Ottawa is launching a new fund aimed at attracting corporate investments for foreign aid, part of a growing push by the Conservative government to work more closely with the private sector in its international development efforts.
Canada will contribute $20-million to establish the fund with the World Bank's International Finance Corporation.
International Co-operation Minister Julian Fantino said Friday that the Canada-IFC Partnership Fund will focus on innovation in the financial sector and sustainable development in the extractive industry, adding that it would pay particular attention to economic development for women.
Mr. Fantino has made it clear in recent months that aid would increasingly be aligned with Canada's foreign policy and commercial interests abroad, a shift that was further cemented when Ottawa announced last month that the Canadian International Development Agency would be merged into the Department of Foreign Affairs and Trade.
In a conference call with reporters Friday, Mr. Fantino said the new fund would help leverage private sector investments to have a greater impact on international development work. Canada wants to "harness the power, resources and innovation of the private sector" to increase economic opportunities and help to lift people out of poverty, he said.
The minister said he met with officials from the World Bank Group and Canadian business leaders in Washington, including those from Bombardier International and KPMG. He said the meeting helped show the international institution that Canadian companies have a "comparative advantage" to offer when it comes to international development work.
In CIDA's most recent report on its plans and priorities, the agency said it would "increasingly assist partner-country governments in strengthening the private sector," particularly with respect to small and medium businesses, improving government regulations, training and access to credit.
"CIDA will contribute to the establishment of partnerships between communities, non-government organizations and the private sector to improve economic well-being for communities living near mines and other extractive operations," the report adds.
The agency has already partnered with several Canadian mining companies and non-governmental organizations on projects that include education and skills-training in developing countries. The projects, which are co-funded by mining companies and run by non-government organizations, have attracted some criticism, in part because they are seen as subsidizing mining companies' corporate social responsibility programs.
But supporters of the initiative argue that mining companies don't know enough about development to run projects on their own, and that the added CIDA investment has helped leverage more corporate resources for responsible development work.
Mr. Fantino has said in the past that he would like to pursue more projects with the mining industry, and facilitated a meeting with developing country officials and mining companies earlier this year.
In a public debate about the CIDA merger this week, Scott Gilmore, a former Canadian diplomat and founder of the international aid group Building Markets, argued that Canada is right to expand its links with the private sector. Business can have a much greater impact on reducing global poverty than foreign aid, he said.
"The future of Canadian aid is going to be on finance, it's going to be on ensuring proper tax regimes for these countries. It's going to be on humanitarian relief, of course, but it's also going to be about innovation, about enterprises," Mr. Gilmore said in the debate, which was organized by the Canadian Association of International Development Professionals.
Speaking in the same debate, Ian Smillie, a consultant and a founder of the Canadian aid group Inter Pares, said that where foreign direct investment and remittances contribute to jobs and growth, they should be encouraged.
"But the investment of an oil company is not the same thing as training teachers or educating children. The trickle-down effect of much foreign direct investment has been small, and the wealth creation is often heavily skewed in favour of people who are already well-off," he said.
Mr. Fantino also met with Haitian Prime Minister Laurent Lamothe and other international donors in Washington on Friday. It was the first meeting with the Haitian prime minister since Mr. Fantino's surprise announcement that Canada was reviewing its development assistance program in the Caribbean nation.
He said the review of aid to Haiti is continuing, but he is pleased with the progress the country's government has been making.