Foreign Affairs Committee on May 30th, 2012

[The Chair, Conservative, Dean Allison]

Thank you very much.

[Dr. Maura O'Neill]

Ms. Brown.

[Lois Brown, Conservative, Newmarket—Aurora, ON]

Thank you very much.

Dr. O'Neill, thank you very much for being here.

There are two things. First of all, I just want to clarify something Mr. Eyking alluded to. Yes, although CIDA has narrowed its focus to 20 countries for the bulk of our money, Canada is still very much present in a multitude of countries, mostly through our bilateral programs. We share them with USAID, through the World Food Programme, through UNICEF, GAVI, the global partnership fund and particularly through our maternal newborn and child health initiatives. So we're still present in many countries.

I want to go back to your discussion about the project with Barrick Gold in Peru. You talked about Barrick’s targeting the creation of 800 jobs. You talked about those being permanent jobs. In what sectors are those growing? How do you see those becoming embedded in the economy so that these 800 jobs are providing ongoing income for families, providing tax dollars as permanent revenue to Peru? How do you see that happening?

[Dr. Maura O'Neill]

The bulk of these jobs are in the agricultural sector, all across the supply chain. I'm sure there are other jobs, but the bulk of them are in agricultural supply. Many of these smallholder farmers just don't have adequate access to markets for their products and they are subjected to middlemen taking the bulk of the profits on the way, as well as spoilage. I don't know what the number for Peru is, but I know that in India there's 40% post-harvest waste or loss. We know that in most of the countries, including Peru, it has to do with storage logistics and access to market. Most of those jobs are in the agriculture sector.

[Lois Brown, Conservative, Newmarket—Aurora, ON]

If we look at the history of Canada, a hundred years ago Canada was basically an agricultural country, as was the United States. Think of the number of innovations that came out of farming communities that grew into major businesses all on their own. It means that there's great hope for those jobs to stay permanent.

Thank you, Mr. Chair.

[The Chair, Conservative, Dean Allison]

Thank you.

We're going to move over to Madam Laverdière, for five minutes.

[Hélène Laverdière, NDP, Laurier—Sainte-Marie, QC]

Thank you, Mr. Chair.

Thank you, Dr. O'Neill. Thank you both for your presence today and for your very interesting presentation.

I would like to follow up on what seems to me an important point. Barrick is working on producing jobs in the agricultural sector, which means that those jobs are not strictly related to Barrick's own activities. Do you see what I mean?

[Dr. Maura O'Neill]

They have an interest, and I can get you the specifics on these 800 jobs. I was told that they were in the agricultural sector, maybe some of them are in mining. But the idea behind our public-private partnership is a development goal that makes the benefits of the economic activity more broadly felt in the community in which the mining is happening. That was the idea behind the focus on these economic centres. It was not just to make sure that they had adequate workers for their mining, but rather a broader set of benefits.

[Hélène Laverdière, NDP, Laurier—Sainte-Marie, QC]

Thank you very much. That really is a very important point.

To start off, I am going to ask a quick question that may seem a bit ridiculous, but that is important. Briefly, what are the main development goals that you are referring to?

[Dr. Maura O'Neill]

We have four main development goals: food security; adequate health, particularly on eliminating preventable deaths; economic growth, because we believe that broad-based economic growth is essential; and the last one is humanitarian assistance, primarily around disasters. Those are our four goals. We have an overarching goal that's a presidential initiative around climate change. We want to make sure that all of these are done in a more climate-friendly way.

I should note that we don't oppose, and we can see as a development goal, sometimes partnering with large businesses to provide them the kinds of infrastructure training and business skills for the local businesses providing supplies to them. While it is not our primary goal to make sure that we recruit and train people for their growth businesses, whether Barrick or Intel, we do think that a whole set of enabling environments can be useful. That could directly benefit the business that’s involved in their operations.

[Hélène Laverdière, NDP, Laurier—Sainte-Marie, QC]

Thank you very much.

