Notes for remarks by Aileen Carroll Minister of International Cooperation at the Global Economic Governance Programme (University College, Oxford) meeting on "exploring aid effective and cooperative aid partnerships" Ottawa, Ontario March 9, 2005 (CHECK AGAINST DELIVERY) Thank you, and good afternoon everyone. It is a pleasure to be with you today. It is gratifying for me to see such an eminent group assembled to discuss perhaps the most central issue in development today: how do we maximize the effectiveness of our aid? Of course, we do know to a large extent what makes aid effective. In my remarks, I would like to touch on some key ingredients: harmonization, coordination, and governance. Harmonization and coordination are closely linked. Many of you know why they are important. Let me share with you what drove this lesson home for me. I travelled to Tanzania last year where I visited projects and met with poor men and women. I also met with my counterparts, ministers in the government. I asked them what they needed from donors like Canada. They shared some sobering statistics with me … Only a few years ago, the Minister of Finance had to produce 10,000 reports each year for donors and welcome 2,000 delegations, each of which wished to be received by the highest powers of state. Different donor countries worked with different accounting systems, used different fiscal years, and occasionally stressed contradictory priorities. Tanzania is a country facing many challenges. HIV and AIDS is a devastating crisis and has thinned the ranks of government officials. Imagine, in this context, what a disproportionate share of resources were being devoted to communicating with donors. It is a wonder that there was any capacity left in the government to actually implement the programs being funded! I think this illustrates clearly what we must avoid. And I can confidently say today that we are taking positive steps forward. The key is not just to coordinate with other donors — for everyone to know what everyone else is doing — but to harmonize our efforts so that we are moving in the same direction, giving consistent advice. There are various ways for donors to move forward on harmonization efforts. Canada is taking a strategic approach that matches Canadian expertise with developing countries' needs, in coordination with other donors. This inevitably means a more effective division of labour among donors. Donors need to understand what each is prepared to contribute, avoid unnecessary overlap, and ensure greater complementarity in our programming in individual countries. The most effective donor coordination, naturally, begins with locally owned objectives. Looking again at Tanzania, the picture today is much brighter. When the government recently updated its Poverty Reduction Strategy Paper, instead of asking each donor for their separate views, donors agreed to work together to come up with a common, coherent submission. This is one small example, but it is representative of the way in which we are changing for the better. My department — CIDA, the Canadian International Development Agency — is participating in the development of common frameworks and agreements for multi-donor actions such as the Tanzania Joint Assistance Strategy, budget support in Ghana, and education programming in Vietnam, Bangladesh, and Kosovo. We are also seeing harmonization and alignment occur through an increasing number of sector-wide approaches. CIDA is currently supporting or developing 50 program-based approaches in 23 countries. More than 72 percent of this support is provided in the form of either pooled funding or direct budget support to the recipient government. We have begun to flow aid money in this form to Ethiopia, Ghana, Mozambique, and Tanzania, and we hope to add several more countries this year. This is not to say that we plan to provide direct budgetary support in all countries. The reason is clear: not all developing countries are in a position to use it effectively. So why certain countries and not others? The answer, in a word, is governance. Good governance, the world now recognizes, is a prerequisite for aid effectiveness. From building peace in fragile states to strengthening long-term governance capacity in more stable countries, governance is a means as well as a goal of development. We know that for our aid to be most effective, a recipient country needs to have a strong civil service, good laws enforced by an independent judiciary, a respect for human rights, and an aversion to corruption. Increasingly, we are choosing where we work based on these criteria. As you are aware, we are currently reviewing the way we deliver development assistance. The results of this review will be released shortly in the form of the International Policy Statement. I can tell you that this document will reaffirm Canada's commitment to promoting good governance. Governance will be one of four key sectors where Canada will focus its development efforts, along with health, education, and private sector development. Within each of these sectors, Canada will further focus in niche areas where we have significant expertise and can make a real difference. Within good governance, we propose to focus on: democratization; human rights; rule of law; public-sector institution- and capacity-building; conflict prevention; peacebuilding; and security-sector reform. But our commitment to good governance and aid effectiveness goes further. Our aid program is currently very dispersed, particularly in our bilateral or country-to-country programs. We provide assistance to 155 countries, more than any other donor. Of these, only 18 receive more than $10 million in assistance annually, and almost 90 receive less than $5 million. How does this dispersion limit our effectiveness? For one thing, managing many country programs makes it harder for us to develop expertise in any. For another, the proliferation of small-scale programming on the part of donors puts a greater coordination burden on the recipient countries. There is no doubt that we must focus our aid. How do we choose where we will focus? The level of poverty will of course be a fundamental factor. We will choose to work where our aid will be most effective, and that clearly means working in relatively well-governed countries. This does not mean abandoning everywhere else. I believe that development cooperation has an important role to play in helping failed and failing states, for example. But we will work very differently in these countries than we do in countries such as Tanzania. Canada Corps is an important part of our strategy. As I speak, Canadian experts are at work in a variety of fields, helping to strengthen governance in developing countries. We have Canadian lawyers working with Chinese judges to better incorporate human rights into the legal system. And, of course, we all witnessed the success of the election observer mission in Ukraine last December. Canada Corps will bring us more successes such as this. Before concluding, I would like to take this opportunity to reiterate that Canada is firmly committed the Millennium Development Goals. In all that we do, we are guided by this vision of the world in 2015. We believe that progress on aid effectiveness and coordination as well as good governance is absolutely critical to fulfilling this pledge in time. If we are to effectively reduce — and ultimately eliminate — global poverty, we must better coordinate and focus our efforts. For Canada, that means not doing everything and not being everywhere. It means making tough choices. My department and this government are prepared to make those tough choices to better respond to the needs of people in developing countries. I look forward to our dialogue today. Thank you.
