Good afternoon, everybody. It's my pleasure to be here today. Thank you very much for fitting me into your busy schedules.
My name is James Haga. I have the privilege of working as a senior director with a Canadian organization called Engineers Without Borders. I've been working with this organization for four years, starting in west Africa and Ghana. I've also had the chance to work in east Africa, in Kenya and Tanzania, and I've been in our office in Toronto for the last three years.
I'll start by telling you a bit about our organization. We have over 55,000 members of EWB, as it's known across the country. We are an engineering-based organization, as is evidenced by our name. We attempt to work in a systemic way, a way you would expect engineers would try to contribute to society, focusing not on symptoms, but on the underlying root causes of why poverty persists.
We have a staff of over 60 people, in five countries in Africa. We focus primarily on three areas of development: first, water and sanitation, particularly via support and maintenance systems, ensuring that the longevity of water resources continues to be accessible; secondly, through agricultural development; thirdly, through rural infrastructure development.
With respect to the subject matter the committee is focusing on right now, I'd like to focus my comments on an innovative new financing mechanism for development aid, one that we believe creates an opportunity for effective engagement between both public and private sector players.
As a leader in international development, the Government of Canada is not only dedicated to improving the lives of people living in poverty, but it is also committed to pushing boundaries in search of better and more effective ways to do such work.
We welcome and support recent commitments by Canada, for instance, untying all of Canada's aid and signing on to the International Aid Transparency Initiative, and being a leader in supporting initiatives such as the G-20's small and medium-sized enterprise finance challenge.
In 2012 Canada also ranked first among all G-8 countries on fulfilling commitments made at international summits, which is a great testament to our country.
The truth is that much of foreign aid does work, and things have been getting significantly better in recent years. Hundreds of millions of people around the world are better off because wealthy countries like ours paid to vaccinate children, dig wells, build roads, and buy school books.
That being said, some foreign aid is misspent. Critics argue that much of it is ineffective and can at times hinder development. Too often money is spent on inputs that fail to achieve the desired outcomes. While many aid programs are successful, others fail for a number of reasons. The primary flaw in the current way of delivering foreign aid is that it tends to strengthen the accountability from recipient countries to donors rather than their own citizens.
Canada allocates close to $5 billion a year in aid, yet even with our good achievements there is still more we can do to maximize the results of our dollars. In the context of the world's current fiscal reality, more than ever it is important to be creative in maximizing the value of those dollars.
With this in mind, I'm here today to talk to you about an idea for Canada to invest in, which is the new cost-effective approach to foreign aid called cash-on-delivery aid.
Critical to the subject matter of the committee's study, the cash-on-delivery approach provides an opportunity for innovative collaboration between public and private sector players. With this approach, the focus is firmly placed on delivering results in the most effective and efficient manner. Notably, this proposal is not focused on the amount of aid that Canada gives, but instead on making our approach to that aid more effective.
Cash-on-delivery aid is inherently a results-based funding approach. This means that Canada only provides funding once progress towards an agreed upon result has been demonstrated. In short, if results are not achieved, Canada doesn't pay.
Paying for results is nothing new in the world of business, but it's not necessarily the way traditional foreign aid has worked. By starting with the focus on results, cash-on-delivery aid can make some forms of foreign aid more effective, less corrupt, and better able to respond to what people truly need. In doing so, cash-on-delivery has the potential to capture more public support for aid programs that often save the lives of millions of people.
Let me provide a quick example of how cash-on-delivery aid could work.
Canada and the Government of Ghana could enter into a five-year contract that specifies a set of payments and what Ghana must do in order to receive those payments. These would be made public. The contract would set a baseline--for instance, the number of children expected to graduate from high school. The year after that and for five years running Ghana would receive $20 for every child who graduates up to that baseline number. As an incentive to do even better, additional money could be provided for every child who exceeded that baseline. The results would have to be accurately measured by Ghana. Since school records are often spotty, Ghana would administer a standardized test and count the number of students who took it and make those results public. Once the contract is signed—and the contract itself is a key element of how this would work—Canada would leave it up to the Government of Ghana to choose how it wants to deliver the agreed-upon result and who should do it. This means that the Government of Ghana, hypothetically, would be responsible for the end-product result, although they could choose the most effective and efficient way to deliver that result. It could be through their own public service, contracting a private company, engaging local or international NGOs, or any combination of the three.
Ghana could do whatever it thought was necessary to solve the problem. If it squandered resources or had money carved off through corruption and there were fewer graduates as a result, it would get less money. By definition, donors would not be wasting taxpayers' dollars.
You might be wondering if this approach is working or being piloted anywhere. In fact, it is currently being attempted through a partnership between the U.K.'s Department for International Development and the Government of Ethiopia. They've stepped into a contract. The idea is that the Department for International Development will make grant payments to the education ministry of Ethiopia for the increase in the number of students above a baseline that sit for or pass the national grade 10 exam. Education is just one example of a sector or an issue this model of aid could work through. Currently it is the only area in which this idea is being piloted.
Piloting cash-on-delivery aid would bolster Canada's reputation as a global leader in delivering effective, efficient, and innovative aid. It aligns very well with Canada's and CIDA's commitment to results and to greater accountability. This approach ensures a higher level of accountability for partner-country citizens and Canadians alike. By working through local governments to establish jointly desired outcomes and then gather precise, reliable information about those outcomes, cash-on-delivery strengthens public institutions and motivates political leaders in developing countries to care about measuring their country's progress towards clear goals.
This alone enhances accountability between partner governments and their citizens, which in the long term is absolutely essential for sustainable development. It would also alleviate the sense that a country's problems were being fixed by outsiders, and local officials and citizens would be able to claim ownership over their own progress. Further, because the cash-on-delivery model means that Canada transfers funds only once results have been demonstrated, Canadian citizens themselves can trust that their taxpayer dollars are being used effectively.
To wrap up and review, I believe there are a number of critical benefits to this approach to delivering foreign aid, things that could leverage both private and public sector players, with the defining element being that it puts an emphasis on the result and on whoever is best equipped to deliver that result in view of the partner country government with whom Canada would enter into a contract. This approach would maximize the value of Canada's aid by delivering funds only once measurable progress has been demonstrated. It would provide better and more evidence as to how Canada's aid efforts are making a difference in people's lives. It would increase the efficiency and sustainability of Canada's aid efforts by decreasing administrative burdens on both Canada and our partner countries and increasing partners' freedom and responsibility to manage and deliver on their own development commitments.
This approach would contribute to enhanced global security and the national interests of Canadians by facilitating the strengthening and stabilization of local leadership, political institutions, and civil society in developing nations. It would continue Canada's leadership in improving aid transparency and accountability, an area in which our country has quite recently become a global leader.
I believe that investing in cash-on-delivery aid would be another step in the right direction for Canada's aid policy. While it is certainly not a silver bullet approach, we believe there is considerable potential for this innovative financing model presenting Canada with a unique opportunity to maximize the value for money of our development efforts and lead the world in piloting an efficient results-based aid model.
Thank you very much. I will certainly do whatever I can to address any questions you might have.