How USAID funding for local contractors increased by 169.8% in 2022

The U.S. Agency for International Development saw a record-breaking obligation to local contractors in 2022 — nearly two years after its administrator, Samantha Power, laid out her plan of allocating a quarter of the agency’s money to local partners. Since Power set her targets, Devex has covered extensively how USAID has fared against them, by looking at the portion of its total obligation that goes to local recipients in low- and middle-income countries. By local, we mean those organizations implementing projects in their own countries. This has been our guiding definition, starting some time before USAID decided how it would define local. Based on USASpending.gov, USAID obligated $5.9 billion through acquisitions — also known as contracts — in the fiscal year that ended in September 2022. Of this amount, $276.9 million went to local contractors in LMICs — up 169.8% in real terms from FY 2020-21. This accounted for 4.7% of the total contract spending in FY 2021-22 — three percentage points higher than the previous year. All the 2021 figures were converted to 2022 constant prices, allowing us to make year-on-year comparisons with respect to changes in the inflation rate. Progress on localization USAID saw an overall increase in its acquisition and assistance spending — from $29.1 billion in FY 2020-2021 to $36.4 billion in FY 2021-22, according to its progress reports. However, a closer look shows that in real terms, only the assistance funding grew, while contract spending remained the same. The agency also reported in late April that its overall local spending increased from 7% to 10.5%. In our analysis of USAID assistance funding, we estimated that between 5% and 6% of the total, worth $1.2 billion, went to local grantees in FY 2021-22. After we add in the amount obligated through contracts, the percentage of total spending on local recipients remains within the 5% to 6% range. As we pointed out in our previous analysis, our figures are not comparable with USAID’s chiefly because the agency excludes a significant proportion of its spending from its assessment. Zooming into localization Overall, USAID obligated $276.9 million to 357 contractors in 57 LMICs — $174.3 million more, in real terms, than the previous year. A further $2.2 million went to 32 LMICs-based contractors for projects in other countries. Sub-Saharan Africa remains the central hub for most locally implemented contracts, with $228.8 million — 354.1% more than the $50.4 million obligated in the region in the previous year. East Asia and the Pacific ranked next with $25.4 million — 101.7% more than in FY 2020-21. Followed by the Middle East and North Africa with $13.4 million; South Asia with $3.5 million; Latin America and the Caribbean with $3.1 million; and Europe and Central Asia, with $2.6 million. The rise in local contract spending was driven by a significant increase in five recipient countries, which were also the overall top recipients in the same order: • South Africa, from $7.1 million in FY 2020-21 to $65.3 million in FY 2021-22. • Uganda, from $11.6 million in FY 2020-21 to $53.5 million in FY 2021-22. • Zambia, from $6.9 million in FY 2020-21 to $31.6 million in FY 2021-22. • Tanzania, from $3.6 million in FY 2020-21 to $26.4 million in FY 2021-22. • Vietnam, from $9.4 million in FY 2020-21 to $25.1 million in FY 2021-22. Relative to their previous total obligation, the following countries saw the biggest jump: • Malawi, from $684,000 in FY 2020-21 to $9.2 million in FY 2021-22 — a 1,249.3% increase. • The Dominican Republic, from $52,000 in FY 2020-21 to $625,000 in FY 2021-22 — a 1,097.2% increase. The following are five countries that were not among the recipients in the previous year but received funding in FY 2021-22: • Iraq, with $179,000. • Moldova, with $114,000. • Laos, with $109,000. • West Bank and Gaza, with $86,000. • Guinea, with $37,000. Among countries, Jordan saw the biggest dip worth $8.4 million — from $20.5 million in FY 2020-21 to $12.1 million in FY 2021-22. Other countries in this category are: • Lebanon, from $4.1 million in FY 2020-21 to $550,000 in FY 2021-22. • Indonesia, from $2.3 million in FY 2020-21 to $47,000 in FY 2021-22. • Colombia, from $2 million in FY 2020-21 to $367,000 in FY 2021-22. Overall, 24 countries saw an increase in funding to local recipients — including five countries that were previously not awarded contracts but received funding in FY 2021-22 — while 31 countries received less funding. Two countries — Mongolia and Mexico — were listed as recipient countries in FY 2021-22, but the total obligation was unspecified. Meanwhile, eight countries that were recipients of contracts in FY 2020-21 did not receive new funding the following year. Who were the top local contractors? Among the top contractors, seven were also part of the previous list — Vina E&C Investment and Construction, Right to Care Zambia, Bolloré Transport & Logistics, Joint Medical Store, Rwanda Medical Supply, John Snow Health Zambia, and Mission for Essential Drugs and Supplies. Three were not among the suppliers in the previous fiscal year — Right to Care, Medical Access, and Deloitte Tanzania. Right to Care emerged as the top contractor, with $63.1 million for six activities. Medical Access ranked next, with $32.8 million; Vina E&C Investment and Construction, with $25 million; and Right to Care Zambia, with $24.3 million. Overall, 24 countries saw an increase in funding to local recipients, this includes five countries that were previously not awarded contracts but received funding in FY 2021-22. In comparison, the top 10 suppliers in FY 2020-21 accounted for 55.7% of the total. The top 10 contractors will also implement the biggest local activities. These include: • $61.4 million to Right to Care to support the USAID COVID-19 response in South Africa. The activities include planning, surveillance, and vaccination services. • $27.1 million to Medical Access for the procurement and delivery of testing kits needed for the diagnosis of HIV among infants in Uganda. • $25 million to Vina E&C Investment and Construction for the treatment of dioxin-contaminated areas at the Bien Hoa Airbase in Vietnam. • $24.3 million to Right to Care Zambia to support HIV prevention, care, and treatment in the country. • $23.3 million to Deloitte Tanzania for technical assistance on USAID’s HIV and tuberculosis project in the country. Update, Aug. 3, 2023: This piece has been updated to clarify that USAID’s funding for local contractors increased by 169.8% last year. Try out Devex Pro Funding today with a free five-day trial, and explore funding opportunities from over 850 sources in addition to our analysis and news content.