Written by Julia Lipowiecka.
When I was first given the opportunity to work in international development consulting I had very little idea of what the industry entailed. In development lectures we had discussed the role of donors and NGOs but this third actor in the development arena often remained unnamed. Making a profit out of poverty alleviation projects seemed a confusing, if not exploitative, notion.
Development consulting firms are increasingly a key actor developing and delivering aid – according to The Guardian private sector contractors could account for 11% of DFID’s aid expenditure in 2013-2014. Working on behalf of donor governments and international organizations these firms serve a number of roles including procurement of equipment, design and management of aid programmes, and provision of specific technical assistance. Their assignments can range from managing a multi-million gender empowerment programme or grant fund, evaluating other aid programmes, or providing a single consultant to advise a national government on how to participate in trade negotiations.
Development consultancies make their profit through a margin placed on consultants fees – a consulting firm employs the consultants directly and then charges them out to the donor at a higher rate. If the project or fund is being directly managed by a firm it may also charge a set management fee as part of the overall project budget.
Most donors don’t have the organizational capacity or in-house technical expertise to directly manage numerous multi-million projects across the globe, nor do they want to bear the direct risks involved in managing such projects, often in highly volatile environments.
Large development consultancies have both the financial resources, the technical expertise, and the project backstopping facilities to be able to closely manage and ensure the effectiveness of development projects. Smaller ones have the technical expertise that allows to provide very specific services to projects, be it advising on the design of the national electoral system, running training for civil society organizations or facilitating value chain development.
The idea of development consultancies is easy to criticize – just read the Telegraph’s scathing criticism of the ‘poverty barons’ i.e. consultants and private firms which ‘make a fortune from tax-payer funded aid budgets’. However the profits made by development consultancies really depend on the firm. There are the development consulting giants whose profits may have reached unhealthy levels, but there are also small technically-focused projects who make a small profit once they cover their overheads (office costs, project management costs, staff wages). In many ways the profits made by development consulting firms create incentives that ensure project results – if you cannot demonstrate the effectiveness of your projects it’s unlikely the donor will want to award you any further work. Nowadays all projects are rigorously evaluated and with so many firms operating in the aid business development consultancies have to demonstrate both the impact of their projects and competitiveness of their fees or risk being left behind.
The image of consultants as middle-aged white men running development projects and living comfortable expat lives is also simply outdated – most projects that I observed are run by local in-country teams with perhaps the nominal foreign consultant (with technical expertise in the specific area and years of experience working in the country) at the helm as Team Leader or Technical Director. Foreign consultants as drawn on when there is a need for their particular expertise and they collaborate closely with the local teams to ensure that projects are culturally-sensitive and locally owned. Development consultancies know that its neither profitable nor good practice to have large teams of expats running projects.
As with anything in international development I think it’s best to take a skeptical view, but overall I think development consultancies are an important and effective actor in the development arena. The recent Independent Commission for Aid Impact (ICAI) evaluation of DFID’s use of contractors concluded that private contractors are an effective option for delivering aid, as they deliver positive results at competitive rates (although of course the review was itself conducted by development consultants).
Thoughts For Interns
For anyone interested in working in international development, consulting offers a very attractive entry point. Working for development consultancies has enabled me to really understand the development industry, including the politics and the complexities involved in managing development projects on the ground. The development consulting business is a fast-paced, results-driven environment to work in, and the skills you develop, including commercial-awareness, will be useful no matter what career you choose to pursue.
Another advantage is that most internships in development consulting are paid.
The fact that you are being paid also means that you will be treated as an integral part of the team, with responsibility and tasks, and you won’t simply be making coffee or shifting paperwork. My average work week is very varied – I might be working in the London office contacting potential candidates for projects and bids, drafting sections of the technical proposal for a project, arranging travel for consultants, keeping track of project financials or I might be travelling in-country, meeting with partner organizations and project stakeholders and participating in theory of change workshop with the local team.
Along the way I have met some truly inspirational and dedicated consultants and have had very insightful conversations sitting in a dingy hotel bar, drinking a cold beer after a long day of meetings and planning sessions. Behind the mystery and dubious reputation, the development consulting industry is an interesting place to start your career and learn what development work actually looks like.