recognizes that we need to do a lot more on the reform agenda.
Senator Di Nino: General Dallaire acknowledged that there are problems, but that is a normal situation in life we have to deal with regularly. My impression was that he felt that individual nations were maybe using the UN as a political football, as opposed to the original mandate of the UN. Would you agree with that?
Mr. Amoako: I would not want to comment on that.
Senator Di Nino: Another point that General Dallaire made rather strongly, I believe, is that the future of Africa, to a large degree, depends on two things: The role that women will play, and educating the young.
Could you comment on those two points?
Mr. Amoako: I agree 100 per cent with both of those points.
At the Economic Commission for Africa, I have tried to put the issue of women on the agenda. We have created a full division of professional staff working on the links between gender issues and development.
The 40th anniversary of the ECA several years ago was on the theme of women and economic development. We have come up with several indices to measure African governance performance toward gender equality. We have created something called the African Gender and Government Index that tries to rank African countries by their sensitivities to the gender dimension.
You are talking to somebody who is very committed and who believes very much that we as economists also need to bring the gender dimension into that subject.
There are other things we need to do as economists and as policy makers. For example, we need to ensure that we have better gender segregated data so that in terms of policy decisions we can better trace the impact on women and on gender in general. That area is very important.
One of the things that came out of the African governance report was that we tried to track in these 28 countries issues of gender, to determine which countries are doing better in terms of representation of women in government, parliament, education, all of that. Some countries are doing better at this than others. We need to ensure that we can move in that direction.
With respect to the youth, one of the senators just mentioned that the proportion of the African population under age 15 is very large. In some countries, the average is as high as between 45 per cent and 55 per cent. We have a very youthful population. That youthful population and the demographics are moving in such a direction that we will see that figure grow more and more.
The situation today is education, which is important, of course. There is the employment challenge, and youth unemployment is a major issue. In some countries in Africa, 40 per cent or 50 per cent of the youth are unemployed in the cities. Even those that are employed are underemployed, and we are not creating jobs fast enough.
If you take Egypt, and I am using this in our studies today, Egypt needs to create 600,000 jobs every year to keep the unemployment situation from worsening, or to absorb the labour force.
I happen to share those sentiments; the youth and gender are the future of this continent.
Senator Robichaud: Sir, you mentioned your greatest challenge was HIV/AIDS. You mentioned the very comprehensive report that indicates the impact of AIDS on people and countries.
In that report are you going to look at the effectiveness of the programs that deal with HIV?
You say your greatest challenge is HIV because of the people who do not become productive, or have a very short time to be productive. Is the report going to look at the present panorama of programs that are going there and then concentrate on HIV?
Mr. Amoako: What we are looking at is the impact to better understand the long-term impact. We are also looking at what are the most effective responses that we need to address this issue, both in terms of the economy and the institutions. However, in doing so, you have to look at all the other aspects — prevention, treatment and care. What programs are working well? What lessons have we learned? Some countries and some interventions have been more effective than others, and how can we scale up these types of interventions?
We are looking especially into the treatment of AIDS. Right now, we have a lot of efforts being made. There is a global AIDS fund; there is President Bush's initiative; the World Bank has some programs for treatment. The World Health Organization has come up with this program that they call 3 by 5; which means to increase the number of people who are treated by 3 million by 2005, which is sort of now. The question therefore is how best can we push and scale up? We are looking at all these dimensions.
I think the question you asked, if I understood you correctly senator, is do we divert resources and effort from other areas in order to address this problem?
I do not think it is an either or, senator. I think it is the greatest leadership challenge. If you look at the dimensions of it, poverty exacerbates HIV, so you must deal with issues of poverty and with issues of access to education and health while at the same time dealing with the issue of HIV/AIDS.
HIV has a gender dimension; as I mentioned, it has a woman's face. More women are getting infected than men. The issue that the senator raised about the gender perspective is very important. We need to look at the more comprehensive picture. Poverty reduction and the links are all related. Having said that, the government needs to prioritize and to create linkages with all these issues.
Senator Robichaud: One more question. What about the FAO? What is their role in Africa in helping with the production of food and the development of agriculture?
Mr. Amoako: Well, I think it is an important institution. It has a network in all African countries. It has a mandate to research, extension, input supply — it works on forestry issues. I think the challenge for FAO is how to coordinate its efforts with other organizations, with the World Bank. Agriculture is not just about the FAO. The agricultural sector in African countries needs a lot of push because most of the people are involved in agriculture. The jobs have to be created within agriculture; our productivity has to increase. Agriculture has to build the linkages because a lot of the export potential is in agriculture.
Unfortunately, in the last 15-20 years, both African governments and the development partners have not emphasized agriculture. We used to put a lot of resources into agriculture in the 1970s; then the pendulum shifted to the social sector, to our infrastructure. Now we are beginning to rediscover it. The World Bank, for example, is beginning to make a big push once again in agriculture.
The FAO has a key role to play in that context, and especially in areas like water resource management, where there are small-scale irrigation programs. These are the areas where the FAO can be particularly important and effective. It is a bigger job for all of us; it is not just for the FAO, but for the whole development partners to our agriculture back at the centre of the development debate.
