Foreign Affairs Committee on Dec. 6th, 2011
Evidence of meeting #15 for Foreign Affairs and International Development in the 41st Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was financial.
A recording is available from Parliament.
On the agenda
The Chair Dean Allison
Pursuant to Standing Order 108(2), we resum eour study on the role of the private sector in achieving Canada's international development interests.
I want to welcome our witnesses before us today: Yvon Bernier, who is the vice-president of consulting expertise with Desjardins; Christina Dendys, who is with Micronutrient Initiative; and Doug Horswill, who is with Teck Resources Limited. Welcome to each of you.
Dominic LeBlanc Beauséjour, NB
Mr. Chairman, I have a point of order.
The Chair Dean Allison
Dominic LeBlanc Beauséjour, NB
Sorry, Mr. Chairman, I don't want to take away time from the witnesses at all; I want to be very brief.
At the vote, I mentioned to you a concern I have. I wanted to bring it up as a point of order—or rather, as two points of order, and we can reflect on these and perhaps talk at the beginning of the next meeting.
My first point of order is that this is our third meeting on this particular committee study: the role of the private sector in achieving Canada's international development interests. I am told—and I think it's true—it's the third meeting where we've heard from witnesses who have been suggested by the government side. It takes away nothing from the merit of these witnesses at all, but some of the suggestions made by the opposition haven't been incorporated into panels. As far as we're aware, none of the witnesses we suggested to the committee—or certainly none who we're in contact with—have been contacted yet.
One example, which is sort of disappointing, is that of Andrew Bauer, who's based in New York—and who happens, exceptionally, to be in Ottawa only for today. We tried yesterday—maybe too late—to see if he could be included in this particular panel this morning; it would have saved money. Mr. Bauer's work is focused mainly on governance and accountability mechanisms in the role of international financial institutions and macroeconomic management in developing countries. He might have been a great contributor this morning, particularly with Développement international Desjardins. He focuses on technical assistance, research, and so on.
Three witnesses for two hours is a good opportunity for the committee, but a fourth wouldn't have been that disruptive. Going forward, I'm just worried that we can find a way to balance out, or not even to balance, because I'm not sure we have separate interests necessarily, but to include the witnesses suggested by opposition parties, who to date haven't yet been integrated into this study. That would be my first suggestion, Mr. Chairman.
Let me address the second point of order now. I apologize—as some of you know, my wife has had some health challenges, which have been sorted out, and there's good news in the end, but I missed a couple of meetings. So I just wanted to understand something from you, Mr. Chair. The original work plan document prepared by the researchers that we were given in October was titled “A study on Africa in the 21st century: key challenges and opportunities, and the role of Canada”. From my colleague Mark Eyking, I know it suddenly changed to a different focus: the role of the private sector in achieving Canada's international development interests. I'm curious to hear from you, Mr. Chair, on how we can.... For us, Africa was an important part of this study.
I have a sense that as we proceed down the road of looking at the private sector's role—which as I said in a previous meeting, I think has considerable merit in and of itself.... I'd like you to reflect, Mr. Chair, on how we can bring a considerable focus to Africa as part of this work, and we can talk at some other time as well. I worry that as we go forward, we're losing what was originally an exciting recognition—which certainly achieved consensus at this table—that we should focus on Africa as a major, if not the key, part of this study. So I want us to be conscious of that as we go forward.
I just wanted to put those two things on the record, and I didn't want to take away time from our witnesses.
The Chair Dean Allison
You mentioned the possibility of Thursday. Why don't we set some time aside Thursday to continue this conversation?
Dominic LeBlanc Beauséjour, NB
Sure, that would be great.
The Chair Dean Allison
Hélène Laverdière Laurier—Sainte-Marie, QC
Thank you, Mr. Chairman.
I would simply like to emphasize that we also consider the study on Africa in the 21st century very interesting. We thought the document the Library of Parliament prepared to guide us through this study provided a very solid base from which it would be very appropriate for the committee to continue working.
As for the comment my colleague Mr. LeBlanc made, I would say we view the parliamentary committees as an opportunity to work together, to really join forces to work together. Consequently, we believe we can provide the names of relevant experts and witnesses, and, Mr. Chairman, we are assured that our suggestions will be taken into consideration. Thank you.
The Chair Dean Allison
Sure, and without getting into any major debate right now, I believe we changed the focus of the study slightly to concentrate on this private initiative and development interest. We asked for new witness lists. The government has already submitted theirs. All the names are on the list now, and we're just working through that list. Let's have more of a discussion on it. I have no issue with that. Let's commit some time on Thursday for that.
Okay? Thank you.
We're going to get started.
