FAAE Committee Meeting

     Pursuant to Standing Order 108(2), we'll commence our study on the role of the private sector in achieving Canada's international development interests.

    I want to welcome Carlo Dade, who is a senior fellow with the School of International Development and Global Studies at the University of Ottawa.

     Welcome, sir. It's good to see you again.

    Next to Dr. Dade we have Oscar Calderon, graduate research assistant from the School of International Development and Global Studies at the University of Ottawa.

     I want to welcome both of you gentlemen here today.

    I've had a chance to see you in other committees for other things, Dr. Dade, and I'm glad to have you back. Since you're the only witness today, I'm sure we can give you a little bit longer than the ten minutes we normally have when we have multiple presenters.

     Why don't I just turn it over to you? We'll hear your testimony, and you know the way it works in terms of questions. I'm sure the members will have some questions following your testimony. Sir, the floor is yours for ten minutes.

    Thank you very much, Mr. Chair.

     It's always a pleasure to be back in front of the committee.

    I see my original strategy of speaking for 55 minutes and leaving five minutes for questioning is not going to fly. So I'll try, as every witness has endeavoured, to keep my remarks brief, with all that means, given the past history we've seen here.

    As I mentioned, it's a pleasure to be back. You can always tell which witnesses have been here before; they bring their own coffee. It's not because the coffee here is not good; I'm just never sure it's fair trade. I wanted to make sure I stick to fair-trade coffee.

    Before I begin, I have a bit of a shameless self-plug. You'll have a handed-out announcement of an event we're doing at the University of Ottawa with the senior Financial Times correspondent for the Andes, Hal Weitzman. Before he speaks publicly, the distinguished member of Parliament from Prince Albert, Saskatchewan, Mr. Randy Hoback, is hosting a morning briefing for MPs here somewhere on Parliament Hill for Mr. Weitzman.

    Given that this is the week before the Prime Minister travels to Cartagena for the summit of the heads of state of the Americas, it is a great opportunity to hear a really incisive and unique perspective on the current situation in the Americas and the changing dynamic among Canada, the United States, and Latin America.

    It's the Financial Times, so it's one of the more sobering and one of the more sober analyses. I think you'll actually be pleasantly surprised; this is a new perspective for the Financial Times. It's something you wouldn't expect to hear from them. I urge you to contact Mr. Randy Hoback's office if you're interested in coming to that briefing.

    In addition, I would like to note that we have some students here from the University of Ottawa. Now that I'm at the university, I thought to bring some of the graduate students. I originally had 30 or 40 students signed up, but I had to give them a briefing as to what parliamentary committees are like: a very erudite, serious, sober, informed discussion and nothing at all like question period. As soon as I said that it was nothing like question period, the numbers dropped from 30 to a few. Still, we have the hard-core students here with us today.

    On to the role of the private sector in development. The committee has heard quite a bit. I've been here for some of the hearings. I've seen the testimony from the others. You've had NGOs talking about their role in development, a quite deep discussion on microfinance, and a bit on what some of the larger private sector entities are doing. What we've heard a bit less of is a discussion of public-private partnerships on the ground. How do they work? What are the benefits? What have been some of the issues from an official government bilateral development agency in implementing and running partnerships? What are some of the issues in terms of implementing policy, in terms of creating an agency, in terms of running a division of an agency that works on public-private partnerships?

    You had Dan Runde here, a former colleague of mine from USAID, who ran the Global Development Alliances. I talked with Dan after his testimony, and he said he really didn't talk about the battles at USAID or some of the policy issues. He said he didn't talk about the partnership with Glamis Gold, with Placer Dome, with Scotiabank, and with other Canadian companies. He said he got too caught up in his current work with CSIS--that's the Centre for Strategic International Studies, not that other group that shares the acronym.

    I worked with Dan when he was at USAID. I ran, managed, created, brokered, and funded public-private partnerships using official government bilateral assistance with private sector companies and with NGOs in Haiti, the Dominican Republic, and the Commonwealth. I also worked on policy issues on this with the U.S. government, with the multilateral agencies. I've spent ten years doing that in Washington, in addition to research on the history of private sector development and different aspects of the enabling environment. I spent six years in Canada trying to download that experience to CIDA, the Department of Foreign Affairs, the Canadian private sector, Scotia, mining companies, and other groups and working with NGOs.

    I'd like to talk a little bit at the end of my speech about some of the policy.... I won't call them recommendations, as that is too presumptuous, but I'll talk about some of the policy ideas that have emerged from that six years, things that had been shared with CIDA, with the Department of Foreign Affairs, and with others up here.

     First, on defining the private sector, the committee has heard much about NGOs—which is one private actor—and they've heard much about for-profit enterprises, which is another. The committee has not heard that much about one of the principal private sector actors, and that's the diaspora. That's where I'd like to begin my discussions this morning.

    If you take a look at exhibit B, definitions, there are essentially three types of private sector actors. We define “private” as that which is not public. It seems fairly simple and straightforward, but when you unpack that statement and start to think about it, there are three principal actors.

    First, non-governmental organizations are groups that are not run by the government and not under the command and control of the government. Even though they may take substantial sums from the public sector, they are not under the control of the public sector.

    The next group is the diasporas. These are immigrants and migrants who identify themselves with a place other than that in which they reside—and most importantly, act upon this origin. So simply being Irish and living in Canada does not make you part of the Irish diaspora. You have to act upon that in some way, by engaging in your historic origins or policy, sending money back home, promoting Irish causes, culture, language, or any of those things.

    The other group is the for-profit private sector. If you look at the graph on sources of development assistance underneath the definitions, this comes from USAID. They've done work for the past decade, examining the sources of U.S. development assistance, public and private. For the Americans you can get a pretty good breakdown of how these different components of the private sector compare with official U.S. government development assistance. You see that remittances are a substantial amount, but the private and voluntary organizations, corporations, and foundations—which are normally corporate foundations—play an equally large role. But the point is that the private sector plays an extremely large role and is an extremely large component of U.S. development assistance.