One thing that really struck me in your presentation is that you work with Scotia Bank, Barrick Gold, and so on. Do you work with companies from around the world, or is there a trend? Approximately what proportion of your partners are American companies?

[Dr. Maura O'Neill]

I don't know the percentages off the top of my head, but I can tell you we are open for business and do partnerships around the world. We do partnerships with businesses in both developed and developing countries, small businesses as well as large.

Not surprisingly, we haven't solved all the complications of doing a partnership with a big organization like the U.S. government. More often than not, we have partnerships with large businesses, which can be in-country or all around the world. So long as we share a development goal, we're fine with whoever it is.

[Hélène Laverdière, NDP, Laurier—Sainte-Marie, QC]

Thank you. It's a very interesting aspect. There is a big picture. You have those partnerships with private companies, but you still work with NGOs. Do you have tripartite partnerships where there would be USAID, NGOs, and private enterprise?

[Dr. Maura O'Neill]

A huge portion of our partnerships have an NGO or an implementing partner. For example, after the Haiti earthquake, Coca-Cola came to us. They own the Odwalla brand. They wanted to source more mangos from Haiti. Haiti has a huge production of mangos, but they aren't of export quality and can't be put in juices. We partnered with an NGO to work with the local farmers and the processing so that they could teach them the world-class standards for mangos. This way, Coca-Cola, through it's Odwalla brand, could be in the position to buy more of them. That's an example of where the tripartite relationship helps everybody.

[The Chair, Conservative, Dean Allison]

Thank you very much.

We're going to move over to Ms. Grewal.

[Nina Grewal, Conservative, Fleetwood—Port Kells, BC]

Thank you, Chair.

My thanks to Ms. O'Neill for appearing today and assisting our committee with its study of how the private sector can assist Canada in achieving its developmental goals.

I understand that your organization has been working more and more with the private sector in support of the foreign policy goals of the United States. The private sector accounts for about 80% of all investment in the developing world. From your experience, what are the benefits of working with the private sector to achieve development and humanitarian goals? Could you provide some examples from the experiences of USAID?

[Dr. Maura O'Neill]

Thank you.

I would actually go so far as to say that I think working with the private sector has been essential to meeting our goals. I'll give you a couple of specific examples.

Afghanistan has been a complicated country for all of us for quite some time. Now about half of their civil servants are actually paid in cash. They think that about 50% of the police and the military do not show up every day, and in large part it's because they're getting their salaries, they're walking to the bank to get their money out of the bank, and then they're walking to their families to give them money.

So we partnered with the largest mobile operator there—we've gone on to expand this program to all mobile operators—and we ran a test in which the police officers were actually paid through mobile money instead of this cash. We discovered that they got a 30% raise. That was the estimate of how much more they got, on average. Another way to look at it is that this was the amount that was siphoned off between the time the money left Kabul and the time it got to a police officer.

What's really critical about this is that not only is there that sort of corruption or fraud tax being paid, but at 30% less, those police officers were being paid less than the Taliban was willing to offer them. When they got their full salary, we were then above what the Taliban was paying.

We don't have an infrastructure in Afghanistan to actually pay electronically, nor does the Afghan government, but the mobile company does. We've been so thrilled with that kind of experiment that we now have created an innovation fund to try to get all the mobile companies in Afghanistan to start using mobile money. As you know, Kabul Bank, the largest bank, also collapsed, so it's not dissimilar to Haiti. When you have a collapse of a major part of the financial infrastructure, the ability to stand it up in a very different way....

There are a lot of issues in making mobile money safe, so we worked very closely with our treasury department to make sure this is not a new vehicle for the bad guys to be raising money or deploying money in money laundering and terrorist financing. We think these issues are complicated, but that gives you an example of where we think that as an aid agency we would never have had the ability to pull that off without a partnership with the private sector.

[Nina Grewal, Conservative, Fleetwood—Port Kells, BC]

Could you please also tell us something about the neglected tropical disease program? Has this been a really successful program, and has it received any support from the private sector?