Senator Carney: Sir, the challenges you outline are really enormous, and I realize they cannot be dealt with here in an hour appearance before this committee. There is one area that you flag in your list of issues, and that is the role that Canada can play in developing Africa's private sector. I know that would be close to your heart because of your economic commission.
We are aware of the WTO efforts on subsidies, and the impact the tariffs have on you. I think you can assume that we are aware of a lot of your problems in that area. What else can Canada specifically do as you said in your presentation:
to develop Africa's private sector, an area where targeted intervention could reap multiple benefits.
Could you expand on that for the benefit of the international trade officials that are here today?
Mr. Amoako: I had discussions yesterday with the Minister for International Development, and I met also with the Minister of Finance today. On Monday, very early in the morning, I met with the Canadian Council on Africa, which is also a group of private sector people who are interested in Africa. We exchanged a lot of ideas.
In October, I had a meeting in Addis Ababa, where I brought some key African finance and planning ministers together with development cooperation ministers. I also brought in some major private sector personalities, both from Africa and outside of Africa, for a two-day discussion to talk about the private sector.
Why did I do that? I did that because I strongly think that we in the development community should put more emphasis on the private sector. Right now, we talk about meeting the millennium development goals; we talk about doubling aid. We never talk about the level of investment that is needed by the private sector in order to push the growth. In terms of the growth agenda, in terms of the poverty reduction agenda, in terms of the employment agenda, I think the private sector is the key.
Having said that, what do we do? I think what we try to do in this meeting is move systematically. Your Prime Minister was a co-chair or member of this commission that produced the UN report on the private sector, so there are a lot of ideas there that resonate well with all of us. In removing constraints on the private sector, African governments themselves will have to play the lead role in creating stability, a framework, dealing with infrastructure constraints — a whole range of issues, including getting the investment climate right.
In the meetings in Addis Ababa we put special focus on the small- and medium-sized enterprise sectors in terms of where the jobs will be created, where the bulk of the potential is and how to scale up. We have prepared the framework document for the small- and medium-sized enterprise sectors in Africa. I will share the framework recommendations with the two ministers I have met, and see how best to work with Canada to move on this agenda.
Senator Carney: It is relatively recently that women have played an important role in small businesses such as co-ops and stores and have been working together. Do you include women in your framework?
Mr. Amoako: We do. I do not know all the details but we have set up women's enterprise development centres for African women, and we have two centres as pilots. One of them is in Uganda. These are networks of women entrepreneurs who can then share their experiences. We can provide training for them and link them to the Internet, for example, so they can explore the roles of women in the entrepreneurial sector. In Ghana, women are the key to micro enterprise. In that context, the role of women is very important.
Senator Carney: We tend to think of Africa as one, huge group of countries such as Europe or Asia. We are aware that there are incredible differences between all the various countries in Africa and in their governance and economic opportunities.
Given the challenges you face, what do you offer the private sector, if you compare Africa to India, Southeast Asia or China?
When you are talking to private sector people, what should we be aware of given that the mosaic of Africa has many different levels of opportunities?
What do you think the private sector is missing?
Mr. Amoako: One of the conclusions we came to is that country specificity is important. You have to look at each country individually. By and large we can agree, broadly speaking, on some of the key parameters one needs to deal with across the board. The severity of the constraints may differ from country to country.
The private sector is not homogenous. In every African country there are different levels or clusters of small- to medium-sized enterprise sectors. One sector produces for the domestic market, one sector is export oriented, and there is also the micro enterprise sector. The constraints that they all face are varied and we need to take that into account when designing interventions.
There are some general constraints: market instability is important; reducing budget deficits and bringing inflation under control; and access to credit is critical. Many, especially in the small enterprise sector, do not have access to long- term credit so in the financial sector many of the African countries are not able to provide the services for bank loans, collateral and the whole issue of property rights. In many cases, you cannot accept land as collateral. There is a whole range of bureaucratic impediments as well.
Senator Carney: We know about that.
Mr. Amoako: We need to address that issue. There is a study each year called Doing Business, in which they try to rank countries. It may take five days to obtain a licence in one country and take 60 days in another country. Removing the bureaucratic impediments is as important as the infrastructure constraints that loom large for both the small- enterprise sector as well as the big entrepreneurs, especially in the export industries where it is an immediate issue.
We have the government's own policies and the ability of governments to dialogue so that the private sector has an interest in, or can gain a perspective on, policy making. It is important to develop mechanisms that allow the private sector to understand policy. These are the broad challenges that we need to address.
Senator Carney: It is interesting, Mr. Chairman, that the witness has identified so many problems and issues that Africa countries have to address. We cannot assist with all of these things and it is interesting to know that you have that perspective.
Mr. Amoako: May I comment on that? I have emphasized what African countries need to do, but it is also a matter of partnership. Even in the private sector, there is much that government can do and in terms of capacity building and training. At the enterprise level, government can do something in the area of investments and technology.
Africa must take the lead but that does not mean that private sector development strategy and support from Canada and other countries are not needed as well.
Senator Di Nino: A witness talked about the Africa governance report that was published this year. Mr. Chairman, I would hope that you would ask him to send us a copy of that report. I did not get the name when you spoke to Senator Carney about another report dealing with business that you were preparing.
Mr. Amoako: That is the World Bank report.