    In terms of the role of the private sector, there are three points. One, the private sector is the dominant and arguably the most important actor in development. Theoretically, if you want to do sustainable poverty alleviation to improve the standard of living and the conditions of living for people, it's about creating jobs and wealth. If you don't have that, you have nothing to share; you have nothing to use to lift people out of poverty. Development is fine for keeping people from starving to death, but in terms of sustainably moving people out of poverty, giving people the power to make their own decisions and the resources to actually effect their own decisions, their own choices about health care, schooling, nutrition, and housing--that comes from the private sector. Governments are essential in this process to making sure growth in an equitable and proper enabling environment is there, but without the private sector creating wealth, the government would have nothing with which to work. This is a key point.

    While it may be subjective that the private sector plays the dominant role, it is not subjective to say that the private sector is and has been the largest funder of development activities. If you take a look at exhibit C, the graph showing foreign direct investment and remittance flows to the developing world versus official development assistance, you'll see this point graphically. It's important to note about this graph that the amounts in the Y axis are in billions of dollars. That's not hundreds of thousands or millions, it's billions. Every point of difference is huge on that graph.

    The other point to note is that the last year for the graph is 2009, the height of the financial collapse in the global financial crisis. Since 2009, remittance flows and FDI flows have returned to earlier levels.

     If you look at 2008, at the difference between private flows for development and the remittances—this is money sent back home by immigrants and migrants to their communities of origin—and foreign direct investment, these were collectively about six times higher than all forms of official development assistance. This has been going on since back in the mid-nineties. So for over a decade now, the private sector has been the largest funder of development activities, broadly defined.

    Also, it's not just sustainable poverty alleviation; it's other activities in which official development actors are engaged, such as disaster relief. A great deal of time, effort, and money from CIDA goes to responding to natural disasters. If you look at the figures for what the private sector is contributing, including diasporas, again, it's many times larger than official development assistance.

    If you switch to exhibit E, the series of bar graphs, I've actually done some original work and have taken a look for the CIDA priority countries in the Americas. Jamaica stands in for the English-speaking Caribbean. You can look at the relative contributions to development in each country from all forms of official development assistance, all forms of foreign direct investment, all forms of remittances, and Canadian official development assistance.

    Unfortunately, we still, years after working and pressing, don't have figures for remittances from Canada, and that's something that really needs to be addressed. But you can look at the relative importance in Bolivia, Colombia, and Haiti. The interesting thing about Haiti is that these figures are for 2009, so obviously development assistance has gone up, but it is still not as important, still not as large, as remittances to Haiti. Even after the earthquake, even after the massive increases in funding through official development assistance, remittances are still a larger source of income in Haiti. Katleen Felix talked briefly about that, but she could give you stories that would underline the importance of this.

    The simple fact of the matter, though, is that no country has ever aided its way out of underdevelopment, but countries have grown their way out of underdevelopment. Look at the Asian tigers: in those countries, this was done with the private sector and a strong national government that was able to implement policy and set an enabling environment. Development agencies played a marginal role in this—if any. So in terms of the private sector, foreign assistance is important, yes, but the crucial element is having the private sector.

    Now, in taking a look at exhibit D, looking back to the map of South America, you can get an idea of the importance of diaspora contributions in Latin America and the Caribbean. In Mexico it's $22 billion; in El Salvador it's $3.6 billion; and in the Dominican Republic it's $3.3 billion. This is money that goes to pay for nutrition, education, health care, and housing. This is not wasteful spending, as some of the more paternalistic elements of the academic community view remittances. These are investments in human capital development. This is the same sort of thing that CIDA is trying to fund. If you improve human capital there's a direct impact on development; it's extremely important what the diasporas are doing.

    Also, from research by Dr. Manuel Orozco at the Inter-American Dialogue—he's the grandfather of remittance work and the person who got me started on this stuff—we know that 5% to 15% of the total flows, depending upon country, also go for collective development projects. If you flip back to our definitions, you'll see a definition of “collective”. I won't waste any of my dwindling time going into that. But the important thing about this, for diasporas and for the for-profit private sector, is the following. Back in Washington in the early 2000s, when we first got wind of these numbers—and it's only been about 16 years since we noticed remittance flows in the development community—our jaws hit the ground and we started salivating. Look at all this money, we said; if we could just leverage a small percentage for digging wells and a small percentage for maternal health, we'd be able to greatly increase the impact of traditional development activities. Very quickly we were disabused of that notion. The early lessons were that this is money sent by poor people to poorer people, and interfering with it has only negative consequences.

    Our work focused on facilitating transfers: making it easier, lowering the costs, and giving people options so that they could decide what to do with their money. We focused on getting them away from a reliance on Western Union—and paying 22% to send the money—and having groups like Fonkoze, which was here testifying before you, to be able to work with groups. That has been highly successful.

     The larger lesson, though, was that money was probably the least important thing being transmitted, and I say that looking at figures of $22 billion and $5 billion. Money's the least important thing. We found that the money being remitted was only one thing that was being transferred; ideas, knowledge, skills, and markets were also being transferred.

    I'll give you an example. I was talking to a USAID governance project officer in El Salvador years ago. He said to me that all the money we spend on seminars, on getting NGOs to do democracy promotion, on getting academics to host seminars, on getting people down here, and on sending people back to the States is not worth half as much as a planeload of Salvadoreans who've spent years living and working in the United States getting off that plane, going back to their home communities, and saying to the local authorities, “What do you mean I have to give you a bribe for a driver's licence? What do you mean we can't see the local municipal development plan? What do you mean we can't comment on the forestry plan or the new agricultural plan?” This has had a huge impact on democracy promotion. This comes not from me but from governance project officers.

