- Canada is the 11th-largest donor country, spending US$3.9 billion on net official development assistance (ODA) in 2016 (in 2016 prices). This represents 0.26% of its gross national income (GNI). The government of Prime Minister Justin Trudeau has committed to “restoring and renewing” Canada’s international assistance and “re-engaging globally”.
- The 2018 budget provides an additional CAD2 billion (US$1.5 billion) over five years, starting in 2018-2019, to the International Assistance Envelope (IAE). As well, it was announced that Canada will reallocate existing available balance in the IAE of CAD1.5 billion (US$1.1 billion) to two new innovative financing measures.
- Canada’s development policy focuses on helping the “poorest and most vulnerable and supporting fragile states”. The government has outlined five priorities: 1) health and rights of women and children; 2) clean economic growth and climate change; 3) governance, pluralism, diversity and human rights; 4) peace and security, and 5) responding to humanitarian crises and the needs of displaced peoples.
- Under Prime Minister (PM) Trudeau, Canada has introduced a feminist foreign policy, including enhanced attention to sexual and reproductive health and rights (SRHR) and continued prioritization of maternal, newborn, and child health. In March 2017, PM Trudeau announced CAD650 million (US$490 million) over three years for SRHR, and the Minister of International Development and La Francophonie pledged CAD20 million (US$15 million) at the ‘She Decides’ conference.
- Food security is another top priority. Canada emphasizes the links between agriculture and climate change, and is integrating food security policies into a comprehensive approach to clean economic growth.
- In addition to the increase in resources announced in Budget 2018, the government will reallocate CAD1.5 billion (US$1.1 billion) over five years to two new programs that make use of existing unallocated International Assistance Envelope (IAE) resources: the International Assistance Innovation Program and the Sovereign Loans Program.
- The government committed CAD2.65 billion (US$2.0 billion) by 2020 to address climate change in developing countries. This presents opportunities to leverage more funding for related areas that help mitigate the impact of climate change (e.g., climate-smart agriculture).
the big six
- How much ODA does Canada provide?
Global health is a top priority, with a strong focus on MNCH
In 2016, Canada was the 11th-largest donor country among members of the Development Assistance Committee (DAC) of the Organization for Economic Cooperation and Development (OECD), with ODA at US$3.9 billion (in 2016 prices). This represents 0.26% of its GNI (18th among DAC countries). After a 17% increase in 2015 to US$4.1 billion, ODA decreased again by 5% in 2016. This decrease is mostly due to a decrease in humanitarian aid funding.
The Liberal Party of PM Trudeau announced when coming into power in November 2015 that it will “restore and renew” Canada’s international assistance and “re-engage globally”. This included a review of its international assistance policy and a stakeholder consultation that were completed in 2016. This review resulted in a new feminist international assistance policy (FIAP) released in June 2017. The new Budget 2018 provides a costed framework for the FIAP and puts forward an additional CAD2 billion (US$1.5 billion) over five years to the International Assistance Envelope (IAE), the main budgetary tool that funds Canadian development assistance. For FY2018/19, Canada’s IAE will amount to CAD5.6 billion (US$4.2 billion). In addition, Budget 2018 proposed two new initiatives that leverage private financing to support the FIAP: the International Assistance Program (US$659 million over five years) and the Sovereign Loans Program (US$473 million over five years). Existing funding will be reallocated to these two programs, and this is expected to double Canada’s ODA provided through innovative mechanisms over the next five years.
The Departmental Plan for the FY2017/18 budget (latest year available) gives an indication into the planned allocations for development-related programs for the coming year. Global Affairs Canada (GAC), Canada’s governmental department in charge of international relations, including foreign affairs and international development, allocates spending across three programs: 1) International Security and Democratic Development, 2) International Development, and 3) International Humanitarian Assistance. The Departmental Plan shows that GAC plans to allocate CAD3.6 billion (US$2.7 billion) to these three areas for FY2018/19, an increase of CAD103 million (US$77 million) from FY2017/18. The increase is due to higher spending on ‘International Development’ attributable to funding for climate change and for maternal, newborn, and child health programs.
In 2015, the government budgeted CAD678 million (US$512 million) over six years (2015 to 2021) to support resettling the 25,000 refugees in Canada by the end of February 2016. The Budget 2018 included a further CAD20 million (US$15 million) over five years for an additional 1,000 refugees. Some of this may be reported as ODA and will likely inflate ODA levels.
For further details on methodology, see our Donor Tracker Codebook.
For further details on methodology, see our Donor Tracker Codebook.
