Canadian Foreign Aid Enters the Twenty-First Century

By Stephen Brown

For over 60 years, Western countries have continuously adjusted their foreign aid programs, often responding to changes in the international context (such as the end of the Cold War) or to new understandings of how best to achieve lasting results. At other times, though, donor countries’ new aid policies follow changes in domestic politics and the ideology of ruling parties, sometimes reverting to practices that closely resemble ones that had been rejected in the past The following article traces the evolution in Canadian foreign aid since 2000 and unpacks two key concepts in development assistance more generally: aid effectiveness and policy coherence. Though it focuses on Canada, the discussion is relevant for other aid donors as well.

The Changing Domestic and Global Context

Changes to Canadian aid policy since 2000 can be understood only in the context of broader shifts at both the national and international levels. At home, after almost a decade of cutting foreign aid, Liberal Prime Minister Jean Chrétien’s drawn-out retirement permitted him to focus on legacy projects, one of which was an increase in spending on aid, with special attention to Africa, the continent in greatest need of assistance. Amid a wider international policy review, Paul Martin’s Liberal government further increased the resources available for development assistance, also emphasising Africa, and took important steps to integrate foreign aid with Canada’s own diplomatic, military, and commercial interests, particularly in Afghanistan. Those changes were in line with shifts in numerous other Western donor countries as well (Woods 2005). Initially, Stephen Harper’s Conservative government continued in the same vein, with growth in official development assistance (ODA), additional emphasis on Afghanistan, and a “whole-of-government” approach to international policy coherence. However, after a couple of years in power, it took several initiatives that reversed previous Canadian policy and broke with the broader donor consensus, notably placing greater emphasis on the Americas, where Canada has important commercial interests, followed by an aid budget freeze. Additionally, it made a mantra of transparency and accountability in government spending, including at CIDA.

During this time, changes at the international level also had profound influences on Canada’s foreign aid, sometimes in contradictory ways. For instance, donors agreed on the urgent need to address poverty in the short to medium term, epitomised in the Millennium Development Goals (MDGs) adopted in 2000. Depending on one’s perspective, these goals complemented, corrected, or contradicted the “Washington Consensus,” the donors’ dominant neo-liberal approach to development since the 1980s and subsequent additions.1 Still, various forms of donor assistance, including debt relief, remained predicated on the “Augmented Washington Consensus” and, specifically, recipients’ prior adoption of a World Bank-endorsed Poverty Reduction Strategy. The latter maintained basic neo-liberal assumptions, although the MDGs implicitly recognised that such policies had failed to achieve sufficient poverty reduction. Even so, donors, including Canada, retained both as important development paradigms.

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At a 2002 conference on finance for development held in Monterrey, Mexico, donors committed to important increases in their aid budgets, reversing a decade of decline – though tempered in some cases by the financial crisis that occurred at the end of the decade. A consensus also emerged, with important contributions from Chrétien and Martin, on the need to recognise that Africa had the greatest and most urgent needs. This was made most explicit by the Commission for Africa, appointed in 2004 by British Prime Minister Tony Blair, who upstaged the Canadian government’s role in advocacy for African development. Donors reached a series of new agreements on how they themselves would reform their practices to deliver more effective aid, best illustrated by the 2005 Paris Declaration on Aid Effectiveness, which calls for greater harmonisation among donors and their alignment with recipient countries’ own development strategies. At subsequent meetings in Accra, Ghana (2008), and Busan, South Korea (2011), donor and recipient governments along with international institutions further refined and expanded on this consensus.

At the same time, countervailing forces reoriented foreign aid flows both geographically and thematically. Since 11 September 2001, donors have dramatically increased their emphasis on security in development policy and practices, including paying far greater attention to so-called failed and fragile states and the potential threat that they might pose to Western interests, especially by hosting terrorist networks. They embarked on massive “state building” exercises after invading Iraq and Afghanistan, with rather limited success. By the end of the first decade of the 2000s, after the global economy went into recession, enthusiasm for development assistance began to wane in several donor countries and aid itself was controversially described as “dead”.2 The economic crisis reversed many development gains of the previous decade and jeopardised the attainment of the MDGs by the 2015 deadline, with many goals seeming increasingly out of reach. Together, the changes at the national and international levels provide the context for understanding the recent shifts in Canadian aid policy.

