Fighting rural poverty requires increasing economic activity at the village level. This village machine shop in Nepal, manufacturing parts for treadle pumps, has greater impact on the well-being of villagers than a distant urban factory.

This is the third of seven parts in the Devex series “Foreign aid effectiveness: A radical rethink,” written by Diana Ohlbaum — a former deputy director of USAID's Office of Transition Initiatives and senior professional staff member of the two congressional panels overseeing U.S. foreign affairs.

The original concept of overseas development assistance is encapsulated in the CARE package: a box full of basic necessities to save lives and restore human dignity. Like the burlap sacks of wheat emblazoned with a U.S. flag, these deliveries of goods did more to display American generosity and relieve short-term suffering than to change the underlying power dynamics that left so many in poverty and despair.

It didn’t take long to discover the shortcomings of this approach as a strategy for change.  As far back as 1966, David E. Bell, as head of the U.S. Agency for International Development, emphasized the concept of partnership and self-help, arguing that “foreign aid is not something a donor does for or to a recipient; it is something to be done with a recipient.”

Read more articles on the Foreign aid effectiveness: A radical rethink series:

● The illusion of control
Betting on the poor
 Knowing our limits
 Old wine in new bottles
 Country ownership 3.0
 The path forward

Yet our aid — the megaprojects of the Kennedy-Johnson years as well as the basic human needs programs that followed (as Andrew Natsios characterizes those eras) — suffered from too much “doing for” and not enough “doing with.” Delivering commodities didn’t pull communities out of food insecurity; constructing roads, dams and bridges didn’t eliminate the key obstacles to economic growth. It wasn’t just things that were lacking — it was also the know-how.

Hence came broad acceptance of the well-known aphorism: Give a man a fish and you feed him for a day; teach a man to fish and you feed him for a lifetime. Whether the saying originated in a Chinese proverb, a teaching by Maimonides or a story by a 19th century British author — all of which have their claimants — it has now become perhaps the most powerful organizing principle behind our aid programs. Today, capacity building is all the rage; it is the basis on which our aid has shifted from goods to services, from shipping grain and building infrastructure to providing advice and conducting training.

Yet this highly appealing slogan rests on two basic assumptions: that what is really missing in the developing world is technical knowledge and that we — meaning the industrialized world in general and the United States in particular — can provide it. The problem is, neither of these assumptions stands up to serious scrutiny.

Local talent underutilized

Even in the poorest and most fragile countries, anyone who bothers to look will find plenty of local talent. Ph.D.s, MBAs, lawyers, accountants — many with degrees from prestigious Western universities — are part of the national labor pool. All too often, these qualified professionals are either unemployed, since there are limited local markets for their skills, underemployed as drivers and translators for Western and international aid agencies, or underutilized by dysfunctional government bureaucracies. Instead of looking right under our noses for local firms and individuals who can provide the requisite know-how, we default to bringing in managers and technical experts we already know and feel comfortable with. Most aid projects hire low- and medium-skilled workers from the local community, but USAID generally requires that the supervisors come from the West. Yes, there are times when outside leadership and direction is necessary and helpful. But these ought to be the exception, not the rule.

Diana Ohlbaum weighs in on the transformations happening at the USAID.

Beyond ignoring local talent, we actually distort the local economy with our hiring practices. All too often, foreign embassies, international organizations and donors compete with local institutions by offering salaries to local hires that are out of line with prevailing wages. First, the wage inflation ends in highly educated and experienced workers taking menial jobs for foreign employers, just because these jobs pay better than working in their chosen professions. Thus society loses the benefit of their expertise.

Second, as Oxfam explains in a 2011 policy paper, even when local talent is put to good use, we undermine self-reliance by luring competent workers away from local civil society organizations, businesses and the public sector. This may build individual capacity, but it weakens local institutions.

Reduced value for money

The prevailing model of technical assistance is to bring in advisers and specialists from the West, either to develop and conduct short-term trainings for local organizations or to literally sit in government offices to help reform bureaucratic practices and processes. Most of the time, the training and advice is provided over a relatively short period of time, from as little as a few days or weeks up to a two- or three-year contract or overseas posting.

While many of these subject matter experts bring unique and important experience, they may or may not have the relevant language skills, historical and institutional knowledge and cultural sensitivity to succeed. Given the length of program cycles and rotation schedules, these efforts generally lack continuity, the opportunity to build lasting relationships of trust, and a feeling of personal stake in the outcome.

This approach not only limits effectiveness, but also inflates costs. Because pay scales for experts hired in the United States are so many times higher than those for residents of partner countries — not to mention the costs of travel, housing and per diem — foreign experts are able to provide far fewer services for the same amount of money. Moreover, they are less likely to pay local taxes and spend their salaries on the local economy, thus reducing the indirect benefits of aid. As Casey Dunning points out in an excellent paper on local spending, USAID has documented numerous examples of savings through the use of local contractors, but we could still use a rigorous cost-benefit analysis of whether and when it makes sense to bring in technical experts from outside the region.

