From Mail&GuardianAfrica. Story by Matt Kennard and Claire Provost.

When governments pledge aid money, it is rarely handed directly over to poor countries in cash, despite the rhetoric from both the right and the left about how much money is “given” each year.

Budget support — the technical term for aid that is in fact given to poor country governments directly, to manage and spend themselves — amounted to just $9.5 billion out of a total global aid spending of $165 billion in 2014, or less than 6 percent. Where does the rest go? Donor countries like the U.K. or the U.S. spend much of their aid money through non-government organizations (NGOs), multilateral organisations like the U.N., and private contractors. Billions of dollars each year are spent buying goods and services — everything from drugs to consultancy.

“We see a lot of business opportunities around the work the UN does in peacekeeping, famine relief, disaster relief, emergency aid,” Peters tells his audience. “We see a lot of good opportunities for those of you in products in terms of famine and disaster relief related to both man-made disasters, which today we’re seeing in countries like Syria and Iraq with refugee camps, and of course natural disasters.”

For some companies, aid is a valuable income stream but still one of many. For others, it is the entire business model. A small group of private contractors, primarily based in the Washington, D.C. area and known as the “Beltway Bandits,” have long dominated the aid-funded business coming out of the U.S. Agency for International Development (USAID), the leading (but not the only) U.S. government agency that spends aid money.

Across the Atlantic, one of the biggest beneficiaries of U.K.–aid-funded business is Crown Agents, a company that grew out of the infrastructure of the British Empire; it was privatized in 1997, moving seamlessly from being a merchant of empire to profiting off the postcolonial world. Other companies have started up specifically to take advantage of these business opportunities.

There has long been an “aid industry” — the swarm of for-profit companies and consultants that take cuts of government aid earmarked for the world’s poorest people. In some donor countries, aid has been officially “tied”: aid-funded contracts that are required to go to companies from the rich country that is “giving” this money.

In the U.S., the world’s largest official donor, “tying” aid has led to extreme cases of giant multinationals profiting off this protected business. Among the main beneficiaries of the multimillion dollar U.S. food aid budget are the huge grain traders Cargill, ADM, and Bunge, who have won the lion’s share of the contracts to provide wheat and other commodities to be shipped from America to poor countries on U.S.-flagged ships. (The shipping industry also benefits.)

Across the Atlantic, the U.K. formally “untied” its aid 15 years ago, on the heels of scathing criticism from a powerful civil society campaign that wanted to see aid disconnected from Britain’s commercial interests, and instead focused on ending poverty in developing countries, not supporting businesses at home.

Despite the fact that all UK aid is officially “untied,” however, it appears that British companies still win the majority of this business. A 2014 peer review of the U.K. aid program, by the OECD (Organisation for Economic Co-operation and Development) group of donors, reported that over 90 percent of the largest British aid-funded contracts go to U.K. firms. (It politely suggested there may be “unintended or implicit impediments” to foreign companies winning this business.)

But since 2000, and particularly since the 2007-2008 global financial crisis, the visibility and power of large corporations in international aid and development efforts has taken on even larger proportions.

Now, CEOs of major multinationals sit on U.N. panels charting the future of global development; USAID is partnering with Walmart and Chevron; and NGOs like Oxfam and Save the Children have joined hands with corporate behemoths Unilever and GlaxoSmithKline (GSK).

With traditional aid budgets under pressure, donors are increasingly turning to the private sector to fill the gap. Today, if you’re a company, there’s a growing menu of ways for you to benefit from aid and global development efforts.

In fact, the 21st century has witnessed a corporate takeover of aid: U.S. and European corporations not only making millions off foreign aid budgets, but using aid and global development institutions to break into new markets and influence public policy in the developing world. Big NGOs are striking deals with multinationals too. The expectation is that these engagements will only grow.

Aid to many developing countries now pales in comparison to the amount of foreign investment they receive. The U.S. is already “increasingly using our (aid) as a way to leverage and catalyse other resources … (so) it ‘crowds in’ other types of investment.”

Corporate takeover of aid

The corporate takeover of aid is not just about co-financing projects with aid donors, however. Large corporations are also increasingly involved in the design and delivery of projects, and, again, in shaping policy and setting the agenda. Jen Kates at the Kaiser Family Foundation said, “there really has been a concerted shift and change in the conversation around the private sector.” And “whether it’s self-interest, economically driven, or due to their sense of being part of a global community,” she said, companies are now involved in aid and development in a “way that wasn’t there 20 years ago, 15 years ago.”

A traditional way of making sure companies act responsibly and sustainably is to regulate them. Countries around the world have enacted minimum wage laws, for example, and environmental regulations, to do precisely this.

But much of the official narrative of why companies are increasingly involved in aid assumes, or takes advantage of, short memories. It presumes that we have forgotten the context: that of decades of deregulation and failed attempts to hold transnational corporations to account for their actions.

From Mail&GuardianAfrica.