Good afternoon, Mr. Chair and members of the committee, and thank you very much for the invitation.
I'm John Guarino, president of Coca-Cola Refreshments Canada. Joining me today is Sandra Banks, vice-president, public affairs and communications.
I've had the privilege of living and working internationally for the last 25 years and serving markets in Europe, the Middle East, Africa, parts of Asia, and now, very proudly I might add, Canada. I've seen first-hand how the Coca-Cola company and its bottlers strive to make a positive difference in the communities around the world, and particularly in Africa. I have been travelling to Africa for the last 20 years and have visited 25 countries on the continent. I have personally witnessed both the promise and the challenges of this great continent. I love Africa for what it is and what it can be, and I am pleased to be here to share our story.
At the Coca-Cola company we know our business can only be as strong, sustainable, and healthy as the communities we serve. We believe that no company can have a significant impact in sustainability by working or thinking alone. Instead, we must rely on partnerships that connect business, government, and NGOs.
In Canada we collaborate with government, NGOs, other businesses, and local communities across the country to develop better solutions in the areas of active living and the environment. Through our partnership with the Breakfast Clubs of Canada, we have provided Minute Maid juices to school breakfast programs for over ten years. We work with ParticipAction to get kids off the couch and get them active, and with the WWF we are working to protect the Arctic habitat of the polar bear. Those are just a few of the ways we are partnering with others to make a positive difference. I should add that in Canada Coca-Cola operates in all ten provinces and employs directly 6,300 people in more than 50 facilities, including seven production plants.
Coca-Cola has been on the African continent since 1928, when the first bottling plant was established in Johannesburg, South Africa. Today Coca-Cola operates in all 56 countries and territories in Africa. We are one of the continent's largest private sector employers, with approximately 65,000 employees. In addition, it is estimated that for every person employed by Coca-Cola, more than ten people are employed in related industries.
Our corporate social investment programs in Africa are coordinated and implemented by the Coca-Cola Africa Foundation. Established in 2001 in response to the growth and impact of the HIV pandemic, today the Coca-Cola Africa Foundation supports many other community initiatives. In being here with you today, I will focus on four important areas of our investments in Africa. These are health, including undernutrition and disease; women economic entrepreneurship; water; and sustainable agriculture. Given the scale and complexity of today's health issues, it's challenging for one business or even one industry to make a material difference on its own.
As you may know, malnutrition accounts for 11% of the global burden of disease, and it is the number one risk to health worldwide. We are using our beverage expertise to help with undernutrition, and Coca-Cola is working to bridge the protein gap in impoverished nations with protein-rich beverages. Coca-Cola is developing and distributing a global fortified juice product to give school children much-needed vitamins and minerals. We are partnering with government, nutrition experts, and organizations like the World Food Programme and the Howard G. Buffett Foundation to get this beverage into school lunch programs, together with nutrition and physical activity education. Our global partners on this include Cutrale Citrus Juices; DSM, a global science-based company active in health and nutrition; Tetra Pak; and the Global Alliance for Improved Nutrition, an NGO related to the Bill and Melinda Gates Foundation.
Last year we launched pilots in Colombia, Malaysia, and Ghana. So far in Ghana we've reached 2,500 students, and we expect to reach 4,000 students by the end of next month.
Our concern for health and well-being extends beyond undernourishment. Since 2006 the Coca-Cola company has been involved in NetsforLife, a partnership battling malaria in sub-Saharan Africa. To date, NetsforLife has distributed 8.5 million nets, saved the lives of more than 100,000 children, and trained nearly 74,000 malaria control agents.
AIDS, of course, is one of the great health issues of our time. Through the Coca-Cola Africa Foundation, we have formed partnerships with local grassroots and international NGOs to deliver HIV/AIDS education and prevention.
Our partnership with the Africa Network for Children Orphaned and at Risk, or ANCHOR, helps to support over 146,000 HIV/AIDS orphans and vulnerable children across eight African countries.
Building on an existing partnership with the Global Fund to Fight AIDS, we joined with RED late last year to raise money and awareness in the fight against AIDS with our music platforms and other resources.