- What are Canada's strategic priorities for development?
New feminist foreign policy with focus on MNCH and SRHR; increasing emphasis on climate change and humanitarian assistance
As part of Prime Minister (PM) Justin Trudeau’s commitment to “restore and renew” Canada’s international assistance, the government underwent extensive consultations with Canadian civil society and the public at large. In June 2017, a new ‘feminist’ international assistance policy was published. The new policy applies a human rights-based approach to six core pillars of work: 1) gender equality and the empowerment of women and girls; 2) human dignity (including health education, humanitarian assistance, nutrition, sexual and reproductive health and rights, and food security); 3) inclusive economic growth, 4) environment and climate change; 5) inclusive governance; and 6) peace and security.
Global health is a key priority of Canada’s development policy. Canada was the sixth-largest donor country to global health in 2015 at US$662 million. This corresponds to 16% of Canada’s total ODA. Health is also among the largest sectors of Canada’s bilateral funding, at 17% of bilateral ODA in 2016 (see figure below). Within health, Canada places a strong focus on sexual and reproductive rights and health and on maternal, newborn, and child health (MNCH) showing strong international leadership in this area. It spearheaded the G8 Muskoka Initiative in 2009, and pledged CAD3.5 billion for MNCH for 2015 to 2020 (US$2.6 billion). In addition, Canada hosted the replenishment conference of the Global Fund to Fight Aids, Tuberculosis and Malaria (Global Fund) in September 2016, pledging CAD804 million (US$721 million) for 2017 to 2019. This is a 23% increase compared to its pledge for 2014 to 2016 in nominal CAD terms.
The Canadian government has also increased its focus on climate change-related issues, committing CAD2.65 billion (US$2.0 billion) by 2020 for climate change-related programs. Under PM Trudeau, Canada has begun to more strongly emphasize climate change, reframing programming within the greater nexus of agriculture, food security, and climate change. This includes integrating food-security policies into a more holistic approach for clean economic growth.
According to OECD data, Canada channels 68% of its ODA bilaterally (2016). Humanitarian aid was the largest sector of Canada’s bilateral ODA at 18% in 2016, followed by health at 17%, corresponding to Canada’s focus on international peace and security, humanitarian crises, and health and rights of women and children.
- Who are the main actors in Canadian development cooperation?
PM provides strategic direction; GAC drives development policy
Prime Minister (PM) Trudeau, head of the Liberal Party, sets high-level development policy priorities. Under the PM’s leadership, Global Affairs Canada (GAC), the governmental department in charge of foreign affairs, also steers development policy. GAC, formerly the Department of Foreign Affairs, Trade and Development (DFATD), was renamed in November 2015 under Trudeau. GAC comprises three formerly separate departments and thus falls under the leadership of three ministers: the Minister of Foreign Affairs, the Minister of International Development and La Francophonie, and the Minister of International Trade.
GAC is headed by the Minister of Foreign Affairs, currently Chrystia Freeland (Liberal Party). With oversight from the Foreign Minister, the Minister of International Development and La Francophonie, Marie-Claude Bibeau (Liberal Party), sets development policy and makes funding recommendations to the Cabinet. The Deputy Minister of International Development, Diane Jacovella, manages GAC’s development policy units and budget allocation. Relevant units within GAC are: 1) the Global Issues and Development Branch, which manages multilateral policies and contributions, 2) four geographic branches managing country programs, 3) the Strategic Policy Branch, and 4) the Partnerships for Development Innovation Branch, responsible for partnerships with CSOs and the private sector.
Minister of International Trade, Francois-Phillipe Champagne, works with the Ministers of Finance and International Development and La Francophonie on development-finance issues. The Department of Finance, currently headed by Bill Morneau (Liberal Party), manages core contributions to – and Canada’s relations with – the World Bank, in consultation with GAC.
Parliament in Canada is composed of the House of Commons, the Senate, and the Monarch of the United Kingdom (represented by the Governor General). Within the House of Commons, Standing Committees review government policies in specific areas. The Standing Committee on Foreign Affairs and International Development (FAAE) supervises the operations and management of GAC. During parliamentary debate of the budget, the FAAE holds hearings with the Minister of International Development and La Francophonie. However, amendments to GAC’s budget lines are unlikely under a majority government like the current one (for more details, see Question five: ‘what are the important decision-making opportunities in Canada’s annual budget process?’).
