Guidance

Aid funded business

Guidance for UK companies on winning business from international aid and development projects.

1 Commercial opportunities in international aid and development

Aid funded business allows UK companies to win business from aid agency projects. The commercial opportunities are created by development and humanitarian aid programmes, funded through International Financial Institutions (IFIs) and Multilateral Development Banks (MDBs).

In many parts of the world, these organisations play a major role in the socio-economic progress of developing nations. This role includes advising on development projects, funding them and providing practical project assistance.

The membership of these institutions is made up of donor countries - who provide loans, credits and grants - and recipient countries. Spending by national governments of recipient countries is typically on projects tied to large-scale programmes of economic and social development.

These programmes support the aims of IFIs and MDBs by:

  • reducing global poverty and improving living standards
  • supporting sustainable economic growth
  • developing regional cooperation

The UK is a donor member of a number of development banks and as a result, UK companies are able to compete for procurement opportunities in bank-funded projects and programs.

1.2 Types of opportunities

Opportunities fall into 3 broad categories:

  • development aid
  • humanitarian aid
  • supply directly to development agencies themselves via corporate procurement

There are opportunities for UK companies of all sizes and sectors in all 3 categories.

1.2.1 The development aid market

Development agencies paid out over £142 billion in loans and grants in 2016. Countries use this money to buy the goods and services they need to design and carry out projects which further their development plans.

Projects tend to be long term, and in a wide range of areas from agriculture to telecoms and infrastructure. They provide many export opportunities for UK companies, either as prime contractors themselves, or as suppliers of goods and services to prime contractors.

Development funds for any projects are provided by 3 types of agency:

Multilateral Development Banks (MDBs)

These are bodies, such as the World Bank and the Asian Development Bank, who use pooled contributions from national governments to give grants to fund projects in borrowing countries. These grants are strictly regulated and projects are usually carried out by executing agencies in the borrowing country, usually a government department or public body.

United Nations (UN) development agencies

The United Nations system includes a dedicated development agency, the United Nations Development Programme, and a number of specialised agencies, such as the Food and Agricultural Organisation (FAO).

Bilateral development agencies

These are institutions set up by individual countries to provide development funding to national governments. It’s becoming more common for these projects to be open to applications from any company or country, known as ‘untied’.

1.2.2 The humanitarian aid market

Immediate funds and specific goods and services are needed for relief in specific crises such as natural disasters, armed conflicts or environmental catastrophes.These are provided by:

  • United Nations aid agencies, such as United Nations Children’s Fund (UNICEF)
  • some government organisations, such as the UK’s Department For International Development (DFID)
  • other international bodies, such as Oxfam International

UK companies supply goods and services for these activities, from medicine and blankets to vehicles.

1.2.3 Corporate procurement

The agencies also buy a wide variety of goods and services for their own use, such as:

  • infrastructure upgrades
  • consulting services and IT equipment
  • catering services
  • supplies and office furnishings

Institutional procurement methods vary depending on the value and nature of goods and services being bought, but there are many supplier opportunities for UK companies.

2 Benefits of aid funded business

Aid funded business enables UK companies to grow, whilst benefiting the populations of developing countries. Asides from the usual payoffs of international trade, aid funded business:

  • means orders are always backed by funds
  • is a secure way to do business in new markets, which can provide lucrative long-term opportunities
  • allows business to establish local presence
  • provides valuable international trade experience
  • is useful to have in your company experience history and references when bidding for future projects

3 Challenges of aid funded business

Aid funded business can present challenges alongside the opportunities, as:

  • development projects often have long lead times
  • payment, while guaranteed, can sometimes be slow
  • most contracts are subject to competitive tendering on a global basis
  • early information for consultancy projects is essential - if the first you see of a project is the tender notice, you’re normally too late
  • companies based in developing countries will sometimes have set preferences for contractors (generally price-based for goods, and experience-based for consultants)

4 How aid agencies manage projects and procurement

4.1 The project cycle

All aid funded business projects are governed by a project cycle, which is the framework for design, preparation, implementation and completion of a project. Opportunities for UK companies occur throughout the cycle. A typical cycle for an MDB project has 7 stages.

Project identification

The MDB works with a borrowing country’s government and other stakeholders to assess how assistance can have the largest impact. They establish and agree on an initial project concept and the beneficiaries. Then the bank’s project team outline the basic project elements.

Project preparation

During this phase the bank takes an advisory role. The government of the borrowing country handles project preparation, which includes feasibility studies, preparing engineering and technical designs, environmental assessment reports and social impact studies. It can contract external consultants for this work, if necessary.

