Proceedings of the Standing Senate Committee on
Foreign Affairs and International Trade
Issue 18 - Evidence - June 13, 2007
OTTAWA, Wednesday, June 13, 2007
The Standing Senate Committee on Foreign Affairs, to which was referred Bill C-293, respecting the provision of official development assistance abroad, met this day at 4:07 p.m. to give consideration to the bill.
Senator Eymard G. Corbin (Acting Chairman) in the chair.
[English]
The Acting Chairman: Honourable senators, welcome to the Standing Senate Committee on Foreign Affairs and International Trade. Today we are continuing our study of Bill C-293, respecting the provision of official development assistance abroad. This bill is a private member's bill originating in the House of Commons.
[Translation]
Today's meeting will have two separate parts: in the first session we will hear from the British Department for International Development and in a second session, we will hear from two individuals who will provide their personal views.
[English]
We now have the pleasure of welcoming, by video conference, Mr. Mark Lowcock, Director General, Policy and International Division at the British Department for International Development in London.
Mr. Lowcock will briefly present the United Kingdom's International Development Act of 2002. Indeed, the United Kingdom has already established legislative mandates for its international development assistance. The International Development Act is the central piece of legislation authorizing disbursements of development or humanitarian assistance, and it establishes poverty reduction as the overarching purpose of the United Kingdom's international development assistance.
This presentation will help committee members to compare the bill before us and an act in force for five years in a commonwealth country.
Mr. Lowcock, you now have the floor.
Mark Lowcock, Director General, Policy and International, (British) Department for International Development: Honourable senators, my responsibilities in the Department for International Development cover our policy roles, our collaboration with other bilateral donors and all of Britain's contribution to multilateral development agencies.
I am one of the three deputies to the permanent secretary, so my nearest equivalent in the Canadian International Development Agency is Diane Vincent, Executive Vice-President of CIDA.
I am happy to answer all your questions on the British approach to international development and on our legislative framework. I am also familiar with the OECD Development Assistance Committee. I represent the United Kingdom at the senior level on the Development Assistance Committee, and in the past I have been a reviewer of the development assistance efforts of other countries as part of the OECD's peer review system.
The 2002 act governs the use of funds voted by Parliament in the U.K. for development assistance. It replaced the 1980 Overseas Development Incorporation Act, which itself replaced legislation put on the statute book here going back to the 1940s. The current government decided, while in opposition in the 1990s, that it wanted new legislation for British aid in light of a scandal in which a high court ruled that the then government acted illegally when financing a hydroelectric power project in Malaysia for reasons other than the promotion of development.
The current government decided it wanted to make it explicit that funds voted by Parliament could only be used where the effect would be to reduce poverty and the purpose was to promote sustainable development or the welfare of people in poorer countries. In other words, the government wanted, unambiguously, to rule out other motivations or purposes governing the use of aid money. Of course, Britain has a wide range of other goals in its international policy, but we have other tools to assist in the achievement of those goals.
Our experience has been that the 2002 act has been beneficial in a number of ways. First, it provides clarity of purpose. This was commented on in the latest Development Assistance Committee peer review of the U.K. Mission fuzziness can be a problem for public sector bureaucracies and the act helps us with that.
Second, the act is beneficial as a motivator for the staff of the department and our external partners. People want to get up in the morning and come to work to contribute unambiguously to the reduction of poverty in poorer countries.
Third, it ensures that we avoid the problems we encountered when we used the aid program to pursue multiple objectives. For example, explicitly using aid to promote Britain's commercial objectives by tying aid to the supply of British goods and services proved not to be very effective, either commercially or developmentally. Studies showed that value for money was reduced by around 25 per cent.
Fourth, my ministers believe that the act has helped to strengthen public support for foreign assistance. The legislation is very much cherished by non-governmental agencies here.
One question we have faced, which I understand has been the subject of discussion in some of the earlier testimony you have taken, has been around whether poverty reduction is either too narrow or too broad a test. That subject was debated to some degree during the passage of the 2002 act through the British Parliament.
The framework for the U.K. development assistance efforts is the United Nations Millennium Development Goals. The truth is that many activities can contribute to those goals. The promotion of private sector development, for example, which generates growth and creates jobs and raises incomes, contributes to the first Millennium Development Goal of reducing the proportion of people living on less than $1 a day. Equally, investments in health and education, governance and conflict reduction can contribute to poverty reduction.
Parliament concluded that the broad poverty reduction test was a good one. The central issue — as they established in finalizing the legislation here — in judging whether to approve any spending proposal, which is the responsibility of the Secretary of State, is one of effect and of motivation. Will the effect of spending be to reduce poverty, and is the purpose or motivation to promote development?
In addition to the 2002 act, in 2006 the U.K. Parliament passed the International Development (Reporting and Transparency) Act. It was introduced as a private member's bill by a backbench member of the governing party. It passed through Parliament with the blessing of the government. It does not affect the use to which money can be put. It does not affect the 2002 act. Instead, it sets out requirements for the ways in which the government reports to Parliament on that expenditure. It is actually rather more detailed than the provisions in the draft bill before you. The government discharges the obligations that Parliament puts on it for that reporting largely through an annual report submitted by the Secretary of State for International Development to Parliament. One result is that this year we have produced a very long annual report for Parliament, running to 300 or 400 pages.
Those are the brief remarks I wanted to make. I am happy to answer all your questions.
Senator Segal: Thank you, Mr. Lowcock, for making yourself available to give us the benefit of British experience in these matters, particularly with respect to the International Development Act, where your reflections will be of great value to the committee. I know it is a later hour in the United Kingdom, so your kindness in making yourself available is very much appreciated.
I do not want to ask a question so much the International Development Act, although I must say that as a Canadian I am impressed by its level of detail and the degree to which fundamental definitions are addressed in a constructive way so as to give clarity to public servants and DFID employees relative to their discretion in a host of areas. However, I would like your perspective on the subsequent private member's bill that passed through the House of Commons and the House of Lords with the support of the government relative to the format of reporting to Parliament in particular. I apologize for not having a copy of that bill present as I frame this question, but I will put it to you nonetheless. Does it in any way prescribe the level of consultation that the Secretary of State or the minister responsible must embrace prior to the execution of his or her duties relative to the actual signing of agreements or the expenditure of funds in any of those countries that might be on the list of targets for DFID?
Mr. Lowcock: The answer to your question is no, the 2006 act does not prescribe that. We believe that consultation is a good thing in order to improve the quality of decisions, but there are no provisions in that respect in the International Development (Reporting and Transparency) Act.
Senator Segal: From your own experience and perspective as a senior public servant, could I ask you to characterize the degree to which there has been a qualitative change, if any, in the nature of civil society dialogue with Parliament and parliamentary engagement with the foreign aid mission as a result of this new piece of private member's legislation coming into effect?
Mr. Lowcock: The honest answer is it is too early to tell. Certainly there was terrific interest, from a wide range of stakeholders, during the process of the development of the bill and its passage through Parliament. Implicit in the fact that the government gave the bill its blessing is that the government thought it was a good idea to maximize transparency and availability of information and to respond to what in the last 10 years has been quite a notable growth in parliamentary interest in international development matters, which of course reflects a wider growth of interest across a whole range of interest groups in our country.
We, the senior officials in the department, the permanent secretary, the other two director generals and myself, will be giving evidence to the International Development Committee of the House of Commons in the middle of next month, which will be their first opportunity to scrutinize us and probe us on the reporting we have done as a result of the 2006 act. The passage of time will determine how that piece of legislation contributes to an improvement of the public debate in the U.K. and an improvement in the parliamentary scrutiny of the activities of the department.
Senator Segal: In terms of the IDA Act of 2002 and its coming into effect, I notice that under the development assistance part of the act, there is quite a broad definition relative to development assistance and its relationship to sustainable development. Can you give me your perspective on the difference between that, as defined in the act, and the poverty reduction proposition, which you referenced in your opening comments?
It is fair to say for those who are proponents of putting the term "poverty reduction'' into proposed Canadian legislation that it is seen as a clarifying measure that will make the focus of our international aid much more explicit and precise. For those who are concerned about poverty reduction as the only term to appear in the proposed Canadian legislation, the argument is that it may get in the way of economic development and other instruments, which, to quote your own act, will facilitate the "likelihood of its generating lasting benefits for the population of the country or countries in relation to which it is provided.''
Without asking you to opine on what our Canadian problems may or may not be — you have enough of your own — if you could give us a sense of how those values interact in your own country under this legislation, it would be most helpful to us as part of our learning experience.
Mr. Lowcock: You are certainly right that we have plenty of our own problems to grapple with. Let me say a bit about the discussion that took place in this country on the poverty reduction test.
This has been written up to some degree in international literature. There is a book edited by Mr. Lael Brainard from the Center for Global Development in Washington, one of the world's better think tanks in this area. The book was published last year, a chapter of which quite well captures the nature of the discussion around the poverty reduction issue.
