Evidence of meeting #27 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 clients.

A recording is available from Parliament.

On the agenda

MPs speaking

Also speaking

  • Dale Patterson  Member, Board of Directors, Opportunity International Canada
  • Keith Weaver  Member, Board of Directors, MicroEnsure LLC
  • Larry Reed  Director, Microcredit Summit Campaign
  • Doris Olafsen  Executive Vice-President, Opportunity International Canada
  • Margaret Biggs  President, Canadian International Development Agency

4:10 p.m.

Executive Vice-President, Opportunity International Canada

Doris Olafsen

CIDA is very results-focused and is driven by impact and outcomes. We went through an audit about a year and a half ago with CIDA. I would say that DFID and USAID likewise focus on outcomes.

We have to continually improve the metrics, as Larry mentioned, but working towards sustainable, economical, and results-based leadership development is also critical for us and for CIDA. That is a model USAID and DFID definitely are aligned with. We work in many countries. DFID and CIDA have worked in countries in Africa on common projects.

4:15 p.m.

Liberal

Mark Eyking Sydney—Victoria, NS

I think one of my colleagues alluded to India and the problems they had there with the farmers. One of the reasons was not just that they were poor and had more debt; one of the key reasons for suicide—there was an article in the The Economist about this—was that their land was destroyed. Yes, they could obtain money, but they bought too much chemical fertilizer and they ended up killing their soil at the end of it. They lost their land too, which is a key part of their lifestyle. I think that article talked about the importance of microfinancing.

The key thing is how, especially if you're with new countries and new philosophies.... You could give a guy chainsaw financing, but it's not very good if he's going to clear-cut. You can give a fisherman an outboard, but if he's going to get out there and just clean it out.... When you get into these countries with microfinancing, do you sit down with governments? Financing is key to how they're going to manage their resources. You know, you could destroy the resources if there are no checks and balances.

I guess that's my question, Mr. Reed. It's easy to go in there and say, “Okay, we have money and we're going to peel it out”, but unless you know what they're doing with this money.... The Conservatives alluded to not having shareholders, so it's easier to give money and there's not much accountability, but I think you also have a bigger responsibility in terms of what you're doing with the environment and what's being left. How does that play into your decision-making when you go into countries?

4:15 p.m.

Director, Microcredit Summit Campaign

Larry Reed

Again, this brings up the issue of motivation and how the private financial motivation and the social motivation work together.

Institutions that are motivated to be sustainable and that also measure their success by the progress of their clients tend to focus a lot more on what their clients are doing with the money and whether or not the clients are in industries that will survive. They help train clients to move from basic buying and selling to more valued-added type activities. In farming they help look at an organization like BRAC, which trains local people to set up a business to provide farming advice and access to good inputs and things like that. If you're focused on what is going to make the biggest difference in improving the life of the client, then you start paying attention to all of those other things.

In India we had a situation where there was the potential for short-term private gain. The idea was to have an initial public offering and sell off shares so the owners could become wealthy in a short amount of time. That skewed priorities or motivations a bit. In private capital, if you're taking a long-term view, you care about the same things, because your business doesn't survive if the land goes bad. If you have a situation where you can get a huge gain in a short amount of time and you have to ramp up your business as fast as possible in order to do that, then you stop paying attention to those long-term interests and you just want to show big numbers on your income statement. The result is that you end up harming your clients.

4:15 p.m.

Liberal

Mark Eyking Sydney—Victoria, NS

My last question is for you, Mr. Weaver. It's about MicroEnsure. There's a statement here that in India, in China, 3% of the people in poverty are using microinsurance, and in Africa it's only 0.3%. It says here that in 23 of the poorest 100 countries in the world, there's no identified microinsurance activity, representing over 370 million people.

It seems that MicroEnsure is a key to part of the basket here. How can we get those numbers to change, so that they come into play more? Would the bank have not only money and insurance? Is there a combination we should be doing here?

4:15 p.m.

Member, Board of Directors, MicroEnsure LLC

Keith Weaver

When we started off with the Bill and Melinda Gates Foundation, we were originally targeting entering 21 new countries. At the time we were in three of them, so we had a whole process to try to evaluate how we can get into those countries.

Since then, we've learned a lot. Each country, unfortunately, is pretty well unique because there's a series of regulatory issues and a series of foreign direct investment restrictions. There are all sorts of combinations and local market practices that make it exceedingly difficult to do that.

At this stage, we do not have funding to enter new countries. If a donor came to us and said they'd like us to consider such-and-such a country, we'd seriously look at that and try to develop it. It's a question of a combination of funding, new distribution technologies and approaches—think mobile phone—and covering off a large number of countries. We're planning to ramp that up big time over the next couple of years. As well, it's a question of the will to get in there and do it.

4:20 p.m.

Conservative

The Chair Dean Allison

Thank you very much.

We've got time for two more questions. We're going to go to the Conservatives and finish off with the NDP.

Mr. Williamson, you have five minutes, sir.

March 14th, 2012 / 4:20 p.m.

Conservative

John Williamson New Brunswick Southwest, NB

Thank you for being here today.

For Opportunity International Canada, I find it interesting that you first got involved with the microfinance sector in 1971, which seems to predate a lot of the excitement that we've seen over the last decade, including the Nobel Prize, I believe.

