State agency is needed to develop indigenous SME sector.
Following Enterprise Ireland’s highly successful seminar on International Business Opportunities on 16th March, Neil McDonnell, CEO of ISME, is calling for Irish firms to start bidding internationally for the USD$1tn market linked to Economic Development Programmes. Organisations like the European Commission, the World Bank and the IMF fund economic development programmes to improve economic infrastructure, output and civil society in developing countries and less developed countries.
These opportunities, typically worth hundreds of thousands of euro each, are won through competitive tendering processes by networks (consortiums) of expert firms.
ISME CEO Neil McDonnell said “After Brexit the UK, which is ranked 1st among the EU states for winning European Commission funded development work, will no longer be eligible to compete. Irish firms have strong experience, native English (all reporting is in English) and much to offer prospective partners in firms from the EU and beyond. Now is the time to pick up the mantle from the UK in this captive market, which spends about €150,000,000 of EU money per year”.
“It takes time and effort to develop relationships and to learn how to win these contracts. That said, there is no requirement to leverage, or take unnecessary risk to access these opportunities. The main investments are time and will; to foster the required relationships with international firms.
“Up to 60% of the fee is paid up front and thousands of opportunities arise every week. We believe this is too big an opportunity for Ireland to miss. Irish firms currently win far below the proportion of business that they could win, when compared to Denmark or Hungary”.
“ISME works with businesses to get them support in competing for international tender opportunities. We believe much more must be done by Government to assist Irish SMEs win international business. The issue clearly illustrates the need for a dedicated State Agency devoted to developing the indigenous SME sector”.
For further information, please contact
Neil McDonnell, Chief Executive
T: 01 6622755, M: 087 2995658
Note to Editors (see additional briefing notes below):
Additional Briefing Notes:
The five core areas offering opportunities to Irish companies are:
Agriculture, Food, Climate
Infrastructure, ICT, Water, Energy
Governance, Security, Local Authority
Trade, Employment, Private Sector
Education, Culture, Health
The global political climate is uncertain. This brings opportunities as well as challenges. ISME is calling on those Irish firms suited to this kind of economic development work to consider using these projects to diversify internationally. Export opportunities like these can provide a buffer to disruptive events such as Brexit.
The recently published European Union framework contract for external aid programmes has an indicative four-year budget of €650,000,000. The types of company which form consortia can be seen here. A graphic illustration of current World Bank-funded projects is available here. This level of opportunity is simply too great to ignore.
Firms that get their approach right and develop the right experience can achieve win rates in region of 1 in every 6 contests. This equates (roughly) to a cost of winning work of between €1 and €2 per €20 of project delivery value. A compelling return on investment rate.
There are a number of reasons why Irish companies should compete for these contracts:
The projects are funded by organisations like the World Bank, the IMF and the European Commission.
These tender opportunities span a wide spectrum of goods and services across diverse sectors such as agribusiness, education, economic development, ICT and many others.
Approximately USD$1tn is spent by international funding institutions (IFIs) commissioning goods, services and works (construction projects).
Ireland speaks English – the lingua franca of the enlarged EU and all international projects;
Ireland is a highly developed nation with valuable insights and experience that can be shared with developed and developing nations;
Ireland has a disproportionately large international footprint: Irish aid agencies, the Irish diaspora, and the Irish Defence Forces are highly regarded and trusted in the countries in which they have worked and lived;
Focussing on European Commission projects: just 60 international consortiums are selected across the sector groups to deliver their programmes. Ireland has no representatives in the agribusiness group, the education group and many, many more. This, at a time when entities like the RCSI and Smurfit Business School are establishing successful campuses overseas;
Britain is highly ranked in these contests and is going to find itself outside European Commission funded projects because of Brexit;
Up to 60% of the project fee is paid up front and the entities delivering the services always get paid (assuming the project is delivered satisfactorily etc.) Credit risk is practically zero.
Firms interested in diversification into IFI funded project work need to develop relationships with international partners (other firms) across the world.
Typically, firms get involved as junior partners in a consortium pitching for work, but must sell themselves to firms doing this work first.
Firms need to be clear about what they can and cannot do – trust has to be built with international partners. This cannot be done by being secretive.
Firms need to be patient, and willing to play the long game.
These tender opportunities are too good to be left to the rest of the world. The United Nations alone spends over USD$25bn per annum and Irish companies won just USD$25m of this last year – statistically insignificant (just 0.1% of the total). There are peer countries like Denmark that won over USD$500m in 2015 and approximately USD$450m in 2014.
For many companies, especially those with valuable expertise, this can become a source of interesting, well-paid work that is additive to their overall business.