The House of Commons Standing Committee on Foreign Affairs and International Development released a report entitled “Driving Inclusive Economic Growth: The role of the private sector in international development” this month.   The Minister of International Cooperation, Julian Fantino, recently gave a speech about this report at the Economic Club of Canada.

The Committee should be commended for studying this timely issue.  Furthermore, the list of witnesses they called is representative of a broad spectrum of opinions and ideologies, giving them a good basis for analysis in their recommendations.

Nonetheless, while the title of the report is enticing, and the consultation process has taken a full year, the recommendations are not as crystal clear as they could be.

First of all, CIDA, the agency upon which this report will have the most impact, was not called to testify.  This is rather unusual and CIDA will likely play a large part in the government response to this report.  The fact that current strategies, such as the Sustainable Economic Growth Strategy and the Policy on Private Sector Development, and development objectives were not considered when these recommendations were being developed feels like the committee missed an opportunity to build on or expand the current policy work that CIDA has undertaken.

The second issue that is glossed over in the report is the assumption that all growth is equally good for poverty alleviation.  This issue was raised in great detail by the Canadian Council for International Cooperation in a discussion paper entitled The Elusive Quest for Pro-Poor Growth” as an analysis of CIDA’s Sustainable Economic Growth (SEG) strategy in December 2011.   As they have pointed out:  “World Bank research does demonstrate that over time growth reduces some conditions of absolute poverty, but it also often accentuates inequality for poor people.  Growth must target the poor directly to reduce poverty.  The SEG Strategy therefore must pay greater attention to where growth is occurring – and ensure that it is in areas and sectors where poor people live and are economically active, and that it is having a positive effect on the livelihoods, assets and capacities of the poor.” (p. iv).  The Committee report does not address the relationship between growth and inequality or have a recommendation on how CIDA would address this issue.   The Millennium Development Goals (MDGs) make it clear that there is much more to development than relieving poverty.  This strategy seems to focus only/principally on this without linking it to other development strategies.

Last but not least, the most concerning aspect of the recommendations is that the Committee does not approach this radical change in international development partnership with a pilot phase that could be evaluated, adapted and improved.  Moreover, it does not even specify how or whether this private sector approach would replace or complement the three existing priority themes or target countries.  Given CCIB Solutions’ interest in evaluation, the evaluation framework around this new private-public partnership approach will be instrumental in measuring success, and this concerns us greatly.  How will the use of public funds be evaluated with the same criteria as the use of private funds if the 1:1 matching requirements are achieved, as recommended by the report?  This is one of many questions we were left with after reading the recommendations.

It seems that CIDA is being pushed ever more into an arms-length relationship with those it is mandated to serve – the world’s poor.  This will lead to a significant loss of knowledge that has been accumulated by the department as well as NGOs that have been operating for years in the field, making a difference in the lives of those we are meant to assist.

CIDA’s mandate is clearly being re-evaluated, and the Committee deserves praise for pushing CIDA to become a thought leader and to take a more active role in the new development paradigm.  Focusing its recommendations on two areas where the Canadian private sector has experience and expertise to offer developing nations assistance and support is also crucial (extractive industries and the financial sector).  Hopefully the models and best practices presented by DFID and USAID will be considered a starting point to creating a role for the private sector in international development that lives up to the reputation and standards that Canada has in this sector.


Have you read this report?  Did you perhaps hear Minister Fantino’s speech?  What are your thoughts?