Can you talk a little bit about how it's changed? What's the environment like today? I want to ask you a little bit about your business model in a second, but I'm curious to get a sense of how it's changed over 40 years.

4:20 p.m.

Member, Board of Directors, Opportunity International Canada

Dale Patterson

Opportunity International was a large international organization, and we decided we wanted to be part of it as Canadians and followed the model they created. We've plugged in as partners who raise money in five countries and disburse it over 20-plus countries.

The model is refined as we offer more products. I think what's unique about the OI model is the international network, and that's what separates us from a number of others. We have organizations in different parts of the world where there's due diligence, where you have a local partner that has its own board that it's responsible to. You have senior management loan officers. There are several levels of accountability that we count on in the partnership. That's enhanced.

You saw the stat earlier about how small CIDA has been in terms of our overall budgeting activity. We made a very conscious effort when we started that we would not be CIDA-dominated. We wanted to build an organization that CIDA would be part of, we wanted to have the credibility of working with CIDA, but we didn't want to be a CIDA-dominated organization, which is why it's been a very small percentage. We continue with that strategy going forward.

Doris made reference to the other CIDAs around the world. I what's also happening as well is that these agencies are coming together to try to bring together the development agencies of three countries with the opportunity partners in those three countries and increase the bang for the buck.

The other thing that's happening, and this is an important element, is the multiplier effect. If we can have a dollar invested and turn that into three, four, or five by multiplying it through other government agencies or other private agencies, that just gives us a greater return here in Canada. I guess that's one of the changes.

4:20 p.m.

Executive Vice-President, Opportunity International Canada

Doris Olafsen

I've been involved with microfinance for a decade, and I would say the biggest change I've seen globally is savings. The poor identified to us early on that saving was important, but there was nowhere to save their funds, so that's one of the reasons Opportunity International moved toward establishing formal financial institutions. That was so we could take on savings and take their funding on deposit, and we could then turn around and lend that to the poor, which is a lever and allows us to increase our capacity and reach further, farther, faster.

That's one of the biggest changes I've seen: the poor now save.

4:20 p.m.

Conservative

John Williamson New Brunswick Southwest, NB

I'm curious. You mentioned twice in your brief that you're a faith-based organization, which I think is nice to see. Tell me about your integrated service holistic model. You're clearly delivering not only a service, but you're also delivering a banking service, and it sounds as if you're delivering other things as well.

Could you talk about that a little as well, please?

4:20 p.m.

Executive Vice-President, Opportunity International Canada

Doris Olafsen

We're very values-based, and that comes out of our faith-based orientation. I mentioned the code of conduct; because of that, we're driven to two that stood out, and I wrote them down.

We have 10 principles in our code of conduct, including treating all people with dignity, fairness, respect, and without any discrimination. Our code of conduct also speaks to making every effort to provide responsible and affordable products, so we're driven by our values to be transparent, authentic, and accountable to our clients as much as to our donors and partners.

4:25 p.m.

Conservative

John Williamson New Brunswick Southwest, NB

Let me come in with an anecdote. You're going to go in with a different world view, perhaps. I was in Sierra Leone a number of years ago, and an example of a microcredit arrangement that failed was a farmer who took out money to buy pigs; because there was a significant Muslim population, he wasn't able to sell any of his pork.

I would think this is an example in which having different people involved from different backgrounds is going to benefit you. In any kind of arrangement with banking, there are always going to be examples of projects failing, but in looking at problems from various perspectives you'll often see things a little differently, I would think, as well.

4:25 p.m.

Executive Vice-President, Opportunity International Canada

Doris Olafsen

Right.

Two weeks ago I sat in Kigali, Rwanda, with a group of our clients. There were Muslims and people from the whole community.They're part of our community we work with and serve, and that is part of our mandate: to be very inclusive. We live from a very values-based perspective in delivering the service.

We're inclusive and we work in all communities around the world. It is our reputation to not be discriminatory in how we live that out.

4:25 p.m.

Conservative

The Chair Dean Allison

Thank you very much. That's all the time we have; we're going to have to finish off here.

We'll start with Madame Laverdière for four minutes.

4:25 p.m.

NDP

Hélène Laverdière Laurier—Sainte-Marie, QC

Thank you very much. I will be sharing my time with Ms. Sims.

Thank you very much to all of you. I want to apologize, first, for arriving late, but I had parliamentary duties to fulfill.

I'll be very brief with my question.

It really came out in some of your presentations that the ways of doing microfinance and microcredit can be quite different depending on whether you are a not-for-profit organization or a for-profit organization. In fact, as not-for-profit organizations don't have the need to satisfy their shareholders—of course, they need to satisfy their donors—they can focus more directly on the needs of the people they are trying to help, which provides a different focus.

I'm wondering... This is really an open question. We've heard about problems such as suicide rates....

I'm sorry, I'm losing my English. I'll switch to French, if you don't mind.

We have heard about suicide rates and I am wondering whether we have data, whether the trend to put more pressure sometimes on borrowers is not likely to be stronger in for-profit organizations than in non-profit organizations. I am also wondering whether that could eventually have an impact on suicide rates and on other problems that we have identified under microfinance and microcredit.

Thank you.