Devex Newswire: USAID’s not the only one struggling with localization

We look at localization — beyond the confines of USAID — and why it has stubbornly failed to take hold. Also in today’s edition: African nations speak their minds about World Bank reform. + Want to dig deeper into localization? Join us later today at 12 p.m. ET (6 p.m. CET) for the closing event of Devex Pro Week 2023 and gain insights on how organizations can put their money where their mouth is on localization from heads of groups that have taken big steps to move their work to a locally led model. Can’t attend live? Register anyway and we’ll send you a recording. Not so grand We often write about USAID’s keystone promise to shift a quarter of its funding to local organizations in the countries where it works by 2025. But America’s premier aid agency isn’t the only one trying to hit this lofty mark. The “Grand Bargain” was forged in 2016 by donors, United Nations agencies, international nongovernmental organizations and local groups, which pledged to give at least 25% of signatories’ humanitarian funding to local and national stakeholders “as directly as possible” by 2020. Then, 2020 came and went, and they wound up only channeling a pitiful 3.4% of their aid that year directly to local and national stakeholders. They tried again in 2021 with “Grand Bargain 2.0.” How did they fare? Even worse, with the percentage dropping to 1.8% in 2022. Apparently hoping that third time's the charm, they’re taking another stab at it for a new three-year phase, but what’s to say the outcome will be any different and why has the whole thing been so lackluster? Devex contributor Andrew Green delves into the reasons, including the difficulties of calculating funding and measuring what counts as aid, calcified donor structures that are slow to change, and a lack of local awareness about what high-level policymakers are doing. But the bargain hunters haven’t given up, despite how elusive that 25% target is. “The 25% commitment might be a bit aspirational and something we might not reach within the timeframe, but it guides the direction of travel, a direction toward which we should all be working,” says Clarissa Crippa, a senior policy adviser to the secretary general of the Norwegian Refugee Council, Jan Egeland, who served as the eminent person for the Grand Bargain 2.0. At least they’ve opted not to call the next effort Grand Bargain 3.0. Rather, it’s being dubbed the “Grand Bargain beyond 2023.” Read: Why the ‘Grand Bargain’ failed to deliver its promise of local funding (Pro) Not yet a Devex Pro member? We’re offering $100 off an annual membership to celebrate Pro Week — sign up now to access all the special content from this week and for the rest of the year. Remember Europe? USAID! USAID! USAID! It’s like a mental chant every time the topic of localization comes up, but what about Europe? European donors have managed to avoid the glare of scrutiny that descends on USAID, even though some of the biggest players on the continent are laggards in the localization department. Our Devex Pro Editor Jessica Abrahams looked at Germany, the United Kingdom, France, the European Commission, Sweden, Denmark, and Norway and found several key themes emerging. One is the lack of an overarching localization strategy and nebulous guidance whereby donors ask implementers, particularly international NGOs, to pass a share of their funding on to local organizations, rather than providing cash directly. In the case of Germany, for example, Jens Schwalb of Johanniter International Assistance says there are legislative barriers that mean getting approval for grants outside the country is cumbersome and slow. “If you really want to talk about true localisation, the legislation would need to be changed,” he tells Jessica. “Only this would lead to locally led action, since it creates a direct equitable partnership between the donor and the local NGO/civil society … I think we are at the beginning, but it will be a marathon.” Another key issue — one that should sound familiar — is data and the difficulty of obtaining it. Because of their reliance on indirect funding, none of these donors were able to provide concrete figures on how much of their money ends up with local organizations. And because of the Grand Bargain, much of the focus is on humanitarian funding — none of the European donors that Devex surveyed have targets for development funding. Read: Are European donors falling behind the US on localization? (Pro) + Localization was a running theme in our latest This Week in Global Development podcast episode, where I joined Devex Editor-in-Chief Raj Kumar and Anera President and CEO Sean C. Carroll to talk about how artificial intelligence will revolutionize the workplace, including efforts to localize aid. To listen, click here. Africa pushes back Like USAID and localization, the discussion around World Bank reform is very United States-centric. U.S. Treasury Secretary Janet Yellen has been a high-profile advocate for fighting climate change alongside the bank’s anti-poverty mandate (a position supported by the bank’s U.S.-anointed president, Ajay Banga). The trade-offs of doing so, particularly for Africa, are often talked about in the U.S. and Europe, but what do African states themselves think? Shabtai Gold reports on a document representing a common front among African states that pushes back on wealthy Western shareholders’ demands to focus on climate change and pandemics. Rather, they argue that food security, water, and affordable energy are “global public goods” — and deserve attention. “For African countries, we need to reinforce the message on global public goods to ensure that their needs, priorities and realities are taken on board,” Abdoul Salam Bello, who represents a bloc of states from the continent on the board of the lender, tells Shabtai from Cape Verde, which is hosting a conference that produced the paper. That paper was issued ahead of the Group of 20 finance ministers’ meeting in India next week when Yellen is sure to reiterate her support for squeezing more lending out of the multilateral lender’s existing balance sheet. But that can only do so much, many experts say, including former U.S. Treasury Secretary Lawrence Summers, who co-authored a recent report commissioned by the G20 arguing that there is no escaping a capital increase. Read: African states detail their needs on World Bank reform ahead of G20 Bridgetown math “The math simply suggests that you need more capital.” --— Pepukaye Bardouille, director of the Bridgetown Initiative unit of the Barbados government It’s as if Bardouille was channeling Lawrence Summers when she spoke at our Devex Pro Week event on the Bridgetown Agenda. She was talking about a capital increase and more concessional lending from the World Bank as part of a larger push to get wealthy countries to pump “fresh new injections of money into the system” to help lower-income countries pummeled by climate change and high debt. Watch: How the Bridgetown Initiative envisions global financial system reform (Pro) Debt dominance The pandemic pushed more than 165 million people into poverty — using the very low barometer of $3.65 per day — the United Nations Development Programme said ahead of the G20 meeting this weekend. All these people live in low- and middle-income countries. The rise in poverty dovetails with a debt crisis, which the U.N. warns is sucking money out of lower-income countries, forcing trade-offs on health, education, and basic services. The U.N. data is alarming: Low-income governments spend 1.4 times their health budgets on servicing debt. Or, put another way, the interest payments on their debt are 60% of their entire education expenditures. “It translates into less health care, less education, no social safety nets,” said Achim Steiner, the head of UNDP, in a call with reporters. U.N. Secretary-General António Guterres is dubbing it a “systemic failure.” Overall, about 3.3 billion people are in countries where governments spend more on debt interest payments than on education or health. ICYMI: Why low-income nations are ‘cracking’ under debt pressure In other news The World Bank has approved $450 million in funding for small and medium-sized businesses in the region of Turkey devastated by the Feb. 6 earthquakes. [Reuters] U.N. human rights chief Volker Türk has demanded an independent investigation into the discovery of a mass grave in Sudan’s West Darfur region, where the remains of at least 87 individuals were found. [CNN] Humanitarian groups called upon the European Commission to review Italy's migration law, as the recent detention of a rescue ship by the Italian government raised concerns about its compliance with European Union norms and international law. [AP News] Sign up to Newswire for an inside look at the biggest stories in global development.