Senator Di Nino: I am thinking if the report that you were preparing, as well as the ``Doing Business in 2005: Removing Obstacles to Growth'' report of the World Bank. I thought you had said, ``assessing some opportunities.'' That report would be a useful tool for the deliberations of the committee.
Mr. Chairman, I am going to suggest that as we plan our visit to Africa later this year, and it would be useful if we could lean on Mr. Amoako to help us with part of that visit in terms of regions and geography.
The Chairman: The committee staff is actively engaged in making inquiries as to where we might visit.
Senator Corbin: It is well known that governments do not move much unless they are pushed by their electorate. I am one who has observed the media over the years. At one time I was a practicing journalist, but that was a long time ago.
One of the greatest obstacles in getting the rest of the world interested in helping Africa is the lack of news coming out of Africa. I am not talking about wars but about Africa helping itself. It seems that we hear more soccer news out of Africa than anything else on some networks.
Would you care to comment on that?
It seems that this could be part of an important public relations exercise that you ought to think about.
Mr. Amoako: Thank you, senator. That is an important point.
I have sitting behind me one of my top media experts, my communications specialist and adviser who used to work for BBC and who is now working for www.ourafrica.com, which will soon be online. We believe very much in communication for development.
One of the news media comes out strongly in favour of African governance support. The full report will be completed in two months or so. We produced a synopsis in October so we can make that available to you; it summarizes some of the report. We will ensure that you receive the other two reports as well.
One conclusion in my report is on the growth of civil society, the media and the vibrancy of media in many African countries, which is some of the good news that we have found. In Ghana and Nigeria ten years ago there would be only one state-owned radio station or television station and two or three newspapers, all run by the state. Now it is entirely different and we have seen that change.
The point you tried to make is on reporting and how the Africa story comes to the rest of the world. That area needs a great deal of work on our part. We need to train our journalists to report our news in better ways. We do quite a bit on the Economic Commission for Africa, and every year we bring African reporters to our media events and take them through the issues on HIV/AIDS, on development and on governance, so they can report more effectively. We need to ensure that we have a better partnership between the African media and the international media. The website allafrica.com is a powerful way to communicate.
The more African-based news coverage we have, with Africans reporting and with access to the international system, the more our message will get out. We need an African voice to relay the African perspective; and that is not happening fast enough.
Senator Di Nino: When I was in Lagos and Ghana, I recall seeing the market women who basically controlled the traders. We have not talked about the traders. Russia is another country with such markets but the kiosk people eventually wind up owning the shops and becoming major commercial enterprises.
Has that happened in West Africa where the women traders have been such an important and influential factor for quite some time?
Do they grow beyond their role as market traders?
What happens to them?
Mr. Amoako: Some have moved on but perhaps not enough of them. The whole point of the discussion is about the role of moving up to the small-scale enterprise level and then on to a medium-sized enterprise. These people must have the links in the chains in order to make those moves.
I talked about property rights and removing the financial constraints, and about the need for training and education. Unfortunately, it has not happened fast enough and we need to do more in these areas in order to unleash the potential of the private sector and of African women in general.
The Chairman: Mr. Amoako, on behalf of the committee, I thank you for your testimony.
Ms. Wood, welcome. Would you like to lead off?
Ms. Alexandra Wood, Deputy Director and Trade Commissioner, International Financing Division, Business Support Unit, International Trade Canada: I hope you have received the handouts we have prepared for you; they are available in both official languages.
In my presentation I will discuss the Canadian private sector involvement in Africa that is supported by International Financial Institution Funding, IFI funding, and my focus will be on Canada's trade and investment in Africa.
In our investigations concerning our trade with Africa we became aware that we have a negative merchandise trade balance that has a lot to do with our imports of oil from Africa. I will not go into great detail here because we will never get through my presentation.
The Chairman: We are talking primarily oil, is that it?
Ms. Wood: Yes, and on the export side of things where our main export markets are Algeria, South Africa, Morocco, and Tunisia, it seems to be in a variety of sectors. We have a surplus trade balance in services; that is where our strength is. Maybe some of the services are the in the areas that support our outward direct investment. We have $2.4 billon of outward investment in Africa, mainly in South Africa and Ghana. I do not have all the details of those numbers, as many of them are confidential.
This leads me to a draft report published by the U.K. Commission for Africa that explains that African trade has lagged behind trade in the rest of the world, not because of trade barriers per se, but from supply-side factors that include governance issues, the investment climate in Africa, and infrastructure and skills development. The report cited problems and this leads me to focus on IFI funding.
The key role of IFI funding is to lend and to provide loans to governments to do all sorts of things. Please open your handout to appendix A, and observe the graph showing the World Bank, which is the largest lender in Africa with U.S. $4.2 billion in 2003. The Africa Development Bank also is a big lender with U.S. $2.2 billion in the same year. The focus of the loans from both of these institutions is in infrastructure, poverty reduction, human development, and sustainable development.
We have provided some fact sheets on the World Bank and the Africa Development Bank that show Canadian businesses how to get information on procurement. You can see the importance of Africa in their lending portfolio; about 20 per cent in the case of the World Bank.
As to other sources of procurement in Africa, many of these projects are co-financed, which means organizations, such as CIDA, and DFID, the British equivalent, co-finance these projects. These are increasingly becoming sources of funding open to Canadian companies.