The world is now close to achieving the first AIDS-free generation of our time by virtually eliminating mother-to-child HIV transmission by 2015.
Coca-Cola is also working with the Global Fund, the Bill and Melinda Gates Foundation, and the Yale health leadership institute to increase access to vital medicines in Tanzania. Using our supply chain expertise, we've joined with Tanzania's Medical Stores Department to develop a new distribution strategy, redesign core processes, and train medical store staffers. We're now working with our partners to replicate this initiative in Ghana, which has an acute need for vaccine distribution.
Around the world, we've seen first-hand the positive impact women's economic empowerment has on the health and well-being of families. In fact, we're striving to enable the empowerment of five million women entrepreneurs worldwide across our value chain by 2020. This effort, called “5 BY 20”, was launched in 2010. We expect to reach a total of 300,000 women by the end of this year.
In Africa, our micro distribution centre model has provided business ownership opportunities for women in Kenya, Tanzania, Uganda, Ethiopia, and Mozambique. In Nigeria and Ghana, over 70% of the micro distributors are owned by women.
Water is a very important focus for us, and one closely related to health and women's empowerment. By 2020 we're committed to giving back 100% of the water used in bottling our beverages.
Already we've conducted 386 community water projects in 94 countries since 2005. These projects not only have a direct health impact but they also empower women, given the time many women must spend carrying water, particularly in Africa.
To date, 42 water projects in 27 countries have been supported, in partnership with and co-funded by the United States Agency for International Development, USAID, under the Water and Development Alliance, or WADA, and other partners.
In Senegal we undertook a Water and Development Alliance project to enhance access to water and sanitation for approximately 22,500 people in poor, rural, and remote communities. Our WADA project in Tanzania is providing water, sanitation, and hygiene services to almost 17,000 people living in ecologically sensitive areas.
The Coca-Cola Africa Foundation also has a Replenish Africa Initiative, known by its acronym “RAIN”. Our goal is to provide over two million people with access to safe drinking water by 2015. In the Amhara region of northwestern Ethiopia, RAIN has given access to water and sanitation to over 45,000 rural residents. RAIN will launch over 100 water access programs across Africa, including sanitation and hygiene education programs.
Finally, encouraging more sustainable agriculture practices is another focus for us. Agricultural products are ingredients in almost all of our beverages, so the health of our business depends on a healthy agricultural supply chain.
Our juice business is growing significantly. To make sure we can source enough juice to meet the demand, and to help improve the livelihoods of fruit farmers, we formed Project Nurture. This is an innovative four-year, $11.5-million partnership with the Gates Foundation and TechnoServe, a not-for-profit business organization.
With Project Nurture, we are helping more than 50,000 farmers in Kenya and Uganda to grow mangoes and passion fruit for locally sold fruit juices, building Coca-Cola's business while creating sustainable livelihoods at the farm level. A third of the participating farmers are women.
So far, more than 18,000 metric tonnes of fresh fruit from this project have been harvested and sold. Minute Maid juice drinks using locally grown mangoes from this project will be launched in eight countries beginning next month.
I know I've covered a lot of territory, and I appreciate your attention. I cannot promise to know all the details behind our many global initiatives, but I will do my best to address any questions you may have.
Thank you very much.
Good afternoon, everybody. It's my pleasure to be here today. Thank you very much for fitting me into your busy schedules.
My name is James Haga. I have the privilege of working as a senior director with a Canadian organization called Engineers Without Borders. I've been working with this organization for four years, starting in west Africa and Ghana. I've also had the chance to work in east Africa, in Kenya and Tanzania, and I've been in our office in Toronto for the last three years.
I'll start by telling you a bit about our organization. We have over 55,000 members of EWB, as it's known across the country. We are an engineering-based organization, as is evidenced by our name. We attempt to work in a systemic way, a way you would expect engineers would try to contribute to society, focusing not on symptoms, but on the underlying root causes of why poverty persists.
We have a staff of over 60 people, in five countries in Africa. We focus primarily on three areas of development: first, water and sanitation, particularly via support and maintenance systems, ensuring that the longevity of water resources continues to be accessible; secondly, through agricultural development; thirdly, through rural infrastructure development.