Project appraisal and negotiation

The government and the bank review the work done during the previous phases and confirm the:

  • expected project outcomes
  • intended beneficiaries
  • evaluation tools for monitoring progress

They reach an agreement on the viability of all aspects of the project and on a project timetable.

Project approval

The project team prepares the project appraisal, along with other financial and legal documents. The proposed loan and project require approval by the bank’s senior management team.

Project implementation

The agency in the borrowing country is responsible for putting the project into action. With technical help from the bank, it prepares the specifications for the project and carries out all procurement of goods, works and services needed, as well as any environmental and social impact assessments.

Project completion

The MDB and the borrower document the results, including any problems encountered and lessons learned.

Evaluation

This includes measuring the outcomes against the project’s original objectives and its sustainability.

You can find more information on procurement and project cycles in the section on individual development agencies in this guide.

4.2 Agencies’ procurement of goods and services

MDBs have made considerable progress in co-ordinating the way they procure goods and services, using similar policies and procedures.

International competitive bidding (ICB) is the preferred method for high value and complex projects. ICB is used for goods and non-consulting services. The aim of ICB is to give eligible firms timely notification so that they all have an equal opportunity to bid.

Prequalification of bidders is often required, especially for large, complex projects and specialist or very high-specification goods. All firms that prequalify are then invited to bid.

Consultancy services must submit an Expression of Interest (EOI) in response to a procurement notice.

Successful companies then need to respond to a Request for Proposal (RFP) from the agency. The RFP usually includes detailed information on the project, terms of reference and the contract.

4.3 Selection criteria

For supply of goods, contracts are usually awarded on the agreed evaluation criteria. The lowest-priced bid might not win, as other factors are often taken into account, such as performance, training, maintenance and operating costs.

For consultancy services, the greatest emphasis is on quality of the provision, with a weight of around 80/20 quality to cost. In very complex projects, the selection may be made on quality alone.

5 Being ready to win business

5.1 Readiness for aid funded business

Though it’s not a specific requirement for many opportunities, it’s recommended that UK companies operating in aid funded business should have some experience of international trade. If you’ve already exported successfully to a particular market, you can expect that your strategy would adapt well to aid funded business project opportunities there.

The size of an operation is not a barrier to opportunity. Some bodies will provide business which is better suited to smaller companies, for example the UN agencies, which supply a variety of goods at short notice to disaster areas. Some projects, such as management of a major infrastructure development programme, are only suitable for larger operations.

5.2 Finding opportunities

Opportunities related to project cycles are posted on the websites of MDBs and agencies as procurement notices. They also appear on other, mostly free, independent websites and apps that consolidate project information from major MDBs, UN agencies and foreign governments. You can usually set up regular alerts on opportunities which match your interests.

You can find aid funded export opportunities identified by UK government’s commercial officers around the world on great.gov.uk.

5.3 Suitability and preparation

To assess your suitability for an opportunity, do as much research as you can. Most MDBs require the borrowing countries to draft project procurement plans, which state:

  • what products and services will be needed when they will be required
  • their approximate costs
  • the procurement methods they’ll use

These plans are on the appropriate agencies’ websites and are updated regularly.

Before bidding, read the procurement guidelines of the agency that is providing the loan. These guidelines define the policies, procedures and procurement methods that have been agreed on by the borrowing country and the agency. But be aware that the relationship between the supplier and the borrower is governed by the bidding documents and your contract with the borrower, not by the MDB’s procurement guidelines.

Visits to the borrowing country are essential for major consultancy or engineering projects, and can be useful for exporters of goods too.

Investigate how you can work with a local partner if it’s appropriate. Aside from the added expertise and cost effectiveness this can bring, local partnership can count favourably in evaluation of contract bids.

Often the best sources of practical guidance and preparatory information for projects are contacts, partners and IFI staff such as project managers in the donor and borrowing countries. DIT has its own staff who can offer advice on winning business related to specific agencies. See the section below, The aid funded business agencies for more information on the agencies and the types of projects and companies associated with them.

6 The aid funded business agencies

A listing of some of the major agencies funding aid projects globally.

6.1 African Development Bank (AfDB)

Size and geographical coverage

The AfDB headquarters are in Abidjan, Côte d’Ivoire. The bank has 54 regional member borrowing countries, across the African continent. Working languages are English and French. The mission of AfDB is to promote sustainable economic growth and reduce poverty in Africa.

