I should preface my remarks by saying that we have also submitted a lengthier version of the remarks. I'm coming from the background of a data and analytics person, so you might find that pervading some of my remarks here as well. The lengthier version is there for you as a resource to have at your discretion.
What I'd like to do is to really situate what I'm going to say in two segments. The first is the challenge. The second is the recommendations—what should Canada do?—if you accept my proposition in terms of the challenge.
The first thing that I think may be worth asking is, do we even really need such a thing as a country of focus list, a prioritization list? So much of assistance now is responsive. So much of what we finance is due to emergencies, which are inherently unpredictable. Do we really need such a prioritization framework?
I would argue that a disciplined commitment to long-term development, especially when budgets are stretched because we have emergencies and humanitarian situations that take up so much of the resource need, is precisely the reason why prioritization is important and precisely the reason to think about the countries of focus list.
What is the problem with the current approach? To summarize, the current approach is based on a threefold formula: the country's need, its ability to benefit from Canadian assistance and from assistance overall, and its alignment with Canadian foreign policy.
What is the problem with this approach? Well, it has been argued, and I agree, that this is way too broad and vague an approach. It leads us to a place where, in our focus on partner countries, we have 37 priorities and partners in all.
There is a lack of transparency about how the approach is actually applied. Really, any country you can think of can be put onto a focus or partner list because the criteria are so broad. In the rationale for how this links to 90% of our bilateral budget—it's actually even contestable whether it is 90% of the bilateral budget—there is no sense of a hard analysis. There is no costed sense of objectives in linking priorities and resources.
I would argue for some other reasons that there are problems with this approach. For what I call the “macro level contextual changes”, which others have talked about as well, let me go through them very quickly.
One, global agendas are getting broader and broader, so they have a tendency to want to make us go wider and thinner. The best case in point is the SDGs, the sustainable development goals agreed to last year at the UN. The COP process on climate change is another one that is an example of agendas getting broader, bigger, and demanding more resources.
Two, the rules of what counts as official development assistance are changing. We can get into this more in the Qs and As.
Three, diplomacy and geostrategic interests can have an impact on broadening and going too wide and too thin. An example of that is linking the idea of our aid allocation and our resource needs in terms of our aid budget to, for instance, winning a seat at the UN Security Council. It's a very bad idea to link those two things together.
It's easy, I would argue, to say too that we want to focus on the poorest and on fragile states, but consider this fact: since 2000, the number of LICs, low-income countries, has more than halved. We had 63 low-income countries. We now have about 31 low-income countries. The number of countries in that category has halved. Halving extreme poverty was also achieved ahead of the millennium development goal target, as others have also pointed out.
In my view, country-level analysis may be insufficient in the situation that we find ourselves. The best projections point to the fact that global extreme poverty will be increasingly concentrated in a small number of very fragile contexts—I would say “contexts” and not “states”—and in hard-to-reach pockets of deep and persistent poverty in large middle-income countries. This is all something that all of you have heard.
In the SDGs, there is also a new framing of our level of ambition, which is to end extreme poverty by 2030, that is, to leave no one behind. It also means that it is beset with a new problem and a new challenge, which is what I call the “last mile problem”. The closer you get to zero, the harder it is to reach zero. This is the context within which I'm situating the challenges we face.
I've done a quick analysis of our current lists or our current focus. I'll go through this very quickly. I hope you can ask me about it during questions. A lot of the data is there for you to refer to.
I want to point to what our analysis shows as eight generalizable characteristics across our current focus and partner countries. These are rapid population growth; rapid urbanization; serious social and economic hard infrastructure deficits; youth bulge; serious challenges surrounding gender issues, gender rights, and equality; vulnerability to climate change; limited state capacity and fragility; and endemic corruption and governance challenges.
In addition to this, our analysis takes into account a set of factors to essentially see how good at prioritization the framework is. We take into account fragility, human development, income poverty, non-income poverty and deprivation, and aid dependence. In summary of that analysis, the complete version of which you have in front of you, when I look at it on a quadrant or two-by-two axis and look at where very high and very persistent poverty is, countries that are also very highly aid-dependent and where Canadian aid is significant—that is, accounting for more than 5%, for instance, of the total assistance received by that country—I come up with only four countries. These are Haiti, Mozambique, Mali, and South Sudan. In each of these countries, Canada ranks among the top 10 donors.
