Canada Eyes African Resources amid Shrinking Foreign Aid

By Fawzia Sheikh Reprint | | Print |

TORONTO, Nov 13 2012 (IPS) - With an initial focus on oil-producing Nigeria and mineral-rich Ghana, Ottawa is bolstering its trade strategy in Africa, but some within the international development and economic communities have expressed concerns about Canada’s approach.

The Canadian government was criticised for cutting foreign aid a few years ago, and in particular when Africa amassed some of the greatest hits.

The Canadian International Development Agency ended bilateral programming in countries where aid efforts are hindered by high operating costs, including Rwanda, Zambia, Zimbabwe, Malawi and Niger. The agency also decided to reduce and concentrate its bilateral programming in five states, including Mozambique, Ethiopia and Tanzania.

Yet last month, after years of viewing the continent as mainly a foreign aid recipient, the Conservative government announced a trade mission slated for next January encompassing the extractive resource industries and the infrastructure sectors related to energy, power generation and mining.

The new-found attention is not that surprising, given that Africa appears to be in the midst of an upswing.

Between 1995 and 2010, Africa’s annual average GDP growth was 4.3 percent a year, making the continent one of the fastest-growing regions of the world, Rudy Husny, press secretary to Ed Fast, the Canadian minister of international trade, wrote in an email to IPS. Solid economic growth is expected to continue this year and in 2013, he noted.

Roughly 100 Canadian companies operate in Ghana, which offers a politically stable business climate and respect for the rule of law, according to the trade ministry. The two countries reported 321 million dollars in bilateral merchandise trade in 2011, a 61-percent increase over 2010, Husny said.

In 2011, bilateral merchandise trade between Canada and Nigeria, Canada’s largest trading partner in sub-Saharan Africa and the continent’s most-populous state, equaled more than 2.7 billion dollars, a rise of 44 percent since 2010, the ministry states.

The fledgling Nigerian Canadian Business Association aims to assist Canadian and Nigerian companies in doubling trade to six billion dollars by 2015.

Is trade, not aid, the answer in Africa?

Without a doubt, there is growing attention on “the very interesting economic growth rates in Africa and also the wealth of natural resources that is very attractive for Canadian companies,” acknowledged Sylvie Perras, the Africa-Canada Forum coordinator at the Canadian Council for International Cooperation in Ottawa.

The government of Prime Minister Stephen Harper is shifting from aid toward trade, Perras told IPS, conceding that Canadian private sector development strategies for Africa are important but must be consistent with poverty reduction and the development goals of African countries themselves.

On the whole, she said, a developing country is constrained from enhancing the potential social, economic and environmental benefits of outside investment and trade and from minimising the potential damage that this funding may bring.

This is why, she said, her organisation is pushing for the inclusion of a human rights impact assessment in all trade and investment agreements Ottawa strikes with foreign governments.

Last month, Canada concluded an investment promotion deal with Tanzania, a country which will see increased Canadian investment in several sectors including mining, oil and gas and transportation. Ottawa has also forged trade and investment initiatives with Benin, Burkina Faso, Cameroon, Côte d’Ivoire, Ghana, Tunisia, Zambia and Senegal.

As the Canadian trade minister and his delegation head to West Africa early next year to unearth opportunities in the extractive resource industry and infrastructure sector, the CCIC, Perras’ group, is also continuing to seek the strengthening of Canadian companies’ corporate social responsibility policies, especially in relation to African mining activities.

“This has very rarely been beneficial for African countries,” Perras argued. “We say that it creates jobs, or it creates revenue, but when we look at it more closely, it’s not necessarily the case.”

Mineral-heavy countries have not spurred economic development for their local populations, according to a CCIC backgrounder, as high unemployment rates, debt and poverty are widespread in mining communities.

According to a report by the Organisation for Economic Co-operation and Development issued earlier this year, the drop in Canada’s overseas development assistance since 2011, as well as a decision to zero in on fewer countries that are predominantly middle income, “may undermine the support (Canada) has given in recent years to poor countries with weak capacity, especially in sub-Saharan Africa.”

In 2011, Canada’s net overseas development assistance fell to 5.3 billion dollars, a decrease of 5.3 percent from 2010, states the peer review published by the OECD’s Development Assistance Committee.

In the report, the OECD advised that Canada and other nations must ensure that development objectives and partner country ownership are key to the programmes it supports, and that there is “no confusion” between development aims and the promotion of commercial interests.

Moreover, Canada’s Official Development Assistance Accountability Act, which was enacted in 2008, directs that aid money should consider the perspective of the poor, human rights obligations and environmental standards, Perras added.

Although Canadian foreign aid is still extremely important to Africa’s funding of health, governance, education and NGO development, conceded Lucien Bradet, president and CEO of the Ottawa-based Canadian Council on Africa, “what we have neglected in the past is being part of the economic development of Africa in a sizeable manner”.

“We are not doing a good job,” Bradet told IPS.

Canada’s bilateral trade with Africa jumped from an annual two billion dollars at the beginning of the 21st century to 13 billion dollars, but it would be feasible to increase these numbers by 15 percent to 20 percent a year, he said.

In comparison, China, India, Turkey and Brazil are boosting by 25 percent to 40 percent a year their trade and technology relationships with Africa, he noted, with China’s trade growth dramatically leaping from 10 billion dollars a decade ago to 160 billion dollars.

Economic development offers an improved standard of living to developing-country populations through investment and trade, and allows locals to manufacture, export and establish their own enterprises, Bradet said.

The more Canada facilitates these activities, the more it will be perceived as a “significant partner in Africa, not only in aid but in economic development”, he added.