With respect to the subject matter the committee is focusing on right now, I'd like to focus my comments on an innovative new financing mechanism for development aid, one that we believe creates an opportunity for effective engagement between both public and private sector players.
As a leader in international development, the Government of Canada is not only dedicated to improving the lives of people living in poverty, but it is also committed to pushing boundaries in search of better and more effective ways to do such work.
We welcome and support recent commitments by Canada, for instance, untying all of Canada's aid and signing on to the International Aid Transparency Initiative, and being a leader in supporting initiatives such as the G-20's small and medium-sized enterprise finance challenge.
In 2012 Canada also ranked first among all G-8 countries on fulfilling commitments made at international summits, which is a great testament to our country.
The truth is that much of foreign aid does work, and things have been getting significantly better in recent years. Hundreds of millions of people around the world are better off because wealthy countries like ours paid to vaccinate children, dig wells, build roads, and buy school books.
That being said, some foreign aid is misspent. Critics argue that much of it is ineffective and can at times hinder development. Too often money is spent on inputs that fail to achieve the desired outcomes. While many aid programs are successful, others fail for a number of reasons. The primary flaw in the current way of delivering foreign aid is that it tends to strengthen the accountability from recipient countries to donors rather than their own citizens.
Canada allocates close to $5 billion a year in aid, yet even with our good achievements there is still more we can do to maximize the results of our dollars. In the context of the world's current fiscal reality, more than ever it is important to be creative in maximizing the value of those dollars.
With this in mind, I'm here today to talk to you about an idea for Canada to invest in, which is the new cost-effective approach to foreign aid called cash-on-delivery aid.
Critical to the subject matter of the committee's study, the cash-on-delivery approach provides an opportunity for innovative collaboration between public and private sector players. With this approach, the focus is firmly placed on delivering results in the most effective and efficient manner. Notably, this proposal is not focused on the amount of aid that Canada gives, but instead on making our approach to that aid more effective.
Cash-on-delivery aid is inherently a results-based funding approach. This means that Canada only provides funding once progress towards an agreed upon result has been demonstrated. In short, if results are not achieved, Canada doesn't pay.
Paying for results is nothing new in the world of business, but it's not necessarily the way traditional foreign aid has worked. By starting with the focus on results, cash-on-delivery aid can make some forms of foreign aid more effective, less corrupt, and better able to respond to what people truly need. In doing so, cash-on-delivery has the potential to capture more public support for aid programs that often save the lives of millions of people.
Let me provide a quick example of how cash-on-delivery aid could work.
Canada and the Government of Ghana could enter into a five-year contract that specifies a set of payments and what Ghana must do in order to receive those payments. These would be made public. The contract would set a baseline--for instance, the number of children expected to graduate from high school. The year after that and for five years running Ghana would receive $20 for every child who graduates up to that baseline number. As an incentive to do even better, additional money could be provided for every child who exceeded that baseline. The results would have to be accurately measured by Ghana. Since school records are often spotty, Ghana would administer a standardized test and count the number of students who took it and make those results public. Once the contract is signed—and the contract itself is a key element of how this would work—Canada would leave it up to the Government of Ghana to choose how it wants to deliver the agreed-upon result and who should do it. This means that the Government of Ghana, hypothetically, would be responsible for the end-product result, although they could choose the most effective and efficient way to deliver that result. It could be through their own public service, contracting a private company, engaging local or international NGOs, or any combination of the three.
Ghana could do whatever it thought was necessary to solve the problem. If it squandered resources or had money carved off through corruption and there were fewer graduates as a result, it would get less money. By definition, donors would not be wasting taxpayers' dollars.
You might be wondering if this approach is working or being piloted anywhere. In fact, it is currently being attempted through a partnership between the U.K.'s Department for International Development and the Government of Ethiopia. They've stepped into a contract. The idea is that the Department for International Development will make grant payments to the education ministry of Ethiopia for the increase in the number of students above a baseline that sit for or pass the national grade 10 exam. Education is just one example of a sector or an issue this model of aid could work through. Currently it is the only area in which this idea is being piloted.