You have my analysis there for other buckets of countries where I similarly do the exercise to situate all our current focus and priority countries. The conclusion is that Canada is among the top 10 donors in 15 out of the 25 focus countries and only two out of the 12 partner countries. This implies that for 20 out of our 37 focus or partner countries, we're not amongst the top 10 donors.
If we look at it from the perspective of targeting poverty and targeting fragility, Canada does reasonably well, even with these criteria, insofar as the share of assistance spent in these areas when compared with other donors. So why the whole business of a new approach? I would say that because we have a changing global context, because we need a more disciplined and transparent approach, and because a new and fresher approach to that is more disciplined, more in line with, and takes into account the changing global realities, this would make Canada a more credible and potentially a more predictable partner on the international stage.
What should we do? I have three recommendations. I'll go through these in order.
The first one, which echoes what many have said already, is the need for a long-term approach, but not only a long-term approach, but also clear, transparent, specific and, I would underscore, a disciplined and serious approach. I mention the latter because I think that is the key gap in the current approach. To reinforce a commitment to long-term development means thinking in time frames of about five years in the case of low-income countries that are not fragile, and at least 10 to 15 years in the context of fragile states. This means that aims should be linked to the time frames and our resources. We can set, and we should set, clear quantitative targets from the outset that will in turn drive discipline, transparency, and accountability. This means that we need to identify and cost key gaps, and then benchmark how much Canadian assistance can be spent in meeting those gaps.
We should remember that development outcomes, at the end of the day, are for our partners and our end beneficiaries in countries, not really for Canada. These are only achievable if we have an equally serious, disciplined, and committed partner at the other end of the table, so to speak. We should simply refrain from investing in contexts where we can't find such partners. If this principle were applied, we would get a different list, in my view.
Second, I argue that we need greater focus through a combination of what I call a differentiated approach and an integrated strategy. A differentiated approach is essentially one that is built around the realities that different countries are in. Bangladesh, for example, is no longer an LIC, a low-income country. Nobody believes there aren't serious issues to be tackled there, but it's not a low-income country. Bangladesh also benefits from market access to the Canadian market. In terms of trade, Bangladesh exports into the Canadian market about 10 times what our aid is to the same country.
This approach reflects more a reality of a graduated sense of where countries are by types of relationships. This approach is not new. It's something other donors do. For instance, the Netherlands has a very similar approach. My suggestion is that in taking such an approach, we would get three buckets, or three groups of countries: the first, fragile countries; the second, low-income, non-fragile countries; and the third, transitional countries.
The reason this approach fits with an integrated strategy is really summed up by the point that development policy in an integrated approach is bigger than just aid policy. In an integrated approach, we would ensure that both concessional and non-concessional resources are aimed toward development outcomes. We would ensure that we do not only projects, but also technical support. We would ensure there is coherence between our aid policy and trade policy.
If asked, I can give you examples of where we lack that coherence currently.
Finally, for the third suggestion, in the context of fragile states, I think we need a specific strategy. Fragile contexts and states are really in a unique situation, very context-specific, and more importantly, very fluid. Things change faster and more dramatically than we can really account for.
Absent a hard-nosed analysis of what we want to achieve and whether it is achievable given the time and the assets that we have to dedicate, investment in fragile states comes at a high opportunity cost. This is not to dissuade investment in fragile states. It's simply to set more realistic expectations and have a healthy appreciation of time frames and risks that make engagement in fragile states quite fundamentally different from engagement elsewhere in the developing world.
Let me sum up.
Applying my criteria, I get three groups: one approach for fragile states; a set of non-fragile, low-income countries; and a set of transitional partners. If you ask me what this means for the number of countries, I would hazard that for the type of budget we're looking at in terms of the current status quo, say, three and a half to four billion in bilateral assistance, or about $3.44 billion, according to the latest data on development projects specifically, it would be about 12 to 15 countries.
In this regard, I should also caution that change should not be taken lightly, as it affects partnerships, affects predictability, affects credibility, and it has real transaction costs in terms of being able to move and shift strategies. Also, it's simply the fact that most assistance, as many of you probably already know, is quite path dependent. About 30% of the budget is simply continuation of projects already in flow. So change should be taken very seriously.
I'll leave my remarks at that for now.