Mr. Bernier, we'll start with you, sir.
December 6th, 2011 / 8:55 a.m.
Yvon Bernier Vice-President, Consulting Expertise, Développement international Desjardins
My name is Yvon Bernier, and I am vice-president,consulting expertise, Développement international Desjardins.
To provide you with some background, the Mouvement Desjardins, as you no doubt know, is now one of the largest financial institutions in Canada and operates virtually across the country. The Mouvement Desjardins currently has assets of approximately $190 billion, which makes it the fifth largest financial institution in Canada and the largest in Quebec, and its aim as a financial cooperative, after all these years, is still financial inclusion.
Développement international Desjardins, DID, is a non-profit organization that has been in existence for about 40 years and currently operates in some 30 countries, essentially developing countries, and whose objective is to promote access to diversified financial services, which means financial inclusion. DID, a non-profit organization, cooperates and acts extensively in partnership with the Canadian International Development Agency, mainly in major bilateral, and most of the time highly structural, projects, but always in the context of the Canadian partnership regarding which we have just renewed a co-financing agreement with the Mouvement Desjardins. In short, my comments will concern access to financial services as a development driver for the private sector.
For DID, improving access to financial services for all is an essential condition for development of a community's private sector. The fact that in many countries, more than 80% of the population does not have access to quality financial services constitutes an actual brake on economic growth of the private sector. In this context, we think that it is strategic to work with small entrepreneurs and farmers who create jobs and also to offer the entire population, including its poorest members, diversified financial services that include savings, credit, insurance and transaction services. Consequently, microfinance should be considered as overall leverage for sustainable economic development, rather than simply as microcredit.
While the cooperative financial model seems, in our opinion, to be particularly favourable to very close involvement by such institutions in the communities they serve, we naturally support financial cooperatives. We support the emergence and development of diverse types of financial institutions in order to ensure maximum access to financial services. Regardless of type, community finance institutions should all operate within the framework of the formal financial industry and in function of its norms, while still adjusting to a primarily informal economy, and focus on a horizon for local ownership.
We also believe that it is necessary to rely on local resources. This would include the mobilizing of savings deposits, which increases the dependence of the communities being served, plus the strengthening of local leadership and democracy that occurs when stakeholders in the community become increasingly involved in the various aspects of the democratic life of their financial institution, and also include local capacity-building, which is the foundation for the performance and viability of the institutions we assist.
DID believes that, in order to have a significant impact on community empowerment and economic expansion, the assistance delivered should aim at increasing the level of institutional professionalism to boost outreach and impact. We also believe that such assistance should focus especially on large cooperative groups, namely institutions whose territorial outreach is national in scope and covers both urban and rural regions.
In West Africa, for example, DID provides support to seven institutions which rank among the leaders in their respective countries. Taken as a whole, these institutions reach nearly 5,000,000 members and clients, 40% of whom are women. They have approximately 1,000 service outlets, employ over 5,000, with the support of just as many elected administrators, and have total assets of nearly CAN$1 billion, although the average loan amount totals only CAN$900.
We believe that community finance institutions must deliver diversified financial services that help create value. DID believes that it is of utmost importance to focus on the efforts needed to provide micro SMEs with access to sources of financing tailored to their needs, since lack of access often places a brake on development and consequently on the economic development of these countries.
To fill the gap separating small entrepreneurs from the financial services they need, DID sets up financial centres for entrepreneurs, which we call CFEs. The 10 CFEs created with support from DID in Africa and Latin America have, to date, issued US$220 million in loans to some 82,000 small entrepreneurs. Using the Calvert Foundation's Social Return on Investment, we estimate that over 53,000 jobs have been created thanks to these institutions.
In the context of a crying need for food security in many regions of the world, developing countries are facing enormous challenges. They must diversify crops, modernize their agricultural techniques and achieve increased agricultural productivity. In order for the men and women working in agriculture to contribute to its development, they absolutely must have access to diversified financial services, such as specialized agricultural loans such as credit for investment or marketing, and crop insurance. It should also be noted that, in most developing countries, nearly 80% of food production depends on the work of women. Indeed, if structural gender inequity is reduced, agricultural yields could reportedly be increased by over 20% on the continent of Africa.
Consequently, in light of these findings, it appears crucial that microfinance institutions make financial resources accessible so that farmers, especially women, may participate fully in agricultural sector expansion and economic growth.
Housing finance meets a rising need within communities in developing nations. One need only think of the current urbanization rate in the major capitals. The impact of sound, well-built homes is enormous, not just on health, education and security, but also on the creation of family wealth, which can be passed on to future generations, and entrepreneurship. These are also prerequisites for community private sector development.
