Is Canada helping the world’s poor, or Canadian [mining] companies? – by Elizabeth Payne (Ottawa Citizen – February 2, 2012)

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Elizabeth Payne is a member of the Citizen’s editorial board.

Few  Canadians have likely heard of the Canada Investment Fund for Africa. But, since 2005, it has been busy investing Canadian foreign aid dollars – $100 million of them, in fact – on companies doing business in Africa.

The objective of the fund, which was eventually worth more than $200 million in public and private money, was “to spur economic growth by providing risk capital for commercially successful private-sector businesses.”

A number of those 16 businesses, including Orezone, a gold mining company operating in Burkina Faso and Banro Mining, a Canadian gold mining company which operates in the Democratic Republic of Congo, are Canadian. The fund also invested in Candax, a Toronto-based oil and gas company working in Tunisia, as well as a number of African companies, including the Commercial Bank of Rwanda, Mr. Big’s Fast Foods, and others.

International Affairs Minister Bev Oda has been busy lately defending recently announced CIDA partnerships with NGOs and mining companies. But it seems CIDA has a longer, and more direct, relationship with the Canadian extractive industry in the developing world through the Canada Investment Fund For Africa.

It is an approach to international development – based on the belief that investing in private companies is the best way to improve the lives of the world’s poor – that we will be seeing more of. Oda has made that clear.

But does it work? And what are the pitfalls? That is not so clear.

The Canada Investment Fund for Africa was the brainchild of Jean Chrétien’s Liberal government and was inherited by the Conservative government. It represents a direction in foreign aid that the Conservative government has embraced. In recent interviews, Oda has moved the philosophy forward, describing an approach that uses Canadian extractive and agriculture companies as virtual tools of foreign aid. Since Canada has expertise in mining and agriculture, she said, Canada can offer a “value added” to development aid by helping countries to attract more foreign investment in those areas. And, all the better if it benefits Canada as well. The joint projects between some Canadian mining companies and NGOs to do development work near where mines operate are part of this philosophy.

Many have questioned who really benefits from this policy – Canadian companies and shareholders, the world’s poor, or both? And, if the benefits mainly come back to Canada, how can that be called international development?

Providing jobs and tax revenues to developing countries seems to make sense as a development tool, but some research suggests that isn’t always the case.

“CIDA has been given a new mandate to support Corporate Social Responsibility projects of mining companies with Canadian tax dollars through official development assistance,” said Catherine Coumans of MiningWatch Canada in a brief to the House of Commons Standing Committee on Foreign Affairs and International Development, which is looking into the issue.

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