As some of you may know, as of 2001, the OECDs Development Assistance Committee recommended the untying of aid to lesser developed countries. We have examples of Canadian firms that have succeeded in winning contracts funded, for example, by DFID. I have provided as your next attachment a fact sheet on the Department of International Development.
The Chairman: Excuse me, Madam.
Senator Corbin: Ms. Wood, please avoid acronyms with which we are unfamiliar.
Ms. Wood: The Department for International Development, DFID, and the U.K. Bilateral Development Agency. As you will notice, 48 per cent of their funding goes to Africa, so this is an important one for us, and their procurement has been untied to a large extent. As I indicated, we have had some success in that Canadian companies have obtained some co-financed contracting work.
Other organizations that provide funding that contributes to Africa's development are the numerous Arab funds and banks. I do not have a listing here, but we certainly have that information. Many of you have probably heard of the Islamic Development Bank, and the Kuwaiti Funds. We have a guide on that, but your handout would have been much thicker if I provided all the material we have.
Finally, the UN agencies do about U.S. $7 billion of procurement a year. I do not know how much in Africa, but it is certainly a lot. I have provided you with just one fact sheet of several buying organizations within the U.S. system. This one is UNDP, United Nations Development Program. It is present in most African countries, and it is often the UN organization that coordinates UN activities within the country.
It is very important to realize that IFI funding also contributes to the private sector development of local countries. What I mean by that is not only does it provide public procurement opportunities, but also offers funding in the form of loans, debt, and guarantees to companies, such as Canadian companies, interested in investing in African countries. This is a new trend that started a few years ago and I have provided here an example of a fact sheet that we have developed for Kenya.
The example found on the page entitled ``Sources of Project Financing in Kenya,'' indicates that many organizations are involved in funding projects in countries like Africa and all over the world. We at International Trade Canada have developed these for 21 African countries, so that you can see the sources of project finance. These, of course, include the private sector windows of the International Finance Corporation of the World Bank Group, the Multilateral Investment Guarantee Agency of the World Bank Group, as well as the African Development Bank's private sector window. This is a new trend.
We recently worked with CIDA to bring to Canada a delegation from the private sector window of the African Development Bank. We brought them to meet with Canadian companies in Montreal and Toronto to tell them that we need their help in infrastructure development and financial intermediaries to build up our continent in the energy and mining sector, where Canada has great strengths.
You will notice also in this project financing fact sheet that we have included development finance institutions of other countries, such as the United States Overseas Private Investment Corporation and the European Investment Bank. We have included all of these because once it is a private-sector-originated project, it is open to Canadians. It is all a question of leveraging financing, but often our Canadian companies do not realize that.
In preparing this one page, we, through our trade commissioner service, also obtained local information because there are myriad of local development banks, equity funds, and local commercial banks that can provide more assistance on a country-specific basis. Please refer to the example for Kenya. We also provide foreign investment regulations. This is relevant because it is a new trend, and we are talking about private sector development in the development of countries in Africa.
There is a catch, though. If a company is interested in working with and obtaining financing from these institutions, there are rules, but they are positive rules. They are the rules of corporate and social responsibility and environmental sustainability, so that is a good thing for the local countries who will be the recipients of this investment. Essentially, these institutions can help mitigate the non-commercial risks of investing in their countries.
The trade commissioner service is part of International Trade Canada. In Africa, 1,300 Canadian companies are targeting African countries, 147 of which are active. It might not sound like much, but these are serious companies with which our trade commissions are working. We are present in 21 countries, with a combination of locally engaged staff and Canada based staff and we have two liaison officers. IFI business is challenging in terms of yes, you will get paid, but the question is when. We need support, and we can get that support through our direct contacts within the banks.
The unit I represent offers advice, information and support, and we have a dedicated website, IFInet. We have supplied you with our flyer that explains the six core services of our commission service.
I would like to quickly go over the contracts that had been awarded to Canadian companies over the last number of years; you will find this information in appendix B and appendix C. Please keep in mind that we have obtained these numbers from the banks, and they have probably underestimated the reality because not all contracts are reviewed. The contracting is done in the country by local governments. The numbers indicate that Africa is number two after Asia. In terms of the contracts we are winning, we are doing well. We tend to win between 2 per cent and 3 per cent of all procurement in those areas.
One positive thing to keep in mind is that more and more locals are winning these contracts thereby creating competition for us. That is good in a sense because there is more local capability, but that means that our companies have to change their business model; they have to partner and establish a local presence. Local competition is from countries like South Africa and Tunisia. Even Burkina Faso is winning a lot of these contracts. As far as international competitions, you can imagine the usual suspects: France, China, Germany and Italy.
Regarding success stories, we feel it is important for Canadian companies to realize what successful Canadian companies working in Africa with IFI funding and CIDA funding have been able to accomplish. The main success is in the area of services, infrastructure development, and governance, all the things that the banks are supporting to help African countries develop.
We are not alone. We work very closely with CIDA Inc., and we deliver their program in the field. In appendix C you can see the statistics on the CIDA Inc. program in Africa. Please note that the program is quite sizable. Another Canadian organization that works in Africa with some CIDA funding is the Trade Facilitation Office of Canada. TFOC is doing a great deal to help build capacity in Africa so that African countries can then export back to Canada. CIDA's Consultant Trust Funds is another mechanism that has been useful to help our companies provide services to improve the governance of, for example, the African Development Bank.
