About $1 in every $10 of Canadian aid money was reportedly unspent last fiscal year, hinting at the difficult road ahead for the government to streamline, simplify and speed up operations in the merged Department of Foreign Affairs, Trade and Development.
Preliminary figures recently released by the Office of the Parliamentary Budget Officer show that the former Canadian International Development Agency reportedly spent only $2.76 billion out of the $3.14 billion set aside for grants and contributions for fiscal year 2011-2012.
Canadian aid implementers consulted by Devex raised their concerns over delayed approvals of proposals and cancellation of CIDA-designed projects that once again hound the country’s development department.
The Harper government continuously upholds its international commitments, but it appears to underspend money allotted for bilateral assistance, according to Keith Ogilvie, a consultant and external committee head of the Canadian Association of International Development Professionals.
In an official statement sent to Devex, DFATD clarified: “These are preliminary figures, therefore we cannot comment on them until the public accounts are tabled in the fall.”
Canadian government agencies can still adjust their expenditure figures until the audited financial statements are sent to the parliament this fall. A source from Canada’s budget office told Devex the adjustments are usually “small.”
Devex also learned that before Julian Fantino left Canada’s development department, he signed a number of proposals pending in his office for months.
For fiscal year 2013-2014, CIDA — recently “amalgamated” into the Department of Foreign Affairs, International Trade and Development — was given $2.72 billion in grants and contributions for fiscal year 2013-2014. DFATD has yet to submit its expenditure reports to PBO as of posting time.
Aid money to pay off debts
At least one major contractor told Devex the buzz in the Canadian aid community is that keeping the money in CIDA’s hands until the end of fiscal year on March 31 was allegedly meant to help the cash-strapped Canadian government pay off its debts.
Canadian law states that unspent money should be returned to the Treasury Board — the lapsed aid money then becomes part of the federal budget pool which the government can tap.
Some sources say the amount is even bigger, possibly $800 million or more than a billion reverting back to the Treasury Board.
“Money lapsed is money lost — it doesn’t roll forward into future years,” Ian Smillie, a member of McLeod Group and a vocal critic of the CIDA-DFAIT merger, told Devex. “The underspending seems to have been a way of cutting the aid budget by stealth and of dealing with the overall government budget deficit in unannounced ways.”
When the news of underspending came out early this year, Fantino was quoted as saying: “It isn’t about shoveling money out the door, it’s about doing the right thing for the right reasons all around.”
Over the past years, aid partners have increasingly been frustrated with delays in disbursing funds.
Holding off proposals for months has rather become a norm in Canada since former development minister Bev Oda introduced at the beginning of 2010 policy changes aimed at boosting aid effectiveness.
Through its partnerships program, Canada puts out calls for proposals based on a selection of thematic priorities and special initiatives, as the government wants to put 80 percent of its bilateral aid only in a select group of 20 priority countries.
“There has been a chronic backlog in approvals by the president and minister of projects proposed by bilateral programs, with some project approval requests now anecdotally reported to be more than a year old,” Ogilvie told Devex.
Development officials have been constantly being asked by aid partners for answers, and Smillie noted their standard reply is: “The project is on the minister’s desk.”
Aid partners confirmed that the majority of projects need to go through the minister. Over the past years, approval levels for projects have been reduced so that projects would need the minister’s stamp of approval, a habit that some partners claim started under Oda.
“To our knowledge, these internally reduced levels have not been changed since her tenure,” said Ogilvie.
But the merged department says they approve proposals consistent with its goals and plans.
“DFATD only considers proposals that are consistent with strategic programming directions, complement its existing programming portfolio, and for which specific financial resources are available,” the agency told Devex. “All proposals submitted by partner organizations to DFATD are reviewed against our stated goal to help people living in poverty in developing countries and for their sustainability, development impact, and projected results.”
Some partners have been increasingly diversifying their funding sources to contain the full impact of delays and underspending on Canadian aid. Ogilvie noted experts, consultants and partners may one day veer away from working in this uncertain period with Canada’s development agency.
These problems in the end may haunt the newly merged DFATD, partners fear. In Canada, the programing cycle is usually five years and there is going to be a “big gap” in programing because there was a year where nothing major really came out.
Projects on hold
Canada’s development agency, according to sources consulted by Devex, appears to have contributed to multilateral organizations more or less as anticipated.
But a Canada-based contractor revealed that although Fantino approved a number of projects, a majority of other proposals worth an estimated $50 million Canadian dollars have been sitting in the department.
Some partners have resorted to issuing multiple requests for “extension of validity.”
Proposals sent to Canada’s aid agency expire after 180 days under current rules. CIDA-designed projects that were years in the making have been reportedly cancelled: In the past six months alone, partners have heard about half a dozen projects being terminated.
Sources also noted that there have been fewer contracts advertised through the government’s online tendering system. AAs of posting time, no opportunities appear at DFATD’s development arm’s tender website.
Even consultants are feeling the drought of projects from DFATD.
“Consulting work continues to flow predominantly through existing standing offer arrangements, some of which are now more than five years old,” said CAIDP’s Ogilvie. This scheme was initially established as a two-year arrangement, he explained.
A standing offer is not a contract but an offer from a supplier to provide goods and/or services at pre-arranged prices.
One consultant with over 30 years experience working on Canadian aid recounted three years ago that “everything stopped” without explanation from CIDA even as he held a standing offer contract.
Since then, CIDA stopped offering contracts to this consultant, who has retired from development work and is now a certified mediator.
DFATD, for its part, said that proposals may not be approved for the following reasons:
Ineligibility based on legal restrictions or criteria within a call for proposals.
Incomplete application package.
Funding not available within the specific program budget.
Expected results as outlined in the proposal are not fully in line with relevant CIDA program strategies or Canadian government commitments.
Elements in the proposal are assessed as weak.
Impact of backlogs, underspending
The impact of backlogs and underspending was featured in a 2011 survey conducted by the Canadian Council for International Cooperation, which carried out the project when a month-long funding delay threatened businesses.
So what happened? According to the report, civil society groups have to restructure their non-Canada-funded projects, alter their overall budgets or draw from their financial reserves to continue work. With little coming out from Canada’s development program, they find it hard to plan ahead.
Staff were laid off or quit amid the uncertainties, and hiring was also delayed.
In the world of development, experts say planning interventions is crucial — programs approved one day may change once situations also change. Development is also long-term and results may not be achieved once program is delayed.
In the words of Smillie, “development delayed is development denied.”
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