The editors of International Development Planning Review (IDPR) have selected ‘Bastard children’: unacknowledged consulting companies in development cooperation’ by Pamela White as the Featured Article for IDPR 42.2.
The paper will be free to access for a limited time here.
When asked to describe the paper and highlight its importance, the author stated the following:
Development consulting companies are strangely invisible in development cooperation despite the pivotal role they often play. If they become visible at all, the attention is usually negative – with images of greedy consultants making money from poverty reduction. There is remarkably little academic literature on the subject. The title of this article came from a quotation of one respondent: ‘Consultants are the bastard children of development – no one wants to acknowledge them!’
International donor governments carefully craft policies and strategies regarding issues such as gender equality, human rights and environmental protection. Donors usually refer to the outcomes of their strategies and funding, yet give little attention in the discourse to how these outcomes will be achieved in practice. Most funding goes to multilateral organisations or NGOs, or direct to recipient governments, yet it is not possible to ensure these third parties will apply donor strategies and plans. Donors also outsource some of the implementation to consulting companies, applying regulatory tools to try to control the results that should be achieved far from their HQ.
The business model of consulting companies is a combination of altruism and profit. They are located between ‘doing good’ (often considered to be the role of NGOs or UN organisations), and the profit motivation of typical private sector companies working internationally (selling widgets or extracting resources). Consulting companies are constrained by the specifications of the donor and partner organisation, in a principal-agent relationship. They hold a key position, with pivotal relationships with all parties, yet are often not trusted.
This article focuses on the history, business logics and the pros and cons of development consulting companies, using the case study of Finland. I ask what is the role of consulting companies in development cooperation? How does it differ from standard private sector operations at home or abroad? Is it ethically appropriate to make money from poverty reduction – and is it even financially viable? Why are consultancy companies needed in development cooperation?
The dramatic decrease in technical assistance budgets in Finland over recent years, along with increasing bureaucracy, has caused profits to diminish and many companies have disappeared, taking institutional memory with them. Only a handful are left. There has been a general consolidation of the industry across Europe also. Consulting companies are often judged by the earlier years of high returns and questionable effectiveness, yet it is clear that this is no longer a high profit business. Only a few companies remain interested in development, with incentives ranging from money, PR, capacity building opportunities and altruism. Tendering processes have become more and more bureaucratic as donors try to avoid accusations of bias. Yet the processes are inadequate for finding the ideal TA – this can result in companies or TA that are good at tendering but bad at implementing projects.
In a best-case scenario, the companies can play an important go-between role, brokering policy to practice, and bringing together donor and beneficiaries. They are the ‘boots on the ground’ when it comes to putting the donor policies into practice at large scale (whatever may be argued as to the validity of those policies). While donors wish to control the funding to some degree, to maintain institutional memory and assert some policy guidance, there is a need for consulting companies and their staff.