    It comes out in other ways too. Think about knowledge and skills. There's a great example in California, where migrant workers from Oaxaca are working in Napa Valley. They're exposed to some really new, high-tech irrigation techniques; the latest is drip irrigation. They learn this technology, they become familiar with it, and little by little they start adapting it and taking it back with them to Oaxaca. They pay for the technology not with money from CIDA, not with money from USAID, not with money from the Inter-American Development Bank, but with the money they earn working in Napa Valley. Eventually, years later, they revitalize the peach industry in Oaxaca. They're no longer travelling up to the States. They have a booming industry. They're hiring locals to work in it. This is knowledge transfer.

    One last example is markets. You had a great presentation by Scotiabank about the mobile wallet and the cellphones to transfer money in Haiti. This will have a profound impact in development in lowering costs and barriers to entry for financial services. You get this, of course, from the private sector. Development agencies aren't going to create this sort of thing. Private sector actors do.

    But the point is this: did you stop to consider how a country where the majority of people earn $2 a day could have cellphones? When I first started working in Haiti over a decade ago, no one had a cellphone, and yet, average person, $2 a day, cellphones. It's because of the diaspora.

    You have two factors here. One, if you go to Unitransfer, Bobby transfer, or CAM in Montreal, you'll see a little glass case with cellphones in it. If you want to send back $150 or $200, for an additional $20 you can send a cellphone with minutes on it. If I were to call a cousin in Haiti—if I had a cousin in Haiti, which I don't—or a friend in Haiti, I'd get off the phone and a month later get a bill from Rogers for some obscene, outrageous amount for having called back to Haiti. I'm going to pay that amount. My cousin in Haiti is not going to get a bill. He's not going to see any charge for this. Yet the money I pay to Rogers they will take, and Rogers will take a percentage of it and ship it down to Haiti.

    Those shared fees account for hundreds of millions of dollars. This is how the mobile cellphone infrastructure has been built out in most of the developing world. It's not USAID, it's not the World Bank, it's not the IDB, it's the diaspora that enables this.

    The difficulty for the development community, though, in working with diasporas is that it is very expensive and very difficult. Now that I'm married, I don't think I could go back to working on diaspora issues; I spent so many Sundays and Saturdays and evenings in church basements in Brooklyn and north Miami and Chicago and elsewhere, working with groups.

    It's also a high cost. These are not professional development actors. They require a lot of hand-holding, a lot of training, and the results do not appear very strong. It requires a great deal of flexibility and creativity, and a real difference in the type of development people you have working with them, something that's been very difficult for the development community to do.

    The cost-benefit also appears skewed. You're paying a lot of money and taking a lot of time to develop projects that aren't building a hundred schools or a hundred health clinics, but what you are doing is creating new development actors. You're helping to professionalize diasporas, enabling them to play a role. They know the communities better than your average NGO does; they're connected to communities in ways your average NGO is not, and they'll be there for decades when your average NGO has moved on to something else that CIDA has decided to fund.

    So in terms of creating new partners, the money with diasporas is crucial. It's the same thing with the private sector and the for-profit private sector.

    Very briefly—and this is an extremely important point—I had a grant in Santiago in the Dominican Republic. A group of architecture students came in. They wanted to work with poor-income communities to help people refurbish their houses, to build extra rooms, so they could gain income by renting out the rooms to people coming into town to work in the maquiladora and the plants. It was a brilliant idea.

    I asked them if they had talked to the private sector to see if they could get support. They hadn't. I had a grant with the chamber of commerce of Santiago to do work with micro-entrepreneurs. I was able to use that grant to get this group to come into the chamber of commerce and present their project.

    What did we get—money? No, we got something that was more important. One of the four major banks in town contacted us afterwards and said, “Why do you have this group of architects running a micro-enterprise loan fund for this project? They know nothing about it. They're going to have to hire someone. We do micro-enterprise. We have branches in the communities where you're funding the loans. We'll run the loan fund for you. We'll train our staff to deal with it. We'll develop forms and use our micro-enterprise stuff to work with these people. We'll provide extra training and advice on how to manage money when it comes in.”

    The money I would have had to give to this group from the grant to hire a micro-enterprise expert was instead taken and put back into the loan fund. In essence, the bank was subsidizing a line item in the project that the U.S. government's development agency was going to do with this group anyway.

    We also heard from a local hardware company, again a Dominican company. They offered a 10% or 15% discount to anyone getting a loan who came into the hardware store. They didn't contribute money, but that discount, again, gave an additional 15% to the project.

    They also asked what sorts of supplies people were using and how we were sure they were using what they were supposed to, and whether they were getting any additional help. They said they could provide that.

    What you see with the private sector is not just money; it's creativity, dynamism, entrepreneurialism, and new ideas. In places like Haiti, where you don't have architects, you don't have accountants, you don't have project managers, and you don't have engineers running around society, the private sector contains these resources. Being able to leverage these resources is key.

    The wealth of the private sector is its ideas, its talents. It's not just money. The committee is focused very much on money, but from the decade or more of experience we have, that is not what you should be thinking about.

     I'll get to the policy suggestions now.

    Also, if you think about this.... You had Scotiabank here. They have won awards for their mobile wallet program in Haiti, not just from the development community and from the Gates Foundation, but also from technology folks. You've had Placer Dome, which decades ago won an award from the World Bank Development Marketplace in a competition with NGOs, with development actors, with people who do nothing but development full-time. They won an award not just for building schools or doing nice stuff but for innovation in development.

    This is what you get from the private sector. This is why DFID, if you want to take a look at their private sector development strategy from last year, is focusing on this and why they've mentioned diasporas—that's an important element in it—and other groups too.

    Very quickly, these are some ideas.

