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A doctor advises the mother of a newborn diagnosed with a chest infection at the Kisesa Health Centre, supported by CIDA through the Health Basket Fund, in Magu District, Mwanza, Tanzania.

Joshua Kraemer

Pope Francis's personal humility and his expressions of solidarity with the poor, during a religiously significant season, have helped bring the question of poverty back to the forefront. At the same time, the federal government's decision in the 2013 budget to fold the Canadian International Development Agency into the Foreign Affairs Department has aroused controversy, with claims that the government is trying to diminish Canada's contribution to the overcoming of international poverty. These objections are misplaced. A more focused version of CIDA will do better work. There is no need to measure success by larger budget allocations or some set percentage of Canada's GDP.

Impressive strides in poverty reduction have been made in the past 15 years in countries such as Brazil, South Africa, China, Mexico, Nigeria and others in the developing world. There are 800 million fewer people living in poverty today than there were in 1990. Some of the emerging economies are growing at a faster rate than Canada's. The proportion of people who lack dependable access to good sources of drinking water has been halved – two years ahead of the time frame set out in the Millennium Development Goals.

There is no evidence, however, that this dramatic improvement in living standards is the result of international development assistance. Instead, these changes can be attributed mainly to trade liberalization, gains in productivity, technology and national income redistribution programs – and even to remittances from immigrants in the developed economies.

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The dawning realization that aid dollars and economic growth are not directly correlated has caused something of a crisis in the aid community. Humanitarian organizations are being forced to rethink traditional anti-poverty programs and consider new approaches.

Of course, they will always be crucial players in the delivery of emergency assistance following natural disasters or famines.

But new models for long-term development are needed, ones that rely less on one-time cash infusions to build bridges, roads and dams, and more on leveraging local resources and people to create sustainable models of growth – poverty prevention rather than poverty alleviation.

Consequently, the government's CIDA decision is well timed, and reflects this changing view. Such a reform is in line with other developed countries, including the United States, Norway and France, which house their aid agencies within their foreign affairs departments. After 45 years standing on its own, Canada's new foreign-aid agency will also be more closely aligned with Canada's trade and foreign policy – which need not be a bad thing.

"The fear that development will be taken over by commercial interests is not warranted. It's not about making development subservient to trade. There are synergies between the two," says Carlo Dade, a senior fellow at the University of Ottawa and development expert.

The government has said it will write a new legislative framework for aid, something that Canada currently lacks. In recent years, CIDA has been criticized for being overly bureaucratic and bogged down by excessive compliance requirements. A 2009 Auditor-General's report found that donors, recipient governments and program staff were unclear about CIDA's direction and long-term commitment to specific countries. A more transparent and rigorous mandate is needed.

CIDA emerged in an era when overseas direct assistance was the major source of capital inflow to developing economies, observes Wayne Dunn, a consultant and McGill University professor of corporate social responsibility. "Today, overseas direct assistance is outstripped 10 to 1 by foreign direct investment. And CIDA's organizational culture and leadership struggled to adapt to the new reality."

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In the present era, the reshaped successor to CIDA should not be only about foreign aid but also about modernizing Canada's relationship to the rest of the world.

The time is right for Canada to expand the public-private partnership model. To its credit, it has already launched several pilot projects with mining companies and non-governmental organizations, investing $50-million in education and training in Burkina Faso, Peru and Ghana. These partnerships, which some in the aid community have opposed, are common in the U.S., Australia, Germany and the U.K. "There is no reason Canada shouldn't leverage the resources and expertise of the private sector, just as they should look for partners in foundations and civil society groups," says Mr. Dade, who testified before the parliamentary standing committee on foreign affairs and international development on this issue.

Scott Gilmore, the CEO and founder of Building Partners, has changed the focus of his development organization, toward connecting local entrepreneurs in emerging markets to domestic, regional and global supply chains.

"We have changed our entire model. We now work with mining companies to help them find local supplies. We work with local governments so they can learn how to win contracts and back small businesses so they can afford to bid on larger projects. It is a revolutionary way of thinking for the development industry. "

Under its new leadership and mandate, the successor organization to CIDA can regain the premier reputation it had two decades ago as a leader in development and a place that fosters innovation and entrepreneurialism and sustainable long-term growth. Inside Foreign Affairs, it should adapt to a world of rapid technological change and dynamic international trade.

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