[Dr. Maura O'Neill]

We are really excited about a partnership we did on neglected diseases, particularly deworming. A lot of kids in the developing world don't show up at school every day. We thought it was because the parents wanted them to work in the fields or because the adolescent girls were menstruating—any number of reasons why. We found out that a lot of the kids aren't going to school because they just feel lousy. They don't have access to clean water and they're getting intestinal worms.

An academic did a study about 10 to 15 years ago and said that if you give them one small pill, a deworming pill, once a year or twice a year, it actually.... In a randomized control trial—much like drug discoveries—they found that school absenteeism dropped by 25%. But most importantly, that study was neglected for a long enough period of time—meaning nobody scaled it up—that they then could go back and track those kids. They said, “Well, they showed up to school, but did it really matter?” It turns out that they stayed in school longer and that as adults they are making substantially more money—20% more.

So we did a public-private partnership, which we are enormously excited about, with a hedge fund out of the U.K. They set up this hedge fund, the Children's Investment Fund Foundation, and said, “We'll return money to our investors, but our money will go into a foundation to help kids”.

They've been wildly successful, so they have $2 billion in this foundation, and they are now paying for the distribution in all of Kenya. So we're covering all of Kenya. The pharmaceutical companies are donating the pills. With our partnership with a foundation in Texas, we are starting the process of expanding that to three or four countries. We like the fact that it's evidence-based. We like the fact that there are unconventional partners—you wouldn't think of hedge funds as being conventional partners for neglected disease—and we're scaling it across an entire country and ultimately the continent.

[The Chair, Conservative, Dean Allison]

Thank you. That's all the time we have.

[Nina Grewal, Conservative, Fleetwood—Port Kells, BC]

I have a very short question.

[The Chair, Conservative, Dean Allison]

They are all short, but you're over by about 30 seconds.

Dr. O'Neill, that is all the time we have, but I'm going to let you have the last word. You didn't get a chance to summarize your recommendations. Would you do that for us? I know you have to catch a plane, but could you take a couple of minutes to summarize your recommendations for us?

[Dr. Maura O'Neill]

I offer three recommendations for your consideration. We have found that these elements have been critical to creating successful public-private partnerships. They accelerate the achievement of development results, mitigate the risk of unintended consequences, and increase the likelihood of sustaining.

First, you need to have top support and incentives for partnerships. If people don't see it as part of what they are going to be evaluated on they're not going to do it—if it's a “nice to have”, but not a “must have” as part of that. I talk about how we have used incentives at USAID to do that.

Second is to create an easy on-ramp for partners so you become the preferred partner. You're the place people want to partner with. They want to bring their money and assets. Have candid discussions about the core competencies of each partner and their motivations. Also, as I said yesterday, don't fall in love with the deal. Be willing to walk away from it if you smell a rat or you don't think the objectives align sufficiently.

Third, we have three words we wake up with every day and go to bed with at night, not just on our public-private partnerships, but on everything we do. Focus on three elements for partnerships: impact, scale, and sustainability. If you don't think about those at the very beginning, they won't miraculously happen in a partnership or when the partnership is coming to an end.

In conclusion, I appreciate your thoughtful study of this issue over the last decade. I hope I've been able to provide some insight and assistance as you think it through. We look forward to learning from you as you move forward in this area as well.

Thank you, Mr. Chairman.

[The Chair, Conservative, Dean Allison]

Thank you very much.

We're going to suspend for a few minutes to change witnesses.

[The Chair, Conservative, Dean Allison]

Okay, we'll get started again.

I want to welcome Karyn Keenan, a program officer with the Halifax Initiative Coalition.

Ms. Keenan, thank you for being here today. We're looking forward to your opening comments. After your comments we'll go back and forth with some questions so you can clarify or go deeper into some of the things you've said.

I'll stop talking and turn it over to you. You have ten minutes.