According to its website, Irish Aid delivers results for poor people and provides value for money. So where does hiring a limousine for Jeff Sachs, the US economist famed for his work on the impact of globalisation on developing countries, fit into the equation? Irish Aid apparently classified the 2007 bill under ‘research/scientific institutions‘. Many, though, would struggle to make the connection between luxury travel and fighting poverty. Limousine for Sachs? In the prevailing economic climate, ‘Taxi for Sachs!’ – and all consultants, however well known – is the likelier cry of aid sceptics.
How far such distrust is warranted is a moot point. Those who work in development are largely inured to its frequent incongruities – roundtable discussions about famine accompanied by light refreshments, drinks receptions to mark the launch of the latest report on access to water and sanitation, and so on. But, to outsiders, the merits of spending public money on private sector expertise are less than obvious. Richly remunerated contractors generate easy headlines and, increasingly, easy politics.
The trend has been particularly visible in Australia, where newspapers gleefully prefaced the launch of the government’s inaugural annual aid effectiveness review with the revelation that technical consultants employed by AusAid to assist Papua New Guinea (PNG) in areas including agriculture, economics, and education were earning more than Julia Gillard, the country’s prime minister.
The review, which followed Papua New Guinean criticism of the prominent role played by contractors in Australia’s aid programme – and a concerted campaign of media scrutiny – sparked a major procurement overhaul at AusAid, including a 25% reduction in the use of expatriate consultants.
‘Some of it is good development practice, but some of it was a reaction to negative media that was critical of aid simply because it was aid,’ says Annmaree O’Keeffe, a research fellow at the Sydney-based Lowy Institute. ‘It was a reaction, rather than a considered look at what was happening.’
As a former deputy director general of AusAid who also undertakes consultancy work, O’Keeffe is well placed to understand the pros and cons of using contractors. She points out that many countries in the Pacific region, a key area of Australia’s aid programme, have small populations and a corresponding lack of capacity, making the introduction of external expertise essential.
‘Advisers complement and supplement the work that has to be done, but they also ensure that there’s added transfer of skills and capacity building, things which sometimes get missed,’ says O’Keeffe. ‘Recipient governments sometimes just like to see a building, which is visible in a way that capacity building isn’t.’
For Brad Parks, executive director of the AidData project at the College of William and Mary in Williamsburg, Virginia, transparency – or rather the lack of it – lies at the heart of the debate on contractors.
Parks points out that, while the financing of major development initiatives is usually reported at project or activity level, multiple consultants are often employed. Consequently, the information required to assess the specifics of their contribution is unavailable.
‘The absence of good data remains a fundamental constraint on our ability to scrutinise these programmes and understand what effects they are having,’ says Parks. ‘The fact of the matter is that very, very few development finance institutions release detailed information about the activities of their sub-contractors.
‘Gaining access to information that would make it possible to understand the relationship between transparency and better development outcomes is a frontier area for development policy and practice. It’s an area where the aid transparency and effectiveness community really want to see progress in the coming years.’
The international response to the Haiti disaster of 2010 shows why. On the one hand, consultants were central to mobilising a rapid response that probably helped to save lives. ‘On the evening of the earthquake we depended very much on our contracting community to get immediate humanitarian assistance into the country,’ says Susan Reichle, assistant to the administrator at USAid.
Yet researchers have found it impossible to ascertain how the $9bn (£6bn) disbursed to Haiti by the international community was spent. Approximately $1.3bn of the total is believed to have gone to contractors and NGOs, but how much of that went to sub-contractors – and how many Haitians benefited as a result – is unknown. Kenneth Merten, the US ambassador to Haiti at the time, allegedly reported a procurement ‘gold rush‘ in the wake of the tragedy.
‘Researchers tried to track money down to the contract level and were just stunned by the lack of transparency,’ says Parks. A report (pdf) by Vijaya Ramachandran and Julie Walz of the Centre for Global Development, published in February, suggests that all contractors should be required to reveal information about their use of sub-contractors and join the International Aid Transparency Initiative. It also calls for consultancies to publish systematic evaluations of all programmes over $1m.
Clearly the onus is on aid agencies to get their collective house in order. O’Keeffe feels they must do more to articulate the case for using contractors to a sceptical public, and also believes consultants should be closely monitored to ensure they are offering good value.
‘Sometimes governments need to be better at explaining and communicating the need to use consultants,’ she says. ‘And there’s always a need for ongoing revision of the processes involved. If you’re doing capacity building it means things are changing, which in turn means you have to continually review and revise the way you are operating to ensure that you aren’t drowning a country with external advisers.’
Greater competition might also yield better value, and here the aid industry could learn a lesson from the private sector. Dennis Whittle, the co-founder of GlobalGiving, has noted that, while only three Fortune 500 companies that started the 90s among the top 10 retained their position throughout the decade, seven of the top 10 non-profits not only held firm but also increased their market share. A similar pattern may be discerned in development, where – rather than the cream rising inevitably to the top – the same names tend to crop up time and again.
‘Some of these contractors have become like behemoths,’ says Parks. ‘They are committed to bidding for every single USAid contract regardless of whether they have the expertise to do a good job. That’s where you get into the seedier side of foreign assistance.’