One of the things it says is that some stakeholders — including, it says, "some of my own staff'' — were worried that the poverty reduction test would mean that DFID would be focused on poverty relief — that is, addressing needs arising from poverty — rather than tackling the underlying causes. He goes on to say that DFID ministers and senior officials always understood that long-term, sustainable poverty reduction involved addressing the causes of poverty; and they interpreted it broadly to include investing in economic growth, conflict reduction, improving governance, fighting corruption and long-term investments, such as research and development and human development.
We certainly have a broad concept of the set of things that would pass the test of contributing to poverty reduction. That is the first test in the 2002 act. The second test is about motivation. The truth, equally, is that you could do some things that would contribute marginally to poverty reduction, but they not be primarily motivated by that test. That was the distinction drawn in the U.K. legislation, but the poverty reduction test was very explicitly a broad one.
Senator Segal: I realize that your primary area is related to policy content, but the DFID is held up by many NGOs and others in this country as an organization that achieves its goal with remarkable efficiency and with a great presence on the ground in the target countries. Efficiency, for our purposes, would be the cost of actually getting aid to the targeted recipient in an efficient and timely way. Would you give your views on the extent to which either the IDA Act of 2002 or the subsequent private act on transparency have contributed to that in some way, if at all, constructively or negatively, as the case may be?
Mr. Lowcock: One of the effects of the 2002 act was to make us very explicit about our core objective. Going back to my earlier comments, it has been our experience that clarity on the objective helps with efficiency and effectiveness. The effect of the 2006 act was to increase the scrutiny exercised by Parliament and other stakeholders of what we do and the way we do it.
These are certainly things that contribute to the drive for efficiency. Of course, other things contribute to that as well, such as the overall framework the government sets for the availability of administration cost resources, as we call them here. Those are the resources that are spent on paying the salaries of the people who work for the organization, the cost of our rent overseas and so on.
That efficiency agenda in the U.K. is a big one currently. It is requiring us, in DFID, to increase the ratio of our program budget compared to our administration budget from a ratio of around 20 to 1 at the moment to a ratio that will grow to around 50 or 60 to 1 over the next 10 years.
We have made some efficiency improvements — about one third over the last five years or so. Efficiency is a big driver and the two acts contribute to that, but there are other things that contribute as well.
Senator Mahovlich: You mentioned that the act of 1980 was replaced by the International Development Act of 2002. There was a development in Malaysia. Can you explain to me how the rich got richer and the poor got poorer from this development?
Mr. Lowcock: I am not sure I understand your question.
Senator Mahovlich: The reason that the act was changed in 2002 was because of a development in Malaysia. Can you explain to me how the rich got richer because of this development? Also, can you tell me why poverty was not relieved by this power plant or whatever it was that was developed?
Mr. Lowcock: That was not the critique that was offered of the decision the government in this country took to finance the hydroelectric power plant in Pergau. There are accounts of this in the public domain; it was subject to a series of inquiries in Parliament in this country. The critique was that the decision to finance the power plant — which at the time was regarded as not economic in the sense that better investments could be made if you wanted to increase the availability of electricity — was because it would facilitate the sale of a package of armaments to Malaysia, which was something that, completely legitimately, the British government wanted to facilitate. What was found to be unlawful was the decision-making process, which had the effect of linking those two objectives.
Senator Mahovlich: You said that your report this year was 300 to 400 pages long. Do you report quarterly or just once a year?
Mr. Lowcock: We have an obligation, on an annual basis, to submit to Parliament a report on how, with the money Parliament has devoted to us, we have discharged the objectives the government has announced. I should make clear that this is not the only reporting we do. We publish hundreds of documents every year. Some documents are produced explicitly for Parliament and others are on particular policy issues such as an enquiry by the select committee. Others may be to the world at large on our website. The annual report is a requirement of the U.K. public expenditure system through which every department of government explains to Parliament what it has done with the money voted to it.
Senator Mahovlich: There multiple reports.
Mr. Lowcock: Yes. There are many reports on a variety of topics. The annual report aggregates against the following test: "We voted you lots of money and you said that you would do these things. What did you actually do?''
Senator Andreychuk: I have two questions. First, how is the minister in charge obliged to consult with the broad array of constituencies such as NGOs and communities that may be involved in development assistance? Second, in what way or to what extent is the minister obliged to involve people on the ground in the countries in which you are working, beyond governments and the NGOs working there — in other words, the people we are there to assist? Is it by policy? Is it entrenched in the act? Is it mandatory or discretionary?
Mr. Lowcock: There are no provisions in either the 2002 or 2006 act requiring a mandate consultation. We are big believers in consultation on policies, programs and projects with both stakeholders in the U.K. and others internationally who know a lot about the topics with which we are dealing. Most important, we consult with the countries and people who live in them and who are the intended beneficiaries. This consultation is motivated by a belief that we do not have all the answers.
Senator Andreychuk: In your description of poverty reduction you include science and research as being very important. Are there any exemptions? Would you say that anyone working within developing countries or, in fact, in your country on research, science and technology that may affect developing countries would be included in your definition of "poverty reduction''?
Mr. Lowcock: The legislation does not determine how the Secretary of State should satisfy herself or himself that the proposed expenditure will contribute to a reduction in poverty. The legislation prescribes that the Secretary of State should determine that poverty reduction should be the effect.
In the real world, if someone invents a new vaccine for HIV/AIDS or malaria, self-evidently that has the possibility to make a massive contribution to poverty reduction. It is the same for research. DFID currently finances research grants from our bilateral budget in the order of CAN $300 million a year. That is very wide ranging, from new crop varieties and new vaccines to social and economic policies that can contribute to poverty reduction. The act requires the question be asked explicitly. The act does not say that some things will pass and others will not pass the test.
Senator Andreychuk: You adopted the first act in 2002. I studied that very carefully and did not review the 2006 act as much as I would have liked. I understand that you have not so much changed the kinds of programs you might fund in developing countries but how you provide and account for them; in other words, the efficiency, involvement and dissemination of information within your country and elsewhere. The types of projects that you do on the ground have not substantially changed. Am I correct? Have the categories of programming significantly changed?
Mr. Lowcock: The 2006 act sets out much more detailed requirements on the information we provide to Parliament. It says nothing about what ministers choose to spend money on.
The 2002 act is rather non-prescriptive in the sense of detailed things that may contribute to poverty reduction. This goes back to the discussion we had earlier. The result of the debate in this country is this key issue: Will the effect of the expenditure be to reduce poverty, and is the purpose to promote development rather than some other thing? It is important to note that we have only had the 2002 act for five years now. Thus far those tests have proved to be a good framework.
The Acting Chairman: How do you deal with the matter of transparency and accountability from the recipients of aid? Do you have conditions or provisions in the distribution of aid that impose transparency upon the recipients? How does that work in your case?
Mr. Lowcock: That is a broad question. First, as part of the agreements we sign with developing countries to provide finance to them, we agree on audit arrangements. This typically involves the U.K. National Audit Office having a dialogue with the supreme audit institution of the partner country and having access to their accounts, processes and so on. Where we have particular concerns, we sometimes supplement that with an independent audit commissioned from a private sector firm.
All of the expenditures we give, not directly to a developing country but, say, to an NGO or to another body, is subject to an audit by the U.K. National Audit Office, and that is stipulated in the grant agreement.
We also invest quite a lot in strengthening public financial management and audit systems in the countries in which we work. For example, we finance an agreement for the U.K. National Audit Office to provide advisory services to strengthen audits and accountability in many developing countries in which we work. DFID has a large cadre of governance and public finance specialists who spend their working lives strengthening and building systems in developing countries to improve accountability, value for money, effectiveness of expenditures and so on. This is a massive area of activity for DFID, and it has been a growth area in the last five years or so. It has been a corollary of the fact that British taxpayers, through their representatives, have voted a lot more money for international development over the last 10 years, but there is also a lot more scrutiny of the results achieved with that money. In our opinion, it is a very good thing to have that increased scrutiny.
Senator Dawson: How does that scrutiny and transparency apply to third parties? I see in the act that you do a lot of work with third parties? My honourable colleague was asking how you scrutinize the receiving countries, but how do you manage the transparency and the access to information with your partners, that is, third parties? You use third parties to help in development. How do you scrutinize those third parties?
Mr. Lowcock: There are a number of different sorts of third party. One category is multilateral institutions like the World Bank or the United Nations. Something like 45 per cent of the budget of DFID goes through those organizations. In that case, as a shareholder in those organizations and a member of the governing body of those organizations, we rely on their own audits and accounting systems.
A second category is the case where we provide assistance channelled through the government of another developed country. For example, we have an arrangement under which we give the Dutch government money that they manage and disburse for improving justice and law and order in Uganda. The U.K. National Audit Office and its Dutch sister organization have agreed to a memorandum, the effect of which is that the U.K. National Audit Office will accept as adequate audit discharge the systems and scrutinies that the Dutch national audit office brings to bear.
A third category would be grants that we make to civil society organizations. There, the grant agreement stipulates that that organization will provide you with their audited accounts and, in some cases, specific accounting documentation on the particular project or program. Those documents themselves will be subject to scrutiny by the National Audit Office.