    First, don't reinvent the wheel. You have DFID, USAID, GTZ, BMZ from Germany, Dutchaid. If you look at the very last diagram, you'll see a list of development agencies and what they're doing. This is a small list. Oscar is still working on compiling more data.

    Don't reinvent the wheel. You can learn from what other agencies are doing. An idea is to partner with development agencies. DFID has identified areas that match very closely with those of CIDA in terms of weaknesses and strengths. It would be very easy to simply partner with them on their centre to study the enabling environment for the private sector. Partner with USAID on how to do public-private partnerships. Take advantage of their decades' worth of experience.

    I have two last points.

     Staff are key. I can't stress that enough from the lessons we learned at USAID, which the Germans worried about and have written extensively about, and which my own agency learned about. I was hired because I had an affinity for working with the private sector. There was a whole cadre or cohort of us who were brought in: it was fundamental in changing and enabling the agency to work with the private sector. It's a particular skill set. Development agencies do not have this. It has to come from outside or it has to be trained.

    If you're not going to bring in staff, you will fail. If you're not going to change the staff, if you're not going to change the people, you might as well open up that window behind you, take the money that you're going to put into this, and throw it out onto Sparks Street. You will meet with failure if you don't bring in people. This is a lesson that has been learned, a lesson I personally lived through.

    Second, you have to protect any public-private entity. The Germans have written extensively about this. If you had asked Dan Runde when he was here, he would have told you this: the agency must be protected. This is a disruptive technology. If you're familiar with the literature on disruption—out of Harvard Business School and elsewhere, and out of Silicon Valley—and how it impacts enterprises, you understand this point. But the entity must be protected.

    Finally, I spend a lot of time talking to the private sector about this issue. The fact is that they are doing these partnerships. They're extensively engaged. Heck, they're winning awards for doing this. They'll continue to do it, but it will be the large Canadian enterprises that do this, those that have resources to go to Washington.

     As for those that don't, it's questionable, but they often come to me and say that they want to go to CIDA, and they ask what they should think about and how they should present to them. My response is, why do you want to go to CIDA? I mean, it's a great agency for doing some things, but public-private partnerships are not its forte. You're going to spend an enormous amount of time, money, and effort to convince them to work with you. Then, when you do, you're going to have to expend even more effort to hold their hands and to bring the staff along on how to do public-private partnerships. Let's get on a plane, go down to Washington, D.C.—and I've done this with companies—and make the rounds, not just of the U.S. government, but of the World Bank, the MIF, and the IFC. There are tons of opportunities. You'll deal with people who have decades of experience, who are expert in this, and who you won't have to convince to do this. You'll have a partnership. That has been successful to some degree.

     I can't understand why the companies would want this added cost, and then it occurs to me.... I remember seeing Dan Runde sitting with Glamis Gold at the CSR Americas conference and talking about the project, and I remember the guys from Glamis looking around when he talked about what the U.S. government was doing. I've talked to Scotia and others. These are companies that are proud to be Canadian. They don't want to sit up there with USAID. They'll sit there if they have to, but they're Canadian. They're proud to be Canadian. They want to extol that virtue and enhance the Canadian brand, and they want to bear the cost. You're not doing them a favour. They're already doing these projects. They're doing CIDA a favour in terms of bringing them along.

    Lastly, it's the smaller Canadian companies. We worked a lot with small and medium-sized enterprises from the U.S. that were investing in Latin America. Our ability to work with them and help them really helped to advance CSR work and to have the U.S. and U.S. companies doing more. That will be the loss. The large companies are doing this already. Heck, they're winning awards, and they're going to continue to do it.

     It's the smaller Canadian companies that won't be able to benefit as much, and I think that will be a real loss. You don't have to do this. It will continue without you. It will continue with or without CIDA, and the Canadian companies will continue to do this, with or without CIDA. It's only the smaller companies, I think, that will be hurt.

    Thank you.

    Thank you very much.

     We're going to start with Ms. Sims, for seven minutes, please.

     Thank you very much.

    I thank you for making your very passionate presentation.

    I don't think it's going to come as a surprise to you that those of us sitting along here, anyway, believe very strongly that the primary purpose of foreign aid is to reduce poverty. It is not to further private sector interests or short-term trade priorities. In particular, we feel that aid shouldn't be used to benefit profitable corporations or to finance the activities they should do anyway, such as cleaning up environmental waste or training workers.

    Now, in your piece in Embassy last month, you claimed that co-funding with the private sector has never meant subsidizing when it comes to international development. But I think the facts speak for themselves. In the fall, CIDA announced $26 million in partnerships with Barrick Gold, IAMGOLD, Rio Tinto Alcan. At the same time, we are learning that established NGOs, such as Development and Peace based in Montreal, are having their funding drastically cut.

    At the same time, I also want to recognize the comment you made about the diaspora, about the contributions the diaspora can make, and does make, without us and without any private enterprises. Those things come because of the connections with the homeland. Whether you're first generation or whether you're third generation, it's that connection to a country. Among the Indian diaspora, I've certainly witnessed to a large degree the changes that have been brought about as a result of the role played by the diaspora directly.

    I agree with you that a lot of that is very direct work that is coordinated by somebody from the village or somebody from the area. However, when we think about public-private partnerships and some of the work we've been doing, we have some very serious concerns.

    Isn't it fair to say that the controversial partnerships with mining companies have actually replaced funding for established NGOs that are doing critical work in the field of advocacy? When you look at the facts—and we have—isn't this clear?

    I love questions that are phrased that way. I can't.... Do you answer yes or do you answer no?

    You have time to answer.

    Mr. Carlo Dade: Okay, great.

    Ms. Jinny Jogindera Sims: Then I do have some more questions.

    Very quickly, then, the evidence on the ground, which comes from the group of development agencies that are working on this—it's not a matter of belief, it's a matter of fact—has to do with the efficiency gains that come from working with the private sector. Look at the amount of money that the private sector is putting in. These are development actors. These aren't different from NGOs in terms of the activities they're doing.

