DEVELOPMENT

"We renew our commitment to secure substantial flows of official aid and to improve the quality of this aid. The whole international community should be mobilized in this effort and new donors should assume growing responsibility, so that the burden is more equally shared." (Paragraph 36 (Sub-Section 2)

Overall Grade: 0

As a means of explaining Canada's grade on this commitment, what follows is a breakdown of the commitment into three component parts. Such a breakdown will illustrate that with action having been taken on some of these sub- components, and little if any action having been taken on others, Canada could be said to be in the process of meeting the commitment, therefore warranting an overall grade of zero.

Securing Substantial Flows of Official Aid - Grade: -1

Continuing budgetary pressures have prevented the Canadian government from meeting this commitment. As in all G7 countries, with the exception of Japan, efforts to reduce Canada's budget deficit have meant that the $2.11 billion net ODA budget of 1996/1997 is to be reduced by 7.2% to $1.96 billion for the 1997/1998 fiscal year. If next year's 7.3% reduction is adhered to, Canadian ODA will have experienced a decline of 29% since 1993/1994. Although the reductions to Canada's ODA during the current fiscal year were planned prior to the Lyon Summit , the government, of course, had the option of altering those plans following the summit. Thus, having chosen to maintain the scheduled cuts, the Canadian government's action could be said to be contrary to the requirement that G7 members seek to secure substantial quantities of ODA.

Although "securing substantial flows of official aid" is a subjective phrase that is open to interpretation, to interpret this commitment as allowing a reduction in ODA would contradict past actions of G7 members. For instance, in May of 1996, just one month before the Lyon Summit, the G7 countries and the other members of the Development Assistance Committee (DAC) of the Organization for Economic Cooperation and Development (OECD) adopted a report entitled "Shaping the 21st Century: The Contribution of Development Co-operation". Endorsed by the OECD Council at Ministerial Level later that month, the report states in at least two places that, [aid donors] need to sustain and increase official development assistance if we expect to see a reversal of the growing marginalisation of the poor and achieve progress toward realistic goals of human development. It is equally clear than [sic] an effort to build stronger compacts with developing countries on a foundation of shrinking resources and declining commitment will lack credibility.

Having endorsed this report, which recommends as a minimum the maintenance of current ODA levels, it is reasonable to infer that a commitment by G7 members, made less than a month later, to secure substantial quantities of aid would require at least the continuance of the status quo, as opposed to a reduction in ODA as Canada has done.

As well, all G7 members maintain the goal of dedicating 0.7% of their gross national product (GNP) to ODA. To the extent that the 0.7% of GNP figure can be used as a quantifiable referent or standard for what the G7 countries define as a substantial quantity of aid, the fact that Canada has not as of yet reached that threshold means that the 1997/1998 reduction in aid levels does not bring the country closer to securing substantial levels of official aid as was committed to at the Lyon Summit. Thus, Canada cannot be said to have complied with this component of the above commitment.

Improving the Quality of Aid - Grade: +1

Improving the quality of aid involves any action that enhances the developmental impact of ODA including the reducing of tied aid levels, increasing the grant element of a country's aid program, undertaking action to relieve third world debt loads, directing development assistance toward areas with the greatest developmental requirements, and undertaking institutional reforms that lead to better aid programs, and therefore to the more effective usage of aid resources. By this definition, Canadian ODA has been of a fairly high quality, with between 95% and 100% of Canada's aid being provided in the form of grants, with "virtually all of its outstanding ODA debt owed by the poorest countries" having been forgiven , and with the bulk of Canada's bilateral ODA being traditionally focused on Africa, the continent with the most widespread and ongoing developmental needs.

The post-Lyon Summit period has seen CIDA undertake a number of actions to maintain and to improve the quality of its ODA, and thereby, bring Canada largely into compliance with this aspect of its 1996 summit commitment. For instance, although the 1997/1998 ODA reductions mean that aid quantities to Africa will decline, approximately 44% of bilateral Canadian aid will still be directed toward that continent. As well, in December of 1996, a new contracting system was introduced to increase the efficiency of CIDA's contract-formation procedures. That same month also saw the creation of a new website which is partially intended to increase the quality of Canada's development policies by giving the public input into the areas of economic and social development, and environmental protection.

