Tied Aid

Canadian InternationalDevelopment Agency

Agence canadienne dedéveloppement international

Tied Aid

University of British ColumbiaSeptember 2005

G-1

Canadian InternationalDevelopment Agency

Agence canadienne dedéveloppement international

Tied Aid: What is it?

Practice of requiring that aid funds be used for purchases in donor countries.

G-3

Canadian InternationalDevelopment Agency

Agence canadienne dedéveloppement international

A Policy Statement on Strengthening Aid Effectiveness Concerns with Tied Aid:

Cost of procurement (15 to 30% higher)At odds with promoting local ownership and capacity buildingComplex administrative controls Constraint on donor coordination

G-16

Canadian InternationalDevelopment Agency

Agence canadienne dedéveloppement international

Canadian Record Relative to Other Donors

In 2000, Canadian bilateral aid was reported as 66% tiedThird highest behind Spain and USA

In 2003, Canadian bilateral aid was reported as 47% tiedThird highest behind Spain and USA

G-16

Canadian InternationalDevelopment Agency

Agence canadienne dedéveloppement international

Theoretical Efficiencies: Can they be achieved?

CorruptionCapacity of Developing Countries to manage ICBExperience of World Bank and Regional Development Banks

G-16

Canadian InternationalDevelopment Agency

Agence canadienne dedéveloppement international

C

IDA

- A

CD

I

Canada

Canadian International Agence canadienne de Development Agency développement international

International Policy StatementApril 2005

Maximize the contribution to be made by Canada and CanadiansAdvance Canadian values of global citizenship, equity and sustainability, as well as our interests re: security, prosperity and governanceMatch Canadian niches with developing country needsMobilize Canadians in dialogue and participation to build our capacity to contribute to global proverty reduction

Canadian InternationalDevelopment Agency

Agence canadienne dedéveloppement international

C

IDA

- A

CD

I

Canada

Canadian International Agence canadienne de Development Agency développement international

Are the two policy statements at odds? What is more important: untied aid or

participation by Canadians? What is right balance? Can a highly untied program sustain

Canadian taxpayer support? Untied aid: does it jeopardize reaching the

0.7% target or is it essential to achieving it?

Questions to consider