Piloting cash-on-delivery aid would bolster Canada's reputation as a global leader in delivering effective, efficient, and innovative aid. It aligns very well with Canada's and CIDA's commitment to results and to greater accountability. This approach ensures a higher level of accountability for partner-country citizens and Canadians alike. By working through local governments to establish jointly desired outcomes and then gather precise, reliable information about those outcomes, cash-on-delivery strengthens public institutions and motivates political leaders in developing countries to care about measuring their country's progress towards clear goals.
This alone enhances accountability between partner governments and their citizens, which in the long term is absolutely essential for sustainable development. It would also alleviate the sense that a country's problems were being fixed by outsiders, and local officials and citizens would be able to claim ownership over their own progress. Further, because the cash-on-delivery model means that Canada transfers funds only once results have been demonstrated, Canadian citizens themselves can trust that their taxpayer dollars are being used effectively.
To wrap up and review, I believe there are a number of critical benefits to this approach to delivering foreign aid, things that could leverage both private and public sector players, with the defining element being that it puts an emphasis on the result and on whoever is best equipped to deliver that result in view of the partner country government with whom Canada would enter into a contract. This approach would maximize the value of Canada's aid by delivering funds only once measurable progress has been demonstrated. It would provide better and more evidence as to how Canada's aid efforts are making a difference in people's lives. It would increase the efficiency and sustainability of Canada's aid efforts by decreasing administrative burdens on both Canada and our partner countries and increasing partners' freedom and responsibility to manage and deliver on their own development commitments.
This approach would contribute to enhanced global security and the national interests of Canadians by facilitating the strengthening and stabilization of local leadership, political institutions, and civil society in developing nations. It would continue Canada's leadership in improving aid transparency and accountability, an area in which our country has quite recently become a global leader.
I believe that investing in cash-on-delivery aid would be another step in the right direction for Canada's aid policy. While it is certainly not a silver bullet approach, we believe there is considerable potential for this innovative financing model presenting Canada with a unique opportunity to maximize the value for money of our development efforts and lead the world in piloting an efficient results-based aid model.
Thank you very much. I will certainly do whatever I can to address any questions you might have.
Thank you for the question.
First of all, given that much of our business is in the developing markets, we feel that the role of women in our business has not been represented properly. Many people think of us as a heavy business—lifting, bottling, cases—but the truth is that we have such a diverse business and we require so many different things that we weren't always able, particularly in booming economies, to get all the resources we needed.
We felt that the economic impact of women's entrepreneurship was not being recognized, so that's why we instituted this program, 5 BY 20. This is a global program. We go country by country and have objectives for each country. It's a separate department reporting into the senior leadership of the company in Atlanta, where we monitor these.
And it's everything.... It's micro-distribution, which would be a small village where we would appoint somebody who is responsible for delivering Coke and our products to the stores there. We would deliver to them and then they would distribute around to that community, store by store and restaurant by restaurant. We've set targets on that. We would want women to own that business, for example. Then they go out and hire the salespeople and the delivery people who can handle the product and do the deliveries every day.
It has been extremely successful. Needless to say, women have been wonderful managers of this business—across Africa. We know that in many places in Africa in developing markets sometimes maybe they don't get a fair shot at economic empowerment, at owning a business, or at running a business, and they're pretty darn good at it. Also, it is linked not just directly to our business, but to looking at our suppliers as well, and to saying that when we go out and work with advertising agencies and suppliers—whether of raw materials for the production plant or just office supply—we have targets of how many women entrepreneurs we're going to be working with.
That's how we plan on getting to five million women by 2020. It's a lofty goal. We feel we're on track. As you said, we're a business. It's a win-win as far as we're concerned. We're getting the benefit of having all of these economically empowered women supporting our business globally.
If it's okay, Mr. Van Kesteren, I'll give another example, something that is burgeoning for our organization in Ghana.
For those who don't know the country of Ghana, it is coming out of the gates strongly right now. In fact, it's sort of entering into middle-income status. They've discovered oil in the last few years, and they have been drilling and finding ways—they've been partnering with the Norwegian government—to ensure they're going to use those revenues that are generated in responsible long-term ways. The Government of Ghana is actually quite a remarkable example.