Canada's executive director's offices at IFI are incredibly important for us because, even though there has been much improvement in the area of transparency and procurement at the World Bank, the African Development Bank and the UN agencies, one runs into problems. The Canadian executive directors provide a troubleshooting service, and we work very closely with them.
A new network has been created; the private sector liaison network of the World Bank. This is yet another effort on the part of the World Bank to get Canada more involved in working with the banks. One of the officers from that network is organizing a March 15 event in Fredericton that will focus on Africa.
At International Trade Canada we are working closely in partnership with all these players, both in Canada and in the field, to help support and protect Canadian private sector involvement in Africa via IFI funding, which in turn, we hope, will contribute to Africa's development.
Senator Carney: You have provided us with a very impressive and helpful dossier that gives us the broader picture of all the sources of funds that are available.
What has the division of International Trade Canada from Foreign Affairs meant in the actual delivery of these programs?
Foreign Affairs and International Trade were merged at great expense and effort so that everyone served the same clients on an integrated basis. Some of us are puzzled about how it will work if you take the Canadian trade service out of Foreign Affairs.
What will happen in the field?
What changes will there be in the reporting relationships?
How will you know whether what you are doing in the trade service complements the political objectives of Canada and vice versa?
Ms. Wood: Things have not yet changed a lot in the field. We are still collocated. We have not yet moved in Ottawa. As of this Monday, we have a new assistant deputy minister of world markets in International Trade Canada, so this is extremely new. As you may recall, the current geographic divisions are joint divisions, including both political and trade. The trade officers will be relocated, in the same building, probably by April 1.
We are living in transition phase but, as I said, as of Monday we will have a new ADM world markets who, I imagine, will announce who the lower-level geographic director generals will be.
I understand that there will be some amalgamation of certain bureaus, both on the foreign affairs side and the international trade side. It will be a bit more condensed and will have a big focus on the United States and on emerging markets.
Senator Carney: That is not responsive to my question.
If you are doing debt reduction in Africa in foreign affairs and you are physically moving the trade officers elsewhere and they report to a deputy minister world markets, how do you have a cohesive delivery of a foreign policy trade service?
It must be very hard for the trade commissioners.
Can you explain how these people are supposed to work in the field in that way?
Ms. Wood: I do not think that has yet been worked out. It is still early days, I am afraid.
The Chairman: I think the answer, Senator Carney, is that they do not yet know.
Mr. Bruce Rayfuse, Director, International Finance and Development Division, Department of Finance Canada: Thank you for the invitation to appear before you today. The Department of Finance is most directly involved in policy toward Africa as a result of the minister's governorship of the International Monetary Fund and the World Bank, as well as his participation in the G7 finance ministers' process. Moreover, this year, Minister Goodale is serving on the Commission for Africa set up by British Prime Minister Blair. The department also leads Canada's participation in the Paris Club of creditor nations. Therefore, most of our involvement has been on the question of the treatment of debts of African countries and my remarks will focus on this issue.
We have provided two documents that cover most of the material I will refer to in my remarks. The first, ``Helping the Poorest: An Update on Canada's Debt Relief Efforts,'' outlines what Canada has done on its own and as part of broader international debt efforts. The second, ``Canada Proposes 100 Per Cent Debt Relief for the World's Poorest Countries'' is the press release and two background pieces relating to Minister Goodale's announcement on February 2 of a Canadian proposal to pay off a significant portion of the outstanding debt of poor countries toward the international financial institutions.
I will briefly do three things in my remarks today. I will first give an outline of the international strategy toward poor country debt and Canada's role in the development of that strategy. I will describe the measures that Canada has taken on its own to go beyond the international strategy. I will close with a mention of outstanding issues and future directions of the international strategy.
The principal international mechanism to address the debt problems of the poorest countries is the Heavily Indebted Poor Countries, or HIPC, initiative. The initiative arose out of an increasing recognition through the late 1980s and early 1990s that some of the poorest countries were so deeply in debt that they would never be able to repay their debts, or that they would only be able to repay at unacceptably high costs to their own societies. The bilateral or country creditors, operating through the Paris Club, evolved over the years a series of terms or treatments that involve increasing levels of debt forgiveness of this bilateral debt.
By the time of the Halifax G7 summit in 1995, however, it was apparent that a bolder approach was needed, one that involved deeper debt reduction not only by the bilateral creditors but also by the international financial institutions such as the IMF, the World Bank and the regional development banks.
At the Halifax summit, leaders called upon the IMF and the World Bank to develop a comprehensive approach to assist countries with multilateral debt problems, and in the fall of 1996, the HIPC initiative was rolled out. It, for the first time, involved the international financial institutions in granting debt reduction. At the Cologne G8 summit in 1999, an enhanced version of this initiative was designed. It was implemented in September of that year.
I will not go into the workings of the HIPC initiative right now. There is some explanation of how it works in the ``Helping the Poorest'' document we have provided. In the question period we can answer any questions on how it works. I will say just a little about what it will achieve and what Canada's role has been in making the HIPC initiative work.