In every case, it boils down to an audit discharge system that we either buy into because we are a member of an international organization or that is subject to the ultimate scrutiny of the U.K. national Audit Office.
Senator Dawson: On a completely different point, prioritization, I see that 45 per cent of your spending is done through the World Bank. They will prioritize what you are doing in cooperation with you, but how do you prioritize the other 55 per cent? Is it done by country or by sector of activity? Who does that prioritization?
Mr. Lowcock: About 45 per cent is multilateral — that is the World Bank, the United Nations and so on — and 55 per cent is the rest. Of that 55 per cent, something like 45 per cent is through country programs, as we call them, bilateral programs in about 50 countries. The top 20 countries, partners of Britain, account for about 90 per cent of those resources. In those cases, we agree on a strategy developed through public consultation and published with the government of that country. It is in that strategy, where we put out a three- to five-year program of work, that we determine the set of sectors or activities we will support.
We have two levels of prioritization there. First, what countries are we operating in and how much do we give to each of them? Major drivers are: How poor is the country; how big is it; what resources are coming from other places? Second, there is discussion within the country to decide the choices within that country program.
The remaining 10 per cent of the DFID budget is absorbed by things like contributions to NGOs, research, evaluation and a variety of other functions. We have an annual resource allocation process through which our ministers decide, for example, how much they want to give to Oxfam, to Save the Children, how much to spend on research on topic X and topic Y.
Senator Dawson: Do you have consultative bodies with whom you consult to prioritize and make these choices?
Mr. Lowcock: Ministers are asked questions and tested on the choices they make primarily through Parliament and the International Development Committee. This U.K. system allows the executive a lot more discretion once the total budget is voted than is the case in many other countries. There is not a parliamentary line-by-line decision-making process; that is left to the executive. There is a lot of consultation on what the choices should be in the country and sector priorities, but ultimately most of the decision-making power is left by Parliament to the executive.
Senator Downe: In the last number of years, the CIDA minister has informed this committee that Africa is the priority of the government for assistance, but when one looks at the budget, one sees that more money is targeted for Afghanistan.
I notice there have been similar complaints in the United Kingdom. British NGOs have complained there has been a shift in a large amount of aid assistance to Pakistan, Afghanistan and Iraq. How do you address those concerns?
Mr. Lowcock: The first thing to say is that since 1997 British assistance to Africa has increased by about fourfold, which is greater than the increase provided to other regions. We have committed ourselves to doubling British assistance to Africa between 2004 and 2010. We are on track to deliver that. There is a high degree of public and political support in the U.K. for the problems of Africa.
We have been very explicit that the priority used for British assistance is the Millennium Development Goals. That means that as a public commitment of the government, 90 per cent of British development assistance bilaterally will go to low income countries with an income of roughly U.S. $700 a year or less.
In 2003 there was a big debate in this country because we wanted to contribute to the reconstruction — as we hoped would then be the case — in Iraq. In order to do that we had to free up money, not from the poorest countries, the low income countries, but from other middle income countries. The choice we made was within the 10 per cent group of middle income countries.
Afghanistan is a different case because it is an extremely poor country. It is one in which, for quite a long time, we have been providing assistance of various sorts. That assistance has increased since 2001. We expect to have a long- term commitment because we believe that reduction of poverty and progress in that country will take a long time. There is a very strong development argument, given the poverty in Afghanistan, for investing in that country just as there is for investing in African countries with similar levels of poverty.
Senator Downe: Correct me if I am wrong, but I understand the complaint of the British NGOs was that there was a shift from aid to security concerns and an increase in the amount to Pakistan, Afghanistan and Iraq. How do you address that concern?
Mr. Lowcock: We have not been subject to much criticism, of which I am aware, of our increase in development assistance to Pakistan and Afghanistan. We have been subject to criticism on Iraq. The response I have given you is the government's position — that this is within a part of the budget that is restricted to 10 per cent of the total.
We believe that the lives of poor people in Afghanistan, Pakistan and other countries are not improved by security, conflict and those sorts of issues. In the same way that we invest in conflict reduction solutions in African countries, we are ready to do that in other countries, too. Conflict reduction, for us, can contribute to poverty reduction.
It is also the case that a number of activities that we finance in DFID contribute to conflict reduction but do not pass the test set internationally by the OECD Development Assistance Committee for official development assistance. DFID has a separate budget, which does not count as official development assistance and which is not governed by the International Development Act, to enable us to do things that contribute to those wider security and conflict reduction goals.
For example, we are a major financier of the AMIS mission in Sudan, which some of your earlier witnesses talked to you about. Under the OECD rules, that expenditure does not score as ODA. In this country, it is not governed by the International Development Act; it is managed by DFID. We think it is important to do because an improvement in the security environment is one of the things that can make the biggest contribution to an improvement of the lives of people, for example, in Darfur. On that point, there is very little criticism or concern among the NGO community here.
Senator Downe: With respect to your assistance to Africa, how much of the funding, if you have a percentage target, is to the private sector?
Mr. Lowcock: I cannot give you an accurate answer to that off the top of my head, but perhaps I could say a couple of things about it.
We own a venture capital company — a private equity company, if you like — called CDC, which has assets of about CAN $5. Half of those resources are required to be invested in the poorest countries, primarily in Africa. That is one of the major ways in which we finance private sector development.
For example, that company was the pioneer investor in Celtel, the biggest provider of mobile telephone services across the whole continent of Africa. That is an investment vehicle we have.
We also have a strong focus in our bilateral program, run directly by DFID and not by the private equity company, on the conditions that will promote private sector development. We believe that a stable macro-economy, a favourable investment climate, the enforcement of contracts, institutions that provide a framework for law and order for the private sector to operate on, and infrastructure like roads and power all help create an environment for the private sector. We finance quite a lot of that activity through our bilateral program.
What we do not do through the regular DFID bilateral program to the same extent as other development agencies is directly provide grants to private sector companies to invest for the development of their own business. To the extent we are involved in that kind of activity, it is through our private equity company.
Senator De Bané: How would you react to people who would say that DFID is another failure because when we look at the economic situation in many countries in Africa, most of them today are in a worse situation than they were in 1960? Do you see any logic in the argument that because Africa is poorer today on the whole than in 1960, DFID has failed?
Mr. Lowcock: I have worked in Africa for much of my career. I followed the history of the continent over the post- colonial period. A snapshot would be that the continent progressed significantly, much of it in the 1960s. The oil shock and various other events in the 1970s reduced that progress. The structural adjustments, the impact of HIV/AIDS, the impact of conflict, governance failures, appalling economic policy in many countries and a collapse in foreign assistance to Africa in much of the 1990s made things even worse.
In real terms, the average per capita foreign aid received by an African citizen between 1994 and 1998 fell by half. What has happened since then, in the last 10 years, is that policies have improved in Africa. There has been a reduction in the scale of conflicts, the number of countries involved in conflict; the terms of trade for many African countries have improved; foreign assistance also, over the last five or six years, has increased; and over the last five years, 20 countries in Africa have grown at more than 5 per cent a year. In the last two or three years, the rate of growth in Africa has been faster than for much of the rest of the world.
I think the story is a complicated one. The role of aid in development is only ever, at best, a supportive one. The main reason countries will or will not develop has to do with what the government and people of those countries do. Aid can make a difference if it is invested well in the right places.
Senator De Bané: Good examples of what you say are Ghana, Uganda, Botswana, Mozambique and Mali, where people have decided, for their own reasons, to govern their country well and we have seen a significant difference. In other countries that are run by thugs — whether Mugabe or the guy from Liberia whose slogan was, "he killed my pa, he killed my ma, but I am going to vote for him'' — with people like that, we know what happened.
I agree with you that the major cause of development is to have a good government in that country. Donor countries with organizations like DFID and CIDA, as well as all like-minded countries who liaise together, can do what they can, but ultimately it is the country itself that has to govern itself. Do you agree?
Mr. Lowcock: I have just said that the major determinant of whether or not a country progresses is what the government and people of that country do. As I said, aid can make a substantial difference. There has been a lot of debate in this country and internationally on the role of aid, which is a healthy thing. Our reading of the evidence is that, applied in the right circumstances, aid can be effective.
Senator De Bané: But when you see Nigeria —
The Acting Chairman: Order. Please let the witness finish his answer, Senator De Bané.
Mr. Lowcock: I finished the point I wanted to make.
Senator De Bané: Since 1980, Nigeria has collected no less than $280 billion in oil revenues and its per capita income today is less than it was in 1960. Surely, it was not a lack of funds in Nigeria that explains that. According to some international organization, we were told that the former President of Nigeria has hidden over $5 billion in the U.K. One must think about that.
The Acting Chairman: Senator De Bané, we must stick to the substance of the bill.
Senator De Bané: Yes, but ultimately I am saying the president is not taking care of his people.
Senator Merchant: Can you give us an instance where you have had to take a region or a country off of aid because the parameters change? Have you refused to give aid to a country even though it is very poor?