That being said, the northern region of the country is particularly underdeveloped and much poorer than the south, and that's where our organization works. Obviously Ghana, in part, is a bread basket for Africa—for western Africa, at least—and there is huge agricultural potential in that part of the country.
One of the biggest challenges is a lack of business skill from within agricultural communities. It is often very small-scale, very subsistence-based farming. So we partner with agricultural colleges. Dave, you met the director of one of these colleges, Dr. Bempong.
We partner with these colleges to work with their students and farmers in the regions throughout rural northern Ghana to equip them with business skills—small things, like bookkeeping, understanding markets better, and helping to facilitate market connections. That's so people who have a great deal of expertise in growing crops in that region are also equipped with the right set of skills to make sure their product reaches market, that they're getting a fair price for that, and that they're connecting to regional markets, and at times international markets as well.
This is something we've been very actively involved with, training thousands of Ghanaian entrepreneurs and farmers in the northern part of the country.
First, it's not, in our organizational view, the be-all and end-all. The work we continue to operate is in fact not an illustration of this model. We are not engaging in this model, because we are, quite frankly, a different kind of organization, and this is something in which the primary actors involved, at least at the first point, are governments.
That being said, our interest in the cash-on-delivery idea has to do with how that fits into a larger conversation about innovation in development aid. This is an example we believe merits further examination, and if it is done it will illustrate that the Government of Canada is investing in and putting its support behind innovative delivery mechanisms for aid.
So an important way to think about this is not that we start diverting significant proportions of our aid financing to cash-on-delivery aid, but instead to say there is a need for risk-taking in foreign aid if we're going to see transformative effects. So let us try this idea, because there is substantial support behind it. There's been a huge amount of discourse on this for the last couple of years and a number of people of great prominence in the international community, to name a few, have supported it. I'm actually forgetting her name, but there is the finance minister from Nigeria, who recently ran for the presidency of the World Bank. She is a big supporter of this idea, as is former Secretary-General Kofi Annan. As well, some of the top brass at USAID have in fact been looking at this as well, as have some other governments around the world.
It's not to say it is the be-all and end-all; it's just to say there is a pilot being done right now, and Canada has an opportunity to get in on this early-stage idea in order to build the evidence base that could then be used to really have an effective new model of aid delivery.
That's a great question.
Just to add a personal angle to this, when I was 19 years old I lived and worked in east Africa, in Tanzania. Every day I would get on a minibus and go to work, and we would pass through two or three police roadblocks. Each day, at each of those instances, the driver would have to pay off a little bit of money to the police officer in order to be able to pass through. There are many reasons why that is the case. They are deeply complex. In many respects, I understand why the police officer wants to take just a little bit on the side. They are not even getting paid enough necessarily to take care of their families. So these issues of corruption are not easily solved. Often there isn't solely one person to blame for them.
With respect to the idea that we're speaking about right now, cash-on-delivery aid, I think it attempts to solve as best it can the issue of corruption. It is not the sole focus of why this is an interesting model. At the end of the day, this is about a result, and the result is what matters.
The thinking is that if a government is going to achieve that result, collusion and corruption are less likely to have taken place, because if they have taken place, then we should not have evidence at the end of the day that the result was achieved. As I said, third party verification that is extremely thorough needs to be in place to have some checks and balances to ensure that moneys have been used properly.
Another key attribute of cash-on-delivery aid is that it requires that the government—of Ghana, for instance—needs to make that contract and all of the details of that contract publicly available. That way, the citizens, the Ghanaian media, the Ghanaian parliamentarians, whoever it might be, can see and access that information readily and can hold their government and their leaders to account on what they are supposed to be delivering to their citizens.
That is actually an innovation and an improvement upon which a lot of aid has traditionally worked. It's not going to solve all corruption, but we believe it is certainly a step in the right direction. It gives more incentive, quite frankly, because a government isn't going to get money unless they're able to deliver that result. They all of a sudden have a lot more reason to really focus in hard on ensuring that they're delivering quality services for their people.