Delivering community financial products and services to clienteles living in marginalized regions comes up against major constraints in terms of accessibility, security and cost. In this context, DID believes that introducing innovative and effective technological solutions is an essential condition for secure and expanded access to financial services. Transaction software, mobile applications, mobile banking services, for example, smart cards, biometrics and inter-coop transaction systems are some of the tools advocated by DID to reduce costs and improve service outreach.
For Développement international Desjardins, the emergence of genuine community finance that is truly inclusive requires suitable legislation and supervision with the purpose of improving professionalism in the sector and safeguarding depositors. DID also promotes sound microfinance practices aimed, among others, at preventing overindebtedness of members and clients.
In conclusion, we reiterate that all support for development, including investment, should be placed at the service of local capacity-building and local leadership development. Based on this prerequisite, the impact of aid intervention for development will be multiplied and significant results achieved on a larger scale.
Thank you very much for inviting us, Mr. Chairman. I was a little nervous at the start. If there are any important questions for us, we will be very pleased to take part.
The Chair Dean Allison
Thank you, and it's all right to be nervous.
We'll hear from your two other partners up there, and then we'll fire the questions.
We're going to move over to Ms. Dendys. Welcome, Ms. Dendys. The floor is yours.
Christina Dendys Director, External Relations, Micronutrient Initiative
Thank you. I'm nervous too.
Chair and members of the standing committee, thanks for this opportunity to present some thoughts on this study on behalf of the Micronutrient Initiative. Before I get into some of the meat of the study, I want to say a few words about MI.
As a mom, I know it matters that my son has enough food to eat, but it also matters what he eats. Micronutrients like vitamin A, zinc, iodine, and iron are vital components of good nutrition and human health, yet billions on the planet—that's right, billions—do not get enough of the vitamins and minerals they need to survive and thrive.
Vitamin and mineral deficiencies affect a full third of the global population, diminishing their health and preventing too many from fulfilling their full potential. So for almost 20 years, the Canadian-based Micronutrient Initiative has focused on developing and delivering low-cost and high-impact solutions to address vitamin and mineral deficiencies among the world's poorest populations, and really has grown into a global leader in the field. Our reach and impact are impressive. Last year alone, we reached as many as 500 million people with our programs.
This is all thanks to significant leadership and generous support from the Government of Canada through the Canadian International Development Agency and also from exceptional partners like Teck, which you'll hear from later. But before focusing on MI's partnership with Teck, and because the focus of your study is broadly on aid and the private sector, I thought I would touch on a few areas of MI's work where the private sector has played or can play a role in the success and sustainability of our programming.
One significant win, not only for MI but for the world, has been salt iodization. Iodine deficiency is the leading preventable cause of brain damage, and it can significantly lower the IQ of entire populations. The most severe impacts of iodine deficiency occur during fetal development and in the first few weeks of life, so it's critical to reach women of child-bearing age and young children.
Because salt is commonly consumed even in impoverished areas, it's an ideal vehicle to carry iodine. In fact, the global strategy of choice for preventing iodine deficiency disorders is universal salt iodization. We take for granted when we go to our grocery store shelves that all of our salt is iodized, but that's not true in many pockets of impoverished areas of the world.
Salt iodization represents one of the world's largest and most impactful global health interventions, and it would not be possible without the private sector playing a pivotal role. In the mid-nineties, only about 20% of the world's salt was iodized, and today that percentage has jumped to about 75%.
MI works with small and medium-sized salt producers, providing technical support and know-how, and in some instances even technological applications, to ensure that the remaining 25% of the world's un-iodized salt is iodized. As well, I'll just say that this intervention is literally pennies per person for the amount of impact.
Last month I was in Bima, a very remote spot in Indonesia. I was with some of our staff there, walking through salt flats and meeting with salt harvesters. The harvesters, using wind or pedal power, draw water from the ocean into shallow ponds. Over time, in the heat the water evaporates, and the increasingly concentrated salt is pumped into different ponds until the salt can literally be raked by women, dried, and made ready for processing.
In Bima we're working with these small-scale salt manufacturers to improve their business. We're supporting their efforts to establish a salt co-op that will benefit their bottom line, providing some technical support to help them meet government standards and improve their processing, and providing mobile iodization equipment, which sprays iodine into the salt as it's ground so we can ensure that the salt they produce is infused with iodine, the iodine that will help improve lives and build healthy brains. When you iodize salt, you can raise IQ levels in a population by as much as 13 points. It's an example of where private sector meets public good.