In 2014 (the last available figures) the Bank ran 232 operations totalling UA 5.05 billion (x 1.4 for US dollars)

Sectoral emphasis of projects

This is heavily weighted towards infrastructure projects. Sectors covered by African Bank projects in order of project numbers are:

  • energy
  • transport
  • water supply and sanitation
  • agriculture
  • social
  • finance
  • multi-sector
  • health
  • environment
  • industry and mining
  • education

Types of opportunities

Roughly 70% of the business opportunities for UK companies will be for consultancy, 30% for goods.

Find AfDB opportunities and project information

6.2 Caribbean Development Bank (CDB)

Size of the bank and geographical coverage

The bank’s headquarters are in Barbados. The borrowing members are 19 states and territories of the Caribbean region. Its working language is English.

Sectoral emphasis of projects

CDB lists its priority areas of operation as:

  • infrastructure (economic and social)
  • education and training
  • renewable energy
  • climate change
  • good governance
  • public private sector partnerships

The CDB signed several development contracts with donors in 2016 to 2017 which aim to further enhance the bank’s portfolio of infrastructure and renewable projects in the region.

Types of opportunities

There are opportunities for consultants, contractors and suppliers – but consultants tend to do better and stand an excellent chance of securing business. Business size is unimportant – micro, small and medium-sized enterprises often win CDB projects, which are rarely huge.

Find CDB opportunities and project information

6.3 Asian Development Bank (ADB)

Size and geographical coverage

The ADB headquarters is in Manila, Philippines. It has 42 borrowing countries, spread throughout Asia, and 25 other member countries, including the UK. Its working language is English. ADB’s operations reached $31.5 billion in 2016, which involved approvals of loans, grants, technical assistance, and co-financing.

Sectoral emphasis of projects

The ADB focuses on infrastructure, particularly in the sectors of energy, ICT, transport, urban development and water. The bank is also active in the areas of environment (including climate change), education, finance sector development, regional integration. To a more limited extent, it also has operations in agriculture and natural resources, health, and public sector management.

Types of opportunities

Roughly 80% of business opportunities are for consultancy, and 20% for goods.

Find ADB opportunities and project information

6.4 Inter-American Development Bank (IDB)

Size and geographical coverage

IDB headquarters are in Washington D.C. Its borrowing country membership covers Central and South America and the Caribbean islands, including Bahamas, Barbados, Dominican Republic, Haiti, Jamaica and Trinidad, and Tobago. The working language is English. As of November 2017, the bank’s website reported its active project portfolio was currently funded by $191 million of loans.

Sectoral emphasis of projects

Between one third and one half of IDB’s portfolio has historically been dedicated to infrastructure. In recent years, the highest share of approvals have been dedicated to building institutional capacity in the region, including the local financial sectors and public institutions.

Projects have an increased focus on climate change, its adaptation and mitigation, with a special emphasis on renewable energy.

Types of opportunities

A major focus is on consultancy, for energy, finance and capacity building, major infrastructure projects

Find IDB opportunities and project information

6.5 Corporacion Andina de Fomento (CAF) – the Development Bank of Latin America

Size and geographical coverage

The bank is headquartered in Caracas, Venezuela. It’s owned by 17 countries within Latin America, Spain, Portugal and 14 private banks. It works in Latin America and the Caribbean (including the Dominican Republic, Jamaica, Trinidad and Tobago, and Suriname). The bank’s working language is Spanish, with all project information in Spanish. In 2015 CAF approved $20.25 billion in new financing operations.

Sectoral emphasis of projects

Projects concentrate on:

  • infrastructure (transport, telecoms, energy and water)
  • social development (education, healthcare and prisons)

Types of opportunities

Roughly 70% of the business opportunities for UK companies will be for consultancy, 30% for goods.

Find CAF opportunities and project information

6.6 United Nations (UN)

Size and geographical coverage

UN membership and reach is global. It represents a global market of over $17 billion annually for all types of products and services.

The UN is financed from assessed and voluntary contributions from member states. The working language is English. There are many different organisations within the UN with their own procurement budget and processes, but the United Nations Global Marketplace (UNGM) should be the starting point for all companies.

There are 4 main centres for procurement, each with a slightly different focus:

Geneva

This centre focuses on:

  • health, and is home to the World Health Organization
  • labour, humanitarian and relief, including the UN High Commission for Refugees and the International Labour Office
  • research and policy, including the United Nations Office at Geneva and the World Intellectual Property Organisation

Rome

Rome centre focuses on food and agricultural development and is home to the:

  • World Food Programme
  • Food and Agriculture Organization
  • International Fund for Agricultural Development

New York

New York focuses on peacekeeping missions, such as the UN Procurement Division and UN Development Programme.

