Thumbs Up, Canada: EWB’s Budget 2017 Breakdown

Federal Budget 2017 is out! Our review? We give the government of Canada our thumbs up on details outlining the implementation of a Development Finance Institution (DFI).

EWB is encouraged by the government’s creation of the DFI, particularly the explicit focus on women’s economic empowerment, poverty reduction and job creation in some of the world’s poorest regions.

This is a win but it needs to be followed up with action. We are looking forward to working with the government to get the details right. It needs to fulfill a number of important criteria including being complementary to foreign aid, focusing on poverty reduction, and providing patient capital and catalytic financing.

Share your thumbs up with Prime Minister Trudeau, Finance Minister Morneau, and International Development Minister Bibeau by signing the letter to the right!

A win for the EWB community

EWB and our members began campaigning for the creation of a Canadian DFI in 2013. Our first win was Federal Budget 2015, which included legislation of $300 million dollars allocated over 5 years for this. But legislation is not the same thing as implementation. Since 2015, we have been campaigning for the government to operationalize the DFI. And now it’s happened!

So we also want to give the EWB community a big thumbs up and say thank you. This win happened because of the tireless efforts of EWB members over the past few years in calling and visiting MPs, signing petitions, and championing these values to our leaders. These policy asks are not easy to explain. They’re not “sexy,” but they work.   

A quick refresher on DFI (in case you forgot)

In Canada, public financing is increasingly stretched to address key development challenges, such as humanitarian crises, the impacts of climate change, and, more notably, the  implementation of the Sustainable Development Goals (SDGs).

In the developing world, promising businesses in low-income and middle-income countries struggle to find the necessary financing to grow, create jobs and reduce poverty. Private lenders typically find it too risky to provide affordable capital to entrepreneurs in these regions. This is the finance gap, and Canada can close it with good policy.

DFIs provide financing to small, medium and large enterprises in countries where access to capital is limited, and within sectors where growth leads to jobs, such as manufacturing, agribusiness, infrastructure, financial institutions, construction, health and education.

So, what’s next?

EWB will be paying attention to how the government will implement its DFI over the coming months and years. We want to make sure Canada operates it in the following ways:

• Focuses on profitable commercial support to businesses building markets in developing countries.
• Uses a broad range of financial instruments: loans, equity investments, guarantees, risk insurance, et al.
• Leverages catalytic financing: small amounts of public finance strategically designed to mobilize private capital.
• Is unconstrained by nationality: able to work with businesses and entrepreneurs from any country.
• Remains distinct from other public development efforts: not a grant provider or a channel for industrial policy.
• Profitable and self-sustaining: profits are retained to finance the operations of a DFI.
• Relies on patient capital: backed by government, able to borrow at low rates and invest in long-term returns.
• Operates as an additionality: a complement, not a substitute, for Official Development Assistance (ODA).

EWB is encouraged to see action on the DFI, and recommends predictable, annual increases to the International Assistance Envelope (IAE) with the goal of reaching the UN target of 0.7% of GNI by 2030.

Keep supporting us!

This victory is the culmination of many years of work with the help of thousands of EWB community members. While we rely heavily on the generous time and energy from our members to advance these advocacy efforts, we also can’t carry out this work without adequate financial resources. Please consider supporting our advocacy efforts by making a donation! 

More ways to support us:

1. Join our community of young leaders and advocates at our Day of Action this May! Sign up here.
2. Sign up for our newsletter to stay updated on EWB’s work! Sign up here.