To date, 27 countries have entered the HIPC process and 15 have completed it and, therefore, received irrevocable debt reduction. According to the calculations of the IMF and the World Bank, those 27 countries will see their debt burdens reduced by an average of 60 per cent as a result of the HIPC initiative. Their debt servicing burdens, as measured by the ratio of debt payments to exports, will be reduced by more than one-half by 2006. As a result of this reduction, spending on education, health and rural development in HIPCs as a share of GDP has increased by 30 per cent since the late 1990s and is now four times what is spent on debt service. One of the key aims of the HIPC initiative was to encourage improvements in governance, both to promote development and to prevent a recurrence of debt problems.
Indications are that governance, as measured by indicators of democratic and civil rights, has been improving. Through its membership in the G7 and G8, as well as the IMF and World Bank, Canada has been actively involved in the development and ongoing evolution of the HIPC initiative. Canada has also provided financial support for the initiative, along with other donors.
A key element of the HIPC initiative is the various trust funds that help finance the participation of the international financial institutions. To date, Canada has contributed $312 million to the various HIPC trust funds.
While supporting the HIPC initiative, Canada has also been a leader in its willingness to go further on its own. Since 1986, Canada's aid has been exclusively in the form of grants as opposed to loans. In March 1999, Canada became the first country to declare that it would provide 100 per cent bilateral debt reduction for the poorest of the HIPCs, rather than the 80 per cent that was then required for participation in the HIPC initiative.
In the February 2000 budget, Canada became the first country to provide 100 per cent bilateral debt reduction for all HIPCs that completed the initiative. In the last year under this initiative, we have completely written off the debts of Guyana, Ethiopia, Senegal, Ghana and Madagascar. Before that, we had done the same for a number of other countries as well.
In September 2000, Canada was the first country to suggest an immediate payments moratorium for all countries that were making sincere efforts to improve governance and human rights, and in January 2001 we implemented this moratorium for 11 of the 16 countries that at that point owed money to Canada.
In the budget of last March, two more countries, Rwanda and the Democratic Republic of Congo, were added to this moratorium.
On its own and as part of the HIPC initiative, Canada has forgiven about $600 million in poor country debt and has about $600 million in remaining claims.
Other countries have followed at least parts of these Canadian leadership examples and introduced their own additional bilateral assistance packages. When you include this additional bilateral assistance in the overall HIPC debt initiative, then the amount of debt reduction rises from the 60 per cent number I gave you a few minutes ago to 68 per cent, so more than two thirds of the debts of HIPC countries will be written off.
While the HIPC and Canadian debt initiatives have accomplished a great deal, no one would claim that they have dealt with the issue of poor country debt for all time. Let me wrap up with a few words of what there is left to do with the HIPC initiative and what happens after HIPC.
There are a number of issues that remain to be dealt with before the HIPC initiative can be said to have delivered as promised. In the first place, all creditors must participate. At present, a significant number of non-Paris Club creditors and private sector creditors have not been participating. Some of these creditors have even gone so far as to sue for payment. The initiative still has to be fully financed. The HIPC trust funds are not full to where they need to be. Creditors must agree on when additional debt relief is required due to economic shocks such as drops in commodity prices or changes in exchange rates. The HIPC initiative seems to have been plagued by overly optimistic economic forecasts. IMF and World Bank work shows, for example, that of the 15 countries who have reached their completion points of the HIPC initiative, 12 of those did with debt export ratios well above what was forecast for them. As a result, it would appear that we will have to consider even greater debt cancellation to be sure of achieving debt sustainability.
This was some of the thinking behind Canada's February 2 proposal that donors should contribute toward forgiving the debt of poor countries toward the three major multilateral creditors, the International Monetary Fund, the World Bank and the African Development Bank.
The treatment of international financial institutions' claims was a major issue at the recent G7 Finance Ministers' meeting in London and will likely continue to be for the rest of the British presidency of the G7, G8.
There is the issue of preventing poor countries from going into debt excessively in the future. This is the post-HIPC initiative work to which I referred. This is the task that the staffs at the IMF and World Bank have been working on for some time. There are two recent outcomes in this regard. They have produced a new debt sustainability framework that has been adopted in the International Development Association negotiations; this is a branch of the World Bank that does lending to the poor countries. The framework assesses debt sustainability in large part on the basis of the institutional and administrative strength of the recipient country. Coming out of this exercise is a willingness on the part of donors to see the International Development Association and the African Development Fund give more of their assistance in the form of grants, particularly to countries that are at risk of debt trouble.
I will stop there and let you ask questions.
The Chairman: In regard to debt reduction, you cannot get blood out of a stone and there is no point ruining people to get money that is not forthcoming. When you say ``debt reduction,'' I presume that when money was loaned to somebody for something that there was an assessment made. They do not just come up with a suitcase and say, ``Here is the money.'' Presumably, there was a proposal and responsible people looked at it and made an assessment. This bothers me with development, in general. They made an assessment and they turned out to be spectacularly wrong.
I do not have a problem with that, but was somebody not spectacularly wrong in assessing what these projects were that have not worked and cannot be paid for?
Mr. Rayfuse: The international financial institutions were very wrong in some of their projections.
There have also been economic shocks such as commodity price shocks that have created difficulties for countries. There has been failure in governance in some countries and in some cases the countries have fallen into civil or international conflict. There has been a series of events that happened over the years that have made many of these loans unsustainable.
