Canadian International Development Agency

Foreign aid on the ropes

Brady Yauch
Probe International
November 16, 2009

The Canadian International Development Agency is effectively dysfunctional, lacking the ability to effectively and strategically deliver its $3-billion foreign aid budget, says a recent report by Canada’s auditor general, Sheila Fraser.

But what is missing most in the foreign aid agency, says the national Auditor’s report, is a sense of direction. The agency has implemented six strategic plans since 1995, while over the past eight years five different ministers and four different Agency presidents have led CIDA. It’s also recently experienced a major turnover of senior management.

All of this confusion has left the agency’s 1,800-person staff struggling to define long-term goals and undermining the predictability of the CIDA’s foreign aid efforts.

“Many of the weaknesses we identified (in the report) can be traced to a lack of corporate management processes to guide and monitor the implementation of CIDA’s aid effectiveness commitments,” the report stated.

The report comes less than a year after the agency announced yet another shift in its policy: last February International Development Minister Bev Oda announced that CIDA would focus on three areas—food security, sustainable economic growth and children and youth.

Allan Woods, writing in the Toronto Star [PDF] , says the audit hints that the new policy directive at the agency may simply be another failed experiment. “The audit suggests the most recent revamp risks being one in a long line of failed plans because there is little evidence the agency is capable of improving,” he writes.

The Star also noted [PDF] the agency’s lack of communication with the Canadian public, saying CIDA last published a statistical update in 2006-2007—making it difficult for Canadians, aid partners and donors to assess its efforts and effectiveness.

But CIDA is not the only dysfunctional aid agency.

In the United States, the country’s flagship aid agency, USAID, is facing many of the same criticisms. A recent critique of the agency by three former administrators suggests USAID lacks a coherent policy and that changes in management have increased the risk of failure for many of its programs. A recent editorial [PDF] in the Los Angeles Times, says that “there is near universal agreement that USAID in particular, and American foreign aid efforts in general, are a muddle.”

“In addition to a lack of clear goals, our aid system, which spent $26 billion on development last year, is largely devoid of mechanisms for monitoring and evaluating its effectiveness,” the editorial says.

That effectiveness is so low, say an increasing number of foreign aid critics—many of them Third World opinion leaders—that it is negative.

Dambisa Moyo, the author of the New York Times bestseller “Dead Aid” and one of Time magazine’s 100 most influential people, argues that foreign aid is a hindrance to the development of countries in the Third World, not a catalyst.

According to Moyo, no country has meaningfully reduced poverty and stimulated economic growth by relying on aid. “If anything, history has shown us that by encouraging corruption, creating dependency, fuelling inflation, creating debt burdens and disenfranchising Africans, an aid-based strategy hurts more than it helps.”

“The aid system has allowed African governments to abdicate their responsibilities,” Moyo said in an interview. “Until African governments live or die based on job creation and providing goods to Africans and not rely just on getting aid money, we will continue to see a situation where the private sector has not developed and Africans do not have job opportunities.”

She says it’s time that developing countries, particularly those in Africa, wean themselves off of foreign aid money. One place to start, she recommends, is by setting a five-year deadline for the taps of foreign aid to be turned off.

Moyo isn’t the only one to make the case for an end to foreign aid.

In Pakistan, the Federal Minister for Finance and Revenues, Shaukat Tareen, recently said the government should fix its broken tax system and make foreign aid unnecessary. His remarks come after the Ministry of Finance and Revenues said in its most recent Fiscal Policy Statement that Pakistan’s current tax system makes it impossible to generate the necessary resources to meet development needs. Fixing the tax system should be a priority, the report says.

Minister Tareen’s arguments were made during a Parliamentary debate and come at a time of public protests regarding a controversial $7.5-billion aid package being negotiated with the US.

Criticism of foreign aid is by no means new. Nor are calls to end it. Groups like the Canadian-based Probe International have long argued that state-to-state aid undermines the financial relationship that governments should have with their people and leads to unaccountable and corrupt governance.

“Canada’s auditor general is right to report on CIDA’s troubled management and poor effectiveness, but her findings are a symptom that the institution of foreign aid itself is bankrupt,” says Ms. Adams Executive Director of Probe International, and a CIDA watchdog. “Dr. Moyo is right. It is time for Third World citizens to have representation with taxation.”

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