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CIDA, governance and Muhammad Yunus

by John Richards

yunusEarlier this year, the Canadian International Development Agency (CIDA) published Development for Results, a 70-page summary of the agency’s activities plus a synopsis of what it is doing in the 20 “countries of focus” selected for receipt of CIDA bilateral aid. To CIDA’s credit, the report summarizes some socioeconomic statistics of the 20 countries and CIDA priorities within each.

In the past, many – including me – have criticized CIDA for dissipating aid in small amounts in far too many countries, with negligible impact. In recent years, CIDA has responded to this critique by selecting “countries of focus.” This is certainly an improvement, though the list has not really been reduced to 20, since 14 Caribbean countries have been bundled together as one. On the whole the choices are sensible, although apart from pressure exerted by the Ukrainian diaspora in Canada it is hard to justify the presence on the list of relatively prosperous Ukraine.

More serious than questions of who is and is not on the list is that CIDA has not really come to terms with what it can and cannot achieve. CIDA has specified three “thematic priorities”: “increasing food security”, “securing the future of children and youth” and “stimulating sustainable economic growth.” It also specifies “three long-term crosscutting themes essential to effective international development results”: “environmental sustainability”, “equality between women and men” and “governance.” In relation to the last point, CIDA insists that “for development results to be sustainable, developing countries need effective, accountable governments and institutions that are responsive to their people.”

These are admirable priorities. However, the appropriate test is to ask: what projects or what countries do these priorities preclude? The answer: none. From humanitarian aid in Haiti to subsidized mining ventures in Sudan, any activity can be interpreted as falling under one or more of these priorities. And the only low-income country that might be excluded by application of the governance theme is Zimbabwe.

More so than elsewhere in official Ottawa, CIDA embodies a certain Canadian angélisme that prevents grappling with the world as it is. In many of CIDA’s countries of focus the major impediment to development is not lack of financial resources; it is the strategic decisions taken by the governing elites. Among the poorest of these countries, those with per capita incomes under US$2,500, whether the elites are nominally democrats or autocrats matters little. What matters is the depth of elite collective commitment to a set of reasonably efficient policies and some redistribution from rich to poor – providing decent education and health care, enabling private market activity, maintaining public infrastructure and so on.

The most glaring recent example of CIDA’s angélisme is taking place in Bangladesh, a major recipient of Canadian bilateral aid. Development for Results acknowledges that Bangladesh has “weak public sector institutions” – a breathtaking understatement given the evidence. Bangladesh has ranked at or near the bottom of Transparency International’s corruption perception index for most of the last decade. A crucial supplement to “weak public sector institutions” are some of the world’s largest NGOs, notably Grameen and BRAC, that provide a broad range of services. Grameen has outstanding microfinance loans to 7 million Bangladeshis, most of them women, for a multitude of small business activities. BRAC runs 40,000 schools.

Since late 2010, Bangladesh Prime Minister Sheikh Hasina has waged a campaign of character assassination against Muhammad Yunus, prophet of microfinance, founder of Grameen Bank and winner of the 2006 Nobel Peace Prize. With no credible evidence, she has accused Bangladesh’s most prominent international citizen of corruption. She has associated him with the unscrupulous activities of some for-profit microfinance providers in India, and forced him to relinquish his position as chairman of Grameen Bank. Having offhandedly once referred to Bangladesh politicians being “in it for the money,” Yunus faces prosecution for defaming the reputation of Bangladesh politicians.

Yunus’s comment was banally obvious. Reported briefly, it was soon forgotten. Why then Sheikh Hasina’s campaign of vilification? The most plausible explanation is that she fears him as a potential rival. During the recent military-backed caretaker government in 2007–08, Yunus tentatively broached the idea of entering politics. A more cynical thesis is that elements of Hasina’s political party look upon Grameen as an untapped source of boksheesh. The first thesis does not preclude the second.

The campaign to transform Yunus from international prophet of microfinance into a nonperson has prompted international outrage. Senior politicians – including Bill and Hillary Clinton – have defended Yunus’s reputation. Senior columnists – including Nicholas Kristof in the New York Times and Stephanie Nolen in the Globe and Mail – have described the campaign for what it is. International NGOs have prepared briefs on his behalf.1

Official Ottawa has been mute. The latest federal budget, tabled in March, devoted an entire page to extolling Canada’s 40-year history of support for microfinance in specific countries. No mention of Bangladesh or Grameen Bank. CIDA’s Development for Results report extols microfinance programs as a development tool, and cites the role of microfinance in many countries of focus – but not in Bangladesh. Again, no mention of Grameen Bank or Yunus.

The significance of host country elites as enablers of or obstacles to development is open to debate. Among academics, former World Bank economist Bill Easterly is the most insistent that they are key to understanding whether any country escapes poverty. His conclusion is that unless they are collectively committed to efficient policies, development aid amounts to pushing on a string. It will achieve very little. To the extent that donors can accomplish anything in such circumstances, they must bypass the host government and work via groups in civil society, such as NGOs.

Easterly’s intellectual opposite is Jeffrey Sachs, a prominent development economist associated with the UN’s Millennium Development Goals (MDGs), which specify targets such as rates for primary school completion and maternal mortality to be realized by 2015. Sachs argues that political corruption is an inevitable byproduct of poverty. If the wealthy first world adequately funded aid, the MDGs could be met and extreme poverty could be eliminated.

While I am closer to Easterly than Sachs, both score points and this is not the place to resolve their debate. But it is a debate that CIDA must engage if it is to have an impact. To pose themes – governance in particular – as vague generalities is to insult Canadians’ collective intelligence. CIDA would deserve a more positive evaluation if Development for Results contained fewer photographs of smiling children in countries of focus and more analysis of the world as it is.

 

Note

1 See, for example, the web site of the Canadian office of Results: www.results-resultats.ca/WhatsNew/NewsRelease_eng.asp?ID=100204

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About the Author

John Richards
John Richards is co-publisher of Inroads and an economist at Simon Fraser University in Vancouver.




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