Overview

Over the past year, the House of Commons Standing Committee on Foreign Affairs and International Development (“the Committee”) has conducted a study on the role of the private sector in achieving Canada’s international development interests. During that time, the Committee heard the views and recommendations of a wide range of Canadians and others on what is a vast, complicated and important subject. While the testimony covered a broad range of specific topics, the Committee has focused this report on core thematic issues relevant to the study.

The report begins by reviewing recent changes in the development landscape. It explains that even though the fundamental goals of international development have not changed, in a number of areas opinions have changed on the ways in which they can most effectively be achieved.

Private sector actors are increasingly being recognized as a major force in development. They drive economic growth through investment, employment and business creation, innovation and knowledge transfer, and other multiplier effects from their operations and activities. Ensuring that this growth is likely to contribute to long-term poverty reduction, however, requires private companies to include the poor as producers, suppliers, employees and consumers. Under the right circumstances, public-private partnerships that are based on the identification of complementary expertise and shared commercial and development interests are also an important tool that can harness the private sector’s contribution to such inclusive growth.

The report also makes clear that the public sector performs key functions in the pursuit of inclusive economic growth. Indeed, the link between governance institutions and development is a recurrent theme throughout the report. Public institutions create the conditions and rules within which sustained and inclusive economic growth driven by the private sector is possible. Beyond this enabling environment, strong public sector capacity is needed to ensure that authorities are able to deliver services and carry out their regulatory and other responsibilities in a transparent manner that strengthens the accountability ties between them and their citizens. The key message of the report is that it is the combination of increased private sector activity alongside good public policies and robust institutions that is most likely to lead to success.

While Canada has very little experience with public-private partnerships in its development work, others have amassed considerable expertise regarding the best practices required to ensure development impact and sustainable outcomes. These examples, which will be discussed in subsequent sections of the report, offer a number of lessons for Canada.

The report also includes two detailed case studies of sectors in which a number of witnesses argued that Canada has significant strengths and expertise that would enable it to have a positive impact on development outcomes. The first of these is financial services (see pages 59-68). The second is the natural resources sector (see pages 68-87). While each case study discusses the issues and challenges specific to the sector in question, both reinforce the need for a combination of responsible private sector activity and public sector regulatory and other capacity.

In considering the full range of private sector actors and activities that could be harnessed towards the realization of development objectives, the Committee has also identified a couple of areas — including engagement with diaspora communities — where it believes further work is needed.

The report concludes with a number of recommendations to the Government of Canada, which reflect the broad range of testimony the Committee heard. The Committee believes that these can help to guide an effective Canadian approach to international development in this new landscape.