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What is Aid Funded Business and how British SMEs can benefit from it?

Updated: Jan 21, 2023

According to OECD, Foreign aid from official donors rose to an all-time high of USD$161.2 billion in 2020, up 3.5% in real terms from 2019, because of extra spending to help developing countries to manage the impact of COVID19.

Foreign aid normally given by developed countries, primarily to developing countries to help them with their economic development and welfare and is given in the form of loans, grants, and finance to mention but a few to support initiative and projects across a wide range of sectors or themes.

So, What is an Aid funded business?

Aid funded business allows companies to win business from aid agency projects. Some of the commercial opportunities are created by development aid programmes, funded through International Financial Institutions (IFIs) and Multilateral Development Banks (MDBs).

In many parts of the world, these organisations play a major role in the socio-economic progress of developing nations. This role includes advising on development projects, funding them and providing practical project assistance.

The UK is a donor member of a number of development banks and as a result, UK companies are able to compete for procurement opportunities in bank-funded projects and programs.

Projects tend to be long term, and in a wide range of areas from agriculture to telecoms and infrastructure. They provide many export opportunities for UK companies, either as prime contractors themselves, or as suppliers of goods and services to prime contractors.

Aid funded business enables UK companies to grow, whilst benefiting the populations of developing countries. Asides from the usual payoffs of international trade, aid funded business:

  • it means orders are always backed by funds or institutions

  • It's a secure way to do business in new markets, which can provide lucrative long-term opportunities

  • it allows business to establish local presence

  • it provides valuable international trade experience

  • it is useful to have in your company experience history and references when bidding for future projects

Keen to explore how your business can get involved in Aid Funded Business opportunities?

We have partnered up with DevelopmentAid to bring you a free bitesize session to provide an intro how UK SMEs can get involved. Join us on 26th October for our upcoming Aid Funded Business Opportunities Bitesize Session.

Source: HMRC, Department for International Trade


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