A Devex PRO special report
The localization agenda 2.0
Editor’s note
The humanitarian and global development sectors have been talking about “localization” — shifting power to the countries and communities where aid work is implemented — for well over a decade. But turning that talk into action has proven a challenge.
The “Grand Bargain” — agreed between some of the world’s largest donors and humanitarian organizations at the World Humanitarian Summit in 2016 — envisioned that at least 25% of humanitarian funding would be allocated to local and national responders by 2020.
In reality, research found that just 3.1% of global humanitarian funding went directly to local and national groups that year, a figure that had barely changed from 2016.
No one has produced a figure for the wider development sector, but data collected by the U.S. Agency for International Development — the world's biggest bilateral donor — showed that just $1.6 billion out of its $36 billion budget went to local organizations in 2022.
Calls for action on localization are growing, amid mounting pressure around equality and decolonization, and frustration about the slow rate of progress. Recent years have seen a renewed push from USAID to localize its spending, and experiments from various other groups to ensure that their work is locally led. But many obstacles remain.
What is the state of localization today, and what are donors and other organizations doing to push the agenda forward?
Devex reporters have been exploring these questions intensively. Let’s take a look at what they found.
The Localization Agenda was originally published in 2022. It has been updated with the latest news and analysis for 2024.
Contents
The need for localization
Let’s start with the basics. What is localization?
The idea behind localization is that communities should be the drivers of the programs and services that support their own needs.
In practical terms, it's generally understood to involve two things. First, shifting funding to organizations based in the low- and middle-income countries where development work is mostly being carried out. And second, ensuring that development decisions are taken in those countries, by people who are affected by the work.
There are some complexities to this, though. There is no official definition of what constitutes "local" and "localization" within development. So, for example, how big international donors like USAID choose to define local is not universally accepted.
Even so, it’s largely agreed that localization brings real benefits. Some say that putting money directly in the hands of local groups is more efficient; others say that it could reduce the risk of abuses in aid work by rebalancing power and improving accountability.
In a Devex Pro Live event in 2022, Gunjan Veda of the Movement for Community-Led Development said: “There is absolute empirical evidence that locally-led development ... is a) more cost effective, b) it’s more efficient, c) it’s sustainable ... because the local organization is so much more attuned” to the needs of the community.
But despite the general acceptance and anecdotal evidence that localization brings better results, there has been relatively little academic study of the benefits. Some say that this weakens the case: Without proof that localization produces better outcomes, it remains easier for funders to ignore it.
Find out more: Does localization actually work? We look for evidence
The obstacles
For well over a decade, development leaders have been talking about the need for localization, but many leading development funders are still making little progress, with some unable even to say how much local funding they provide.
Even USAID says it will struggle to meet the localization targets it has set itself.
There is a widespread sense of disillusionment among leaders in the global south, with many saying that localization efforts are missing the mark.
So why hasn’t change happened in any significant way?
Experts told Devex that a lot of it comes down to the dominance of Western cultures and perspectives in global development — from hiring practices to leadership models — and entrenched ways of doing things, such as separating roles for “national” and “international” staffers.
And many people argue that, despite all the talk in favor of localization, those people and organizations that currently have the power are keen to hang on to it.
“Everyone wants more local decision-making, but are they willing to change the rules to allow that to happen? The answer is usually ‘somewhat’ but rarely entirely,” Sam Worthington, former CEO at InterAction, told Devex.
International NGOs (INGOs) themselves are thinking hard about what they want their role to be in this new environment. Most accept that they will need to change, and maybe accept a reduction in their balance sheet. But in some cases, NGO staff feel their leaders are not going far enough or fast enough – a discussion that is tearing the organizations themselves apart, as they battle over what their future identity should be.
What is not needed, local leaders say clearly, is for INGOs to transform themselves into local organizations. Instead, they say, their role in the long term will be to support and facilitate, not to lead.
Discover: Why the Grand Bargain failed to deliver its promise of local funding
How to fund it
Many of the discussions around localization come down to funding. Much of the cash provided by big bilateral donors is still mostly going to INGOs and other implementers based in the global north.
There are various reasons for this. At the moment, access to funding from big donors typically involves stringent application and reporting requirements, which aren’t feasible for smaller organizations. Grant sizes often aren’t appropriate for them either, although large grants can make life easier for the donor. And donors typically prefer to fund groups they’ve already worked with, which are seen as tried and tested but which also hampers change.
Even where funding is directed toward local organizations, there are questions about whether the money is truly going to locally-led groups. A Devex analysis found that of USAID’s top 10 partners for acquisition spending based in lower- and middle-income countries, three were local affiliates of international organizations.
So what kind of support do local organizations want from funders? They say they want flexibility over how much funding is provided – enough money to make a difference, but not so big a grant that a small organization cannot manage it. And they want money to be provided over a long period, without unnecessary restrictions that prevent them from building reserves and funding core costs, and without so much paperwork that funding becomes too costly to apply for.
Funding for capacity building is a sore spot for local leaders. Local organizations do often need funding to build skills such as financial management to meet donor requirements and to prepare to receive larger grants, but too often, a one-size-fits-all approach leaves skilled individuals wasting time on training they don't need. Not only that, but local communities often have capacity that international organizations lack.
“We have to bin this myth that communities don't have capacity,” Frank Kasonga, the Malawi country director at World Connect, which gives small grants to local communities, told Devex.
