In the March 2010 federal budget, Canada capped its international assistance envelope (IAE) at $5 billion. Overseas Development Assistance (ODA) comes out of IAE. This has two implications.
1.Canada fell short of doubling its ODA by 2010, even though the Conservative government honoured the former government’s pledge to double IAE. The ODA in 2001/02 was $2.9 billion. Double that is $5.8 billion, which is where we should be for 2010/11. Instead, Canada’s ODA budget for 2010/11 is $5.2 billion – $600 million short.
2. By capping ODA at $5 billion, Canada will continue to fall short of the 0.7% target. Forty years ago, donor countries agreed to direct 0.7% of their gross national income (GNI) to ODA. Only a handful of countries have met the target, even though all countries have reaffirmed their commitment. As GNI increases, so should the ODA. But by capping ODA at a dollar amount instead of a percentage, Canada’s ODA will remain stagnant as GNI goes up, which pulls us further and further away from the 0.7% target.
How short is Canada?
In 2010, an estimated 0.33% of GNI is going to ODA. Because of the $5 billion cap, the percentage is projected to keep dropping. With a capped budget level, Canada will achieve just 0.28% by 2015. To add some perspective, average ODA as a percentage of GNI for donor countries rose from 0.26% in 2004 to 0.31% in 2009 and is expected to rise to 0.32% in 2010.
What does Canada need to do?
The Canadian Council for International Cooperation (CCIC) calculates that Canadian ODA spending would have to increase by 14% annually for the next 10 years to reach 0.48% of GNI by 2015 and reach the target of 0.7% of GNI by 2019.
Why does it matter?
In 2000, 187 countries came together at the UN to create the Millennium Development Goals (MDGs) designed to eliminate extreme poverty and create a more equitable world by 2015. ODA helps fund these goals.
What’s the problem?
Progress toward the MDGs remains off-track in many countries, particularly in large parts of Africa where some states are fragile and emerging from conflict. Progress appears most severely off-track on MDG5 (maternal health).
What’s the solution?
The world needs to fulfill commitments to provide the promised ODA to achieve the MDGs. Countries continue to reaffirm their commitment to direct 0.7% of GNI to ODA. In 2008, DAC members spent an average of just 0.47% of their GNI on ODA. That same year, Canada was the ninth largest donor but achieved just 0.32% of GNI and ranked 16 out of 22 countries.
Who came up with 0.7% of GNI?
Actually, Canada did. Former Prime Minister Lester B. Pearson led a UN commission in 1969 that recommended resources equivalent to 1% of GNP of developed countries be directed to developing countries. The report further recommended that the ODA component of the 1% should be equivalent to 0.7% of GNP, which is now called GNI. Developed countries, including Canada, agreed to this in 1970. Since then, countries have reaffirmed their commitment to the target of 0.7% of GNI to ODA, but with few exceptions have failed to reach that commitment.
How much are we talking about?
Achievement of the MDGs in Africa will require US$72 billion per year in external funding. To add some perspective, the world spent US$1.2 trillion on its militaries in 2006; OECD governments spent an estimated US$267 billion on agricultural subsidies in 2007; and Wall Street bonuses totaled more than US$145 billion in 2009.
What about the global financial crisis?
The short answer is economic recovery shouldn’t be made on the backs of the poor. The UN and World Bank have demonstrated that the impact on developing countries of the financial crisis and potential reneging on donor promises will significantly hurt the poor and may undo recent advances in attaining the MDGs. Other donor countries have maintained their aid performance despite dealing with more serious effects from the crisis than Canada. The UK, for example, is on track to reach the 0.7% target by 2013.