The Federal Budget and Canada’s Foreign Aid

Although the Federal budget maintained the status quo on Canada’s foreign aid funding, there were no indications to suggest that there will be any improvement in our decades-long promise to assist developing countries to extricate themselves from the grip of poverty.

Canada’s aid as a percentage of its Gross National Income over the last several years has been about 0.3 percent of its GNI – far less than the 0.7 percent commitment made by the rich OECD countries decades ago. In contrast, in 2011, Finland, the UK, the Netherlands, Sweden, Luxembourg, and Norway contributed between 0.6 and 1.1 percent of their GNI. But all of this apparent Canadian benevolence does not go to the poor, developing countries that really need aid.

The amount of aid given by rich countries is not necessarily dependent on the needs of poor countries. In the past, the poverty and desperation of poor countries were less important than issues that rich countries considered to be in the rich countries’ interests. This is still true today. In addition, aid donors might suddenly change their aid direction. For example, in 2009 the Canadian government removed Cambodia, Sri Lanka and a number of least developed countries in sub-Saharan Africa (some of the poorest countries on that continent) from its list of aid-recipients. Instead, it added Colombia and Peru (two moderately rich countries) to the list. This change prompted the Canadian government’s Auditor-General to comment that within seven years the government (through the Canadian International Development Agency – CIDA) had changed its priorities five times.

The present government’s rationale for cutting aid (in the recent past) and for finagling its aid allocations (over its years in government) is stated as a means of making our aid more effective by being more focused and to increase aid efficiency. These are misguided reasons and an excuse for not being serious about the need to alleviate poverty in the world.  In addition, such statements normally do not translate into more effective aid.

If our government really wants to ensure that aid is more effective, it should dust off the Paris Declaration on Aid Effectiveness and Accra Agenda for Action and work with poor, developing countries and international non-Governmental Organizations to make aid more effective.

Another excuse given by aid providers (and many among the general public) is that poor countries do not have the capacity to use the aid funding that they obtain. Paradoxically, however, one of the reasons that this might be the case is that there has not been the right amount of aid in the past 50 years that would have built that capacity. In other words, more aid is needed to build the human resource and infrastructure capacities in order to make aid work more effectively.

The cutting or reducing of aid to poor countries causes another problem for many countries in the developing world. When aid money is included in a poor country’s budget for infrastructure development and aid funds are suddenly reduced or stopped altogether, governments have to make budgetary changes in order to deal with their infrastructure improvements. This causes extreme strains on a poor country’s revenue, their ability to repay debts and, again, their ability to address poverty alleviation.

Aid is essential, if only to prevent the desperation of the extremely poor and the general situation of least developed countries from getting worse. But to work toward poverty alleviation and the making of extreme poverty history, both developed and developing countries have to work together to put the right amount of aid to good use in a sustained and systematic fashion for the improvement of the lives of the poor in the developing world.


Ashmead A. Ali, P.Eng.

VP Toronto Professional Chapter, Engineers Without Borders.

© Copyright to Ashmead A. Ali. 2014.