Copenhagen

Copenhagen houses health, education and development projects including UNICEF, the United Nations Children’s Fund. Additional offices are located in developing countries known as ‘field missions’.

Sectoral emphasis of projects

Typical goods procured by the UN include:

  • food products
  • pharmaceutical and medical
  • vehicles and generators
  • shelter and domestic supplies
  • telecoms equipment
  • laboratory equipment
  • water and sanitation
  • educational materials

Typical services include:

  • security
  • personnel
  • diversity training
  • freight services, including inspection
  • printing services
  • specialist consultancy
  • web design and communications

Types of opportunities

Roughly 50% of procurement is for the supply of goods, and 50% for services. The UK has an excellent reputation and order sizes are particularly suitable for small and medium-sized enterprises (SMEs).

The organisations buy from manufacturers – usually under long-term frame agreements for the most commonly procured products.There are also opportunities for distributors and wholesalers who hold stocks and can assemble items into kits, often at short notice. The UN interest is in finished products – they will not provide funding to companies who are developing products.

Find UN opportunities and project information

The UNGM provides access to UN tenders and statistics on types of value of procurement carried out by each UN organisation. You must register here to be a supplier to the UN system.

6.7 World Bank

Size and geographical coverage

Headquartered in HQ in Washington D.C., it works globally, across all the developing and transitional economies. It committed $45.9 billion in loans, credits and grants to its members in 2016.

With 189 member countries, staff from more than 170 countries, and offices in over 130 locations, the World Bank Group is a unique global partnership. It has 5 major institutions working for sustainable solutions that reduce poverty and build shared prosperity in developing countries.

Sectoral emphasis of projects

The World Bank procures:

  • goods - from commodities and raw materials to machinery, equipment and vehicles
  • works - construction, repair, maintenance and rehabilitation of civil works structures
  • consulting services
  • non-consulting services - for example drilling, aerial photography, mapping, and similar operations

Sectors with projects funded by the bank, in order of importance by contract value in 2016, were:

  • transportation (47% of funding)
  • water and sanitation (18%)
  • energy and mining (17%)
  • healthcare (5%)
  • agriculture (5%)
  • public administration and law (3%)
  • education and training (3%)

Types of opportunities

The majority of World Bank opportunities are for consultants. However most projects also have a requirement to procure goods and equipment (the ratio is around 70:30 consultancy to equipment)

Find opportunities and project information

6.8 Millennium Challenge Corporation (MCC)

Size and geographical coverage

The Millennium Challenge Corporation (MCC) is headquartered in Washington, DC and is an independent, bilateral United States foreign aid agency. The MCC offers untied aid – this means companies from any country, including the UK, can apply for work contracts.

MCC’s s reach is global, with a high number of projects in Africa, Asia and Central America. Borrowing countries are full partners in developing investment programs and take the lead in program implementation. As full partners, MCC partner countries solicit, award, and administer grants and procurement of goods, works, and services.

Sectoral emphasis of projects

The MCC predominantly works within the following sectors:

  • agriculture
  • education
  • energy
  • health
  • roads and transport infrastructure
  • water, sanitation and irrigation

Types of opportunity

The MCC is seeking to widen its range of suppliers, and is very keen to have UK companies working on their projects. Read more on working with the MCC

All payments under contracts are made by the U.S. Treasury and overseen by MCC staff, mitigating risk. Projects are strictly time limited to a maximum of 5 years, and managed under procurement guidelines similar to the World Bank’s.

Find MCC opportunities and project information

6.9 Department for International Development (DFID)

The Department for International Development (DFID) leads the UK’s work to end extreme poverty and tackle the global challenges of our time including poverty and disease, mass migration, insecurity and conflict. DFID operates globally, with offices in 28 countries overseas.

Find opportunities and project information

The DFID supplier portal is the central source of information for all DFID aid funded business opportunities - you must register and complete a company profile to register and bid for contracts.

Read more on DFID’s tender process, purchasing arrangements and other information provided for those looking to become a supplier or contractor.

7 Next steps and contacts

If you want to make the most of opportunities in international aid and development, visit the great.gov.uk site to view aid-related export opportunities. Register on the site to apply for opportunities and receive alerts relevant to your sector and target markets.

For more information on DIT’s aid funded business network contact mackenzie.clayton@trade.gov.uk.

Published 11 April 2014
Last updated 16 March 2018 + show all updates
  1. Text fully updated, with new information and links
  2. First published.