Devex Newswire: What’s so hard about localization in global development

There is still considerable pressure on donors to shift power to local leadership and funding, but it’s a struggle. We look at five critical hurdles to making it work.

Also in today’s edition: One New Zealand company thinks it’s found a way to ramp up localization, and we talk to IDB President Ilan Goldfajn about reform.

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Decoding localization

Localization is the darling of the development sector and USAID Administrator Samantha Power’s flagship policy — and likely legacy, one way or another.  

At its core lies a simple yet profound principle: Development should prioritize the voices and agency of those it seeks to help, particularly in low- and middle-income countries. But the journey from principle to practice is fraught with complexities and challenges.

While the concept of localization embodies the noble aim of shifting power dynamics and fostering true empowerment, its execution has often fallen short of expectations.

Devex Business Editor David Ainsworth delves into the heart of this discourse with five insights on localization:

• Localization is more than just redistributing funds — it's about fundamentally reshaping power structures.

• Despite widespread discussion, action on localization remains disappointingly sparse. There’s “a blizzard of acronyms and forms to influence decision,” David writes.

• Implementation hurdles underscore the intricate nature of localization efforts — much of it political.

• As conversations proliferate, clarity on effective strategies becomes increasingly elusive.

• While USAID treads cautiously, other donors lag further behind in embracing localization principles.

Read: 5 things we've learned about localization

+ Don’t forget to download your copy of our newly updated report on the localization agenda, which tracks USAID’s and global development leaders’ localization progress since the start of the decade.

There’s an app for that

Amid all that rhetoric of localization and community empowerment, a nonprofit in New Zealand is working on a solution to transform talk into action.

It’s known as The Wellbeing Protocol, a mobile app designed to help groups draft a shared constitution and distribute donor funding using a unique voting algorithm that’s more complicated than conventional majority rule.

Founder Mark Pascall, speaking at the Impact Investment Summit Asia Pacific, described the app as a catalyst to "scale localism," leveraging technology from his software development and blockchain background.

Here's how it works: Each member receives 100 voting credits, which they can allocate to proposals using a sliding scale — rewarding thoughtful, long-term thinking while ensuring community sentiment is accurately represented.

Crucially, the app fosters face-to-face dialogue, emphasizing nuanced discussions and collaborative decision-making, with proposal thresholds dynamically adjusting based on voter engagement and fund availability, writes my colleague Vince Chadwick.

Read: The New Zealand nonprofit aiming to 'scale localism'

+ Explore Devex's new partnership series Roots of Change, where we dig into the shifting paradigm toward localization, amplifying the voices of local leaders while also examining the successes and challenges of this approach. 

Risky business

They say a change is as good as a rest to rejuvenate and bolster productivity, and that’s the hope for the Inter-American Development Bank, which is heading in a direction it hopes will bring in new money, take on more risk, and shake up its culture.

As part of its new strategy, the Latin American multilateral bank plans to overhaul how it defines success. No longer will it be measured primarily by the number of projects completed or dollars out the door, but development impact will be the driving metric for the bank.

“We are going to make the institution care deeply about what is the ultimate result of our work and less about how much we lend,” IDB President Ilan Goldfajn tells us in a wide-ranging interview. That means success will be measured by whether a project lifts people out of poverty, gives them access to clean water, or lowers carbon emissions.

“This may seem easy, but it’s very difficult because it means that we have to change the culture, that we have to change incentives,” he tells Devex Senior Reporter Adva Saldinger.

As part of the plan, IDB’s board already approved $3.5 billion for its private sector arm, IDB Invest, and $400 million for IDB Lab, its innovation and venture branch. And by easing capital requirements — in addition to shareholder capital — the bank could invest another $50 billion over 10 years. It has already begun injecting $1 billion to 2 billion, Goldfajn says.

“We’re quite ambitious, we want to have a very different IDB,” he says, adding that despite all the proposed changes there is no need to do a “major restructuring.”

The mood for change is there; multilateral bank shareholders are on board. The World Bank is also working through its own reform agenda that aims to reorient and focus more squarely on the impacts of climate change — oh, and preventing another pandemic — alongside growing its lending capacity.

And like the World Bank, IDB also wants to take on more risk to stretch its balance sheet to unlock more capital.

“The private sector is screaming and shouting asking for multilaterals to take more risk,” IDB Invest CEO James Scriven tells Adva.

Read: IDB reforms, new funds have been approved. What's next? (Pro)

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Australia's new 'guvnor with aid cred

Sam Mostyn, the former president of the Australian Council for International Development (among many other things), will become governor-general of Australia from July, Australian Prime Minister Anthony Albanese announced Wednesday.

Mostyn — who has had a long career in law and business and is considered one of the main drivers behind the creation of the Australian Football League's women's competition — will have to attend a lot of ceremonies, but the role is not purely ceremonial.

Technically King Charles' representative in Australia, Mostyn will be responsible for dissolving Parliament (at the prime minister's invitation) and swearing in ministers. In 1975 the governor-general even dismissed the democratically elected government of the day, and Mostyn's outgoing predecessor, David Hurley, caught flak for allowing then Prime Minister Scott Morrison to secretly appoint himself to five ministerial portfolios during the COVID-19 pandemic.

Here’s hoping it doesn’t come to that …

Window on the World Bank

Navigating the labyrinth of the World Bank's vast resources and myriad funding mechanisms can be daunting for development organizations and professionals. But understanding the key financing trends of the bank’s different lending units — from the International Bank for Reconstruction and Development to the International Centre for Settlement of Investment Disputes — is also a source of invaluable insight.

The bank committed $128.3 billion for the fiscal year ending in June 2023 — that’s 18% more than the previous year, while disbursement was up more than 30% to $91.4 billion. Our number crunchers, Miguel Antonio Tamonan and Alecsondra Kieren Si, break down the financing trends since 2019.

Read: A primer on the World Bank and its institutions (Pro)

Words, but no action

The Biden administration said it is “outraged” by the Israeli airstrike that killed seven aid workers on Monday and called it "emblematic of a larger problem" of getting aid into the besieged Gaza Strip. Despite that, it seems the United States will not be shifting its military support to Israel – at least, not yet.

“The more violent it gets for humanitarian workers ... the less likely it is that they’re going to be willing to take those risks, which means it’s more likely that the people of Gaza will suffer all the more,” John Kirby, the administration’s National Security Communications Adviser, said during a White House press briefing.

The World Central Kitchen aid workers were leaving a warehouse in northern Gaza after unloading food deliveries when their trucks, branded with the humanitarian organization’s logo, were hit in a deconflicted zone. Kirby said Israel is conducting investigations.

In other news

A new report has estimated $18.5 billion in critical infrastructure damage in Gaza's ongoing conflict, with 84% of health facilities destroyed. [Al Jazeera]

The World Bank is set to approve $1.2 billion in budget financing for Kenya, aiding the East African nation's efforts to reduce reliance on commercial debt. [Bloomberg]

Japan announced it will lift its suspension of funding to UNRWA, the main U.N. aid agency in Gaza. [Reuters]

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