The Chairman: I understand. That begs the question: Will these decisions be any better in the future?
Mr. Rayfuse: There has been recognition in the past that these decisions have not worked well. That is why we have gotten more in into grant financing as opposed to loan financing.
The Chairman: They just give them the money because there seems to be such an ineptitude in making a judgment that in order to cover your error, they say, ``Okay, here, you can have the money, we will not bother with the loan because I am not certain of my ability to do the assessment because I have been so wrong in the past. Therefore, we are just going to give you the money.'' That is how that sounds to me.
Mr. Rayfuse: You are lending into very difficult environments here. I have talked about the international financial institutions. You must remember that about one-half of HIPC debt is export credit agencies. These are agencies that are created to take risks that commercial banks do not make. They go in and purposely lend in risky environments. It has turned out that these environments were even more risky than they had supposed.
Senator Andreychuk: I wish to set aside the critics of HIPC who say that you are rewarding those who have not done well, and those who are struggling and have done the governance, and so forth, are not benefiting to the same extent. That has been a frequent topic of discussion in the development field.
One of the dilemmas is that you are concentrating on debt relief. As we have found in our own country, you do not escape poverty by easing your debt load; you must have some means of trade investment. If we do not do something in tandem on the trade in the WTO to allow them to have the same market shares, to have the same kind of access to technologies, and so forth, all of this HIPC and debt relief keeps them still at a subsistence level. I have yet to hear the whole scheme.
While we go into help one country and we allow some exports into Canada at a different rate than from other African countries, we provide an imbalance between neighbouring regional countries.
I was recently in Africa. We have taken some trade initiatives with Tanzania, which the Kenyans say creates an imbalance for them and some of their businesses are moving from Kenya into Tanzania, which was not what we were starting out to do.
How are you addressing all of these imbalances?
We saw this competition in London as to which plan will work for debt relief as opposed to how we get these countries functioning and able to catch up to a world market.
Mr. Rayfuse: You are exactly right; debt reduction is only one element of the development package. All debt reduction can do is free up resources. Provisions have been made in the HIPC initiative to try to ensure that those resources go to poverty-reducing expenditures and investments. However, that is only one element. Much more important is policy that will stimulate growth, and trade in particular.
I think the G7 finance ministers have been quite supportive of the Doha round of the WTO negotiations. As well, I mentioned that Minister Goodale is participating in the Commission for Africa. Trade will be a very key element of the package of measures that the Commission for Africa recommends.
No one has ever claimed, and we certainly do not claim, that HIPC, or an initiative like the Canadian debt initiative, is the answer. It is only one element of a total package that you have to have.
Senator Andreychuk: I do not see where the coordination comes from. We have had these initiatives of HIPC, and they come from the Canadian government, or the British government, and then we have the Doha round that has had many false starts and some initiatives. Where is this coordination? It cannot come from within the country unless you have all the governance and all of the issues, and have room at the table with the rest, and they do not have it. You are asking an impossible task of the governments, and I do not think we are maximizing the dollars we are spending.
Mr. Rayfuse: Again, it would be better if you had a more liberalized international trade system. As you know, trade negotiations move along at their own speed, or not. I do not think you can delay a solution or assistance on the debt side to wait for a success on the trade side.
The HIPC initiative puts money in the coffers of these governments that they can use right now to undertake certain desirable investments. It would be better, yes, if trade could expand at the same time, but I do not think a lack of motion or success on the trade side should cause us to delay granting debt reduction.
Senator Andreychuk: A final question; it was some 15 years ago that the president of one of the countries said to me, do not give me your aid, give me your trade. At that time, I recall there was some amusement because of that comment. I think we are coming to the conclusion that these initiatives are stopgap measures. I think that if we do not address a rebalancing of the entire trade system we are going to find Africa in this position 50 years from now.
Mr. Rayfuse: As I say, I do not wish to understate or to limit the importance of trade, because I think you are absolutely right. That said, the HIPC initiative is working now, and socially productive investments are being made now that, in the future, if and when trade is liberalized, may pay off.
For example, I do not know if you saw Stephanie Nolan's article in The Globe and Mail on January 29, as a result of the HIPC initiative in Tanzania, the government was able to abolish school fees. As a result, 1.6 million children are attending school for the first time. This is an investment that, in the future, will pay off. If and when trade is liberalized, that investment will help.
Senator Downe: I am curious as to the level of debt relief we are giving in Africa compared to the rest of the world.
Are we currently doing any debt relief anywhere else in the world outside Africa, and if so, how much?
Mr. Rayfuse: The HIPC initiative applies to heavily indebted countries wherever they may be. There is a list of 42 potentially eligible countries that has been drawn up. Most of them are in Africa, but I think five or six are outside of Africa.
Senator Downe: What I am trying to focus on, a few weeks ago we had the CIDA minister here, who informed this committee that Africa was the priority. When we look further, we realize that Africa may have been the priority, but more funds were going to Afghanistan than to any African country.
What is the ratio of debt relief to African countries compared to the rest of the world, and how does that compare to 20 years ago?
Are we doing more in Africa as a percentage or less?
Mr. Rayfuse: In terms of just the HIPC initiative 22 of the 27 countries that are receiving assistance are African.
Senator Downe: Do you have a dollar value?