Mr. Lowcock: Yes. Ultimately, the test is whether we think we can provide assistance that will contribute to development, given the context, and contribute to the reduction of poverty. The reality is that we are operating in the poorest countries with the biggest problems and often not the strongest governance in the world. We do find, as do all contributors to international development, that there are circumstances where problems emerge and we have to decide what to do about them. We first ask ourselves not questions about the level of assistance but about whether we need to change the sort of assistance we provide.
We asked ourselves those questions in Ethiopia, Uganda and other poor countries. I could mention several things about Nigeria, which the previous senator raised. Through much of the 1990s there was essentially no development assistance provided to Nigeria despite the fact that it has by far, by a factor of two or three times, more poor people than any other country in Africa.
Over the last five years, there has been a lot of progress in Nigeria. The government has shown itself to be more committed. Our response has been to increase our development assistance. If the environment is potentially positive, we are willing to invest. Nigeria has 7 million girls and boys who have never had a chance to go to school, and the government is now trying to do something about that. We can make investments that will support that and that will contribute to the reduction of poverty.
Of course, you must look at the circumstances of the country and identify ways to assist. Sometimes you accept limits to what you can do.
Senator Merchant: If aid is tied solely to poverty, might that present problems for us?
Mr. Lowcock: All I can offer is the experience since our 2002 act was passed. It is helpful to be clear about your objectives. That is what the 2002 act gave us; clarity over the mission.
You then have to face the following test: "Can I, in this country, do things that will contribute to those objectives''? There is no replacement for hard-headed analysis of the particular context. It is possible to do more things to relieve poverty in very populous, poor and fragile countries in Africa than has been done over much of the last 10 years, countries like the Democratic Republic of Congo, Nigeria and Sudan. However, you must feel you way carefully and make hard-headed judgments.
The Acting Chairman: I must conclude this very interesting exchange. Mr. Lowcock, on behalf of the committee, I wish to thank you from the bottom of my heart for making yourself available. The exchange has been useful and fruitful. We hope that in the future we can connect again.
Mr. Lowcock: Thank you very much. I hope it has been helpful.
[Translation]
The Acting Chairman: It is our pleasure to welcome Mr. Robert Fowler, a retired senior official who had an outstanding career in the federal public service. His last position was that of Canadian Ambassador to Italy. He also has been the personal representative for Africa of the Prime Minister, and he held that position under three different Prime Ministers, Mr. Chrétien, Mr. Martin and Mr. Harper. Although he is now retired, since January 2007, Mr. Fowler is president of the Study Group on Africa of the Canadian Institute of International Affairs. Mr. Fowler appeared before the committee in May 2006 on our study on Africa.
It is a pleasure to have him here in person today.
[English]
We will also hear from Professor George Ayittey, Professor of Economics at American University in Washington. Dr. Ayittey holds a Ph.D. from the University of Manitoba and has written on many subjects related to Africa, including political economy, economic development, et cetera. He is the author of, among others, Africa Unchained: The Blueprint for Africa's Future. He appeared before our committee during our Africa study in May 2005.
Welcome all to the Senate of Canada.
[Translation]
I shall begin with Mr. Robert Fowler. You have the floor.
[English]
Robert Fowler, Retired Senior Official, as an individual: Honourable senators, I am pleased to be invited to offer views as you consider Bill C-293. From the outset let me be clear that I do think that we Canadians can do better. We can be smarter, more efficient and more effective providers of development assistance. However, in my opinion, this bill, as drafted, will accomplish none of that.
I do believe that the administration of our development assistance program should be transparent, more focused and better connected to the priority objectives we are seeking to achieve. Those objectives ought to be more widely understood and their accomplishment better monitored, but none of this will occur as a result of this bill.
Mr. Chairman, your committee's report entitled Overcoming 40 Years of Failure: A New Roadmap for Sub-Saharan Africa, published four months ago, highlighted a number of constraints on the delivery of an effective aid program. You noted the minister responsible for CIDA changed 11times since 1989. Many observers and witness appearing before this committee on Bill C-293 have referred to the flavour of the month policy shifts in political direction which such a ministerial revolving door pattern has encouraged.
You will know, however, that Canada is by no means alone in questioning its development assistance delivery mechanisms and processes and in seeking to better manage the daunting challenges of administering aid effectively in today's complex circumstances. Long gone are the days when aid was simply building dams, roads, clinics and drilling wells, although many will agree, including me, that it is perhaps time to return to some of that.
There are important issues in this aid business that deserve close scrutiny. Among them, aid concentration, both geographic and thematic, and untying direct budgetary support on which your committee and I disagree. Additionally, there is the ODA quantum and a vitally important matter of unrealistic expectations regarding what development assistance can and cannot reasonably be expected to accomplish. This bill does not go to any of those places.
Clearly the status quo in Canadian aid delivery needs work. We owe it to the people of Canada who are putting up the funds and to the desperately poor throughout the world, particularly those whose circumstances are progressively worsening, to do better.
I simply do not believe that this bill will achieve any of those ends. Indeed, it seems it me the passage of this bill might well render our aid delivery less efficient and further complicate the resolution of the unresolved essential issues related to the improvement of our aid performance.
Let me spend a moment speaking to the specifics of the bill now writ, not necessarily in the order in which they occur in the draft. With regard to the overarching imperative and focus on poverty reduction, I believe Canada ought to have a "made in Canada'' aid policy that should not be determined by the rules applied by the Development Assistance Committee of the OECD or by the practices and procedures of other donors, however excellent they may be. Let me be clear, though: The DAC plays a vital playing field levelling role that deserves our continuing support. Just because we have not scored much, I am not advocating we make the nets wider.
I would like to think that all of us believe that aid should be about changing the economic circumstances of the Third World, about releasing billions of people from the slavery of grinding poverty and, in this regard, about ending the progressive marginalization of a billion Africans from the world economy.
I also believe most of us would agree that there are a variety of valid approaches to meeting this challenge, that no one approach has proved dramatically more effective, and that 50 years of development history has taught us to eschew any easy or simplistic solutions. There are lots of right ways to do development and certainly some proven wrong ways, including imposing development solutions on our development partners.
I hope we can also agree that if we are to change the circumstances of the poor, we cannot do so in the midst of war and anarchy. Helping to resolve conflicts and managing instability is a wholly legitimate and necessary part of relieving poverty. Therefore, I am assuming there would be no disagreement with any competent minister spending development funds to allow the African Union to keep a semblance of the peace in Darfur, as we so clearly are unwilling to do it ourselves.
What happy news it was to hear only yesterday that Khartoum has finally agreed to a hybrid AU-UN force.
If such expenditures are not 100 per cent considered by DAC in the calculation of Canada's aid performance and are not then included in the DAC's calculation of Canada's aid output in terms of GDP per capita, so be it. The choice for the Canadian government is either to accept the lower officially sanctioned performance record or, of course, to increase its ODA aid expenditures. This is something which, honourable senators, you know that I believe fervently we ought to be doing anyway. This is not because the DAC or the ghost of Mike Pearson said we should, but rather because we can and the need is self-evident to all who will see.
In the same vein, I am assuming no reasonable person would disagree with Canadian aid monies being spent promoting a more propitious investment climate in recipient countries or, indeed, in providing training to, say, African trade negotiators so they can secure a fairer shake in multilateral trade negotiations, should they ever resume.
If there is disagreement that the exclusive focus on poverty reduction must include such elements of a balanced approach to development, then the bill before you could have extremely pernicious consequences. In order, therefore, to avoid such possibilities and to diminish the potential for confusion, I would argue against any qualification whatsoever of what poverty reduction might or might not entail.
On the question of accountability, sure, the responsible minister should be accountable for his or her decisions and ought to ensure that those decisions and resulting expenditure flows and program allocations are transparently revealed. Personally, I believe that any interested person can find whatever data they need through existing publicly available documents and paper and electronic publications, and I fear that layering additional reporting and message massaging requirements on the already bureaucratically constipated CIDA bureaucracy will render our aid delivery even more cumbersome and slow.
When I was responsible for offering advice — along with your colleagues Senator Dallaire and Senator Jaffer — on how to relieve the suffering in Darfur, I was at wit's end that it took four months to deliver helicopter support and six months to deliver armoured vehicles to AMIS. The reasons cited were principally bureaucratic processes and layer upon layer of oversight inspired significantly by the post-sponsorship, risk-adverse climate that still reigns in this town.
Nobody likes risk-taking very much, particularly politicians and their bureaucrats, no matter what they say, but when people are dying as we apply yet another audit or report to Parliament, you have to wonder about the validity of our priorities.
Your report on Africa decried the number and proportion of CIDA staff present in Ottawa. I guarantee that if this bill passes with these reporting provisions, the trend will not be in the direction you choose.
The draft bill requires that our development assistance be provided in a manner consistent with Canadian values and exclusively with regard to those values. I know what I would like those values to be, and some of them are more or less contained in the interpretation section. I am not at all sure there is extant a legally proven definition of what these are, and I fear that, contrary to the dictates of political correctness, one might get significantly different responses from the disparate parts of the Canadian mosaic.
