April 12, 2014
Published in The Toronto Star
By James Haga and Aniket Bhushan
Despite Canadians’ self-image as a generous international leader, our global influence in the fight against poverty is dwindling. Canada is struggling to figure out what we want our ever-scarce aid dollars to achieve at a time when new players are rising and the geography of poverty is changing rapidly.
New data from the Organization for Economic Cooperation and Development (OECD) shows that Canada’s official development assistance declined sharply, 11.4 per cent in real terms, between 2012 and 2013. This is disappointing for an economy that is rightly lauded as one of the strongest in the G7.
Canada’s declining investment in development assistance stands in stark contrast to the global trend, which saw overall aid flows reach an all-time high of $135 billion in 2013.
Many of our OECD counterparts — including the U.S., Japan and Britain — have been increasing their aid spending despite faring less well through the economic crisis and shouldering larger fiscal burdens than Canada. For instance, in the face of a deficit dwarfing that of Canada’s, the United Kingdom increased its aid spending last year by a whopping 28 per cent, becoming the fifth OECD country to reach the United Nations target of 0.7 per cent of gross national income (GNI), proposed by former Canadian Prime Minister Lester B. Pearson.
Using the aid-GNI ratio, Canada’s global rank fell from 15th to 17th out of the 35 countries tracked. To put this in perspective, at 0.27 per cent of GNI Canada came in well below the average generosity level among donors and well below the UN target.
While Canadians gratify ourselves with talk of “punching above our weight,” our image of ourselves is grossly out of step with emerging realities. In many respects our place at the global head table is being crowded out by new and increasingly assertive players.
While the numbers don’t lie, they mask deeper changes both in the global aid landscape and in Canadian aid.
Peeking under the hood of the recent OECD data, for instance, we see that over the past couple of years “non-grant aid” — which includes things like soft loans and equity transactions — grew much faster than traditional aid grants.
We also know that while 72 per cent of the world’s poor now live in mainly stable middle-income countries — countries that have seen large increases in non-aid financial flows like foreign direct investment and natural resource revenues — there are still hundreds of millions of people who continue to live in chronic poverty, mostly unaffected by these changes. For these people, aid is uniquely well-suited to provide vital, life-saving services that will have a measurable impact on their quality of life.
Big changes have taken place within the Canadian aid landscape in recent years. We’ve seen the aid budget frozen and then cut significantly, and more recently in 2013 the government amalgamated its development agency with the Department of Foreign Affairs. These wholesale changes inevitably create winners and losers, not to mention new friends and enemies along the way.
This is why Canada’s retreat from being a major player in foreign aid is so puzzling. More so now than in recent decades, Canada must leverage its soft influence towards creating more global prosperity — a smart investment that would not only help address the injustice of poverty, but also enable Canada to have stronger ties in quickly evolving developing economies.
While aid remains but one of many tools of engagement in a multi-polar world, it is an effective one. Just look at Norway — a tiny country of 5 million people — for evidence that a sustained and impassioned approach to foreign aid can translate into significant global influence.
So while how much we spend on aid isn’t the only measure of Canada’s contribution in the fight against poverty, in this case it is an important proxy that affects our credibility at an international level.
Canada has the opportunity to reimagine what we want our scarce aid dollars to achieve and how we want to be perceived in a fast-changing global development landscape. This starts by becoming more transparent about why we do what we do and where we do it.
The reality is that our development partners are demanding new modes of engagement. They are increasingly interested in engagement that builds more direct links with the private sector, facilitates trade and greater market access, and drives socially and environmentally responsible private investment.
Bearing this in mind, fostering a more open dialogue on what we want our aid to achieve is an important first step toward rebuilding Canada’s role in this arena. As the federal government looks to clear the deficit in coming months, all eyes will be on Canada to begin increasing investment in smart, effective foreign aid. Doing this is possible even in the most austere times and is necessary if we are to forestall Canada’s rapid decline on the global stage.
James Haga is Director of Policy and Advocacy at Engineers Without Borders. Aniket Bhushan is a Senior Researcher at the North-South Institute, where he leads the Canadian International Development Platform.