Mr. Rayfuse: I can find that for you in a few minutes, or one of my colleagues can. In the Canadian debt initiative, of the $600 million that we have granted so far, $580 million has been to Africa.
Outside of HIPC initiative, through the Paris Club, there have been some other cases of debt reduction. Back in 1991, I think, we did fairly substantial debt reduction for Egypt and Poland; and just this past year, the Paris Club negotiated a pretty substantial reduction for Iraq.
Senator Downe: I wonder if you could provide the committee with those comparisons. I am interested in the dollar figures.
Our commitment to Africa has been very vocal, and I wonder if the dollars are following that commitment through the Paris Club and other areas.
Are we giving more to other areas, and have we given more in the past than we are currently giving to Africa?
Mr. Rayfuse: I can get you the exact number. However, I can tell you that for Iraq, for example, our debt reduction is about $580 million. It is a very large case; just because its exposure was very much larger than most of the African countries, the amount of debt forgiven will be very large.
Senator Downe: The last question, Mr. Chairman, is to Madam Wood. I am not clear on your presentation. The direct investment of $2.4 billion, is that just for the year 2003, or is that total as of 2003?
Ms. Wood: That is cumulative stock of outward investment.
Senator Downe: Thank you.
Senator Di Nino: I wonder if we can get some idea of all of the money that we make available to the world, either through CIDA, through the World Bank, through IMF, through HIPC, and through the Paris Club.
I think it would be interesting to see how much of that in total, not picking up a program here or there, goes to different continents.
I am particularly interested, as Senator Downe apparently is, in comparing how much money we are giving to China today versus Africa today, through all of the programs that we have.
I am not sure that you can supply that information to us, but I am going to ask the chair, through our people, if we can get that information because I think that information may very useful thing for us to have.
Let me first of all say that General Dallaire, our witness yesterday, made a very strong statement about the rage that eventually come from Africa, if the world does not start paying attention. I am not quoting him directly but he suggested that terrorism may not be only based around religion, or other factors. I will use that as a way to ask some questions because I happen to agree with him. People are hungry and they do not have much control over how they behave.
Ms. Wood, I am frustrated in attempts to understand why Africa has been ignored while Asia has received a great deal of attention, particularly in the area of foreign direct investment and imports.
Prime Minister Chrétien's visits to Asia were incredibly successful in creating jobs in Asia. Our trade imbalance, particularly with China, has sky-rocketed but that is not my focus.
Why can we not do the same with Africa?
Ms. Wood: Yes, I understand your point, senator. A couple of years ago Mr. Pettigrew led a business mission to Nigeria and Senegal, I believe, and probably another country. He was not the Prime Minister but he was our Minister of International Trade. There was an effort to determine what was out there and what other Canadian government programs, such as EDC and CIDA, could provide in those markets. We then looked at other sources of financing for our enterprises in those markets. We tried.
Senator Di Nino: Why did we not succeed?
Ms. Wood: As you know, we are importing more from Africa than we are exporting.
The Chairman: You can buy Kenyan coffee in the cafeteria.
Ms. Wood: I learned today as I was preparing for the committee that the Canadian Least Developed Countries Market Access Initiative was launched in January 2003. Basically, 34 of the 48 least developed countries are in Africa. That means they have duty free access to Canada for all goods except supply managed agricultural products.
Senator Di Nino: That is another issue. I am talking about the large retailers in Canada. I will not mention names because then I would have to say ``Chinese Tire,'' which I should not say. On the shelves of retailers, it is difficult to find a product that is not made in China.
Why have we not succeeded in doing that with Africa?
I am not suggesting we should not do it in Asia but perhaps it should be more equitable. You deal with this every day.
What are the impediments?
You listed skill development but we can deal with that over five-to-ten years. We can teach people how to use some of the equipment that makes T-shirts, shoes, et cetera. Most of it is simply technology.
Are we talking about corruption? Are we talking about no energy? I do not know.
Ms. Wood: It is probably a little of each reason you mentioned. I find it interesting that the Chinese have a strong presence in Africa, everywhere. I mentioned that they are one of our key competitors, together with France and Germany, in Africa. They are investing in developing processes.
Indeed, corruption is an issue, as well as low wages, health, education. Part of the role of the international financial institutions is to try to improve those conditions both through public procurement and through helping the private sector to develop.
Senator Di Nino: Your answer is not what I had hoped to hear.
Is there a level playing field when we are dealing with those two different regions of the world?
Do we apply more pressure in one region than in the other?
Ms. Wood: International Trade Canada has trade commissioners in 21 of those countries, and our services are available to Canadian companies. Government programs are there to help but we can only facilitate because that is our role. We provide information and context but we cannot do more than that. It is up to the Canadian private sector to decide whether they want to take that risk and do business in African countries.
Senator Di Nino: Mr. Chairman, we should hear from some Canadian private sector investment experts.
This fundamental problem exists. If we do not lead the way in resolving some of the trade and economic issues, the others will not be solved.
The Chairman: Honourable senators have mentioned the private sector and we will have representatives here to speak to us. This is a complicated issue, but it is not a complete disaster; we get coffee from Kenya, wine from South Africa, and so on.
Honourable senators, on behalf of the committee, I thank the witnesses for their testimony.
The committee adjourned.