A similar point might be made with regard to the stipulation that the development assistance provided by Canada must be consistent with international human rights standards, although here the interpretation section is of a little more concrete help.
Honourable senators, my final observation relates to the requirement that the competent minister "shall'' consult with governments. Let me be clear: I am a firm believer in the importance of wide consultation with our development partners. This language, however, strikes me on general grounds as unnecessarily specific in instructing the minister in how to do his or her job.
My principal concern, however, is that such language would impair the flexibility of the minister and her staff to act as imaginatively and creatively and indeed courageously as they have in the past to alleviate strife and suffering and to encourage positive change in very particular geopolitical circumstances.
Mr. Chairman, I leave to you and your colleagues to speculate on whether the historical examples I am about to give you might have current or future relevance in our troubled and imperfect world. Let me recall that in the 1980s CIDA ran programs in southern Africa, both in the Front Line States and within South Africa itself, to "assist the victims of apartheid.'' These programs provided education and training to banned individuals and offered financial support to banned organizations like the party now ruling in South Africa. Can you imagine the implications of a requirement to consult with the apartheid regime regarding the establishment and implementation of such programs? Quite simply, there would not have been any.
A decade later, in the nineties, CIDA was providing support to free journalists in Serbia during and immediately following the Balkan wars. You will recall that Milosevic was brought down less by external pressure and more by protest from within an evermore informed public. Could such a program have been a result of comprehensive consultations with the government in Belgrade?
If, as I contend, "shall'' is too strong and I am correct that the drafters of this legislation cannot abide "may,'' how about "should consult'' as a clear indication of Parliament's intent, but one which would allow the minister a little discretion when clearly he or she should not?
The Acting Chairman: Thank you very much, Mr. Fowler.
George Ayittey, Professor, Economics, American University, as an individual: Honourable senators, thank you very much for inviting me to testify before the Standing Senate Committee on Foreign Affairs and International Trade. This is an opportunity and an invitation that I have never received from any African government or Parliament.
I would like to distinguish between humanitarian assistance or humanitarian relief aid and official development assistance. I will focus my comments on official development assistance.
My position is that foreign aid is noble and that it is noble to help Africa, but helping Africa has been turned into a theatre of the absurd, with the blind leading the clueless. The fact of the matter is that the aid resources Africa so desperately needs can be found in Africa itself. Its begging bowl leaks horribly.
The amount of foreign aid from all sources that flows into the bowl every year amounts to something like $25 billion, but there are massive leakages. According to the African Union, corruption alone costs Africa $148 billion a year. Capital flight out of Africa is estimated at $50 billion a year. As a matter of fact, the World Bank estimated that 40 per cent of all the wealth created in Africa is invested outside of the continent. At least $15 billion is spent by African governments on arms imports and the maintenance of the military, which instead of protecting the people has turned its guns on them. Somalia, Rwanda, Burundi, Zaire, Liberia, Sierra Leone, Ivory Coast, Togo and Nigeria have all been ruined by military regimes.
Another leakage is the $19 billion that Africa spends every year to import food, when back in the 1950s Africa not only fed its own but also exported food. If you add up all these leakages, they amount to more than $230 billion a year, nearly 10 times what comes into Africa in foreign aid. Obviously Africa can find more aid resources by plugging the leakages than by begging for more aid.
Aid cannot be stopped. It is a moral imperative for the rich countries to help the less fortunate countries. I am sure that civil society organizations in Canada will mount pressure on the Canadian government to raise the aid commitment from 0.4 per cent to 0.7 per cent of GDP, especially in light of the fact that Africa is not expected to meet the Millennium Development Goals.
In April of this year, at the ECA Conference of Ministers, Dr. Wani Tombe Lako of the Information and Communication Service of ECA, said in Addis Ababa, Ethiopia, that at the current pace, it is unrealistic for African countries to imagine they could meet the Millennium Development Goals, not even in 100 years. The same sentiments were echoed by another United Nations African development director, Gilbert Houngbo, who said in Brazzaville that African countries "will fail to reach the goal of slashing poverty in half by 2015.''
Honourable senators, to help Africa, we cannot proceed to do business as usual. Forty years of development assistance to Africa have been a massive failure. As I indicated in my testimony before this committee two years ago, there were problems on both the donor and the recipient sides. Accordingly, I would like to congratulate this committee for its courage in admitting this failure in development assistance to Africa. I know it is tough to admit failure, but it is cathartic.
In crafting this bill, especially given the fact that the government opposes certain provisions of the legislation, I recognize that this bill has gone through the parliamentary meat grinder and has been stripped of certain provisions — for example, the advisory committee and also the petition clause. Nonetheless, the bill seeks to achieve three laudable objectives.
First, the objectives of Canadian development assistance are more clearly defined. In the past, Canada used to be all things to all poor people. This time around, the bill makes poverty reduction the goal of Canada's official development assistance, and to ensure that this assistance is consistent with Canada's international human rights obligations. Also, it takes into account — and this is the part that I like — the perspectives of those living in poverty.
Second, and perhaps for the first time in Canada's history, the bill seeks to enforce accountability and transparency in the disbursement of official development assistance. The competent minister will have to report or show what has been spent and what results have been achieved in terms of poverty reduction.
Third, the bill also seeks to shorten the time it takes to obtain information regarding development assistance, from the current two years to six months from the end of the fiscal year.
Nonetheless, while this bill is a major improvement on the status quo, I have some reservations about the bill itself.
First, I recognize that the term "poverty reduction'' has been adopted in consonance with international norms as specified by the OECD Development Assistance Committee. However, as the previous witness indicated, perhaps it would be better to adopt a made-in-Canada definition. The reason I agree with that is this term can create perverse incentives in the sense that since poverty in Africa has often been exacerbated by misguided government policies, what prevents a government from causing more poverty in order to receive more development assistance?
"Wealth creation,'' in my view, might be a better term because it would change the matrix of the whole frame of development thinking. Instead of conceiving of the poor as being in a pitiful state for which their poverty is to be reduced, they may now be seen as dynamic wealth creators, which they are. More important, the adoption of this new term "wealth creation'' will help reduce the role of the state in economic development. Wealth is created in the private sector, not by the government.
The existing "poverty reduction'' terminology rather strengthens the role of the state in economic development. As a matter of fact, Africans view their governments as a problem, as beautifully summed up by a tribal chief in Lesotho when he said, "Here in Lesotho we have two problems: rats and the government.''
Second, the bill seeks to take into account "the perspectives of the poor,'' but how this is to be achieved is unanswered in the bill. In the original version, a provision was added, which was to have an advisory committee and also a petition process; but these have been dropped and there is no mechanism to answer that in this new version.
Next, about the recipients, to me this is the important part of the failure of foreign aid programs. There are more problems on the recipient side in the utilization of development assistance. I recognize that due to diplomatic constraints and also issues of sovereignty, there is only so much Canada can do to influence accountability and transparency, but these are exactly the concepts the poor would also like to see. They want to hold their governments accountable. They want to ask their governments how much they receive in aid and what they do with that aid.
Last year, I testified that smart aid is that which empowers the poor to instigate change from within and also to demand the same kind of accountability that Canadian taxpayers also want to demand from their competent minister. The donors talk about poverty reduction, but the poor in Africa who see their governments as the cause of their poverty would rather see change. Canada can be a leader in this regard by setting conditions under which it will grant aid.
At the minimum, the bill requires the competent minister to account for the development assistance that was disbursed; but, at the same time, it could also require the correspondent minister in the recipient countries to account for how much that government received in Canadian aid and to what uses that aid was put. Such a report from the corresponding minister in the recipient country should be made public and sent to both Parliaments.
At a maximum, Canada could target its aid strategically. Currently, this is not the case. Foreign aid given to an African government is considered to be general government support and disappears into the government's budget. It is impossible to determine how that aid is used.
A better way for Canada offer assistance is to target the aid to specific institutions. The previous witness indicated that CIDA gave aid to Serbian journalists. The institution of a free press is very important in Africa. Currently, only eight African countries have an independent and free press. You cannot fight corruption without an independent free press nor an independent judiciary to enforce the rule of law. I personally believe that they are six critical institutions. If the Canadian government were to target them, it would empower the poor to demand accountability and also to enforce transparency in the use of aid.
I would like to end my testimony here and thank you very much for giving me this opportunity.
The Acting Chairman: Thank you very much, Mr. Ayittey.
Senator Johnson: Mr. Fowler, you speak of a constipated CIDA bureaucracy. I am fascinated; could you explain what you mean by this?
Mr. Fowler: I gave you an example of that, Senator Johnson, when I talked about the four months it took to deliver gas and helicopters.
Senator Johnson: What would fix it?