After the global economy went into recession, enthusiasm for development assistance began to wane in several donor countries and aid was controversially described as “dead”.

Key Themes in Development Assistance


During this period, two concepts emerged as central to discussions of aid policy, namely aid effectiveness and policy coherence. Neither of these terms was new, but the great emphasis placed on them certainly was. These warrant a closer examination here, particularly because of the ambiguities that surround their use.

 

Aid Effectiveness

Aid effectiveness is a common-sense goal. No one would advocate aid being ineffective. The rub, however, lies in how to define and measure effectiveness. There are in fact many different approaches. At its most basic, effectiveness implies good value for money – but how does one assess that value? Does it refer to the value of aid results, aid outcomes, or aid’s share of development outcomes?

In fact, donors rarely use the term aid effectiveness to refer to results on the ground, applying it instead to their own aid modalities and practices.

Aid results refer to the direct consequences of assistance, for instance, the construction of a certain number of schools or the vaccination of a certain number of children. These are assumed to translate into positive outcomes in the longer term, but this is not always the case. Aid-funded school buildings can fail to be maintained or even be destroyed in civil conflicts or they might remain closed for lack of staffing or supplies. Children may be vaccinated, but perhaps not immunised from disease (some immunisations require several doses of a vaccine at given intervals). Even complete achievement of desired aid outputs could thus have little or no impact at all, because of either design flaws or unforeseen changes in conditions. And, even if successful, aid outcomes do not guarantee a concomitant positive impact on broader development outcomes. For instance, educated individuals might never be afforded the opportunity to apply their skills in a productive way owing to a lack of suitable jobs. Further, even when aid does translate into national development, progress is almost impossible to apportion to different contributing actors, since various donors provide different forms and amounts of ODA and, moreover, foreign aid is but one of national development’s ingredients. Finally, many types of results are difficult to measure empirically, such as improved governance or women’s empowerment. In such a context, aid effectiveness is even harder to assess.

In fact, donors rarely use the term aid effectiveness to refer to results on the ground, applying it instead to their own aid modalities and practices. The central concern of the Paris Declaration and other international agreements on aid effectiveness is more aptly described as efficiency, rather than effectiveness. The international aid effectiveness agenda seeks above all to provide assistance in a way that does not, for example, duplicate or contradict other actors’ efforts, including the recipient government’s own, or place an unreasonable burden on recipient governments. In other words, donors laudably want to be efficient and avoid wasting precious resources. However, theirs is a preoccupation with form, rather than content. None of the prescribed aid effectiveness measures implies that the aid will actually support an effective strategy. The recipient government and donors might follow all the right processes and agree on a very efficient scheme that nonetheless utterly fails to produce the desired outputs, let alone positive outcomes. The last six decades are unfortunately littered with examples of aid gone wrong. This vision of aid effectiveness is thus insufficient. For that reason, many development actors, led mainly by civil society organizations, are beginning to move conceptually beyond aid effectiveness and explore instead the notion of development effectiveness, including for the first time at the most recent international forum on aid effectiveness, held in Busan, South Korea, in November 2011.3 (The Canadian government, however, generally limits its use of the concept of effectiveness to an even more narrow interpretation.)

Aid that rewards an ally for policies that primarily benefit donors should not be construed principally as development assistance, and thus not be expected to be effective at or efficient in producing development outcomes.

Many failures of development assistance can be attributed to the fact that foreign aid lacks any magic bullets and a certain amount of experimentation is required to determine what works and under what conditions. Although accurate, such explanations belie the fundamental point that donors’ actual objectives for providing ODA often relate more to their own commercial, security, economic, or diplomatic interests than to poverty reduction in developing countries or other developmental objectives. The literature on foreign aid is unanimous in this observation, though many authors may differ on the actual degree and nature of self-interest inherent in specific countries’ aid programs. In fact, aid agencies themselves, including CIDA, openly acknowledge self-interest as a motivation for aid and a criterion for selecting priority recipient countries.

