The Rana Plaza disaster in Bangladesh in April killed more than 1,100 garment factory workers and has drawn scrutiny to the sourcing practices of western retailers. (Reuters.)
Canada's foreign aid agency for several years has been in a controverisal partnership with companies in the mining sector.
The Canadian International Development Agency, now folded into the Foreign Affairs ministry, gave cash to non-profits who partnered with mining companies. The partnerships have been widely criticized by activists who say the mining sector’s poor image threatens to tarnish the reputations of charities. Moreover, some charitable donors complaine the mining companies have enough money to fund their own social programs.
A new report for the CD Howe Institute by Simon Fraser University professor John Richards suggests the Canadian government should consider adopting that controversial model in Bangladesh's garment sector. Richards writes, "Canadian diplomats should play a larger role in tackling political obstacles to effective aid, whether in negotiating trade agreements or assuring the success of development projects."
He suggests Canada could financial help those companies who have signed onto the Accord for Bangladesh Fire and Factory Safety. Loblaw is the most prominent Canadian member of that group, which has pledged to spend millions of dollars to improve factory safety in Bangladesh.
"Manufacturing offers the potential to increase labour productivity among a sizable fraction of the labour force, as opposed to a very small number with most resource projects," Richards writes.
He also argues that Canada might consider adopting a relatively new foreign aid tactic called cash-on-delivery aid. Instead of paying in advance for a development program in a poor country like Bangladesh, Canada might pay only based on positive results. But this strategy, promoted by the Center for Global Development, a New York aid policy think tank, is hardly a cure all.
Cash on delivery aid would only be a success if information about a program's successes could be verified by an independent third party. A garment company, for example, that could reap tens of thousands of dollars in Canadian aid if it graduated workers through literacy programs would be tempted to inflate its number of graduates.
Rick Westhead is a foreign affairs writer at The Star. He was based in India as the Star’s South Asia bureau chief from 2008 until 2011 and reports on international aid and development. Follow him on Twitter @rwesthead