Author: Huang Zhen
What localization policy goals has USAID proposed? What progress has been made in its implementation? What challenges does it face?
Localization of development cooperation and locally-led development originated from participatory development in the 1970s. Since the early 2000s, the development field has focused on the effectiveness of aid and then development, and proposed the "people-driven 2030 Agenda". In recent years, global challenges such as the COVID-19 pandemic and regional conflicts have occurred frequently, and countries have called for changes to the traditional international development model, including strengthening the localization of development cooperation and the effectiveness of development.
In 2022, 22 bilateral aid agencies including the United States Agency for International Development (USAID) and 26 foundations jointly issued the Donor Statement on Supporting Locally-Led Development. The statement emphasized the positive significance of localization in achieving development cooperation goals, and stated that localization would be promoted through a series of actions such as directly providing more funds to local institutions in recipient countries.
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Localization vs. Local-led Development |
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Localization is a general term for the implementation path of international development actions, which aims to promote the local autonomous promotion of development projects from project establishment, design, implementation to evaluation in the project host country, so as to promote the implementation of development results in the local area. The recent report of the OECD defines localization as: a transformation process aimed at promoting the development aid policies, mechanisms and practices of traditional development aid fund providers and implementers to promote the realization of locally-led development cooperation. Locally-led development is "ongoing development in which local institutions have the right to plan, design, implement (including control over funds), monitor, evaluate and summarize development activities, with or without international support." Locally-led development is what many local communities and institutions seeking development are already doing, that is, seeking development according to their own needs. |
USAID proposes localization policy
At the beginning of its term, the Biden administration clearly proposed to strengthen the localization of US foreign aid, that is, to provide more foreign aid funds to local social organizations in recipient countries. After taking office as the Director of USAID, Smantha Power has been committed to promoting the implementation of the "localization" of development aid by USAID. Based on this, USAID has launched corresponding goals, policies and implementation methods.
(USAID/Photo)
In November 2021, USAID proposed two goals to promote the localization of development cooperation. First, by 2025, at least a quarter of development cooperation funds will be provided directly to local partners in host countries; second, by 2030, at least half of the projects will be led by local communities to identify priorities, participate in the design of project activities, promote project implementation, and evaluate project effectiveness. Goal one defines "direct funds" to support localization as: "local direct funding" directly provided to host country partners, "regional direct funding" directly funding multiple countries in the region, and G2G directly funding partner governments. Goal two aims to enhance the dominance of local users of funds in the use of funds, requiring that half of USAID's projects be led by local actors. The two goals complement each other. Direct funding is an important manifestation of supporting local autonomy, and the autonomy of local institutions in development methods, paths and implementation is the core of locally led development.
USAID takes local approach
Transform the internal systems and culture of the organization.USAID has taken action since 2021 to strengthen the capacity building of localized employees so that they can effectively promote localization in the decision-making, disbursement, and supervision of the use of development aid funds. The main measures include: First, providing practical tools to assist employees in localization work, providing specialized training for relevant employees, and hiring new employees to ensure the advancement of localization work. Secondly, hiring local experts (Foreign Service Nationals) stationed in host country offices. These experts have a better understanding of local conditions and needs, and are given greater authority to participate in fund use decisions and project evaluations.
Simplify the way of working with local implementers in host countries.Traditionally, the application process for USAID project funds is quite complicated and can only be applied in English. Therefore, international or American institutions often obtain project funding and then subcontract it to local institutions in the host country for implementation. USAID has simplified the project funding application process, encouraged staff to proactively contact local partners and share funding information, and promoted the establishment of new partnerships. These adjustments provide a more flexible, adaptable and simpler mechanism, authorizing USAID staff involved in the use and allocation of funds to provide direct funds to local institutions in host countries if they meet the conditions, and expand the opportunities for local partners to apply for project funds in other languages. When supporting development projects, USAID also co-designs projects with local partners more (co-creation approaches), and provides training to these partners during the co-design process to promote locally led sustainable development. Compared with the past, these changes help local partners more easily access USAID and have more opportunities to apply for USAID funds directly.
Develop an evaluation indicator system.USAID consulted and interviewed multiple stakeholders, including internal staff, host countries and U.S. partners, and local communities, and designed a set of pilot evaluation indicators (Locally-Led Programs indicator) to evaluate the progress of projects in enhancing local ownership and leadership. This approach uses a set of "good practice" indicators to track the extent to which UASID's projects can promote the leadership and autonomy of local partners. The pilot indicators include 14 practices in four categories to enhance local leadership. After using the pilot indicators to evaluate the progress of Goal 2 in fiscal year 2023, USAID pointed out that the pilot indicators do not list all practices that can enhance local leadership. The evaluation indicators will be further adjusted based on the results of the trial in fiscal year 2023 and fully used in the evaluation in fiscal year 2024. For example, USAID staff reported that if the "good practices" were divided according to the stages of the project cycle, it would be more helpful to take into account the requirements of Goal 2 project design, implementation, evaluation, monitoring and summary in practice.
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USAID Localization Pilot Evaluation Indicators |
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Working directly with local partners • Work directly with local or regional partners |
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Building effective local partnerships • Collaborate with local or regional partners to co-design projects |
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Recognize, leverage and enhance local capabilities • Capacity enhancement based on needs |
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Direct community involvement • Project design goes deep into the community to listen to local needs |
USAID localization progress
In 2023 and 2024, USAID released the "Localization Progress Report for Fiscal Year 2022" and "Localization Progress Report for Fiscal Year 2023" respectively, sorting out the specific goals and implementation progress of the localization policy.
