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    Supplying Aid Agencies

     

     
     
    International Trade Forum - Issue 4/2001, © International Trade Centre

    In 2000, international aid agencies procured an estimated US$50 billion worth of goods and services for worldwide development and relief projects. The United Nations (UN) system accounted for US$3.7 billion of this total. Constantly growing and diversifying, the portfolio of goods, equipment and commodities procured by international aid agencies ranges from grains, cereals and agricultural equipment, to water supply and sanitation, shelter and domestic items, medical and transport equipment, office equipment and supplies and fuels.

    Procurement by international aid agencies: a vast market

    In 2000, international aid agencies procured an estimated US$50 billion worth of goods and services for worldwide development and relief projects. The United Nations (UN) system accounted for US$3.7 billion of this total. Constantly growing and diversifying, the portfolio of goods, equipment and commodities procured by international aid agencies ranges from grains, cereals and agricultural equipment, to water supply and sanitation, shelter and domestic items, medical and transport equipment, office equipment and supplies and fuels. For example, the UN Children's Fund (UNICEF) alone annually procures over 2,500 different products and services. All goods and services are required globally, but above all in Africa, Asia, Latin America and the Middle East.

    Firms: seize the opportunity

    It is estimated that aid agencies, including those within the UN system, procure less than 10% of their total requirements from developing country sources. But with growing encouragement from the development community for international aid agencies to buy "locally", this market is increasingly opening up. Above all, it represents a major opportunity for businesses in developing countries to develop the services and products needed for development and relief projects.

    Be proactive

    To gain a bigger share of this market, businesses in developing countries need to seek out opportunities, become acquainted with specific market requirements, produce needed goods and services and acquire the necessary export skills to satisfy aid agency needs.

    Aid agencies: broaden your procurement scope

    Aid agencies are becoming increasingly sensitive to the potential of businesses in developing countries to provide the products and services they need. The agencies are aware that under competitive conditions, enterprises in developing countries produce a wide range of food, medical equipment and other basic necessities. But awareness needs to be translated into action, thus broadening the scope to increase the developmental impact of the agencies' operations.

    Supplying Aid Products and Services

    Promising trends for developing country enterprises


    • UN commitment to procure from developing countries and economies in transition In response to General Assembly resolutions and Executive Board decisions, UN agencies are making serious efforts to diversify sources of supply, particularly from developing countries. The goal is to ensure a broader geographical distribution of procurement.

    • Decentralization of procurement within international organizations Many UN and international aid agencies have delegated management of their field operations to regional and local offices, including procurement authority for amounts ranging between US$5,000 and US$100,000. Some local and/or regional contract committees and specific missions such as peacekeeping, authorize purchases above US$100,000. This offers distinct advantages to suppliers based in the region.


    • Wider choices, lower costs As the UN and other aid agencies are increasingly discovering, there are many advantages to sourcing goods and services locally: reduced transaction costs; shorter delivery lead times; fewer contingency needs; and lower life-cycle costs.

    Business rewards and socio-economic benefits


    • Businesses: gaining revenue and learning to compete internationally

    By entering the humanitarian aid market, developing country enterprises become familiar with international standards and with the procedures and business practices under which products should be offered and marketed to international aid agencies. Operating in this vast market will also generate additional income and provide enterprises with an internationally recognized customer reference.

    • Strengthening local economies

    When agencies procure from countries and regions where they operate, they contribute to sustainable development and the growth of local economies. This in turn reinforces the expertise and skills of the people and reduces a community's vulnerability to man-made or natural disasters in the future.


    • Promoting regional trade Local procurement can foster regional trade by linking enterprises across national borders in the supply and distribution chain of goods and services. Such arrangements will bring about economies of scale.

    They will also enable an exchange of know-how and improved operational performances, ultimately enhancing the competitiveness of enterprises within the region and beyond. 

    Obtaining a Foothold in the Market

    The multi-billion dollar market of goods and services procured by international aid agencies presents attractive business opportunities for enterprises in developing countries. But they are opportunities that need to be approached with appropriate marketing.

    Seven key steps to market entry

    1. Research and target your market.
    2. Pitch your company.
    3. Understand procedures, commercial terms and conditions.
    4. Register with the United Nations Common Supply Database (UNCSD) and with individual agencies.
    5. Be proactive in submitting bids.
    6. Perform the contracts carefully.
    7. Be persistent.

    ITC can help

    Through its technical assistance activities, ITC can help businesses in developing countries understand the complexities of international marketing. One of ITC's key roles is to provide business information sources. Online sources related to the aid market include the following useful web sites:

    • IAPSO (Inter-Agency Procurement Services Office):
    http://www.iapso.org
    • UNBIZ (Doing Business with the United Nations System of Organisations):
    http://www.unbiz.un.int
    • UNCSD (United Nations Common Supply Database):
    http://www.uncsd.org
    • UNICEF procurement division:
    http://www.supply.unicef.dk
    • UNPD (United Nations Procurement Division):
    http://www.un.org/Depts/ptd/
    • IAPSO's online catalogue UNWEBBUY:
    http://www.unwebbuy.org
    • WFP (World Food Programme):
    http://www.wfp.org




    The proof: Kenyan firms are succeeding

    Kenya's Kaluworks supplies US$30 million worth of pots and pans every year to the International Committee of the Red Cross, the International Federation of Red Cross and Red Crescent Societies, the Save the Children Fund, the Office of the United Nations High Commissioner for Refugees and the World Food Programme. Meanwhile another Kenyan company, Spinners and Spinners, manufactures and exports blankets to aid agencies throughout Africa and beyond to areas such as Kosovo.


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