Mr. Fowler: If senior CIDA officials were freed by their political masters of this overarching need to take no risks; if they had the ability to get aid out the door rather than being so very enormously careful that, in providing an endless array of reports, accounts and statistical compilations and passing things through Treasury Board — I should stop for a long moment on the Treasury Board, but I will leave it aside. Who is doing aid in this country? Is it the minister responsible for CIDA or the minister responsible for Treasury Board? It is a nice point. Nevertheless, I think that a lot could be done to streamline the approval process and to get the aid out the door faster in a less constrained manner.
Senator Johnson: How do you see that happening, Mr. Fowler?
Mr. Fowler: I do not see that happening.
Senator Johnson: Mr. Ayittey, Senator Dallaire is the sponsor of this bill and is not in favour of amending it at all. What is your opinion of passing it in its current form? Is it better to have something rather than nothing?
Mr. Ayittey: From my point of view, it is an improvement from what we currently have, but it does not go far enough. As I indicated in my testimony, a major part of the problem lies with the recipient side. We do not have enough accountability. We cannot ask our government. We do not know how much Canada gives any African country. We cannot ask. We do not know what the money is used for.
I recognize that sovereignty issues are involved here. Canada cannot force an African country to open up its books. Canada can only do so much. That is why I say that although the bill is an improvement, it does not address the major concerns I have as far as the spending in Africa is concerned.
Senator Johnson: You are not in favour of the term "poverty reduction.'' You say that this term can create perverse incentives. What do you mean by this? Could you elaborate?
Mr. Ayittey: I think "poverty reduction'' portrays the poor as being in a pitiful state. "Poverty'' itself has a stigma attached to it, especially in Africa where governments have been the cause of poverty. It may create the perverse incentive that governments create more poverty in order to receive more aid.
Look at Darfur, for example. Each time the international community provides humanitarian assistance, it relieves the government of its own responsibilities toward the people. This is what I mean by perverse incentives.
Senator Johnson: Having said that, in place of "poverty reduction'' you advocate the term "wealth creation.''
Mr. Ayittey: Yes.
Senator Johnson: This could change the focus.
Mr. Ayittey: I am suggesting that term because "wealth creation'' is a more positive term — positive in the sense that it is the other side of the same coin. If you make people wealthy, you make them less poor. "Wealth creation'' has a positive ring to it in the sense that it does not portray the poor as helpless and hapless, crying out for pitiful help or assistance. Portraying them as wealth creators changes the dynamics of economic development. As wealth creators, we are then obligated to see how we can facilitate the process of wealth creation.
As a matter of fact, Mr. Richard Fowley indicated that perhaps Canadian aid should be used to create a friendly environment in which business can prosper. If we change our thinking in terms of wealth creation, we might be able to reduce the power or the role of the state in economic development, because wealth is created in the private sector and not by the government.
Senator Johnson: Having said that — and I do not disagree with your thesis — to my mind this could change the focus of the bill. The idea of the legislation is to have a clear purpose for Canada's official development assistance on poverty reduction, which may not mean the creation of wealth. How important is this amendment to you? Do you have anything further to say? I think you have pretty much covered what you think of this.
Mr. Ayittey: The term has already been adopted in the bill. I am only suggesting this as an alternative concept.
Senator De Bané: Mr. Ayittey has reminded us that, according to the African Union, corruption amounts to about $150 billion a year. Of course, the donor countries do not have that kind of money, even if they were to double or triple their money. Over $50 billion flies out every year; 40 per cent of the wealth created is stashed in foreign banks.
Mr. Fowler reminded us that aid will never be the major factor in the development of a country. It can help but, at the end, it cannot offset war and corruption.
Mr. Fowler, I was very surprised when you, as one of the most experienced deputy ministers, put aside the rules of Treasury Board, of the Auditor General. This is money that belongs to the taxpayers, and it has taken years to develop those rules. When you were deputy minister, you were a tough administrator; you administered huge budgets that were five or six times more than the budget of CIDA per year and you insisted on rigorous administration. I hope that, as a taxpayer, we will continue to have rigorous management of expenditures.
Mr. Ayittey, I liked very much what you said about political space for the people, that journalists and people should be able to speak freely. One of the major problems in Africa is that there are nominally several democratic countries, but do not try to criticize the political leaders.
Robert Calderisi is a Canadian, a Rhodes scholar who devoted his life to Africa. He just retired after 35 years at the Department of Finance Canada, CIDA and the World Bank. He published a book entitled The Trouble with Africa: Why Foreign Aid Isn't Working. The Economist has rated it as one of the best books of 2006. He says that finally the Africans need a lot more political space to express themselves than all the aid of the donor countries. I suspect that you agree with the assertion that as long as they are not free to criticize their leaders, those distressing statistics of which you reminded us will continue.
Mr. Ayittey: Yes.
Mr. Fowler: Senator De Bané delicately did not ask me a question. Nevertheless, I would like to answer it.
I did not say for one moment that Treasury Board and the Auditor General should be put aside. They play vital and important roles. I think they can play them more effectively and efficiency, and I think that we do not need to overlay their important roles with additional roles of the same sort in order to be doubly and triply certain of where we are going in a manner that then slows down, in particular, our emergency assistance to the point where lives are being lost. That is what I meant.
The Acting Chairman: Mr. Ayittey, do you wish to respond to Senator De Bané?
Mr. Ayittey: No. I agree with what the chairman said. Until we have the freedom and the political space, let us not forget that the poor know exactly what hurts them. The poor must get some political space to hold their governments accountable and to demand that their governments show results from the aid they have received.
Let me give you an example. From 1970 to 2004, more than $450 billion flowed into Nigeria's government coffers. According to the Chairman of Nigeria's Economic and Financial Crimes Commission, $412 billion of that money had been stolen by Nigeria's rulers. If you look at Nigeria's income per capita, in 1960 it was about $200. Today, Nigeria's per capita income is about $265, which is a marginal difference.
Corruption has also been a huge setback. Nigerians cannot do anything about it because they have had military rule throughout much of their independence.
I am trying to say that until Africans are able to hold their governments accountable, until they have political space and the freedom to criticize their government, things will not change.
Canada can help. One of the ways in which Canada can help is to target its aid to certain specific institutions, as I have indicated in my testimony. For example, they can target aid to the establishment of an independent and free press, the establishment of an independent judiciary for the rule of law and the establishment of an independent electoral commission.
I identified six of them in my presentation, a copy of which I sent to the members of the Standing Senate Committee on Foreign Affairs and International Trade. If you gave Africans these six critical institutions, they will do much of the work themselves.
I would like to remind the members of this committee that they should look at how the ways of dealing with the former Soviet Union and the Eastern Bloc communities. They should also try to recall the role of the media in the demise of the former Soviet Union, as well as the role of perestroika. We also want to have our own glasnost in Africa.
Senator Segal: Mr. Ayittey, would you be happier with this legislation if it took the specifics of your brief and made it clear that, in most cases, until we have proof to the contrary, we are best not to spend any poverty reduction money on a government-to-government basis in Africa but, rather, through other institutions of the kind that you yourself have referenced in your brief?
Mr. Ayittey: That is a difficult question to answer because of diplomatic relations that Canada may have with various government in Africa.
My own gut feeling, and from my testimony last year, is that government-to-government aid has been disastrous. It simply has not worked because there has been no accountability.
I would personally like to see the corrupt and incompetent governments in Africa bypassed so that aid could be sent to help people directly.
Canada has shown some leadership in this regard by giving a portion of its aid to civil society organizations in Canada. I would like to see that extended to civil society organizations in Africa, those on the ground. Those on the ground know exactly what is going on, and perhaps they could be far more effective there.
However, I do not know whether it would be possible to completely cut out government-to-government aid.
Senator Segal: Mr. Fowler, thank you for your frankness and clarity. I did not have to ask myself after your presentation, "I wonder what he meant?'' It was very clear and appreciated.
You have been around this certain cycle for a long time in a host of different positions. You know that the motivation of the proponents of the bill is actually quite constructive. They are trying to be helpful. They are very much of the view that the quality of our foreign aid — not the amount but the quality — would be aided through greater transparency and through a more structured consultative process.
We have looked at legislation that has been around some time now for the British DFID. We heard testimony on that earlier today. I think there is a general view that DFID has been doing a better job on the ground than perhaps CIDA has been for a host of reasons that may not be the fault of anyone who works at CIDA but, rather, structural impediments.
Where would you go with this particular proposition if you found yourself as a legislator having to pronounce upon it, which has been put forward in the best of faith for the best of reasons, and taking into consideration your own considerations about it, with which I must say I am largely in agreement?
Mr. Fowler: I will answer Senator Segal's question through Mr. Ayittey, if I may.
You will be aware from our discussion when I was in Rome and you were studying Africa that I believe we should be highly selective in our aid partners. We should focus our aid much more tightly. There are certainly African aid partners with whom I would feel quite comfortable providing government-to-government assistance. We should not provide it to those with whom we are not comfortable.
There is a separate issue about whether you think, for instance, it is viable that with regard to Tanzania or the DRC — and I do not put those two countries in precisely the same category — it is long-term viable that 60 per cent of their budget should be provided from the outside. However, with respect to corruption or leakage or money lost, there are governments with which I believe we can complete government-to-government business effectively.