    If you focus less on who they are and more on the results, what is being achieved? What is being accomplished? For every dollar of development assistance, how much output are you getting? How much impact are you having on poverty alleviation?

    It's not what “we” like. It's not what “I” like. It's not what makes me feel good about myself. It's about what has the greatest impact on the community for dollars spent. Why not work with a partner that has the resources and that has the money to do this? If you work with an NGO, you'll build a hospital that will cost you $100. If you work with the private sector, you'll get two hospitals that will cost you $50.

    Where is the better use of development assistance? Where is the better outcome for the people on the ground? It comes from working with those people that are actors and have the resources.

    Well, just as a follow-up, you claim that somehow these projects are almost always better for taxpayers. But if these mining companies are among the wealthiest corporate actors in the world, isn't it fair to say that they could fund these projects without taxpayers' help?

    I've heard a lot of your discussions, including on the partnership skill sets to be learned. We're not saying that any of these corporations should be stopped from doing international development work. Do it out of the goodness of your heart or because you're already in there taking goods out of the land, as the mining companies are. I was going to use a more colourful term, but I'll stay away from that today.

    You're actually going into another country, in the extracting industry, and you're actually taking things that belong to that country and making huge, huge profits from it and then turning around to the taxpayers and saying “Please subsidize us, or work with us in partnership, by giving us some money”. Surely it's the responsibility of those corporations to do the work out of the goodness of their heart. They shouldn't be looking to the taxpayers for handouts.

     It's not a question and never has been a question of looking to the taxpayers for handouts. If you remember my example, when I partnered and was on the ground and was doing this—so I'm speaking from real experience—I can tell you it was actually the private sector that was subsidizing what I was doing. If they're going to be doing this anyway, why not work with them?

    In terms of large-scale money, take the case of Haiti. The International Committee of the Red Cross has raised more money for the Haiti earthquake than CIDA has for its next three years of spending.

    In terms of funding someone who has tons of money, in terms of funding someone who's going to be making a ton of money in Haiti, why not cut funding to the International Committee of the Red Cross? Why don't you go to them and say, “You're going to do this anyway, and you have more money than Croesus or CIDA in Haiti, so why don't we cut you?” No, we do it because they're a partner.

    The other point is, as I keep saying, it's not just about money. You want to work with the private sector. The mobile banking thing in Haiti with Scotiabank is not about money; it's about ideas and creativity.

    Thank you very much.

    With all due respect, I still want to state that I think that he companies that make huge profits have an obligation in those countries to help with development work and to build schools and hospitals in a long-term systemic way. I'm finding it very hard to think that they think that now the taxpayers are going to assist them. There are different ways--

    A voice: They're not asking for taxpayers to assist them.

    That's all, Ms. Sims. Hold on a second.

    Am I done?

    Yes, that's all the time we have, seven minutes.

    We're going to move over to Ms. Brown for seven minutes, please.

    Thank you very much, Mr. Chair.

    Mr. Dade, it won't be a surprise to you that people on this side of the room believe in assisting independence and self-reliance, whereas my opposition colleagues seem to be intent on keeping people in poverty. We want to see people lifted out of poverty. That has to be our long-term goal. Our long-term goal ought to be for CIDA to work itself out of a job. That's really what we should want to see happen.

    As you have so colourfully said, it's not necessarily about money; it's about ideas and innovation that come out of the private sector.

    I've been in the private sector. I come from a business background. I know how you have to reinvent yourself every day in order to be current and in order to continue to be relevant to the culture in which you are working.

    With regard to these long-term strategies and to creating sustainability, you have this great expertise in public-private partnerships. I know you've had discussions with CIDA on them. Can you talk to us about the response you've had from CIDA and about what this looks like going forward for Canada?

    Sure.

    First let me note that I agree that putting CIDA out of business is a great goal. There are many development organizations that have as their motto “Putting ourselves out of business”.

    I do think, though, that the opposition is deeply concerned about poverty alleviation, and I applaud them. I wish that the honourable MP for Laurier—Sainte-Marie were here. She would be able to comment from her time in Chile and elsewhere. I know they're deeply concerned about poverty alleviation. It's simply a matter of the most efficient and effective means of achieving it. I believe this is both more efficient and more effective, that it will do more good and be able to do more in terms of development.

    It's the difference between methods and goals. We all agree about the importance of poverty alleviation, and we all have that as a priority.

    In terms of conversations with CIDA, if I took exhibit A, I would need another couple of pages to talk about the decks and presentations to CIDA and the Department of Foreign Affairs on this issue. If you look at exhibit B, from the last conference, we used our own money to bring up the leading experts from Washington, the IDB, USAID, and the Prince of Wales business leaders forum to meet with CIDA and DFAIT to talk about these issues. Most of the papers you see listed there were done with money from CIDA. So time and time again, we've been to CIDA. We've done presentations for staff, senior to junior. We've done decks. We've discussed the reports.

    I have had three phone calls from CIDA over the past six years, each of which has started with, “Hi, Carlo. My name is.... I've just been handed the task of looking at how CIDA can work with the private sector, and someone said I should talk with you.” And I say, “Well, great. I'm happy to talk. Have you seen all the work we've done on the issue, the papers, the reports? Have you talked with other people inside CIDA?” The response has always been, “No.” So I ship it over. It takes several e-mails. You can't send the stuff in one e-mail. It takes five or six or ten e-mails because they're so large.

    Three years later I get another phone call: “Hi, Mr. Dade. My name is.... I'm at CIDA. I've just been assigned to look into how CIDA can work with the private sector and was told I should talk with you.” And I say, “Well, did the last guy give you the...?” The answer's always been...“No”.