One way big funders could better support local organizations might be to create funds designed to give small grants in particular locations, perhaps by using pooled funds or local networks. But right now, there appears to be a reluctance to do this, despite attempts to lobby for it.
Key issue: Donors, here's how local NGOs want you to fund
Read more: How funders are trapping local NGOs in a starvation cycle
How do we shift the power?
It’s not enough to move funding to the global south.
In order to really succeed, localization must also see local communities take the lead in making decisions. If the zip code of the organization receiving the funding changes, but all the decisions are still made in Washington, is that really localization?
Right now, many believe that the power continues to lie with the funders.
“It eventually comes back to this root of power and racism and bias … If funders have not come to understand the power problem, [they] will continue to perpetuate inequities,” said Katie Bunten-Wamaru, co-CEO at the African Visionary Fund, which channels funding to African social entrepreneurs.
Even the word localization itself is seen by some as perpetuating the problem. “I hate the word localization with a very strong capital H,” Jeroo Billimoria, a social entrepreneur from India, told Devex.
She said the word – and its sister term, decolonization – represented a hierarchical structure with countries in the global south at the bottom.
“Decolonizing is still putting us at a lowest level,” she said. “Localization is also putting us at a lower level. So when do we become equals?”
Ironically, advocates say, local voices are often excluded from the debate around localization. Right now, leaders in the global south sometimes cannot even get to the conferences where the discussions take place.
Few of the big donors in the global north are addressing the issue of power. USAID has set a target for local leadership on its programs, but some see that target as far too soft. Other funders have not even got that far.
Read: Where are the local voices in localization?
Hot take: Localization? I hate the word. Decolonization? I hate that even more
Who's doing it differently?
For localization to succeed, funders and INGOs in the global north will need to change how they work.
While progress so far has been limited, some organizations are taking big steps and experimenting with how to make it work.
Recently, a U.S.-based organization announced plans to shut down and transfer resources to its local arms. And other U.S. organizations have also shut down their overseas work entirely, handing the reins to local groups instead.
Beyond USAID, other U.S. government agencies are having reasonable success with their localization efforts. The U.S. CDC already directs 70% of its global funding to local partners, while the Inter-American Foundation’s model allows community groups to submit their own proposals, receive manageable dollar amounts, and build organizational capacity to ensure their sustainability. The U.S. African Development Foundation also describes itself as “100% localized.”
Meanwhile, there are governments which have made progress, including the Netherlands, which was widely held up to Devex as a symbol of progress – although the Dutch themselves feel they still have more to do.
We also spoke to aid groups that have made real change in taking power and control into the global south.
And we met a group of aid workers that is undertaking targeted experiments aimed at overcoming specific barriers to localization — from increasing local leadership to untying aid.
The group’s founder, Deborah Doane, said that the current system suffers from “functional inertia.”
“There were a lot of systemic factors at play [preventing change] — donor rules, business models, legal issues,” she told Devex. “We wanted to stop putting out reports talking about what was wrong. We’ve seen too many reports that explain the problems but don’t lead to change. We wanted to do practical work and find solutions.”
Read: 7 experiments tackling the barriers to localization
New approaches: 4 organizations taking a fresh approach to localization
Case study: The story behind the '100% localized' US development agency
In focus: USAID
Amid these challenges and changes, the world’s biggest bilateral donor is having another go at localization. A few months into her time in charge, USAID Administrator Samantha Power set out the details of her plan to direct a quarter of the agency’s funding to local organizations by 2025 — even as assistance funding for local partners fell in 2021.
Since then, USAID has released a flurry of initiatives and metrics to try to make this happen, with the launch of a new acquisition and assistance strategy, and a new local capacity building policy.
It’s identified how it will define what a local organization is, and what it means to be locally led – a definition that was met with mixed feelings from local leaders.
USAID has also pushed partners to go further, leading the work on a joint declaration among large aid agencies.
But despite all of the effort, so far, progress has been relatively slow – at least according to the one update USAID has so far issued.
A key litmus test will be the $17 billion NextGen global health supply chain contracts — the biggest suite of contracts that USAID has ever issued. Following Power’s pledge, localization advocates are keeping a close eye on NextGen to see how accessible the contracts are for groups that haven’t worked extensively with USAID in the past. So far, progress on the contracts has been badly delayed. And the winners of the awards are widely expected to be big legacy USAID contractors.
So far, data on who USAID actually works with has shown that the usual suspects are still the ones winning most of the grants and the contracts.
So what’s the delay? Why has progress been so slow?
It’s a question Devex examined in detail earlier this year, and it seems that it’s hard for USAID to simply shift its funding strategies overnight. It has to deal with interference from Congress, for one, which often puts rules in place telling the agency what it can and can’t do, and which is viewed as significantly less supportive of localization than USAID itself, although official policy pays lip service to the idea.
USAID also has to deal with chronic understaffing – caused, once again, by a lack of Congressional budget – which is making it hard to find time to make changes.
And leaders within the agency are limited in how far and how fast they can push the crucial procurement function, which acts as a bottleneck through which all USAID funding must pass.
Deep dive: What's stopping USAID from localizing?
The big question: Is USAID taking the right approach to localization?
Funding analysis: How USAID awarded $1.1B in grants to local partners
Thank you for reading.
The Localization Agenda is the latest in Devex’s range of special reports on issues at the heart of the global development sector, exclusively for our Pro members.
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