LOCALIZATION IS inevitable, but NOT CHEAPer
Dr. Githinji Gitahi, CEO, AMREF Health Africa
For USAID, localization means local people leading local legal entities. The implication is that when you are applying for certain grants, you will be penalized if you are not a local legal entity. There are two questions here:
When you are a local country legal entity, are you cheaper than when you are international? The challenge we face is that USAID thinks that you should be cheaper when you are a local country entity, yet the same quality and rigor is expected from both. It’s an issue that needs to be addressed – local is not cheaper. The cost is the same because you are doing the same work but with better and sustainable results. It’s the Return on Investment that’s higher for the same money.
The second question is – what is local in terms of definition and approach? If USAID insists that the only way to be local is to have a local country board and local legal entity, then this takes away the strength of shared regional resources which built on existing capacity to multiply local capacity.
Currently, regionally string approaches share trademarks as well as institutional capacity, reduce duplication and increase efficiency.
If the definition of local is forced down to a legal country entity only, it means the only existing relationships that would remain with regional capacity would be trademark related only – a franchise of sorts – which then asks the question as to how to retain shared resources and avoid duplication country by country, increasing costs and reducing efficiencies.
This will result in every country replicating a very complex structure, increasing cost, reducing efficiencies and also losing big on cross country learning.
This is not necessarily cost-effective or efficient compared to having shared support services like knowledge, compliance, business development, financial management and human resource management and enterprise resource planning systems.
Localization is proximity and the only way forward to allow those close to the challenge determine the solutions but we must develop an approach that does not destroy shared resources and capacity – throwing the baby out with the bath water.
WE CAN BE A FUND MANAGER AND HELP DEVELOP LOCAL CAPACITY
Asif Saleh, CEO, BRAC
With the Rohingya crisis in Bangladesh, we are now witnessing a depletion in donor funding. INGOs are leaving and donors are saying local organizations have not developed capacity. But they are not giving any money to develop local capacity either and squeezing them on overhead. Then how are local organizations going to develop capacity? It’s a chicken-and-egg problem.
We are interested to work with donors in a fund manager capacity with a localization agenda. BRAC would do a call for proposals and do a diagnostic of organizations in terms of where the capacity enhancement will be needed. Then we will bring in other organizations to develop those capacities or do some training ourselves. The goal is that by the end of the funding cycle, we should have at least two or three organizations who can compete directly and donors won’t feel that they are risky. The arrangement must be for a finite number of years and there must be performance indicators about building local capacity so that this intermediary relationship does not become permanent.
TWO POTENTIAL CHALLENGES FOR LOCAL ORGANIZATIONS – FRAGILE BALANCE SHEETS AND WORKING IN SENSITIVE AREAS
Karl Hofmann, CEO, PSI
We see two potential challenges for local organizations.
One is financial fragility. If you’re heavily dependent in a particular country on USAID and there is a temporary disruption in their funding, which happens occasionally. The US government has come to us and said – don’t worry, just keep doing your work. We will come back and pay you later. This isn’t always feasible if you don’t have a balance sheet and resources to keep running.
Second, in some cases INGOs may be better placed to undertake work that is exceptionally sensitive or controversial in a local context like HIV prevention for key populations or full-spectrum reproductive health work.
Transitioning to local funding mechanism
Anne-Marie Kamanya, Global Business Development Director, AMREF Health Africa
Let’s be honest, the funding is not going local yet. Most of the calls for proposals are open for everybody to apply (not just local organizations). A recent DevEx study has shown that the funding does not match the rhetoric yet and we are well behind on localization targets. USAID Administrator, Samantha Power, set a goal to direct 25% of USAID funding to local organizations by the end of 2025; but currently around 6% of the funding is being channeled to these organizations.
WE WANT TO REINFORCE THE PRINCIPLE, “NOTHING ABOUT US WITHOUT US”
Donald Steinberg, Special Advisor, USAID
USAID is committed to building a more equitable, effective, and sustainable international development and humanitarian assistance system by changing power dynamics between donors and partners, centering local voices, and working through local, community-based partnerships on behalf of the American people.
To that end, we are ensuring that our policies, priorities, programs, and practices reflect the principal of local ownership. This agenda includes revising our Acquisition and Assistance strategy, our Policy Framework that drives mission development strategies, our Risk Appetite Statement, and our Local Capacity Strengthening strategy in ways that reinforce the principle, “Nothing about us without us.” By 2025, we intend to have at least a quarter of all our obligations going to local organizations; and by 2030, our goal is that fifty percent of USAID activities will put local actors in the lead to set priorities, co-design activities, drive implementation, and evaluate the impact of our programs.
We are looking closely at the barriers to local ownership, and we are changing the way we do business at USAID by reducing the paperwork required by our partners, translating documents into local languages, providing more Fixed Amount Awards and smaller grants that introduce local partners to our requirements, expanding our universe to include marginalized groups and regions not currently benefiting for assistance, and being less prescriptive and more open to new approaches. Equally important, we are working with current implementing partners, including U.S. based NGOs and development companies to ensure that they continue to use their impressive capacities to contribute to this shift.