CANADA'S DEVELOPMENT COOPERATION SYSTEM
The House of Common’s Standing Committee on Finance (FINA) is responsible for budgetary policy, including Canada’s development assistance. FINA invites CSOs, the public, and other stakeholders to submit suggestions by August each year on the next year’s budget as part of a pre-budget consultation process.
The Development and Humanitarian Assistance Civil Society Partnership Policy, released in 2016, outlines the guiding principles and objectives underlying the government’s engagement with CSOs in alleviating poverty and delivering humanitarian assistance. It lays out several principles and high-level objectives for Canadian CSOs. These include giving a voice to the marginalized, promoting community-government engagement, and increasing accountability and aid effectiveness through the enhanced involvement of individuals in decision-making processes. GAC convenes CSO representatives annually to discuss the implementation of this policy.
Beyond these key decision makers, there are important fora in which development discussions and decision-making occur. The International Development Research Centre (IDRC), headed by President Jean Lebel, is a Crown corporation, and an independent, publicly-funded institute. The IDRC is a key vehicle of Canada’s development cooperation, and is mandated to support research, tools, and leadership to address development problems. The government appoints the Board, which along with the Centre Management Committee guides the direction of the center. The Management Committee includes four regional directors and directors from main program focus areas.
Since 1944, Export Development Canada (EDC) has been Canada’s state-owned export credit agency. Headquartered in Ottawa, it comprises 17 regional offices across Canada and permanent representations in 12 foreign markets. EDC is mandated to support trade between Canada and other countries and promote Canada's competitiveness in the international marketplace. Its current President and CEO is Benoit Daignault. A new actor in Canada’s development program in 2018 is FinDev Canada, Canada’s development finance institution. FinDev Canada is a wholly owned subsidiary of EDC and aims to be financially sustainable by generating returns on loans and investments while producing favorable economic and social impacts in the communities where its clients operate. Capitalized with CAD300 million (US$235 million), FinDev announced its first investment in March 2018, a CAD10 million (US$8 million) investment in Kenya-based solar energy company M-Kopa.
- How is Canadian ODA budget structured?
IAE is the primary ODA budget tool; new funding through innovative tools
The main budgetary tool that funds development assistance in Canada is the International Assistance Envelope (IAE). According to Budget 2018, in FY2018/19 Canada’s IAE will amount to CAD5.6 billion (US$4.2 billion). The largest share of the funding will be allocated to the core development programs (56%). Other key areas of funding are international financial institutions (14%), such as core contributions to the International Development Association (IDA), and humanitarian assistance (13%). The IAE includes new funding for 2018 of CAD200 million (US$151 million). These new resources will be mainly dedicated to support Canada’s core development programs. This is part of the government’s proposal to provide an additional CAD2 billion (US$1.5 billion) over five years to the IAE. This increase will be done incrementally, with an additional CAD100 million added each year after the CAD200 million first-year increment in 2018/19.
Overview: Budget FY2018/19
International Assistance Envelope (IAE) 5,186 4,057 Core Development 3,615 2,828 International Financial Institutions 1,344 1,051 Humanitarian Assistance 194 152 Peace & Security 33 26 New Budget 2018 Funding 527 412 Crisis Pool 271 212 Strategic Priorities Fund 172 135
In 2018, Canada aims to increase its use of innovative financing mechanisms by allocating CAD1.5 billion on a cash basis over five years, starting 2018-19 (US$1.1 billion). This funding will be divided among two new measures: the International Assistance Innovation Program (CAD873 million, or US$659 million over five years) and the Sovereign Loans Program (CAD627 million, or US$473 million over five years). These two new measures will complement Canada’s core development activities by leveraging the use of guarantees, equity, and repayable contributions. The government expects to double its international assistance provided through innovative tools over the next five years, placing Canada as a leader in ‘blended financing’ for foreign assistance.
In line with Canada’s commitment to protecting vulnerable women and girls, the government will provide CAD20 million (US$15 million) over three years starting 2018-19 to welcome an additional 1,000 refugee women and girls.
Overview: Reallocation to IAE of existing resources FY2018/19
Total spending 200 150 New Innovation Program 55 41 New Sovereign Loans Program 2 2 Ongoing Program Funding 143 108
- What are important decision-making opportunities in Canada’s annual budget process?
Fiscal year runs from April to March
Canada’s fiscal year runs from April 1 to March 31. Key stages in Canada’s budget process include:
- Central agencies work with departments to develop budget strategies: In June, the Cabinet convenes to review the current budget and identify priorities for the upcoming fiscal year. From June to September, central agencies (Privy Council Office, Department of Finance, and Treasury Board Secretariat (TBS)) work with the government departments to incorporate the results of the Cabinet review, in order to develop budget proposals for the Finance Minister to consider. By September, all government departments, including GAC, send budget letters to the Finance Minister, which includes requests for budgetary changes.
