Donor aid is offloaded at a port

Africa has had more than its fair share of natural and humanitarian disasters. This, combined with the widespread poverty, means the many aid agencies and development banks which have offices on the continent have their work cut out for them. While the media rightly focuses mainly on the relief work the agencies do, the possibility of aid-related business opportunities is less likely to be highlighted. Yet aid is undoubtedly big business. As an example, the United Nations represents a global market of over USD 10 billion annually for all types of goods and services.

In this article we look at some practical ways in which companies in Africa can attempt to secure a contract to supply some of the aid or development agencies active in Africa. There is scope for the provision of everything from relief supplies to the supply of specialised consulting or construction services.

Historically much of the business has gone the way of companies in developed/donor countries. The controversial practice of tied aid – loans or aid granted on the undertaking that procurement will be from companies based in the donor country – has seen a huge repatriation of aid monies to countries such as the USA, Germany and Japan.

Thankfully this pattern seems to be changing as governments increasingly come under pressure to ‘untie’ aid. Numerous international agencies have subsequently made a commitment to increase procurement of relief supplies and other goods and services from emerging markets or to source their goods locally where possible.

One agency which has made great strides in procuring locally is the UN's World Food Program (WFP). WFP purchases more than 2 million metric tons of food every year and at least three quarters of it comes from developing countries. The reasoning is simple – with the bulk of donors now giving WFP cash, not food, the agency must procure the right food at the best price as close to where it is needed as possible.

This change in purchasing patterns has not been consistent or dramatic though. Statistics issued by the UN indicate that, whereas they procured 57% of goods from developed countries and only 43% from developing countries in 2003, the percentage of goods purchased from developing countries had increased to 46% by 2008. Despite this, the percentage of goods purchased from Africa decreased from 18% to 16% over the same period.

It is important to note that the total volume and value of goods purchased increased during the past five years so the amount of money spent on purchasing goods from Africa actually increased considerably. (This data refers to procurement conducted by the procurement division of the United Nations Secretariat and the peacekeeping missions.  It does not include procurement conducted by other organisations within the United Nations system.)

Jonathan Baker, logistics coordinator southern Africa for the International Federation of the Red Cross and Red Crescent Societies, admits that, "Locally supplied humanitarian relief products often do not meet our specification requirements. Many years of product research and development... have gone into defining specification requirements and working with global suppliers to manufacture the best product for the lowest possible landed cost. With limited exception, Frame Agreement suppliers have tended to be outside of the African continent. IFRC Logistics in southern Africa wishes to move in a direction where African-based manufacturers and suppliers are offered the opportunity to be considered for supply agreements."

When asked about the opportunities for local companies, Jonathan Baker said, “IFRC Logistics of Southern Africa wishes firstly to focus on those relief goods and services which are needed to assist the most vulnerable families following disasters within the Southern Africa region, and secondly to focus on support goods and services required to run and maintain humanitarian operations.”

African companies and aid agencies have been assisted by an initiative called 'Buying from Africa for Africa' undertaken by the International Trade Centre (ITC). Since 2001, the ITC has been instrumental in bringing potential suppliers and procurement officials from the UN and other NGOs together in face-to-face meetings. They estimate that more than USD52 million in business has already been generated since the inception of the programme.

Beatriz Rodriguez Perez, associate trade promotion adviser at the ITC claims that, "In ITC we believe that the perception of UN Agencies and NGOs with regard to local availability of services and products is changing. This has been confirmed by the aid agencies on the evaluation and surveys conducted upon completion of events. Increasingly UN Agencies and NGOs are reforming their procurement policies in favour of local procurement."

Have a look at these links to see how your company can become a supplier to the following aid and development agencies. (There are obviously dozens of other agencies also working in Africa so this is just a brief introduction to a few of them.)

United Nations (and all 18 related agencies)
For all of the UN procurement requirements see the United Nations Global Marketplace. Registering on the Global Marketplace website also gives you access to tender notices published by the UN.

International Federation of Red Cross and Red Crescent Societies
The IFRC, which describes itself as the world’s largest humanitarian organisation, uses both open and restricted tenders to procure supplies. They will usually carry out an analysis of suppliers in a particular market but suppliers will still need to register as a supplier here and you can find more information at http://procurement.ifrc.org.

The IFRC’s emergency items catalogue lists over 2 000 standard commodities with product specification details for each item. View it here: http://www.icrc.org/emergency-items/.

The IFRC requires humanitarian relief materials including jerry cans, tarpaulins, blankets, kitchen sets, hygiene kits, tents, soap, medical non-pharmaceutical materials and support equipment and services including storage, transportation, generators, water pumps, general hardware and printing services etc.

Interested companies from within the Southern Africa region (Angola, Botswana, Lesotho, Malawi, Mozambique, Namibia, Swaziland, South Africa, Zambia, and Zimbabwe) are asked to mail their company profiles and product catalogue to: Logistics Coordinator - Supplier Profile C/O P.O. Box 650312, Benmore 2010, Johannesburg, South Africa. Meetings by appointment only.

World Bank
It is important to note that with regards to projects funded by the World Bank, the implementing agency in the recipient country is responsible for procurement. However, there are often a variety of opportunities for consultants to get involved with World Bank-funded projects both before and during the implementation phase. See the procurement pages for more information.

African Development Bank
One institution which provides an advantage to African companies in terms of procurement is the African Development Bank (AfDB), as only companies from member countries can participate in the bidding and procurement process. (Most African companies are members of the AfDB.)

However, as with the World Bank, the responsibility for the implementation of the project, and therefore for the award and administration of contracts under the project, rests with the borrower.

The latest AfDB procurement notices can be viewed here.

Millennium Challenge Corporation
The Millennium Challenge Corporation (MCC) is a United States Government corporation designed to work with some of the poorest countries in the world. Countries with signed compacts administer the procurements of goods, works and services relevant to the programmes specified in their compact. These procurements are awarded and administered by the country through the organisation established by the country to manage the programmes identified in their compact.  MCC is not a party to these contracts.

Recipient countries are required to post procurement notices on these official websites:
• United Nations Development Business
• dgMarket
Each procurement notice includes a point of contact for any questions.

Despite the enormous sums of money spent by aid agencies on procurement and by development agencies in funding development projects in African countries, being in this line of business is not always easy and companies are encouraged to persevere.

Shakeel Sayed, director of Medimark Marketing, a South African company that supplies medical equipment and mobile medical clinics explains his experiences.  “We registered on the UN suppliers’ database and one of their agencies contacted us about a year later. After their stringent vetting process we were requested to supply them with medical equipment. Although supplied in South Africa, the goods were destined for use in Zimbabwe.”

There is another advantage to supplying goods to relief and development agencies. Ajit Desai , director of Kariba Textiles (a Zambian blanket manufacturer) claims, “Apart from the direct financial benefit that we have received... it has also helped us improve our overall quality systems by keeping a tight watch over the production.”