5 things we've learned about localization

Localization. It’s the topic that everyone in the development sector is talking about. The leader of the world’s largest aid organization, USAID administrator Samantha Power, has made it the keystone topic of her administration. Before that, it was the centerpiece of the Grand Bargain, agreed in 2016.

The principle appears simple. Development is about helping people in low- and middle-income countries. And if we want development to be about those people, then development decisions need to be made by them, and development projects need to be delivered by people and organizations from those countries.

But in practice, localization has proved anything but simple. To help understand why, here are five key takeaways from Devex’s coverage over recent years.

1. It’s about shifting power, not just funding

Much of the discussion about localization has focused on money. Specifically, it’s focused on how more money gets into the hands of organizations based in low- and middle-income countries, particularly NGOs.

In one way, the focus on money is not surprising. Development is about the transfer of resources.

But in another way, this definition of localization is extremely narrow. The point of development is not to fund NGOs, it’s to serve people who need support.

Increasingly, voices from the global south have been raised to point out that successful localization is about shifting power, not just money. They say that it’s as important, or more important, that local communities have the power to decide what gets done. If the zip code of the organization doing the work changes, but the decisions about the work itself are still made in Berlin or London or Washington, that would not constitute success.

These organizations also point out that most of the localization discussion that has taken place so far has done so on terms decided by big donors in the global north. It is about what they are willing to give away, and when, and on what terms. Ironically, they say, local voices have been marginalized in the localization discussion.

And it is expensive even to take part in the discussion. To engage with the policy debate, and try to influence its outcome, local leaders must take attention and resources away from the pressing problems they are trying to solve, and instead spend time engaging in a discussion that is currently centered in the global north. If they can even get into the places where the discussion is being held.

2. A lot more people are talking about localization than doing it

Engaging in the localization debate would make it easier for organizations in the global south to justify if it was yielding results. But local leaders have repeatedly said that when they do get involved in discussions on how funds are spent, they find it extremely difficult to navigate their way through a blizzard of acronyms and forms to influence decisions. Currently, many say, they have relatively little faith that they will be listened to.

One organization in Haiti told the story of how it submitted proposals at the behest of USAID’s own staff, only to have them rejected by the organization.

INGOs and implementers have expressed consistent support for localization, with some NGOs in particular tying themselves in knots over how best to address the issue. And donors around the world signed a declaration in 2022 committing themselves to supporting it.

But the pace of change is not matching up to enthusiasm. Even the most vocal champion, USAID, is famously struggling to move the needle. Only $1.6 billion out of the agency’s multibillion budget is currently committed to local spending, and critics say even that figure is generous.

Part of the problem is that while lip service to localization is all but universal, genuine enthusiasm may be somewhat thinner on the ground. While senior staffers at donor agencies are likely sincere in their support of localization, their political overlords might see development through a more geopolitical lens — one that involves keeping power for themselves.

For example, Rory Stewart, now special adviser and former president of GiveDirectly, and a former aid minister in the U.K. government, said last year that in his opinion giving cash was “the most radical form of localization” because it transferred power directly into the hands of individuals. But, he said, it did not happen, because of “strong vested interests” who wanted to see funds go to their constituents.

3. Localization is harder than it looks

But it’s not just the lack of political buy-in that keeps localization from moving fast. There are also major practical barriers within agencies that keep much from changing.

While some smaller agencies have succeeded in making themselves into primarily local funders, none of the big bilateral donor agencies have succeeded in doing so.

In large part, this is to do with how they were set up, and what they have been expected to achieve. Historically, large donor agencies have tended to be designed to give away money in large tranches, in partnership with governments, in a way that minimizes the risk of fraud or mismanagement, with a focus on geopolitical goals laid out by the political entity providing funding.

Local funding typically requires far more consultation, and much smaller funding tranches to be successful. This means that it involves longer lead times, significantly more staff hours per grant, and a conscious change in approach from those leading the project.

Donor agencies are frequently not correctly resourced in a way that gives staff the time, freedom, and political coverage and management support to make changes.

What’s not yet clear is how difficult these barriers are to overcome. When donors have been required to localize, they have been able to do so relatively rapidly, but when they have not, progress has been slower.

4. The more we talk about localization, the less clear it is

While the fundamental idea of localization remains simple, it becomes less clear as it is examined in more detail. Differences begin to emerge between the vision laid out by local organizations, and that espoused by big donor agencies and INGOs.

Rather crucially, no one has tried to agree on an official definition of what localization is, and there remains dispute over what constitutes a local organization. There is uncertainty around subsidiaries and affiliates of INGOs and implementers based in the global north. And there is no clear consensus over how organizations based in the global south should be counted when operating outside their own country.

There have also been limited attempts so far to provide evidence to show that localization actually has a positive effect, and if so, what that effect might be.

While these are in some ways technical concerns, they have real-world implications. Without evidence, for example, localization could be easier for policymakers to dismiss and minimize. Without an agreed definition of local funding, it is harder to hold donors to account for how much they have provided.

And in some circumstances, where local organizations might be affiliated with a particular culture or religion, they may not be suitable providers for all service users. There is evidence that people in need of humanitarian assistance, for example, may frequently prefer to receive support from the United Nations, because it is perceived as neutral, as well as being seen by some as more professional.

5. USAID is moving slowly on localization, but other donors are worse

A significant proportion of the coverage of localization has centered around the work of USAID, both because it is the largest single funder, from by far the richest and most powerful country, and because it has made localization a flagship policy, and provided clear and measurable goals against which it can be judged.

It’s been widely reported that USAID has moved slowly against its best-known target, to have 25% of eligible funding go to local organizations by 2025. And it has only got as far as saying how it will measure its other main target, to have half of all projects be locally led by 2030.

But change is occurring, and USAID is showing signs that it will continue to make progress, albeit at a different pace than it would want.

For other major donors, the situation is significantly worse. While INGOs in London, Paris, Berlin, and Brussels appear as supportive and dedicated as those in Washington, European donors remain well behind the curve. Even the Dutch, widely regarded in Europe as leaders in the field, have found localization a difficult nut to crack.

So what next?

What is clear is that the pressure on donors to localize funding and decision-making is not going away. But it seems clear that progress is going to be slow and the willingness of governments to change their processes will continue to be a bar to charge. The likelihood is that change will be incremental, but inevitable.

Dig into Roots of Change, a series examining the push toward locally led development.

This is an editorially independent piece produced as part of our Roots of Change series. Click here to learn more.