Given the Canadian government’s growing focus on self-interest, rather than recipient countries’ priorities, it is not surprising that Canada has been slow to implement the more altruistic elements of the aid effectiveness agenda. In fact, its record is measurably worsening in some areas. For instance, a study by the Organisation for Economic Co-operation and Development (OECD) found that Canada’s alignment with national priorities in thirty-two recipient countries surveyed actually declined since it endorsed the Paris Declaration. Compliance with that principle fell from 52 per cent in 2005 to 45 per cent in 2007 and dropped again to 39 per cent in 2010, less than half of the target of 85 per cent for 2010 set by the OECD’s Development Assistance Committee (DAC).4

The lack of altruism has serious implications for the question of aid’s actual effectiveness – and not just on the Paris conception of it. For example, if the elimination of security threats to donors themselves, such as insurgent movements linked to international terrorist networks, is the main objective of assistance to a certain country or of a certain aid program, its effectiveness should be measured against those goals, not economic growth, poverty reduction, or other forms of development in recipient countries. It is an inconvenient truth that, when such aid fails to have a significant positive impact on development, the lack of aid effectiveness is not the culprit per se, but rather the fact that development was not the actual objective in the first place. Similarly, when donors provide assistance to governments or other actors that are not credibly committed or able to use it to reduce poverty or undertake other development activities, any lack of aid effectiveness is not the real problem – it is a result of the donors’ selection of partners and the motives behind it. Thus, aid that rewards an ally for policies that primarily benefit donors should not be construed principally as development assistance, and thus not be expected to be effective at or efficient in producing development outcomes. Unfortunately, donor countries find it convenient to ignore such matters, in large part in order to avoid embarrassing their peers or incriminating themselves. As a result, these fundamental obstacles are rarely, if ever, raised in discussions of aid effectiveness and how to achieve it.

 

Policy Coherence

Like aid effectiveness, the term policy coherence is widely used in the development policy context. It also has many distinct uses and interpretations. There are several levels of potential coherence, including: 1) between various aid/development policies of a specific donor; 2) between a donor’s aid/development policies and its other policies, both foreign and domestic; 3) between the donor country and the recipient country’s policies; and 4) between various donors’ aid/development policies.5 International discussions on policy coherence focus almost exclusively on the second level. Aid policy circles refer to the third level as “alignment” and the fourth as “harmonisation,” rather than policy coherence per se, in the Paris Declaration and other aid effectiveness instruments.

The basic principle of policy coherence is a sound one: that a government’s departments should not work at cross-purposes but rather coordinate and cooperate toward common policy goals. The resulting whole-of-government approach can therefore harness resources more effectively to achieve government objectives, however they are defined. At its best, policy coherence for development recognises that more than just aid is required for development, including reforms to the global trading system. As a result, a donor country may consider eliminating tariff and non-tariff barriers to goods from developing countries or dramatically reducing subsidies to domestic industries, both of which would permit developing countries’ exports to compete more fairly on an open market and thus facilitate their economic growth. The effects of such endeavours, if widely undertaken by donor countries, could surpass by far the benefits of their current development assistance. Other examples of non-aid policy areas in the global North that can have an important impact in the global South include immigration (for instance, ending the deliberate “poaching” of health professionals in the global South), global public goods (such as ensuring environmental protection and fighting against climate change), and technology transfers (for example, being more flexible about life-saving drug patents).

Such measures, however, exact a price on the donor country and government, some more so than others. For example, in Canada, ending the protection of the egg, dairy, and poultry sector would turn an influential lobby sector against the ruling party, especially in Quebec. The consequences would be even more severe for an American government that went against its pharmaceutical companies’ interests or for a European or Japanese government that ended the protection and subsidisation of its farming sector. These political costs can act as extremely powerful incentives against policy coherence for development.

