Private entities in the development sector

 The International Development sector has grown considerably in recent years. Here, Jesus Rodriguez argues that despite the much needed extra funds, greater accountability and transparency are also needed to prevent the misuse and misallocation of vital resources.

International development is slowly becoming more and more popular, the rise of NGOs, big and small, private donors and foundations, and the subject is becoming more widely offered at undergraduate level. What used to be a fairly niche area of knowledge and research is beginning to open up more as money is entering the sector and funding more projects and opportunities, which is ostensibly a good thing. Yet one must wonder whether such an influx and growth of private agents in development is necessarily a good thing insofar as these actors naturally have wants and goals. Therefore with increased funds comes a greater amount of control, interest, and specific agendas. Though the same questions can be asked of foreign aid that is a separate issue for a separate post. The decision behind examining the private sector follows from the recent influx of these actors and because they do not necessarily have to follow the same protocol as other actors in the development community. In this piece I will be discussing the growth of private agents/contractors and analyse their performance through the case study of USAID’s use of private contractors in Haiti. This piece will argue that while greater funds will always be welcomed in the development sector there must be careful regulation and monitoring in regards to how actors that gain access to these funds function, to prevent negative outcomes.

As more money has been poured into development it has become more lucrative as a sector, prompting the growth of private contractors working on behalf of governments. Private organisations are often used by governments as subcontractors to state mandated development initiatives. The rationale behind this is that as private contractors compete for opportunities they will strive to achieve the best result possible at the lowest price, yet this is not necessarily the case in reality.

US Army Africa / Creative Commons License

US Army Africa / Creative Commons License

The example of USAID’s efforts in Haiti’s long term development in the aftermath of the 2010 earthquake perfectly encapsulates this. USAID functions as described above, used a number of subcontracts to fulfil different goals, yet in this case the majority of the work contracted went to one specific subcontractor, Chemonics International, a private international development company. To be brief the results were appalling, millions were spent on unnecessary facilities while thousands were without the bare necessities, with perhaps the most damning evidence being the multi-million dollar industrial park with air-conditioning, running water, and electricity while the local town had none. Though Chemonics professes to have been wholly participatory in their approach, local officials’ testimonies do not agree and there is little evidence to support Chemonics’ claims. This occurred owing to the way the contract had been set out. It had been done in such a way as the majority of the 25 page contract was redacted, making it impossible to audit or hold the company accountable.

A similar pattern is found with other subcontractors used by USAID, who are essentially allowed to operate without any real accountability while receiving funds. This leads to more money being spent than necessary, beneficiaries not receiving what they need, and the damaging of the international development sector both in reputation and in the field through the perpetuation of sloppy groundwork. If one thing can be taken with this example it is that the agenda and incentive for profit making has overpowered that of wanting to provide benefit to others.

Mediamolecule / Creative Commons License

Mediamolecule / Creative Commons License

Though the wants for profit and development are not necessarily opposed, the incentives behind both can be counterproductive, especially if followed like in the example above. Should the functioning of private contractors continue like this, it is worrying what the future of development will look like. For any policy initiative to be successful there must be adequate regulation and accountability, without this there is little incentive to act according to demands. In the public sector we have elections and clear pathways of progression. Without mechanisms such as these private entities will continue to act as they please as there is little alternative in subcontracting if all organisations function in a similar manner.

Accountability mechanisms specifically for private contractors could include reinforced contracts with clauses of accountability that could invoke legal action if they fail to act appropriately and greater transparency regarding these government contracts; allowing all to scrutinise these actors and adding to a larger dialogue concerning how development contractors should operate. That being said we are still in the relatively early days of private entities acting in the development sector, though it is possible that they may be able to function effectively, early indicators are not too promising.



The views expressed in this article are those of the author and do not necessarily represent the views of Development in Action.


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