The previous sections of this report have drawn attention to several broad arguments regarding the Committee’s study topic. These include:

• The private sector comprises a number of actors: large, medium and small-sized for-profit firms; individuals; and non-governmental organizations.
• An understanding of the private sector’s role in development must encompass both the activities of multinational firms and firms of all sizes based in developing countries.
• For-profit firms can make a substantial contribution to meeting international development objectives, particularly through inclusive business models.
• Private resource flows — including foreign direct investment and remittances — now dominate the developed world’s economic relationship with developing countries; those resources need to be harnessed more effectively for development objectives, particularly given the scale of the challenges that need to be overcome. These challenges cannot be overcome by governments acting alone.
• Public and private sector actors can complement each other in the pursuit of development interests by partnering and enabling each other to focus on their unique approaches, skills, expertise, etc.
• Maximizing the contributions of private firms — local and multinational — requires a strong enabling environment for private sector activity within developing countries, conditions and rules which must be established and implemented by public sector authorities. This is an area where official development assistance can play a significant role.
• Ensuring that economic growth is inclusive — benefitting the poor and local communities in developing countries and helping them to emerge from poverty — requires strong institutions and public accountability mechanisms, another area where official development assistance should play a significant role.

In short, the private sector’s role in development is significant, multi-faceted and complex.

In 2003, under a previous government, the then-Minister of International Cooperation launched a Canadian International Development Agency (CIDA) “Policy on Private Sector Development.”[344] In May 2009, the then-Minister of International Cooperation, the Honourable Bev Oda, announced that “sustainable economic growth” would be one of the three priority themes for development assistance provided by CIDA, alongside food security and children and youth.[345] Then, in October 2010, the Minister released CIDA’s strategy for “Stimulating sustainable economic growth.”[346] This document is focused on overcoming the obstacles to sustainable economic growth within developing countries, by building economic foundations, growing businesses and investing in people. While it does mention that CIDA will work with development partners that include “Canada’s civil society and private sector” to implement this strategy, it does not discuss why or how.

The Committee believes that as a foundation for an increased engagement with the private sector, CIDA needs to develop an updated and comprehensive strategy that addresses the full range of activities and actors involved, the connections between them, and the mechanisms that should be put in place to ensure that CIDA is able to engage effectively with the private sector to achieve Canada’s development objectives. The issues addressed in such a strategy would be relevant to all three of CIDA's priority themes. The Committee is also mindful of Canada’s Official Development Assistance Accountability Act, which under section 4 (1) states that: “Official development assistance may be provided only if the competent minister is of the opinion that it (a) contributes to poverty reduction; (b) takes into account the perspectives of the poor; and (c) is consistent with international human rights standards.”[347] Therefore:

1. The Committee recommends that the Canadian International Development Agency (CIDA) publish an updated and comprehensive policy position on the role of the private sector in achieving Canada’s international development objectives. This document should address in detail the ways in which private sector actors — enterprises, individuals and non-governmental organizations — can contribute to inclusive economic growth in developing countries within a framework of effective governance, strong public sector institutions and sustainable development (i.e. development that takes into account social, economic and environmental aspects). It should also articulate a strategy that, among other things, outlines:

• How CIDA will adapt internally in order to implement this policy position and engage effectively with private sector actors;
• The Agency’s overall approach to public-private partnerships; and
• Any new development finance tools that may be required.

Witnesses, as well as the then-Minister of International Cooperation,[348] argued that CIDA is behind other development agencies in the pursuit of public-private partnerships. The Committee believes that such partnerships offer a number of benefits as a development cooperation mechanism. The Committee has taken into account these advantages, as well as the challenges and lessons which were discussed in this report, in formulating the following recommendation:

2. As part of the overarching policy recommended above, the Committee recommends that CIDA pursue appropriate public-private partnerships as an important tool of its development programming. The Committee further recommends that CIDA’s approach to partnerships with private sector companies should incorporate:

• Non-governmental organizations (NGOs), foundations, and associations, other bilateral and multilateral development agencies, and developing country governments, as additional partners where appropriate;
• A robust and transparent mechanism of due diligence to identify partners and viable projects;
• A simple and year-round procedure to allow companies, NGOs and foundations to submit project proposals;
• An office within CIDA that is dedicated to communication and engagement with the private sector, providing a consistent contact point for prospective partners and ensuring a timely response to all project proposals;
• A process that involves partners in the planning and design stage of projects, when appropriate;
• A requirement for partners to match CIDA resources at least 1:1 with financing or in-kind contributions;
• Clear, detailed and publicly available statements on the objectives of each project that is undertaken and the contribution being made by each party; and
• A process to monitor each project which would assess its outcomes against the project’s established objectives, and its broader contribution to poverty reduction through inclusive economic growth.

3. The Committee recommends that CIDA consider offering loans and utilizing other financial instruments to enable private sector led, sustainable economic growth in developing nations.

4. In order to ensure that CIDA has the expertise to engage effectively with the private sector, in compliance with existing Government of Canada conflict of interest rules and guidelines, the Committee recommends that it:

• Provide appropriate training to existing staff;
• Explore ways in which the Agency can increase its recruitment of staff who have experience working in the private sector; and
• Consider the possibility of staff exchanges with Canadian companies.

Throughout this report, institutions and rules, particularly where economic governance is concerned, were also highlighted as key determining factors in inclusive economic growth. Therefore:

5. The Committee recommends that CIDA reallocate attention and resources to working with developing countries to help them establish the institutions, regulations and policies that provide an enabling environment for sustainable economic growth.

6. The Committee recommends that CIDA offer technical assistance to developing country governments that enables more foreign direct investment for the purposes of private sector employment.

A number of specific issues, concerns and recommendations regarding the natural resource and financial services sectors were also brought to the Committee's attention, as documented in this report's two case studies. On those two sectors:

Natural Resources

7. The Committee recommends that the Government of Canada restate its support of the internationally recognized Equator Principles for corporate social responsibility.

8. The Committee recommends that CIDA work to strengthen institutional capacity — including taxation, regulation, monitoring and reporting functions — in developing countries with significant natural resource sectors, focusing in particular on strengthening governance and consultative processes at the local level to improve development outcomes.

9. As part of recommendation 8, the Committee further recommends that CIDA support work to strengthen democratic oversight capacity in developing countries with significant natural resource sectors. Such support could include the establishment and maintenance of a network and/or roster of retiring and retired Canadian public servants interested in such work.

10. In light of recent developments in other jurisdictions, the Committee recommends that the Government of Canada review the policy recommendations, when completed in 2013, of the Resource Revenue Transparency Working Group related to mandatory disclosure requirements for payments that are made by Canada-based natural resource companies to governments in developing countries.

Financial Services

11. The Committee recommends that CIDA work with financial institutions and mobile phone companies to help facilitate the expanded availability in low-income countries of financial and information services based on mobile platforms.

12. The Committee recommends that CIDA continue to provide development assistance for microfinance initiatives, but that it focus its support on those institutions which have demonstrated results in lifting people out of poverty and in reaching the poorest and most vulnerable members of society, and on those institutions that have demonstrated reputable practices with respect to interest rates and client indebtedness.

13. In order to implement recommendation 12, the Committee further recommends that CIDA help microfinance organizations to establish standards of behaviour for the industry and metrics to monitor whether social objectives are being realized from microfinance products.

Finally, the Committee heard compelling testimony regarding the importance of remittance flows from Canada to developing countries. Therefore:

14. The Committee recommends that the Government of Canada establish a statistical profile of remittance flows from Canada and explore all possible mechanisms to reduce the costs within Canada associated with sending remittances to developing countries.