(USAID/Photo)
There has been positive progress in supporting the goal of localized "direct funding", with Africa and health care being the most obvious. According to USAID's evaluation report, over the past five years, the direct funding provided by USAID to local implementing agencies has increased significantly, reaching nearly US$1.6 billion in fiscal year 2022, or 10.2% of the total funding, the highest proportion in history. Its resident offices in Africa are particularly outstanding in expanding direct cooperation with local partners, with nearly 25% of funds directly supporting local partners in fiscal year 2022. The health sector, led by the President's Emergency Plan for AIDS Relief (PEPFAR), is another bright spot, with nearly 20% of funds directly provided to local partners in fiscal year 2022. In fiscal year 2023, the proportion of direct funds provided by USAID to local implementing agencies decreased to 9.6%, but the number of local projects and local partners directly supported increased. In fiscal year 2023, USAID’s direct funding for local operations in Africa was the highest among all regions, accounting for 22% of the region’s development funds. The greatest support for local operations in the health sector exceeded 20% of funds in this area.
The progress and effectiveness of the implementation of the local community-led goal remain to be seen. In fiscal year 2023, USAID used a pilot evaluation method in half of its projects (about 2,500) to measure the progress of this goal. Among the evaluated projects, 53% adopted at least two methods from the "good practices" list. The report pointed out that if the adjusted evaluation method was used, just over 25% projects in the pilot evaluation in fiscal year 2023 would meet the standards. The report also pointed out that this evaluation method cannot evaluate the implementation quality of these specific practices, nor can it evaluate the extent to which the leadership and leadership of local implementing agencies have been improved. In order to effectively enhance local leadership and actual participation capabilities, USAID has provided new training, implementation guidance and some practical tools on several good practices. In addition, in order to better understand the implementation of localization, USAID has also conducted special research to analyze the actual effects of "localization" related practices, processes and mechanisms in development projects. The results of the research will be announced in the fourth quarter of 2024.
Local development faces challenges
Despite the positive progress, the localization process of development cooperation in OECD DAC member countries, represented by USAID, still faces some challenges, including:
How to define local institutions and localization needs.At present, the development agencies of OECD member countries have not yet formed a set of universally recognized indicators for measuring localization. How to coordinate and balance the different development needs of the host country at the national level and at the local levels is a challenge in the localization process. The development priorities or strategies at the national and local levels are often different. The benchmarking partners of bilateral agencies such as USAID are generally the central government of the host country, while the local implementing agencies that meet USAID's localization goals are not necessarily host government agencies. This situation poses a challenge to USAID's localization goal of providing more direct funds to local implementing agencies. In addition, government agencies and social organizations have different views on which development needs are the most urgent. In this regard, USAID also admits that localization is a complex concept and some details depend on the specific situation.
(Pixabay/Image)
How to balance localization goals with the risk management and compliance requirements of development organizations.As a government development cooperation agency, the government budget funds used by USAID must be submitted to Congress for review and approval. Since Congress has strict requirements on the security and compliance of the use of government funds, the development projects of bilateral development agencies such as USAID often have strict requirements in terms of compliance procedures and risk management. For example, USAID requires funding institutions to have financial and risk management systems, conduct complex due diligence procedures on project applicants, and the funding allocation and use process is also relatively complex. These complex compliance procedures and risk management requirements place high demands on the capabilities of implementing agencies. International agencies or US agencies that have cooperated with USAID for a long time are familiar with this process and have a high ability to meet the relevant requirements. For many local agencies in host countries, this process is too complicated and therefore beyond their capabilities. In 2023, OECD DAC member countries organized a special seminar on balancing risk management and local leadership, discussing which risks need to be taken and which risks need to be avoided in the localization process, how to adopt a more flexible risk management mechanism according to specific circumstances, how to share due diligence assessment information among development cooperation agencies, and how to cooperate with more stakeholders to reduce the negative impact that risks may have on the reputation of development agencies. In 2022, USAID updated its Risk Appetite Statement, expressing its willingness to take a certain degree of risk (smart and disciplined risks) to promote localization. USAID believes that new local partners may bring some risks compared to experienced partners. USAID will seriously consider risk issues when expanding the scope of partners, and will work closely with local partners to jointly identify risks and develop risk management plans.
How to balance USAID’s “natural mission” and “localization” goals.Former US Secretary of Defense Robert Gates once called diplomacy, foreign aid, and strategic communication important tools for maintaining national security. When USAID implements foreign aid policies and foreign aid projects, it is inevitable to implement the US government's foreign and national security policies. This is USAID's "natural mission". In the complex and challenging global geopolitical landscape, when the US foreign and national security policies are inconsistent with the local needs of the host country, USAID will face huge challenges in implementing localization in its development aid. Some US researchers also believe that this political mission is an insurmountable obstacle to the localization goals proposed by USAID. Under the leadership of the mission of serving the US foreign and national security policies, USAID's international development projects and funds will or tend to provide more opportunities for US institutions.
(Note: USAID's fiscal year 2022 is from October 2021 to September 2022, and fiscal year 2023 is from October 2022 to September 2023)
References
https://www.usaid.gov/localization/donor-statement-on-supporting-locally-led-development
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