Perhaps to answer, somewhat obliquely, Senator Johnson's earlier question to me, quite aside from what we do in Ottawa, there are different ways of aid delivery that are, by definition, more efficient.
If I could grossly simplify, we are providing aid today somewhat like we were 50 years ago. We are providing it "retail'' and in small projects. Part of those small projects is a result of "flavour-of-the-monthism''; that is, a bit here or there. Souvenir programs, when important people visit, are meant to make ambassadors, ministers and prime ministers happy. That takes a lot of administration.
Direct budgetary support does not take much administration with trusted partners. It does not take a lot to write a cheque. You will be aware from my earlier comments also that I believe we should follow the principles we pretend to endorse with regard to good donorship.
Why should Norway not audit education programs in Tanzania for us and for everyone else? Are the Norwegians more venal than we are? Why not do that sort of thing? To do that, however, we will have to have leave from the Treasury Board or the Auditor General to do something like that, and at the moment I think they would not agree.
With regard to your broader question, I was trying to keep my opening remarks related to this bill and not to design a new aid delivery mechanism for Canada. I think that is what you were inviting me to do.
Senator Segal: No. I was asking you to pronounce on the bill.
Mr. Fowler: I guess that is where I am going. I certainly agree with you, and maybe I should have made it clearer that I think the bill is well-intentioned. It should give some focus to Canada's aid but not, I hope, such focus that a strict interpretation of poverty reduction would mean we could not help the African Union peacekeeping mission in Darfur, I suppose.
Were we to adopt the phrase "wealth creation'' — and, Professor Ayittey, I have certainly flirted with that idea myself — I am not sure. Trying to fund the African Union in Darfur would even be more difficult under "wealth creation.'' I do not think there is one nifty little catch phrase that will sum up the complexities of development in today's world. I think that is what the authors of the bill want to do, but.— I do not think you can do that.
If the bill were to speak to a whole new way of doing the development business, where CIDA should be situated in machinery-of-government terms and what is the best kind of political oversight, those are completely different issues that I believe very much merit the government's interest and concern. However, that is not this.
Senator Downe: Senator Segal referred to the frankness of Mr. Fowler's report. I can tell you, when I had the honour to serve as Chief of Staff to the Prime Minister and Mr. Fowler was a senior public servant, he was just as frank in private as he is in public, which is what made him so effective.
I share some of the concerns he raised about the bill. Consultation is a major concern, but I asked other witnesses about the reporting provisions and the requirement that there be a report six months within the fiscal year. That now takes two years to prepare and leads back to the concerns expressed in our study on Africa — obviously both witnesses have read that study because they referred to it today — where over 80 per cent of CIDA officials are in Ottawa and not in the field.
During the study, we met representatives of other countries who have their officials dispersed to the aid recipient countries. Not only are they dispersed, but they are dispersed with great financial authority in many cases. We heard examples of Canadian officials who were approached for projects and had a signing capacity of $50,000 or $100,000; their counterparts from other countries had signing capacity of $2 million or $2.5 million. By the time our officials received approval, the host government had moved on to other projects and they had to go through the whole process again.
The intentions of the people who drafted Bill C-293 are obviously noble; no one can be opposed to a focus on poverty reduction. However, I am concerned, Mr. Fowler, about what the committee can do about the bill. Would your advice be to reject it totally or try to amend it?
Mr. Fowler: I tried to answer that by suggesting that I think our aid delivery would be better off without this bill. That said, if there is going to be this bill, I offered you specific changes that would make it less disruptive.
With regard to reporting requirements, I cannot assess the additional workload in person hours or days or months, but I know there is some. I know CIDA is already overburdened with reporting requirements. If you are concerned about either the size or the distribution of the CIDA bureaucracy, this will make it worse.
I do think there should be more CIDA people abroad. I also think it odd that 71 per cent of foreign service officers are based in Ottawa. Senior officers in key countries of concentration — and I mean very senior officers — working with informed, trained, expert, locally engaged staffs, could do wonders, in particular if we streamlined our aid into more close collaboration with partner governments as opposed to the rather more detailed retail development of specific, complex project matrices. Yes, it will cause an additional bureaucratic overburden, but that could be discussed. In other words, perhaps the will of Parliament could be better articulated so that CIDA could look at what they are doing now and decide what they could stop doing in order to satisfy what it was that Parliament really needed and provide that in a forum that would be acceptable to Parliament. CIDA certainly produces an awful lot of information.
Senator Downe: There is no question that we are not short of information. Unless they get an increase in their budget and they have to reduce the reporting time from two years to six months, obviously it will take more money. Otherwise, they would be doing it now.
The other concern I have — and I try to mention this at almost every meeting —concerns the priorities of CIDA. You referenced this in your earlier remarks about the rotation of ministers. I believe you said "trendy projects'' or referred to it as "the flavour of the month'' and the reallocation or resources. CIDA ministers in previous governments have come before this committee and informed us that Africa is the priority; that is, the aid and assistance is all in Africa. You then look at the budget and find out that more money is not necessarily spent but targeted for Afghanistan than to any African country. When you go back and ask, "How is Africa the priority when the funding is targeted for Afghanistan?'' you get a variety of answers.
Someone of a suspicious mind could argue that because we were not in Iraq, the government tried to reallocate funding to help the poverty situation in Afghanistan. Something could happen next week where, suddenly, the priority is Africa but we have to put money in another country. This bill would have an impact in that area as well. Do you share a concern about the allocation of CIDA funding?
Mr. Fowler: I do, yes; but I would, would I not? I have been engaged with and about Africa for a long time. By the way, you did not mention the $300 million or $400 million we sent to Iraq on the way to Afghanistan. I would put that in the same pocket as this one.
There are 32 million desperately needy Afghans — and they are desperately needy. They are damn near the bottom of the human development index. There are 960 million needy Africans. I do not have any trouble deciding between 32 million and 950 million. Yes, Africa deserves more attention. I also think — and this is a little brave — that, done right, we can achieve better results in Africa than we can in Afghanistan.
Further, this allows me to make another point, which is that the development business, by its very definition, is long term — much longer than political horizons.
The pressure, not only to throw hundreds of millions at Afghanistan but also to produce visible, important, happy results within months, is simply not the way it works. It does not work that way in Africa, either.
Mr. Chairman, I do not know whether you can stand my taking three minutes to offer the committee a little parable on how the amounts of money that both Professor Ayittey and I have been talking about cannot really be expected to change much in the Third World generally and in Africa in particular.
The Acting Chairman: Please do.
Mr. Fowler: You know from the great discussion last week about how much we actually pledged for Africa and how much we have delivered and we should have delivered. The rock stars insisted that it must be 2005's U.S. $25 billion becoming U.S. $50 billion by 2010. The issue then was that as of the summit this year, was Canada on track to keep Canada's share? Should we have delivered $2.1 billion, should it have been $2.7 billion or more than $3 billion, or whatever? The point of the parable I am mentioning is the total amount of development assistance we are providing will not a change a great deal in the Third World and will not change a great deal in Africa. To expect otherwise is to misunderstand the economic realities of the business we are in. At best — and I think Professor Ayittey mentioned this a while ago — we can nudge good performance and good government into better performance, which will make investment come and we will begin to achieve takeoff at best.
My parable was explained to me when I was at the United Nations and the German minister responsible for internal playing field levelling came to the UN to explain what Germany was doing to welcome and accommodate the former East Germany into Germany.
When the wall came down at the end of 1989, the Government of Germany decided that it would spare no effort, and its number one priority would be to make those 13 million erstwhile East Germans feel happy and equal about being in a new, single Germany. They allocated 100 billion marks a year. In those days and today, converting the euros, that is about U.S. $135 billion a year to level that playing field for those 13 million Germans next door.
This program was to run for 15 years, which is 15 times U.S. $135 billion. Two years ago, they decided, whoops, they were not getting there. It would have to run at least a further 10 years, possibly a further 15 years for a total of 30 times U.S. $135 billion to level the playing field between 65 million West Germans and now 18 million East Germans next door.
I do not know any Africans who would not be happy to be a former East German. That was pretty good compared to where they are in most circumstances in Africa.
We are trying to deal with 950 million Africans who are not next door and who have widely different and often significantly more unfriendly geostrategic and geopolitical circumstances. All of that is to say let us not think that Canada's $2 billion a year for Africa or maybe $3 billion will make the differences that many Canadians think it ought to.
Mr. Ayittey: I am looking at things from a slightly different perspective in terms of what the bill is trying to achieve. First, we should draw a clear distinction between humanitarian disaster relief aid and official development assistance. If there is a crisis in Darfur, for example, and people are dying, I see that more as humanitarian relief assistance rather than economic development. We should make a distinction between those two.
Also, as I indicated, Canada will have to come up with criteria regarding which country in Africa it wants to help. Not all countries are at the same level.
