Thank you for the opportunity to share Oxfam's thoughts on the new development finance initiative. Oxfam is an international confederation working in 90 countries to support long-term development and provide humanitarian assistance. We also do advocacy and campaigns to address the root causes of poverty. We put women's rights and gender justice at the heart of everything we do.
The new DFI is an opportunity to be innovative and to leverage finance for poverty reduction and gender equality. Canada will need to be bold in how it is designed in order to ensure that these goals are met. Higher finance should never be a replacement or substitute for aid. However, if designed carefully and in alignment with Canada's new feminist international assistance policy, the DFI could add important contributions toward achieving these same goals.
Oxfam recognizes that the private sector has the potential to significantly contribute to sustainable development. The private sector, of course, comprises a multitude of actors, including those which often offer employment opportunities for women in rural and poorer contexts, such as co-operatives or micro and small enterprises. In a vibrant, thriving, accountable, and responsible private sector, there are greater possibilities for sustainable development and economic growth that can lead to poverty reduction and reduce inequality.
However, the experience of other development financing facilities shows that without a strong alignment with the goals and strategies of sustainable development, public-backed private finance can fail to reach its potential contribution and in some cases reinforce existing inequalities. The DFI should avoid these pitfalls by starting with a strong mandate to reduce poverty and to complement the government's feminist international assistance policy. We have five recommendations in order to do this.
The first recommendation is that the DFI's mandate should align with development effectiveness principles and focus on additionality. In order to ensure alignment with sustainable development, the DFI should conform to the principles of development effectiveness, particularly country ownership, transparency, and accountability. Globally, civil society has called for much greater transparency and accountability of DFIs. The Canadian DFI should consider how it will adjust this, including through complying with the international aid transparency initiative, which several other DFIs, including the Dutch FMO and U.K. CDC, already comply with.
How the DFI will measure and report on its goal of contribution to poverty reduction should be thought of in the early stages. The DFI should focus on maximizing the additionality that it brings to Canada's development strategy. It could be thought of as financial additionality, where the public and private actors together are bringing additional funding, through development additionality, whether it's a greater sustainable development impact as a result of public and private finance working together, or value additionality where the public actor is bringing something that wouldn't otherwise be present, such as focusing on poverty reduction, sustainability, or gender equality.
The three main pillars of the Official Development Assistance Accountability Act also provide a strong framework that can be drawn on for the DFI's mandates. The DFI currently is not counted as ODA and is not subject to the same principles, but the same principles would be useful to apply to the DFI. That would ensure it would contribute to poverty reduction, take into account the perspective of the poor, and be consistent with international human rights standards.
A second recommendation is that the DFI's investment strategy should be strategically aligned with Canada's new feminist international assistance policy. Ensuring close alignment with Global Affairs and the feminist international assistance policy is key to ensure strategic investments that contribute to development. It would also show that Canada is learning from the experience of other bilateral institutions.
When independently evaluated, the U.K. DFID's private sector investments were criticized for not being aligned with their objective of poverty reduction and for lacking strategic oversight, clear objectives, and the ability to demonstrate additionality. On the other hand, the Finnish DFI, Finnfund, has aligned its investments with the priorities of their aid strategies. They're focusing on green technologies and telecommunications. As Canada's new feminist international assistance policy focuses on a feminist approach to ending poverty, the DFI should complement this and do the same.
In practice, this will require working closely with Global Affairs to develop complementary and focused strategies, and sharing expertise and intelligence about development priorities and particular contexts in which they are both operating. The DFI could also consider designing its governance structure so that accountability is not only to EDC but to the ministers in Global Affairs as well.
Our third recommendation is to ensure that the DFI has the capacity and expertise for mainstream gender equality throughout its work and also to provide targeted investments that benefit women and girls.
In designing any development policy or program, a gender analysis is essential to ensure that both women and girls benefit, and that gender inequality is not inadvertently reinforced. The DFI should ensure that it seeks to build on its own expertise and capacity as well as that of its partners in order to be able to meet this goal. This is another important area where working closely with Global Affairs will be key.