- Pre-budget consultation process, including public outreach and parliamentary consultations with external stakeholders, begins: From June to August, the Department of Finance invites CSOs and other stakeholders to submit suggestions on the full budget, including for development. These are compiled and may be taken into account by the Finance Minister during the development of the budget. The pre-budget consultation process provides direct opportunities to advocate for issues around the overall ODA file.
- Minister of Finance consults with Parliament: In October, the Minister of Finance releases Budget Consultation Papers and begins consultation with the House of Commons’ Standing Committees. These consultations run from October to December; participants from within government as well as other experts are invited to give testimony on policy areas and budget lines. Results of the consultation process and recommendations of the Standing Committees and Cabinet policy committees are compiled and taken into account by the Finance Minister in the development of the budget. Continued engagement with key decision-makers is key during this time. Further, during this period, the Department of Finance launches its annual consultation on ODA, as required under the Official Development Assistance Accountability Act. While not part of the official budget consultation, this is a critical opportunity to advocate for increases for overall ODA or specific initiatives.
- Fall Fiscal Update and Public Accounts of Canada are released: In fall – typically November – the Department of Finance tables its Fall Fiscal Update and Public Accounts. These provide an update of economic and fiscal projections since the previous budget. Around this time the House of Commons’ Finance and Foreign Affairs Committees hold consultations. These may provide direct opportunities to advocate for development issues, especially during the discussion of the Public Accounts, when the status of the execution of the previous year’s budgets are released.
- Finance Minister develops budget strategy, Cabinet reviews it; Prime Minister and Finance Minister make final decisions: In early December, the Minister of Finance develops a budget strategy with input from the Memoranda to the Cabinet from all departments. These outline both policy priorities and financial asks. The Cabinet reviews these and budget proposals from December to January. The Prime Minister and the Finance Minister may make final adjustments until February/March. At this time, the PMO and other Cabinet-level officials are able to ‘push in’ funding for specific development initiatives.
- Main Estimates are tabled, Finance Minister delivers Budget Speech; budget is approved: The budget is usually presented to the House of Commons in February/ March in a speech by the Finance Minister. The Main Estimates (ME), which are the detailed spending plans for each department for the upcoming financial year, will be tabled by the President of TBS no later than April 16 in 2018. However, there will be areas of surplus not included in the ME, as the government will look to maintain a ‘surprise’ factor around highly political areas, including development spending.
- How is Canada’s ODA spent?
Multilateral organizations are a key channel; World Bank’s IDA is largest multilateral recipient
In 2016, Canada channeled more than half (53%, or US$2.1 billion) of its ODA through multilateral organizations. Core contributions to multilateral organizations accounted for 32% (US$1.3 billion) of total ODA in 2016. Key recipients were the World Bank’s IDA (29%), followed by UN agencies (21%) and regional development banks (11%). In December 2016, at the 18th pledging session of the World Bank’s IDA, Canada announced a total payment of CAD1.3 billion (US$981 million) to IDA for the three-year encashment period. In addition to core contributions, Canada channeled 31% of its bilateral ODA (US$826 million, or 21% of total ODA) in 2016 through multilateral organizations as earmarked funding for specific countries or issues. This is well above the 11% average of OECD Development Assistance Committee (DAC) countries. Canada considers this an effective way to deliver increasing amounts of ODA while reducing administrative burden.
From 1986 to 2010, Canada provided all bilateral ODA as grants. In 2011, the government began to provide loans within the framework of the ‘Fast-Start Finance’ climate initiative. In 2014, loans were first reported as ODA (5%), but in 2016 bilateral ODA was fully allocated through grants again (DAC average: 9%). In the FY2017/18 budget, Prime Minister (PM) Justin Trudeau’s government announced plans to launch a development finance institution (DFI) – initially introduced by the Harper government in the FY2015/16 budget – which will be capped at CAD300 million (US$226 million). The DFI, operating under the FinDev Canada brand, will be a wholly-owned subsidiary under Export Development Canada (EDC), a Crown corporation that serves as Canada's export-credit agency. Launched in January 2018, FinDev will focus on generating economic development by job creation, promotion of gender equality, and green growth, with a regional focus on Latin America and sub-Saharan Africa. Canada is the last G7 country to create such an institution, and it will, among other things, be leveraged to support companies operating in developing countries and promote investments in the local private sector.
