What Canada can learn from other bilateral aid mergers

The tough job of merging Canada’s foreign aid agency with the country’s diplomatic and trade arms may begin as soon as this week, after the Senate ratifies a budget bill that contains the historic reform. The legislation, known as C-60, calls for the amalgamation of the Canadian International Development Agency with the Department of Foreign Affairs and International Trade — two gargantuan institutions, each with their own unique management styles, diverging cultures, business lines and staff profile. The government of Prime Minister Stephen Harper plans to take a “phased approach” led by DFAIT and CIDA, a spokesperson told Devex. Ambassadors and high commissioners will continue to ensure the coherence of Canadian affairs on the ground, and staff working at headquarters and abroad will be transferred to the new department, which will continue to be responsible for ensuring on-the-ground coherence within all Canadian programs being delivered in the country, including development and humanitarian assistance. The CIDA chief will remain a cabinet member, but the spokesperson noted: ”CIDA would no longer exist as a separate agency.” As for how the merger will take shape, it is hard to predict, since the budget bill provides no time tables and few specifics, but a look at the agency’s current challenges, as well as the experience of other bilateral donors that have merged their aid programs with other government agencies, may provide clues on the road ahead. Lessons from other aid mergers Over the last two decades, at least four countries integrated their aid programs within a broader foreign affairs department: Denmark, Finland the Netherlands and Norway. Their experience, and that of others, may help Canada anticipate the challenges ahead and avoid common pitfalls: From communication breakdowns and uncoordinated staff to duplicitous responsibilities and a bureaucracy resisting change, or a new recruitment system that favors generalists over specialists who are so crucial to the successful delivery of foreign aid. Peer reviews regularly conducted by the Organization for Economic Cooperation and Development indicate that amalgamation in many — if not all — countries with an integrated foreign affairs arm remains a work in progress. Finland and Denmark, for instance, have struggled with communicating and consistently implementing policy across 12 departments, in the case of the Finnish Ministry for Foreign Affairs, and 11, in the case of the Danish equivalent, according to reviews by the OECD’s Development Assistance Committee. “There is also the risk of duplication of activities and a lack of clarity about responsibilities,” OECD-DAC wrote in 2007. Two years ago, the panel said about Denmark: “Creating a new layer of managers through the 11 centers has made decision making and coordination among staff more complex, and rendered reporting lines unclear.” Amalgamation requires collaboration and the sharing of best practices between development specialists, diplomats and trade experts in and between embassies and headquarters. Staffing, training and disseminating knowledge is key to sustaining a strong workforce dedicated to development. Finland grappled with human resources: Its general recruitment system was, according to OECD-DAC, “not designed specifically with development issues in mind,” an training was, at one time, limited to one week out of a three-month general induction program. The OECD recommends governments pursue a merger by creating a career path that allows development specialists to climb the organizational ladder. This was the institution’s suggestion in 2011 to the Netherlands, whose integrated foreign affairs agency at the time employed only a small group of sector specialists — 77 out of more than 1,500 ministry staff — and had suffered job mismatches: Expertise did not match new thematic priorities in the case of education, which wasn’t a priority sector even though 21 education specialists were on staff. Bureaucratic challenges By many accounts, Canada’s aid program is highly centralized and bogged down by high staff turnover, budget cuts and a creeping bureaucracy. The value of procurements has decreased over the years, and in 2012, CIDA failed to spend between 20 percent and 25 percent of its budget, Keith Ogilvie from the Canadian Association of International Development Professionals told Devex. CIDA approved in 2007 a total 276 “purchases of goods or services for development assistance,” but that number was down to 125 last year, a Devex analysis of the agency’s quarterly reports of contracts worth more than 10,000 Canadian dollars shows. One out of every 20 procurements was worth more than one million Canadian dollars between 2004 and 2013; three out of five were worth less than 50,000 Canadian dollars. The process of approving the average CIDA project took 10 documents and 20 signatures, according to a 2012 peer review by OECD-DAC which noted that “at times, small projects, were referred upwards for approval.” CIDA is “centralized and overburdened by approval and reporting procedures,” the peer reviewers reported. Staff turnover was found to be an issue, particularly at senior levels. Many staff members were said to be dissatisfied with CIDA processes, and the agency was in danger of not having enough people with the right skills to support its programs. A government survey conducted two years ago showed that although 81 percent of CIDA staff liked their job, about 43 percent of the respondents thought of leaving in the next two years due to of burgeoning paperwork, unreasonable deadlines, lack of stability in the agency and dizzying changes in priorities, among other reasons given. One question for the new, integrated agency will be how to place staff across offices, missions and embassies, and how to tweak the chain of command. CIDA is a top-heavy agency in part because nine in every ten employees work at headquarters, with only 207 overseas staff. The Canadian International Development Agency has been leaning towards hiring generalist staff and, staff surveys claim, lacks a management model “which uses and values CIDA’s professional and specialist resources effectively.” CIDA may need to do more to attract and develop skills and expertise in its five thematic priorities and cross-cutting issues, staff members have suggested. CIDA’s road ahead DFAIT’s creation in 2006 “enhanced policy coherence” across foreign and trade objectives and helped Canada to increase economic opportunities through international engagements, says the Canadian government. “There are similar opportunities for synergies with our development assistance,” Harper noted in his 2013 budget plan. For CIDA to be fully integrated with diplomacy and trade, more decision-making authority should be delegated to field staff, argue aid advocates like Ogilvie. Terms such as effectiveness, sustainable development and, above all, Canadian values and priorities would need to be clearly defined. Current agency staff will be retained in the new, integrated department, the agency spokesperson confirmed. “CIDA staff, including staff currently posted in partner countries, would become employees of the new department, and in the case of CIDA staff posted abroad, would continue to represent the programs for which they are currently responsible,” the spokesperson told Devex. Merging CIDA with DFAIT will, of course, take time — a long time, most likely. When a number of foreign affairs and trade agencies merged in the 1980s, it often took a decade for the integrated departments to fully function. But amalgamation may prove to be a blessing if it helps tackle some of the challenges the agency continues to face now, and if it avoids some of the pitfalls other mergers have experienced. Read more about the ‘tug of war’ over CIDA reform here and Canadian minister for international cooperation Julian Fantino’s exclusive opinion for Devex here.