    Luckily the last person with whom I had this conversation is still at CIDA. Thank God he's still there and he's still working on the issue. So I'm hopeful that this time it's finally taken.

    So I'm sure you're happy that we've undertaken this study.

    I had given up hope.

    Well, we definitely thank you for your input.

    As you know, we had Hernando de Soto with us, and one of the things he talked about in his presentation was the need for companies to have capacity-building, to have legal structures, to have property rights, and to have a judicial system. Do you have any recommendations for us or any comments on how we can help or how CIDA could help with that?

    Sure.

    There's been a proposal presented by Hernando de Soto's think tank in Haiti, Centre pour la Libre Entreprise et la Démocratie. It was developed several years ago with USAID funding to develop the proposal. USAID hasn't been able to continue with it for a variety of reasons, but that proposal has been shared with CIDA and it gets to the issue of unlocking the huge amount of capital that's available for the poor in Haiti. This is an agenda that development agencies want. The UNDP talks about this, the UN talks about this, and in the Haitian private sector their banks are on board for this. It's part of their revolution of growth for all in Haiti.

     This would be something that's very easy to look at. It's been shared with CIDA. I sent a copy to your side and also I sent a copy to the critic for Latin America. I don't know if she's passed it on to the other members of the NDP, but that was my one contact with the party. I sent it to Paulina to pass on to you. So I think you're both familiar with it.

    Unfortunately, Mario Silva is not around any more, so I didn't have a contact with the Liberals to send it to.

     I still have more time, so I will talk about the diaspora.

    You talked about the great opportunity there is for the diaspora to be participant in this. Are we seeing the diaspora growing their own companies in countries in which they are currently living and taking that expertise back? Are we finding that there is a mutual benefit that's happening there?

    It depends on the diaspora group. If you look at diasporas, the characteristics differ by country of origin and they also differ by country and place of settlement. So the huge difference is, for example, in the Haitian diaspora in Brooklyn and the Haitian diaspora in Miami in terms of business engagement, political engagement, and differences with the community in Montreal.

    The best example of this is India, where the flood of investment in IT and other things in India was largely enabled by the Indian diaspora in Silicon Valley. You had people who knew India, relatives, and knew the system back home, but were through and through 100% Microsoft. They worked their way up through Microsoft or through Google or through another company and the U.S. company would trust this person enough, because they were 100% Microsoft, to go back and set up an operation in a country where the U.S. company didn't know the business environment and they wouldn't normally risk investment. So that's been hugely important.

    Again, the problem with Canada is we do not have the research on this. In the United States we have remittance flows down to the county. If you look at a map of Georgia, you can see how much money is coming from certain counties and where it's going. We know extremely little, almost nothing, about this phenomenon in Canada, so research is desperately needed. The best we get are estimates from USAID about what's going on. We just haven't done the research. But there's huge potential, and we see this potential being realized in projects. USAID, the French, the Spanish are using these projects to increase development outcomes, create development actors--

    I'm sorry, but we're going to have to cut you off here.

    We're going to move on to our last seven minutes of the first round.

    Mr. LeBlanc, sir.

     Thank you, Mr. Chairman.

    Thank you, Mr. Dade. It has certainly been very informative, from my own perspective. The passion you have, the knowledge you have, and the experience you have certainly make me imagine a scenario where it's not an either/or prospect of having public funds for development projects or working with the private sector in the broadest sense of the term.

    What struck me in your opening comments is we tend to think about company X building a school near project Y as private sector work in development, but if you look at it much more broadly, there is a whole host of possibilities that aren't necessarily contradictory with other development objectives, or don't necessarily get substituted for other development objectives.

    I want to pick up on a question Ms. Brown had. The diaspora involvement is an interesting way to view private sector participation in development. You mentioned the example of the Indian diaspora in California, and you ran out of time. I want to give you a chance to pick up on that.

    In Canada we don't have research or accurate information on these remittances and on the level or the precise nature of them. What would you suggest the government or some other group could do? How would we get better information? Who typically funds this kind of research? How would we get this information? It certainly appears to be very valuable.

    I found your example of the Haitian community in Miami or Brooklyn or even Montreal very interesting. Are there other examples in Canada, looking at the Canadian context, where diaspora communities might, in your view, be good partners for development and where Canada, the Government of Canada, has development priorities? In other words, is there a match with an effective diaspora community? The Haitian one in Quebec certainly is an obvious one, but are there others that come to mind specifically with which the government or CIDA or other private sector developers could work in terms of trying to leverage some of that participation?

     Sure.

    The best example is actually with the Haitian diaspora. CIDA has the longest-running contribution agreement of any development agency with the diaspora group Regroupement des organismes canado-haïtiens pour le développement--ROCAHD. When I was working the Haiti beat and the U.S. mission in Haiti first started working on diasporas, the ambassador came to the post, Dean Curran, with a list of priorities, and so did the USAID mission director. I had been working on the issue for a couple of years, and there was great synergy.

    We found out about the project that CIDA had been running and we tried to get information about it. Dean Curran, the ambassador, wrote to his counterpart, the Canadian ambassador in Haiti, asking for information. The head of USAID for Latin America wrote to his counterpart in CIDA, asking for CIDA to send a group to Washington, to send a group to New York for meetings. We never could get any information out of CIDA about this. I finally had a PhD student who was interning for me interview the group. To get the information from CIDA, I actually came up on a house-finding trip—a longer story—and I took the afternoon off, went over to Gatineau, walked in to CIDA, tracked down the guy who was in charge of the project, and got him to pull the project files down.

    So there has been some work done by Canada, but it's mostly hidden. There have been remittance corridor studies funded by Finance Canada. That's a source for information on remittances that should be coming out of the Department of Finance. In the U.S. it's being funded by foundations—Ford, Rockefeller. We don't have an equivalent in Canada. The Gordon Foundation has done some work on this, but they can afford $5,000 or $15,000, and Rockefeller will spend that on coffee in a year for meetings on diasporas. So we don't have the resources from that sector. It will have to come from the government.

