Back in the day (i.e. when I worked for DFAIT and then CIDA), people rarely discussed what “development” meant. It was just taken for granted that development was “obvious”. Sure, it might have a definition in terms of it meaning some combination of the “six pillars” we used to have, but that was more about saying what our priorities were than what was and was not development. And when Canadian experts on such things as budgets and development assistance talked about “aid levels”, they would use phrases like the “International Assistance Envelope” and “Official Development Assistance”. Once in a grand while, they would even note that not all of the IAE was ODA, and people would nod sagely and pretend they knew what the difference meant.

However, at varying times over the last 40 years, there was talk on how CIDA should focus more on “poverty reduction”, i.e. pure development. Of course, for many, asking them to define how something was “poverty-reducing” would be like asking if it was okay to sleep with their mother or father. It isn’t something people ask in polite conversation because they get flustered very quickly if you imply (a) that it wasn’t obvious or (b) that not all development was poverty-reducing. This isn’t a small thing — even asking experts to give you a simple explanation of how human rights work directly reduces poverty is not often fruitful.

But the pundits who are commenting on the recently-announced merger for CIDA and DFAIT are replicating both errors regularly. It amazes me, quite frankly, how people who are relatively well-informed — Derek Burney, Ian Smillie, even Maurice Strong — can be talking about “development” or “poverty reduction” as if these terms are well-defined, well-understood and fully agreed-upon domestically and internationally. Maurice Strong, for example, says “making commercial interests the main purpose of our program will undermine its effectiveness – quite apart from its damage to our credibility and influence.” This is probably true, except for the definitional issue that that if commercial interests are the primary purpose, it won’t even qualify as development in the first place (more on that later).

Most of those editorials, articles, and blog entries are well-reasoned, interesting even, but I think they completely blur the second biggest problem that DFATD will have in a merged world — defining what development means in a way that permits an actual conversation. While the pundits merge multiple issues together, I’m going to try and break them out a bit more structurally as I think we need a better basis for conversation than simply saying “protect development” or “focus on poverty reduction”.

Even most of CIDA does not know what “official development assistance” means

People complain that Canada’s aid levels are dropping or that their goals are skewed — but what does that mean? It means what we do with our “official development assistance”, as counted by the OECD. Yet most of CIDA couldn’t tell you the five requirements for a project to count as ODA.

Quick, pop quiz! What are the five elements? I’ll hum the theme from Jeopardy while you think about it. Okay, I’m done. How did you do?

For something to be considered “official development assistance”, there are essentially five criteria:

1. It has to be an actual flow of resources;
2. It has to originate from a (donor) government;
3. It has to be to a country or territory or multilateral organization on the OECD approved list;
4. It has to be primarily for the promotion of the economic development and welfare of developing country recipient(s); and,
5. It has to be concessional and contain at least a 25% grant element.

What does all this mean? Is it just policy wonk gobbledygook or does it affect anything? It affects quite a bit since every time people say Canada’s budget for development goes up and down, they mean the budget Canada has to do those things that meet categories 1-5, and those elements determine not only WHAT you do, but HOW you do it and with WHOM. And for the coming discussions within the DFATD halls, it is incredibly relevant.

Element 1 (a flow) is really quite elegantly simple, at first anyway. Money must flow from a developed country to a developing country. It can’t be in-kind contributions, it can’t be cutting tariffs, it has to be an actual flow of resources from one point to another. It’s all about the money — there has to be some and it has to move. Simple, right?

Well, what about tied aid? If you do a project in Ghana, and hire all Canadian Executing Agencies to do the work, all earning Canadian salaries and paying Canadian taxes, where is the actual “flow” of money to the developing country? Money is “flowing”, yes, but is it just being spent in Canada? The ideal would, of course, be “only developing country executing agencies using only developing country citizens”. But, to be blunt, if that was possible, they wouldn’t need any other expertise, just cheques. And try selling development funding to Canadians when you say “No Canadian companies are eligible to compete on these contracts”. As an aside, Canada (and Australia, and a few others) used to include figures on their aid websites reporting how much of the aid budget was given to domestic companies — at one point it was as high as 70% of all Canadian bilateral programming was actually spent in Canada. Know who started putting a stop to that? A Minister that was responsible for development AND trade AND foreign affairs. Because it wasn’t development-friendly. But I digress…

Every country has to do this balancing act on the head of a pin — selling development using taxpayer money while ensuring that domestic NGOs and businesses can compete on the projects, etc. But even tied aid isn’t a reliable gauge of measuring flows as sometimes the numbers make no sense.

I had two projects at one point where one was a Canadian EA (100% tied), yet they hired lots of locals under the project, while the second used a regional organization (100% untied) yet they hired Canadian consultants to do the work. The first was tied but there was flow, the second was untied but the flow was doubtful.

Generally speaking, all of this boils down to “we exclude donors from claiming ‘in-kind contributions’ and donors shouldn’t use tied aid, wherever possible”. Put more bluntly, FAC can’t spend all the CIDA budget on embassies and parties and call it development — there’s no flow of resources to a developing country recipient.

To meet criteria 1, there must be flow. On to Part 2…