Who are Canada’s ODA recipients?
Canada’s development programs focus increasingly on low-income and fragile countries. From 2014 to 2016, one-third of Canada’s bilateral ODA (33%) was channeled to low-income countries (LICs). When excluding funding not specifically allocated to one country (e.g., regional programs, administrative costs, and funding for CSOs), more than half (53%) of bilateral ODA went to LICs. PM Trudeau has pledged to refocus Canada’s development-assistance program on “helping the poorest and most vulnerable and supporting fragile states”. This may result in a greater share of ODA being allocated to LICs.
According to the FIAP, Canada will ensure that at least half of its bilateral ODA will be directed to sub-Saharan African countries by 2021-22. The largest share of bilateral ODA goes to sub-Saharan Africa (33% from 2014 to 2016). In addition, between 2014 to 2016 12% of bilateral ODA went to the MENA region. This is consistent with Canada’s new multi-year commitments to the Syrian region and its emerging interest at the nexus of peace, security, humanitarian, and development assistance. On average, Ukraine was the largest recipient of Canadian development funding for the 2014-2016 period, with US$156 million per year on average, followed by Afghanistan (US$103 million), Ethiopia (US$94 million), and Mali (US$85 million).
How is bilateral funding programmed?
GAC’s geographic program branches share programming with input from embassies
The basis for programming of Canada’s bilateral programs are multi-year country strategies and mutual accountability frameworks, in which sector priorities, expected results, shared principles, and high-level indicative funding for bilateral assistance are outlined. The most recent country strategies were developed for the former 20 focus countries, for 2009 to 2013. The recent FIAP moves away from priority country lists, and it is expected that GAC will renew its country strategies. The country strategy review process, led by GAC’s geographic program branches, offers an opportunity to shape country programming, including sector priorities in each country. GAC’s geographic branches also take the lead on designing concrete projects and programs and allocating funding.
Canada’s embassies provide input on project development and assist in monitoring projects. Under PM Trudeau, ambassadors and high commissioners (consulars) enjoy a certain degree of autonomy. However, major projects usually require approval by the Office of the Minister of International Development and La Francophonie, who can approve programs up to CAD20 million at her own discretion. Programs with a budget beyond this limit require approval from the Cabinet’s Treasury Board.
How will Canadian ODA develop?
- ODA has slightly decreased from 2015 but is expected to increase. Budget 2018 puts forward a CAD2 billion increase in the International Assistance Envelope over five years (US$1.5 billion). This is in line with the government’s pledge to “restore and renew” Canada’s development assistance.
- Budget 2018 also puts forward a new allocation of existing resources through two new programs that leverage innovative financing mechanisms: the International Assistance Innovation Program and the Sovereign Loans Program. These programs indicate Canada will use blended finance to achieve the SDGs.
What will Canada’s ODA focus on?
- Through the new feminist foreign policy, Canada’s international assistance has a stronger focus on “the world’s poorest and fragile countries” and applying a ‘feminist lens’.
- Health, particularly sexual and reproductive health and rights (SRHR) and maternal, newborn, and child health (MNCH), are an important focus. This was recently evidenced by Canada’s pledge of CAD20 million (US$15 million) at the ‘She Decides’ conference in Brussels in March 2017, and by PM Trudeau’s announcement to allocate CAD640 million over a three-year period for SRHR. Canada has also newly committed to Family Planning 2020 and the Ouagadougou Partnership.
- Tackling climate change in developing countries is a top focus of Canada’s development policy. The government has committed to spending CAD2.7 billion by 2020 within this sector (US$2.0 billion), and has already increased funding for related programs. It is likely that this trend will continue through increased integration of agriculture, food security, and clean economic growth.
What are key opportunities for shaping Canada’s development policy?
- In June 2018, Canada will hold the G7 presidency with a focus on five key priorities: 1) Inclusive growth; 2) Preparing for jobs of the future; 3) Advancing gender equality and women’s empowerment; 4) Working together on climate change, oceans, and clean energy; and 5) Building a more peaceful and secure world. This presents a major opportunity for Canada to show leadership on these key priorities.
- Canada’s pledge to the UN climate convention Conference of the Parties (COP21) in Paris in November 2015 could be used as an opportunity to advocate for more resources to be allocated to addressing the effects of climate change within other sectors, such as to agriculture and health.
- Canada’s heightened commitment to sexual and reproductive health and rights (SRHR) within its feminist international assistance policy may offer an opportunity to secure resources or engage in policy implementation in this area.