CIDA has also undertaken to further the implementation of its Results-Based Management (RBM) policy. RBM refers to a management approach that focuses on analyzing the results of projects in order to ensure that aid dollars achieve the maximum possible developmental impact. Although RBM was adopted in January of 1995, and introduced in March of 1996, related new initiatives include improved results-based reporting procedures in the 1997/1998 Main Estimates, and the undertaking of year-end assessments of the developmental impact of projects carried out in each of CIDA's four geographically-defined branches. Furthermore, the process of conducting in- depth performance assessments of CIDA's six ODA priority areas will continue, with the assessment of the Agency's basic human needs programming being completed in 1997/1998, and with its infrastructural services funding being reviewed in 1998/1999. As each of the above reforms will improve CIDA's ability to develop effective programming that will provide greater developmental benefits to aid-recipient countries, it can be concluded that Canada has largely complied with its commitment to improve the quality of its development assistance.

Promoting More Equitable Burden Sharing - Grade: 0

Only limited evidence was found of Canadian efforts to achieve a more equitable degree of aid burden sharing. "Burden sharing" refers to the concept in which responsibility for the provision of development assistance is spread out amongst numerous donors, primarily so that no single donating country or group of countries experience a disproportionate share of the expense. As stated in the above commitment, burden sharing involves encouraging both existing donor countries and institutions, as well as new donors to assume their fair share of the aid burden, and to ensure that the aid that is provided is effective in promoting development.

The Canadian government's efforts since the Lyon Summit to encourage existing donor countries and institutions to improve the quality and quantity of aid that they provide appear to be somewhat limited. On September 30, 1996, in a speech to the Development Committee of the World Bank, Finance Minister Paul Martin stated that "Canada is strongly committed" to "improving the development impact" of lending by the World Bank and other international financial institutions (IFI). Toward that end, Mr. Martin outlined a number of recommendations including increasing the dialogue between the IFI's and the developing countries, promoting IFI accountability and project-lending effectiveness, ensuring that lending supports private sector development in the third world, and creating indicators to measure the developmental impact of IFI loans. Finance Minister Martin also stated that IFI's (especially the International Monetary Fund), and bilateral donor countries should increase the resources allocated to third world debt relief, and thereby limit the quantity of aid resources that are in effect diverted from developmental pursuits to the repayment of third world debt.

The Finance Minister's speech itself, however, is not sufficient to judge Canada as having complied with its Lyon Summit commitment. Nonetheless, the detailed outlining of the above recommendations, in conjunction with the speech's repeated references to a number of commitments and recommendations that were contained within the Lyon Summit's Economic Communique suggest at least an acknowledgement of Canada's summit commitments, and represent an effort by the Canadian government to undertake initial steps toward mobilizing the international aid community.

The evidence of the government's efforts to encourage new donors to assume a greater responsibility for the provision of development assistance is also fairly limited. It should be noted, however, that the ability of any G7 country to promote more equitable aid burden sharing is constrained by the sovereignty of potential new donors. In other words, G7 members cannot force new donors to assume a greater prominence in the international aid effort if the latter are unwilling to accept such a responsibility. Therefore, the developed world's efforts to promote burden sharing are largely restricted to undertaking international advocacy to persuade new donors to increase the quantity of aid that they provide.

Nonetheless, there are a couple of examples of how Canada has sought to encourage greater burden sharing between existing and new aid donors. First, on January 13, 1997, it was announced that CIDA and the Korea International Cooperation Agency (KOICA) signed a letter of intent through which CIDA would provide development programming training to the Korean institution. By providing such training, CIDA will help to increase KOICA's capacity to establish and implement effective development assistance programs, thereby enabling South Korea to assume a greater burden of the international aid effort. As well, similar results should accrue from the posting of a Chilean aid officer at CIDA in April of 1997. Although these two initiatives are not sufficient to warrant a conclusion that Canada has fully complied with its Lyon Summit commitment to promote more equitable burden sharing, they do illustrate that Canada is aware of the commitment that was made, and again has taken tentative steps toward meeting it.