    In terms of diasporas, for the white paper I wrote for USAID on remittances I looked at groups in Africa, Europe, and elsewhere. Every community is different, so you really have to inventory your development priorities in groups, and this is what we did back at USAID a long time ago. But every country in Latin America and the Caribbean has a “Minister of the Diaspora”. The importance of these groups is recognized by the host country--not just the World Bank, it's the sending countries. Haiti's had a diaspora minister for ages. Mexico is doing so many things to leverage their input and to work with them. It's unbelievable. In Uruguay and Argentina, you wouldn't think of them, but they're focusing on the scientific diaspora and how to get them back home. So if you want to do something, it's not just development agencies and not just the diaspora groups, but ministries and countries back home.

    We've had meetings of diaspora ministers. The Indian diaspora minister has been over to Mexico and we've helped organize and run meetings between them. The Philippines have joined in. So there are these great networks. It's low-cost and easy to tap into, but it requires a change in culture; it requires a change in thinking about development. You really have to change the people on the official development side to become more flexible, more creative, and more entrepreneurial in their thinking. It requires a huge leap of faith, to some degree, by the development community to be able to work with these groups, and that's been a major obstacle. It's been overcome at the IDB. It's been overcome at USAID. It's been overcome in Europe. Canada, as the honourable Minister of International Cooperation noted, is late to the table on this. I think even CIDA recognizes that they're the odd man out in the international development community.

    There's a reason why every other development agency is doing this. There's a reason why development agencies are working on their second generation of public-private partnerships. They're not throwing it out; they're not saying it didn't work. They're working on their second generation because it works, because it's effective. It's not just bilateral agencies, it's multilateral too. Canada stands out as the one that's not doing it.

    That's all the time we have.

    We're going to start our third round.

    Five minutes, Mr. Dechert.

    Thank you, Mr. Chair.

    Thank you, Mr. Dade, for your very important information today.

    You've talked a lot about diaspora remittances. We all know that Canadians contribute a lot of these remittances around the world. We should find out the exact numbers.

    One of the things you talked about was the cellphone payment method. I wonder if you've done a study generally on the costs of transferring funds from Canada, the U.S., and other countries to these diaspora groups. I know in my riding, in Mississauga, there are probably at least a hundred different diaspora groups. You see these Western Union shops everywhere. I don't want to just dwell on one company; there are many companies who are in this business. My sense is that they charge a significant amount of money, a significant percentage of the cost of transferring funds. I wonder if you could tell us if you've done a study on that. How can those costs be lowered so that greater amounts can actually get to the people who need the assistance in their home countries?

     The remittance corridor studies that Finance Canada did through or in partnership with the World Bank looked at those issues to some degree. Alan Simmons at York University did a very brief bit and I did a survey of recipients in Jamaica and that gives some ideas on ways to look at the cost. But again, in terms of not reinventing the wheel, this work has been done extensively in the United States. The markets do not differ so significantly or to any degree that the work there would be not be applicable here.

    A lot of the work in reducing costs has already been done. The systems set up by the Inter-American Development Bank and by groups like Fonkoze are already in place and are being used in Canada. It's simply a matter of making sure that groups here have access to these systems.

    Do you have information on the percentage charged by companies that fund transfers to particular countries?

    At one point in time I did—

    If you have that kind of information, I think the committee would be pleased to receive it.

    —and I can pass it on.

    What are your views on temporary foreign worker programs? Canada, as you know, has some significant ones, and they get criticized by various groups for various reasons.

    Are these important for development assistance? Should they be increased? What are your general comments on those types of programs?

    They're hugely important. You hear of people who live in countries where the labour market does not perform. It does not offer a decent return on investment. Allowing people to move has significant impacts on poverty alleviation.

    The Canadian program, while not perfect, is better than much of what's out there. The criticisms, while important.... I would never denigrate the criticisms, as they can make the programs better, but to some degree it's a matter of letting the search for the perfect destroy the good. Having lived in the United States and having at one time been American, I can tell you that if you want to, you can spend a little while with the U.S. system of bringing in temporary workers, and you'll begin to appreciate how good the system is that we have here in Canada.

    I think it's unfortunate that Canadians really don't realize globally just how good this is. Even compared to Europe, on the treatment here.... Again, it's not perfect, but my God, you look around and you go, “Thank God there's Canada and thank God we have this as an example of how to do things right”.

    Increasing the numbers of course is a good idea, and so is increasing the oversight and other things that are needed to go along with it. Temporary workers are hugely important. It's a great way to help communities.

    One of the interesting ideas, which is something you'll see in a few weeks, is the idea of creating charter cities. Paul Romer, one of the leading economists on growth theory—at Stanford, NYU, and Chicago—has a concept for creating cities that are run according to outside norms and outside institutions. He's talking about creating a city in Honduras that functions like this. Rather than having the millions of Hondurans who have voted to leave Honduras and go to the United States, they can actually work in Honduras in a system that allows them to remain home and allows that talent to remain in Honduras.

    A lot of countries in the Caribbean are promoting a similar idea, basically for having retirement homes and facilities in the Caribbean. It's cheaper. The Ontario health care system would be solvent if you could move people in retirement to the Caribbean and have them treated there, as opposed to in the higher-cost environment. Also, instead of taking nurses and doctors that are desperately needed in the Caribbean and flying them up to a high-cost environment in Ontario, you can actually have them remain in their communities, where they can continue to make a contribution.

    Let's face it: where do you want to fly in the middle of winter? Winnipeg, or Jamaica or Cuba? It's an idea that's already taking place in the United States.

    Can I ask you about working with diaspora chambers of commerce? In my private sector days, I was a member of a number of different diaspora chambers of commerce. How can the government support diaspora chambers of commerce here in Canada and help them take their business experience back to those home countries to do some good?