It is not whether Canada should or should not help. Aid works in a country that has good policies. It has been shown by several studies, including that by the World Bank, if a country is pursuing the right type of policies, aid can help that country along. Canada has to come up with its own criteria on which country in Africa to help. I know it is a tough exercise, but that is something that needs to be done.
Also, a way must be found — I do not know whether the Canadian Parliament will be able to do this — by which the people can be heard. The bill says that we should take the perspectives of the poor into account. I see no mechanism by which the poor can make their voices heard. How do we take the perspectives of the poor into account?
At a minimum, the poor ought to be able to hold their governments accountable. I know that Canada cannot do this; but at least we can require that the competent minister must require the corresponding minister in the recipient country to also produce a report.
My contribution is that, yes, this is a step in the right direction. I would tweak the bill in terms of making a distinction between official development assistance and humanitarian disaster aid, and focus the bill more in terms of what it is supposed to achieve in Africa. Also, Canada will have to come up with its own criteria in terms of which countries to help; it cannot help all the African countries.
Zimbabwe, for example, is beyond redemption. Until we have political change in Zimbabwe, no amount of Canadian aid can help that country.
Senator Mahovlich: Mr. Fowler, can wealth be created with a corrupt government in place? Is it possible? Also, are there poorer countries with good governments that need help in Africa?
Mr. Ayittey, we will get four or five more reports on this bill. CIDA will have more reports with this bill the way it is. Should we send copies of the reports to the countries we are giving aid to so the poor there can see what we are accomplishing? Instead of all the reports going to CIDA — they already know what we are doing — but I think what you are saying is the poor people should know what we are doing also. That is not what is happening here. All the reports are coming to us, but the poor people do not see what is going on. Is this what you mean, that they should have our reports also?
Mr. Fowler: Can development occur in countries where governments are corrupt? Certainly not well. Yes, we can go to extraordinary lengths to do some good in those countries and try to keep the money away from those corrupt governments; and we do some of that. You will know from my testimony during your African study that, first, I urged Canada to not deal with corrupt governments.
Senator Mahovlich: What if people are starving?
Mr. Fowler: We should reward success and stop rewarding failure, basically.
Zimbabwe was an example just mentioned. In fact, Canada is helping significantly in Zimbabwe, largely through the World Food Program, to feed people in Zimbabwe who are starving. They have, as we know, little control over who is their government.
With regard to humanitarian assistance — and I always divide the two very starkly — for people in desperate need as a result of natural or man-made disasters, Zimbabwe would qualify. We must continue to provide them humanitarian assistance, but carefully.
With respect to development assistance, trying to assist governments to achieve takeoff, beginning with — and I agree with Professor Ayittey — African investment, of which 70 per cent to 80 per cent now goes offshore, that should only be done with governments that are not corrupt.
With regard to whether there are good governments of poor countries that need Canada's help, yes, there are. In my view, the best-governed country in Africa is Botswana. It has had consistently excellent government from independence. It is true that it lives on a pile of diamonds and, therefore, it is relatively better off. It has a small population, a rather large area, and because of those diamonds, it has a per capita income of something over $3,000 a year, which disqualifies it from any kind of Canadian assistance. I do not think that is right. If we are looking for stars, if we are looking for countries that can show the way and demonstrate that good government pays, Botswana is a great example.
In the same breath, because this business is not easy, let me mention one of the great dilemmas that I have not figured out — there are many of those. Botswana, which I just said I thought was the best governed country in Africa, has an AIDS rate approaching 40 per cent. The only other country with an AIDS rate that high is one of the less well- governed countries in Africa, which is Swaziland, not too far away. They both have an AIDS rate that is about 40 per cent. Why is it that it is the same? I do not know. It is all about changing patterns of behaviour, and we clearly have not figured out how to do that.
There are other extremely well-governed countries in Africa, and Ghana would be my next example. Ghana is a privileged partner of Canada. President Kufuor talked to me about NEPAD and the ideal and vision and how to achieve it. He said, "Let me get this straight: If a government does all those good things, changes power from one part of the house to the other freely and without violence, deals with corruption — and I have sent three of my ministers to jail and done all those good things — then investment will come, right?'' I said, Yes, that is the idea.'' He said, "Four years ago I got $300 million in foreign investment, two years ago I got $210 million in foreign investment, and last year I got $70 million in foreign investment. How does it work again?'' The answer was that you live in a rough neighbourhood. With the Ivory Coast in flames, with uncertainty at the Togolese border and the large Nigerian uncertainty above, investors are nervous of the region. It was not a very good answer for President Kufuor, but he is an excellent development partner.
Mr. Ayittey: You asked whether reports by the competent ministries should be made available to the Parliaments of developing countries, the poor. I certainly wish that would happen because then there would be greater transparency and the poor would know exactly how much Canada is giving them and how much of that money is spent. I believe that making such reports available will also help the poor to hold their governments more accountable. We could also ask the minister in the recipient country to provide reports so that Canadians themselves could see how their aid dollars are being utilized in a country.
Let me add to what Mr. Fowler indicated about poor countries with good governments. He mentioned Botswana, Ghana. There is also Mali and Mauritius; they are also poor countries that are well governed. I might also add Benin, for example.
It may interest the committee that in the case of Ghana, President Kufuor describes me as one of the architects of change that country. We brought about democratic change in Ghana without any help from Western donors. We mobilized the opposition forces in Ghana to stand for elections and were able to change and bring true democracy in Ghana through the ballot box. Having done so, we believe we can replicate that example in other African countries.
The main point of this testimony — and this is an aside, but it is important — is that there are Africans, civil society groups, working to effect change.
I just came back from Arusha, Tanzania, where we held a global conference. We brought together young dynamic Africans. These are entrepreneurs. We call them the African cheetahs; they are not going to wait for governments to do something for them. They understand what corruption is, what transparency is. They brook no nonsense about corruption. These young Africans are taking things in their own hands, trying to run Africa and turn a new chapter for Africa.
Unfortunately, these groups of people are quite often under the radar screen of the donors. The donors do not know about the existence of such groups. This is why it is important to cast outside and identify these Africans, agents of reform. Perhaps this is one of the ways by which Canadian aid can strategically target certain groups of people. I am not saying that Canada should do certain things subversively in Africa, but smart aid will seek out specific organizations.
Senator Merchant: Wealthy nations have a responsibility to help the poor, and Canadians want to do that. I think from the comments that have been generated today, and on other days, sometimes we lose sight; sometimes good politics and good government do not work together. When we give aid, is there some way we can avoid these pitfalls?
You mentioned something about rock stars, Mr. Fowler. That is something that immediately catches the attention of the media and Canadians, and we lose sight of what is good government, as opposed sometimes to what is good politics.
With this bill, is there something you can say that will help us channel our desire to help people in the proper way? Is there something we can do with this bill to help it along the way and not completely throw it out? As many of us have said today, it is very well intentioned.
Mr. Fowler: Senator, you know my views on the bill. I genuinely do not understand and I need to go back to school on what is your scope of action in this regard. I am not sure it is all written down.
Could a bill be written that would be useful? I have said yes. It could be a small bill or a big bill. The big bill is reorganizing Canada's development assistance delivery; providing a legislative framework for CIDA; clarifying the way CIDA is politically managed; embedding concentration in its focus; talking about both the themes and areas that we have discussed around this table. That could all be done, but not tomorrow. That is a great big deal, and whether the political stars are all in the right place for the Parliament of Canada to take on such a task, I have no idea.
Can this small bill be adjusted to be useful? If we are only talking about tweaking, I do not think so. I have offered you views on how it can be less pernicious. I do not for a moment believe that the framers, authors and sponsors of this bill have any intention of being pernicious. However, I do see that additional bureaucratic overburden being added to the tasks of what I believe is an already administratively overburdened CIDA. I do see problems with Canadian values and with human rights standards and with requirements to consult that are both dangerous and burdensome. Therefore, I would urge you to change those things.
What can you insert instead? Obviously, I would like to see something that said: "Development assistance is vitally important and the world needs more of it and Canada should do more.'' I suspect that might be problematic as well. I do not have an easy fix for you.
The Acting Chairman: Mr. Ayittey, do you have any comments?
Mr. Ayittey: This bill is a step in the right direction. It is well intentioned. It might need tweaking here and there in terms of being more specific and the objectives or the criteria by which Canada will help. For example, I will pick which countries need to be helped in Africa. One of the previous senators asked which poor countries have good government? I would pick those countries. I would have the bill require the minister who receives the aid to also do some accounting to hold that particular minister accountable. Those are the minor things.
My major concern is that we have far more problems at the recipients' end. I do not see how the bill can address those problems because of sovereignty issues. The poor in Africa need to be empowered so they can hold their governments accountable.
The Acting Chairman: Thank you, Mr. Ayittey.
It remains for me now on behalf of my Senate colleagues to thank both witnesses, Mr. Robert Fowler who has generously come out of retirement to give us the benefit of his long and valued experience; and Mr. Ayittey, for the second time, from Washington. Thank you both for accepting our invitation. The discussion has been tremendously useful.
The committee adjourned.