All Tied Up

Dan Watson

A trefoil knot

Aid money has been “untied” for more than a decade but much of it still goes to UK companies. Image: Baserinia

The recent furore about the pay-packets recieved by government aid consultants masks a more ugly feature of UK aid policy, as the Guardian reported. Aid contracts have been ‘untied’, meaning that there is no minimum share required to be awarded to UK firms, since 2001. Yet, with great transparency comes great responsibility and DFID is now under fire for awarding so few of its contracts outside of the UK and, in particular, so few to companies within developing nations. Why is it a matter of great concern that so much money for aid is destined for UK companies?

Whilst it is important to support UK industry it is even more vital to foster economic growth in receiving countries. Supporting industry in developing countries helps to keep money within the nations’ borders whilst fostering trade and growth and delivering economic and social opportunity.

Why might UK industry be receiving such a large proportion of development contracts? Really, this is a question for the staff at DFID but I have a few theories of my own.

1. Controlling bias and preventing the influence of corruption may not be a stated reason for the lack of contracts landing on developing nations’ business leaders’ tables but it must surely play a role. For instance, in one of DFID’s recent awarded contracts, “Monitoring and Evaluation of Nigeria’s State Level Porgrammes”, an organisation independent of the Nigerian government’s approval is vital. It might be more wise to ask an outsider, a non-Nigerian company, to “monitor progress with, and evaluate the achievements of”, new state-level programmes as they may have a greater capacity for impartial comment.

2. Related to bias control but far more likely to be a factor is the simple matter of trust. This works twice in the process. Firstly DFID looks to fulfil its programmes through organisations it can trust. This is all subsumed in DFID’s renewed passion for value for money as exemplified by its cuts in admin costs over the last year. It is further evidenced by a report from 2008 that talked about bringing commercial awareness to DFID’s procurement strategies. Minimising risk goes hand in hand with this concern for maximising value for money. Secondly, these organisations will rely on suppliers that they are confident are reliable. The argument currently is that the organisations selected by DFID are seldom based in developing countries. What this dual process of trust shows us is that capacity must be built from the bottom up; for local agencies to be able to rely on local suppliers, these suppliers must first be in business. For now we ought to drive for local suppliers, later we can talk about local agencies.

3. DFID’s portal is its online gateway to connecting with the organisation as a supplier. In my opinion, with boasting about the ease of registering online, DFID has rather unfortunately shut out a vast number of developing world suppliers that may find it harder to complete online applications.

4. Aid is certainly a numbers game. Development is all about targets, the quantifiable the better. The numbers don’t read well for organisations looking for suppliers in Africa on the UN’s pioneering forum, UN Global Marketplace, that seeks to connect suppliers and UN member states’ organisations. There is a real paucity of choice available to those looking to hire companies within developing nations. For instance, registered on the UN database, Mali and the Central African Republic have a grand total of only 3 and single supplier respectively. How we expect DFID to use local companies when one of the supposedly most comprehensive resource of suppliers lists so few local options. Lack of access similar to DFID’s exclusive focus on online applications will certainly play a large role. Though I suspect that, as with all new systems, the UN’s marketplace with grow with time.

Piles of pound coins

Money for aid is ending up in UK pockets but why is this? Photograph: Roger Tooth for the Guardian

5. Another factor that may give rise to a larger portion of contracts remaining on rich soil is the requirement for complex technical equipment that is vital to successful logistics. Where relatively simple construction efforts are to be required local companies are likely to profit. But, the more complex the job, the greater the infrastructure change, the more likely that the money will never visit the pockets of the local firms. Bolivia’s water privatisation saga and alleged ‘land-grabs’ are huge offenders. Local knowledge is, however, key to success and this is where we come up to concerns with recruiting consultants within the UK. Indeed, the contract I talked about earlier, analysing the efficacy of Nigeria’s government support programmes, awarded to a Dutch firm, may have benefited from a greater inside knowledge of Nigeria. I do expect though that, with the suggestion that the work will not be subcontracted included in the contract, “ECORYS” (the Dutch company in question) will have its own team of consultants drawn from people with experience of Nigeria.

I want to make a final point about the different kinds of work that DFID is engaged with. There is essentially an argument to be made about what I’ll call ‘engaged’ and ‘disengaged’ aid. Engaged aid being that which seeks to address the underlying, ultimate causes of poverty, disengaged aid being that which is apparent during an emergency, that seeks only to alleviate the immediate suffering as quickly as possible.

While some of DFID’s work is straightforward lifesaving, ‘disengaged’ (helping to immunise 21 million children against preventable diseases), much is to do with policy changes, ‘engaged’ (aiming to help up to half of the countries in Africa benefit from freer trade). Whilst the former faces logistical challenges, local knowledge is of paramount importance. The latter may benefit from outside observers complementing locally led campaigns.

To change this current situation we need a confidence in local companies that will thrive in a symbiotic relationship with local suppliers. The first step must be opening up to awarding contracts to local suppliers. The experts of which will go on to provide the fulfilment agencies of the future. But it is by no means an open and shut case as outside input will always have value in providing a fresh perspective to development dilemmas that may sometimes seem insurmountable to those living within stalled progress.

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