Here's another example. I've brought some props. Forgive me: I'm relentless. What I have here is called chispitas. It's a single sachet of what are known as multiple micronutrient powders. They contain a mix of micronutrients—iron, vitamins A and C, zinc—and they're used to add nutritional value to the foods that are fed to small children. If you can imagine being in a rural village—this mix is from Bolivia—where whatever is in the family cooking pot gets portioned out and served to everybody in the family, even to young children who are a year or under two years old, like porridge, for example.... If you open a small sachet like this--which really costs pennies--and mix this in with the children's food, it adds good nutritional value.
In Bolivia, MI worked with the Ministry of Health on a tender for producing micronutrient powders and providing technical support to the private sector producers. The producers were motivated because they had a guaranteed public sector purchaser. In the end, chispitas were successfully marketed to end users using the private sector style of social marketing techniques. Again, private sector meets public good.
My last example before going to Teck is to speak briefly about vitamin A.
This little red capsule with a nub at the end—the nub is cut off and squeezed into a child's mouth to get the vitamin A into the child--looks simple, but it's a technological and global health marvel. It costs two cents per capsule. It takes only two capsules a year to ward off blindness, build up immune systems, and help save lives. So let me say it again: two cents per capsule; two capsules a year to save a life.
With CIDA's support, MI has distributed seven billion of these capsules to children around the world. To do so we work with private sector manufacturers to ensure that the world's supply of high-quality vitamin A is met. So private sector production has to be of the highest standard, because just imagine the technology needed for that little capsule to ensure that it maintains its integrity in blistering heat, or survives transport to some of the world's most remote locations. I've seen these bottles on shelves in clinics in Kenya and in remote health posts in Ethiopia.
Vitamin A scale up helped usher in a revolution in child survival. It's just another example of where private sector and public good meet.
Finally, my last example, and one of the most exciting, involves MI's partnership with the Government of Canada and Teck Resources in the unique private and public sector and civil society partnership called the Zinc Alliance for Child Health, or ZACH.
There's a persistent child killer that takes the lives of more than 4,000 children per day, and one and a half million lives per year, and that killer is diarrhea. It's just that nobody talks about it. You hear about pneumonia and you hear about malaria, but we don't talk about diarrhea enough. It's time to start talking dirty, as I say.
The combination of oral rehydration salt with a strip of ten zinc supplements is a new and extremely powerful treatment for reducing diarrheal disease. Many countries are trying to add zinc to their child health programs, and they're turning to organizations like Micronutrient Initiative for help. And that's where Teck comes in. In keeping with Teck's commitment to corporate social responsibility, Teck is providing MI with $5 million in new funding to scale up our zinc and ORS programming. Their generous contribution is being matched three to one with funds from CIDA, another partner in the alliance.
Our first ZACH project will roll out in Senegal with the support and leadership of the Government of Senegal, and we're looking at up to four other countries where we can have impact. ZACH has the potential to save and improve the lives of children around the world, and in doing so it will not only help Canada meet our Muskoka objectives, it just might be leading the way to the next revolution in child survival. It is also yet another example where private sector and public good intersect, and MI is honoured to be a partner in that.
In closing, MI values the relationship with private sector partners like Teck and sees this partnership as integral to meeting our mission, so we welcome the committee's study.
The Chair Dean Allison
Thank you very much, Ms. Dendys.
We're going to move over to Mr. Horswill from Teck Resources.
Doug Horswill Senior Vice-President, Sustainability and External Affairs, Teck Resources Limited
Teck and its predecessor company, Cominco, have been mining, smelting, refining, and selling zinc for a hundred years. Only in the last decade have we understood that it's not just a product that galvanizes steel and keeps your garbage cans from rusting; it's really a wonder element. It's crucial for human health. Children who are deficient in zinc end up stunted in growth. They end up not incapacitated, but with reduced capacity mentally. Crops that don't have enough zinc are deficient in terms of quality and quantity.
When it comes to tackling the issue of zinc deficiency, there are four uses. First is for acute deficiency. It can prevent deaths from diarrhea or the complications associated with diarrhea. Second is for chronic deficiency, which leads to growth and mental retardation. Third is the actual fortification of foodstuffs, which will affect not only children but the population generally. Fourth, ultimately, is the fortification of fertilizers, which in theory will actually improve the quality of the grain and the rice and so on grown in the zinc-sufficient soils. We can maybe eradicate a problem that today contributes something in the order of 450,000 deaths a year among children under five, according to UNICEF and WHO.
We're very pleased to have partnered with the Micronutrient Initiative and the Government of Canada on the Zinc Alliance for Child Health to try to recognize this role. We'd certainly like to thank the committee for inviting us here to talk about this.