    Just a quick response, please. We're out of time.

    You have a great example. The Trade Facilitation Office of Canada did some work with the Jeune Chambre de Commerce Haïtienne de Montréal. You have groups in Canada that have expertise and experience. It doesn't cost a lot, but the return on investment is huge.

    Thank you very much.

    We're going to move back to Ms. Sims for five minutes.

     Thank you very much.

    I want to make one thing clear. We're not saying there is no role for the private sector, but I definitely don't see a role for the for-profit private sector.

    You wrote an article that was published recently in Embassy. You wrote that “Traditional development actors like CIDA and NGOs play critical roles in immediate poverty alleviation and building enabling environments for development...”.

    You also praised the U.K. for the stance it has taken on its international development. As you know, Prime Minister Cameron recently said that despite the economic state they are in, they're going to continue to live up to their commitment. He sees development as the right thing to do in moral terms and profoundly in the national interest.

    Unfortunately for us here, our funding has essentially been frozen. The ODA envelope has been frozen. This freeze means that by 2014 our aid budget will have fallen to 0.28% of GDP, which will be the lowest in the 22 OECD countries—and shame on us.

    We feel that despite the fact that maybe we have been buffered the most from the economic woes and that we're one of the wealthiest countries on earth, Canada is increasingly abandoning the world's poorest people and countries.

     As you know, we have a federal budget coming up this week. I think a few people know that. A coalition of groups came to Parliament Hill last week to urge this government not to fight the deficit on the backs of the poor, a very heart-moving lobby. In light of your comments in Embassy about the critical role CIDA can play in alleviating poverty, do you share the view of this coalition that the budget must not slash foreign-aid funding?

     I'd like a very brief answer, because I have another question, please.

    I never would presume to tell the government or the opposition what it should or shouldn't do. I can offer ideas on cost-benefits and what the impacts would be.

     If aid money is going to be decreased, then these sorts of partnerships will become all the more important. Getting the maximum efficiency from every aid dollar spent becomes more important.

    Okay.

    Madame Groguhé, you have two minutes.

    I would like to ask you many questions, Mr. Dade, but I'll make do with just one.

    First, let's talk about the diaspora, the presence of which is important in various countries. Originally, the diaspora always sent money. In developing countries, the extended family is a cultural reality and is very important. The diaspora has always supported the families that stayed behind, whether in terms of upbringing, schooling, health or just for food.

    To promote development, it is quite interested in the survival of people, and sometimes in the acquisition of goods. With respect to the infrastructures, education, training and health, I think the diaspora will not be able to take over on its own. On the other hand, the role of the public sector seems essential to me. I think the participation of CIDA and the NGOs is essential. Who will lead this development?

    If the private sector takes a larger and larger role, how will control and evaluation work? How can we know concretely, how these various actors will improve the development issues in those countries?

    I await your response.

    Okay.

    I will answer in English.

     On the question of diaspora contributions, first, education, health, housing, yes; but as I mentioned, depending on the country, 5% to 15% of remittances go back for collective projects. Take ROCAHD in Montreal and the projects they finance: building schools, building health clinics, building roads, putting in libraries, sending back medical personnel. The diaspora in the collective projects are involved in these sorts of things.

    The Mexicans have a project called “Tres por uno”, now “Cuatro por uno”—quatre pour un—and this basically takes contributions that diasporas are making for roads, for hospitals, and matching four to one with Mexican government money. They bring in local actors such as the state or the municipality to work on projects together. So as diasporas are brought into the development process, by partnering with development agencies, by working with the state, you get this coordination the same way that you have with NGOs.

    In terms of the larger coordination for diasporas in the private sector, again, as you develop partnerships between the private sector and aid agencies, this coordination results. You have an exchange of expertise, of knowledge. The private sector is already involved. By working with them, you're not subsidizing them. You're not giving them money. Just like working with the diaspora, you're helping to make them better development actors. Likewise, they help make CIDA a better development actor.

    So there's this cross-fertilization, not subsidization. It's a complete misunderstanding of the situation to think of this as subsidy. I can tell you that everyone who works on the issue would agree on that point.

    Thank you very much. That's all the time we have.

    Mr. Dade, I have one quick question before you leave. Daniel Runde talked about financial tools used by the International Finance Corporation, and said that if Canada could develop some of these tools, it would be effective. Are you familiar with that testimony at all? Or have you any thoughts on what those financial tools would look like, just very quickly?

    Sure.

    In terms of encouraging private sector investment, putting tools in place for increasing flows of money, tools in place for working with diasporas, there are a number of things that the IFC has developed. I would pull Dan back here, because he helped to create many of these. I wouldn't want to speak for him on that issue.

    One last point is that in terms of evaluations, there have been some questions in front of the committee on whether or not this works, and on how we know that public-private partnerships work. Every year USAID has to submit a Congressional Budget Office justification, which is the equivalent of a Treasury Board request up here. You have 15 years of these, written in your language, using your terminology as legislatures, about the effectiveness of aid programs. You can look at this. And it's the same thing for the Germans.

    My former agency, the Inter-American Foundation, has books—books—on our experience with public-private partnerships and working with corporations. This isn't something that development agencies have adopted out of faith. There are evaluations and analyses, with decades' worth of evidence. The changes in programs are designed to respond to this.

    Again, Canada's late to the table, and a lot of this has simply missed us up here. But it's out there. I could fill this room with evaluations of public-private partnerships showing how development agencies have gotten maximum returns, and also where mistakes have been made, where we screwed up. There have been lots of those too. But if you don't make mistakes, if you don't fail, it simply means you're not trying hard enough, and that's an issue, I would say, with CIDA.

    Thank you very much, Mr. Dade.

    With that, I'm going to adjourn the meeting.

    Thank you very much.