Evidence of meeting #34 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 countries.

A recording is available from Parliament.

On the agenda

MPs speaking

Also speaking

  • Stephen Foster  Director, Commercial Crime Branch, Royal Canadian Mounted Police
  • Gisèle Rivest  Officer in Charge, Operations of National Interest and International Corruption, Commercial Crime Branch, Royal Canadian Mounted Police
  • Christopher Dunford  Senior Research Fellow, Freedom from Hunger

4:20 p.m.

NDP

Ève Péclet La Pointe-de-l'Île, QC

The report says that the act must be amended to make it clear that it applies to all international business, not just business for profit.

Is that also included in your consultations?

4:20 p.m.

Officer in Charge, Operations of National Interest and International Corruption, Commercial Crime Branch, Royal Canadian Mounted Police

S/Sgt Gisèle Rivest

Yes. We are studying the matter right now.

4:20 p.m.

NDP

Ève Péclet La Pointe-de-l'Île, QC

You mentioned NGOs, but have you consulted the general public? Don't you find it a little strange to consult companies about something that…

prosecute the companies?

4:20 p.m.

Officer in Charge, Operations of National Interest and International Corruption, Commercial Crime Branch, Royal Canadian Mounted Police

S/Sgt Gisèle Rivest

The consultations are quite extensive. We have brought experts in the area to the table and asked them for their opinion.

4:20 p.m.

NDP

Ève Péclet La Pointe-de-l'Île, QC

Okay. Thank you.

4:20 p.m.

Conservative

The Chair Dean Allison

Thank you very much.

Mr. Schellenberger, you have one quick question?

4:20 p.m.

Conservative

Gary Schellenberger Perth—Wellington, ON

I do.

If you expected bribery and corruption in a country that you wanted to do business in, would it not be prudent to make the request to the RCMP instead of to the corrupt government where you wanted to do business? And if so, what could the RCMP do to that foreign government?

4:20 p.m.

Director, Commercial Crime Branch, Royal Canadian Mounted Police

Supt Stephen Foster

At what stage of your business transaction would that be?

April 30th, 2012 / 4:20 p.m.

Conservative

Gary Schellenberger Perth—Wellington, ON

I'm a businessman and I want to do business in country A, a developing country, and I suspect bribery and corruption is happening. If I were to go to the local government, the people there would probably be the corrupt ones. If I came to you, what could you do other than advise me not to do any business there? Is there anything the RCMP could do in that particular case, because it is a foreign country?

4:20 p.m.

Director, Commercial Crime Branch, Royal Canadian Mounted Police

Supt Stephen Foster

I think what you're describing is perhaps outside the area of activity where we would be involved. That sounds like it's in advance of the business transaction. That's perhaps the domain of some other government department, perhaps DFAIT and the trade commissioners or Export Development Canada or CIDA, but it would not necessarily be the RCMP at the start of a business transaction.

4:25 p.m.

Conservative

Gary Schellenberger Perth—Wellington, ON

Okay.

Thank you.

4:25 p.m.

Conservative

The Chair Dean Allison

Thank you.

To our witnesses, thank you very much for being here today.

We're going to suspend for a few minutes to set up our video conference for our next meeting.

Thank you very much.

4:30 p.m.

Conservative

The Chair Dean Allison

Could we have all the members back to the desk?

I want to welcome Freedom from Hunger's Christopher Dunford, senior research fellow, who is video conferencing all the way from Sacramento, California.

Welcome, sir. We're glad to have you here today.

We'll ask you to make your opening presentation, and then we'll take some time to go around the room and have the members ask questions to follow up.

I will turn it over to you, sir. You have 10 minutes. We look forward to hearing your presentation.

4:30 p.m.

Christopher Dunford Senior Research Fellow, Freedom from Hunger

It's an honour to be called to appear before this committee, especially as an American with only tangential connections to Canada.

My name is Chris Dunford. I've been the president of Freedom from Hunger, based in Davis, California, just outside Sacramento, for the past 20 years.

Just recently, I moved into a new role as senior research fellow. In that role, I'm charged with gathering what we and similar organizations have learned about supporting the self-help efforts of people who are so poor that they are chronically hungry. That's important to keep in mind, as that frames the rest of my remarks.

So that's about 1 billion people, mostly in developing countries, particularly South Asia and Africa. This number is far greater than the number suffering from catastrophic famine due to natural or man-made disasters. The primary cause of their chronic hunger is deep chronic poverty. These billion people correspond roughly to the number living on less than the World Bank's $1.25 U.S. a day, which is the World Bank's cut-off point for deep poverty.

Now, it's important to understand that these are not passive victims. They have the resilience and resourcefulness of the human spirit, and they have each other for mutual aid and solidarity. So the most appropriate development intervention, therefore—rather than replacing these considerable self-help assets—is support to enable chronically hungry people to help themselves and their families.