Teck is a resource company, a mining and metals company, based in Vancouver. It has operations in the western hemisphere from 1000 miles north of Anchorage in Alaska through to southern Chile. We produce zinc, as I've already said, metallurgical or steel-making coal, and copper. We sell to markets around the world. We are one of the largest producers of zinc.
We have supported zinc health initiatives directly with MI and also through the International Zinc Association, together with UNICEF.
The world challenge is not that there is an insufficient quantity of zinc in the world. It's really about distributing it and getting it into the hands of the mothers who look after their children and understand the need to get zinc into their diets. It's education, it's distribution, and it's working within the supply chain. But the supply chain isn't so much the issue.
We've been working with MI for quite a number of years to actually formulate the partnership we're now executing, first with the program in Senegal and then, potentially, in other countries, as Chris mentioned. We launched the program last June. We're very excited to be able to continue it. With our resources, MI's knowledge and capability on the ground, the support of CIDA, other partners as we go forward--we're looking to bring other companies and other organizations, such as Save the Children, into this--and UNICEF, we can strengthen health programs around the world.
It's fascinating. As Chris says, we can save lives. For vitamin A, it's 4¢ a tablet or 2¢ a tablet. Treatment with zinc and oral rehydration salt together virtually eliminates the consequences of diarrhea. The zinc strengthens the immune system. The oral rehydration salts rehydrate the body. For 25¢ a treatment, you save the life of a child under five. So the more collaboration and partnership we can bring to it, the more resources and capability can be achieved.
We are always asked why we are involved in this. It's primarily to save the lives of children, to give back, and to do something we can be recognized for as a company. Our employees are extremely enthusiastic about this. It's amazing to see them and feel the vibrant enthusiasm they have, whether they are collecting money from each other or purchasing from our website. Employees can purchase material that has a zinc and health logo. They really get engaged.
It's certainly not a matter of selling more zinc. The amount of zinc that would be required to meet all of human need would amount to maybe 2% of our annual production—one tenth of 1% of the annual production of the whole industry. It's really immaterial from a transactional point of view. It's about reputation, global citizenship and doing the right thing. Having the opportunity within a product that we produce to be able to contribute so much is really quite exciting.
When you look at zinc deficiency, about a third of the world's population is actually zinc deficient. Zinc deficiency contributes to the death of about one and a half million children per year. Half a million of those, according to WHO and UNICEF studies and other scientific evidence, could be saved through the treatment that I mention. As we've seen the opportunity to contribute to a global issue, we've kind of stood up to the plate and taken the steps that we can take.
As an aside for a moment, in 2008 an organization called the Copenhagen Consensus Center—which some of you may have heard of—asked eight scientists, five of whom were Nobel laureates, how, if they had $50 billion to spend, they would spend it to make the world a better place. The top of their top ten list was vitamin A and zinc deficiency treatments, partly because zinc saves the lives of people with diarrhea, but also because of the IQ gain of populations in sub-Saharan Africa, Asia, and parts of South America that are zinc deficient. The IQ gain would just add to economic growth. When you see that kind of substantial and well-researched evidence, you think there's nothing better you can actually get into.
Teck Resources Limited is part of the United Nations Global Compact. As such, we have to commit activity and effort to achieve millennium development goals. In Teck Resources Limited's case, we've chosen MDG 4, to reduce by two thirds between 1990 and 2015 the death rate for children under five years old.
What the Micronutrient Initiative was doing meshed together perfectly with our global compact commitments on zinc, and gave us this opportunity. We hope we can take the Zinc Alliance for Child Health, with MI and CIDA, well beyond the scope and scale it's now at. The first program—the one we're in now—is Canadian. We believe that it could be replicated in countries like Australia, where there are zinc producers, government aid agencies, and potentially others. You could have a Zinc Alliance for Child Health in Australia, the U.S., or the U.K. We can bring in other partners from the NGO community, we hope, and Save the Children may be one. We can go beyond that in terms of other partnerships, such as the one that the IZA has with Zinc Saves Kids.
There are organizations around the world, like the Bill and Melinda Gates Foundation, and GAIN, the Global Alliance for Improved Nutrition, that have recognized the importance of zinc and are moving forward. In some ways, we're leading the way. We think our work is quite path-breaking in terms of the private-public partnership that it represents.
The Chair Dean Allison
Thank you very much.
For those who haven't been here before, we're going to both sides of the House here. We're going to start with the opposition. The first round will be seven minutes for questions and answers. Then we'll go to five-minute rounds, and we'll keep going as long as people have questions.
I'm going to start over here with the opposition, the NDP. I'm going to have Ms. Sims start, for seven minutes.