Women's organizations and experts should also be included in the design of investments. The new feminist international assistance policy commits all of Canada's development partners to consult with local women's organizations when designing interventions, which is a powerful principle to ensure they are guided by their priorities and concerns. The DFI should also ensure that, when it's gathering information about the context of the investments being made through any consultations or advisory bodies that are set up, women's organizations are included and able to provide their expertise.
Our fourth recommendation is that the DFI should have robust monitoring and accountability systems and should only involve companies that respect human rights, including women's rights. The DFI must commit to do no harm by ensuring that investments are assessed and monitored for their impact on human rights and women's rights in particular.
Oxfam's research into the World Bank's private sector arm has documented instances of violence against women, land grabs, and other disturbing outcomes of private sector development budgets. The DFI needs to put in place robust monitoring and accountability frameworks that identify and prevent any negative impact on groups marginalized based on gender or sexual orientation, including changes in livelihood, likelihood of violence, access to assets, and labour rights. The DFI should also ensure that jobs created through these investments are decent jobs, that investment partners and contractors respect labour standards, and that measures are in place to avoid discrimination.
Currently, EDC does not have a human rights policy, but it has a statement on human rights that was issued in 2008. This should be updated to a policy and staff should be trained to implement it. The DFI should also consider putting in place accountability mechanisms, for example, setting up an independent complaint mechanism that is accessible to local communities involved in the investments. The Dutch FMO's independent mechanism, which was set up in consultation with civil society, would be a good example to follow.
Another aspect of “do no harm” is ensuring that private sector finance is not a substitute for the public financing of essential services that are accessible to the poorest. The DFI should not seek to increase private sector involvement in the provision of public services. The DFI should only partner with companies that pay taxes on the value created in the developing countries that they operate in. Oxfam research into the World Bank's private sector lending in 2015 showed that 51 out of 68 companies that received loans to finance investments in sub-Saharan Africa were using tax havens, which was denying those countries much-needed public funds.
Our final recommendation is that the DFI should invest in projects aimed at reducing gender inequality and that benefit women and girls. Going beyond the do no harm policy, to be truly transformative, the DFI should set the goal of making investments that address gender equality and enable women and girls to benefit from development.
Women and girls often do not benefit from development due to the heavy and unequal responsibility for unpaid care and domestic work. On average, women are responsible for 2.5 times more hours of unpaid care and domestic work than men. Using the DFI to leverage investments that help reduce this burden would be a powerful way to address a structural barrier to women's full and equal participation in the economy. For example, infrastructure projects can be designed to reduce the time women spend fetching water or fuel or transporting dependents, but only if a gender analysis is included in their design and women are consulted on their needs.
Another approach would be to catalyze investments in time-saving and labour-saving technologies and ensure that these are available in rural and poorer areas. Oxfam has been working on small-scale projects in Ethiopia, Uganda, and Zimbabwe that connect communities with fuel-efficient stoves that reduce time fetching fuel and cooking and are also far safer to use. Making these types of investments would be a truly innovative way to address gender inequality.
The DFI should also prioritize financial service programs for women-led small and medium enterprises. The DFI could look at making sure land guarantees are available for women-led small and medium enterprises. Generally, these are at a disadvantage in attracting credit due to women being less likely to own collateral or due to harmful social norms. It could also offer technical assistance to financial institutions and businesses to train women entrepreneurs. I believe Engineers Without Borders provided testimony with further details on proposals in these areas last week, which we support.
To conclude, Oxfam does not believe the DFI should act as a substitute for ODA, and the DFI should not be using ODA allocations. However, DFI has the potential to complement the work of Global Affairs and the new feminist international assistance policy if its aims and objectives are aligned, and to set a new standard for development finance contributing to sustainable development.
We hope the committee will consider these recommendations to help ensure that the DFI is bold and innovative and reaches its goals of reducing poverty and increasing gender inequality.