Freedom from Hunger has been working in this arena for more than 65 years. We've learned that the most cost-effective, sustainable way to support the self-help efforts of very poor families is a combination of microfinance, education, and health services delivered to groups of women living in very poor communities.

We've developed this combination as an integrated service delivery package and have provided training and technical assistance to a wide variety of organizations: credit unions, rural banks, microfinance institutions, and non-financial NGOs. We've helped them adopt and then adapt this delivery model to the particular circumstances of the local populations they serve. In effect, we're a wholesaler of innovation to the retailers of services to the poor.

As of the end of 2011, our worldwide staff of only 50 have been training and providing technical assistance to about 150 local organizations in 19 countries, with emphasis on francophone West Africa, where we have had long-term productive partnerships with several credit union federations started and still supported by the Mouvement Desjardins, and also on the Andean countries of South America, as well as India, the Philippines, and Mexico.

These partners—our partners—are delivering this combination of microfinance, education and health to well over 4 million women these days. When we count the number of their family members, that comes to almost to 30 million men, women, and children. Now, this is of course a drop in the bucket, compared to the 1 billion chronically hungry poor, but our purpose is to create a powerful demonstration of what can work for these people.

I'm going to make three points, but for background to those points, I should point out that Freedom from Hunger is a classic charity in its ownership, governance, and funding structure, even though we operate much like a consulting firm—but with a very clear social purpose.

About half our funding comes from individual Americans. The other half comes from private grant-making institutions, including the Toronto-based MasterCard Foundation, with the appropriate blessing of Revenue Canada, I hasten to add. We have never received funding from CIDA or other parts of the Canadian government, and don't expect to, so you may say that we don't have a dog in that fight; however, some of our developing country partners have received and do receive CIDA support in some way.

My first point is that the problem of chronic hunger and support for self-help of the poor is fundamentally a social service problem that in more developed economies is the purview of public sector efforts. However, there are some social services, such as financial services to the poor, that are much more effective and sustainable for the long term when they are delivered by the private sector—in which I include the private cooperative sector—albeit with appropriate government oversight and regulation, especially when saving services are provided. Of course, we all know that the past few decades are littered with failures of government efforts to provide retail financial services to the poor.

My second point is that the poorer the clientele of a microfinance service provider, the more these clients face severe problems that are not being addressed by the usual specialized services, such as education, health, agricultural extension, business development services, and so on, especially in rural areas and marginal peri-urban neighbourhoods. A microfinance provider may be the only social service in town.

There's often a strong business case for the microfinancier to push the boundaries of their standard business model and skill set to provide non-financial services as well as financial services, especially education and training and facilitation of access to whatever services are provided by whatever other organizations are in the local area, including government.

For example, it's clear that a healthy client is more likely to be profitable than a sick client, or a client with sick children. Our market research in Burkina Faso and Benin found that one-third of the annual income of very poor households is spent on dealing with just one disease—malaria. That's an enormous financial impact that a microfinancier cannot ignore.

We've shown such microfinanciers how they can provide their clients—and their staff, for that matter—with effective education for prevention and treatment of malaria, as well as access to insecticide-treated mosquito nets and even clinical services for malaria and other disease treatment when they're locally available. This can be done for only a small, marginal cost that reduces their annual profit by only a couple of percentage points, say from 24% to 22% per annum, to cite an average for five microfinance providers in five countries on four continents that are providing these kinds of health protection options.

My third and last point is that not all microfinanciers are the same in their business motives. Many are strictly commercial and profit oriented, especially in more developed regions like eastern Europe and central Asia, but equal or more numbers, especially in Africa or south Asia, are motivated primarily by social objectives.

Even as they operate as commercial entities with the same imperative to cover all their true costs and generate a profit—call it a surplus if they have a cooperative or non-profit structure—they and their lenders and investors, or members, are willing to sacrifice a few percentage points of profit in order to achieve measurable social objectives, such as improvement in family food security and health status.

In thinking about microfinance as a private sector social service delivery infrastructure, it's very important to discern the difference between primarily commercial and primarily socially motivated microfinance providers. Regardless of their driving motives, almost all microfinance providers claim to be socially motivated, but only those that are truly so motivated in their daily business practices are likely to literally go the extra mile and make the extra effort to deliver an effective combination of both financial and non-financial services that are required to truly support the self-help efforts of the chronically hungry poor.

Those are my opening remarks, and I'd be very pleased to hear your questions and concerns and try to answer some of them.

4:35 p.m.

Conservative

The Chair Dean Allison

Thank you very much, Mr. Dunford.

We're going to start with the opposition.

Mr. Saganash, welcome.