The Canadian government’s instances of policy coherence tend to undermine development rather than promote it. Much depends on what common objective underpins whole-of-government efforts, including what benefits are sought and for whom. For instance, when various Canadian public institutions promote extractive activities in a developing country, is the fundamental purpose to create growth and employment in the recipient country or is it primarily aimed at promoting the profit making of Canadian mining companies? To what extent can they achieve both? If the basic goals are growth and employment, was the extractive sector chosen for assistance because it is the most effective way of achieving those goals? More fundamentally even, are economic growth and employment generation the most effective tools of poverty reduction under those circumstances, or are development objectives primarily a smokescreen for ulterior motives? As discussed above, for what is the policy-coherent aid actually meant to be effective? Likewise, to avoid highlighting their own record on such thorny issues, donors generally prefer to sidestep these key concerns in their discussions of policy coherence.

The Canadian government’s instances of policy coherence tend to undermine development rather than promote it.

Postscript

Since the above text was written, the Canadian government has increasingly emphasised self-interest in its aid program. For instance, Minister of International Cooperation Julian Fantino stated in December 2012 that “This is Canadian money… And Canadians are entitled to derive a benefit” and that the government has “a duty and a responsibility to ensure that Canadian interests are promoted”.6 In March 2013, the government announced that CIDA would be absorbed into the Department of Foreign Affairs and International Trade in order to ensure greater coherence and effectiveness in the pursuit of Canadian foreign policy. This decision further fed concerns that aid would be used for the pursuit of narrowly defined self-interest, rather than the needs of poor people in poor countries.

This article is excerpted from the introduction to Struggling for Effectiveness: CIDA and Canadian Foreign Aid, edited by Stephen Brown (McGill-Queen’s University Press, 2012, pp. 4-10), and used with permission.

About the Author

Stephen Brown is Associate Professor of Political Science at the University of Ottawa, Canada and Senior Fellow at the Centre for Global Cooperation Research, University of Duisburg-Essen, Germany. He is the author of numerous publications on foreign aid, democratisation, political violence and African politics, as well as the editor of Struggling for Effectiveness: CIDA and Canadian Foreign Aid. He is currently co-editing a book on the securitisation of foreign aid.

References

1. The donors’ “Washington Consensus” advocated minimal government regulation, privatisation, emphasis on trade, and global market integration. Other requirements were later added, such as good governance, seeking to enable the policies to bear fruit. For further explanations and an in-depth analysis, see Dani Rodrik, “The Global Governance of Trade – As If Development Really Mattered”, Background Paper (New York: United Nations Development Programme, 2001), pp. 14-16.


2. Dambisa Moyo, Dead Aid: Why Aid Is Not Working and How There Is a Better Way for Africa (New York: Farrar, Strauss and Giroux, 2009).

3. There is, however, no shared conception of development effectiveness. For an analysis of four different ones, see Shannon Kindornay, “A New Agenda for Development Assistance? From Aid to Development Effectiveness”, Policy Brief (Ottawa: North-South Institute 2011).


4. Organisation for Economic Co-operation and Development, Aid Effectiveness 2005–10: Progress in Implementing the Paris Declaration (Paris: Organisation for Economic Co-operation and Development, 2011), p. 170. Canada is not the only donor failing to meet its Paris Declaration commitments. The same report’s main finding is that DAC donors have collectively attained only one of the thirteen 2010 aid-effectiveness targets that they set for themselves.


5. Ann Weston and Daniel Pierre-Antoine, “Poverty and Policy Coherence: A Case Study of Canada’s Relations with Developing Countries” (Ottawa: North-South Institute, 2003), p. 18.


6. Kim Mackrael, “Fantino defends CIDA’s corporate shift”, Globe and Mail, December 3, 2012. Available at: www.theglobeandmail.com/news/politics/fantino-defends-cidas-corporate-shift/article5950443.

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