Give a man a fish and you feed him for a day; teach a man to fish and you feed him for a lifetime. Whether the saying originated in a Chinese proverb, a teaching by Maimonides or a story by a 19th century British author — all of which have their claimants — it has now become perhaps the most powerful organizing principle behind our aid programs.

—  Diana Ohlbaum, former deputy director of USAID's Office of Transition Initiatives

Of course, not all technical assistance is performed under short-term contracts. There are many international NGOs, for instance, who with their own resources invest decades of effort in building long-term relationships with local communities, strengthening local institutions and transferring skills and technology. However, this is not the model that is generally favored by USAID grants and contracts, which tend to be short-term and limited to supporting a specific project which can be completed in three to five years, often much less. Given the uncertainties of the U.S. budget and appropriations cycle — not to mention shutdowns and sequestration — funding streams are turned on and off like water faucets: money put on hold, employees pink-slipped, deliverables reduced or revised. The value of these efforts is frequently reduced and distorted by the vagaries of an aid program that incentivizes the quick fix.

Partners or paid help?

This projectized approach to capacity-building, and to aid in general, rarely leads to sustainable outcomes in part because it treats partners as “implementers” and skews local resources toward donor-identified priorities.

Thomas Dichter, in his excellent report on local organization capacity development, explains how donor-issued calls for proposals provide financial incentives for organizations to engage in activities that are peripheral to their operations and that are unlikely to be continued once the money runs out. In addition, the grants and contracts rarely cover overhead expenses, such as offices and equipment, which become stretched to their limits, and organizations often hire short-term staff to run the project. As a result, individual workers benefit from the employment and the experience, but the organization itself may actually be weakened in its ability to respond to local needs and distracted or diverted from its core activities.

Moreover, our organizational capacity development efforts have focused largely on what Dichter calls “‘1.0’ kinds of capacities” — organizational procedures based on the Western business model, which are primarily useful in applying for, receiving and accounting for grants of assistance. Ignored or overlooked are the capacities to adapt and learn, facilitate and influence, plan and strategize, perform and persuade — higher-order capacities that are essential to a well-functioning society. Ironically, our technical assistance for capacity development may serve to perpetuate and franchise the donor-recipient relationship, training local partners to administer subgrants rather than to carry out their missions.

If you really wanted to build a country’s capacity, for instance, to evaluate the impact of development projects, whether they were financed by donor money or the country’s own resources) you wouldn’t hire a U.S. consulting firm to create a training module for local evaluators. You wouldn’t host a regional conference at a fancy retreat. You wouldn’t invite a local individual with evaluation skills to join the U.S. evaluation team to provide local “context” and interpretation services. You wouldn’t issue a request for proposals that required bidders to subcontract part of the work to local evaluation firms. None of these things are necessarily bad, they just don’t build long-term institutional capacity.

Instead, you’d ask the partner government to provide credible, independent evaluations of programs for which they were seeking external support, and to make those evaluations public. You’d provide long-term core support to the local evaluation association to implement its own strategic plan to build professional competencies, serve and accredit members and stimulate local demand. And you’d let that association determine what kind of training and technical support it needed and purchase that support wherever it could find the best value for money, be it on the local market or from other developing countries that had overcome similar challenges.

These kinds of south-south exchanges and peer-to-peer trainings often seem more relevant and accessible to the trainees, not to mention more affordable. Yet there are significant legal and political hurdles to trilateral cooperation and the hiring of non-U.S. firms. More fundamentally, there is a perception gap: U.S. government agencies and contractors tend to think they are providing unrivalled expertise and can tick off numerous examples of impressive-sounding programs with proven results. Meanwhile locals, when asked about these programs, often express enormous anger and frustration about the cost of the experts and the value of the training.

For the most part, technical assistance ought to be demand-driven, sought out in response to locally identified needs rather than imposed as a condition or prerequisite for aid. How much value is there in a training that is accepted begrudgingly, by partners who don’t feel they need it or think the money could be put to better use? It’s true that sometimes people don’t understand what they are missing until they obtain it, and then regret that they didn’t have the skills or information sooner. But even when the subject or nature of the training may be unwanted or controversial — think gender or ethnic sensitivity — the local partner ought to be able to select the provider of technical assistance and to hold that provider responsible for performance and results. In fact, the entire system of checks and balances would be strengthened if, for instance, local civil society organizations concerned about their government’s lack of gender or ethnic sensitivity were able to oversee or weigh in on the selection of contractors to provide such training to government ministries.

USAID funding opportunities

Review current and upcoming USAID grants and tenders, and check out in-depth analysis of USAID country and regional strategies, including hot sectors, trends and pipeline opportunities.

In effect, as Dichter rightly argues, instead of treating civil society organizations as “executing agents of donors’ emphases and plans,” we must help them to evolve as legitimate and viable organizations in their own right. This is particularly important in the area of democracy promotion, where our clientelist relationship with local organizations has provoked a somewhat predictable backlash among even friendly governments, which have increasingly responded with heavy-handed NGO registration requirements and restrictions on foreign funding. Although we have good reason to be concerned by these newly erected barriers to a freely functioning civil society that Thomas Carothers and Saskia Brechenmacher have explored in a thoughtful brief, we should approach it with a good dose of humility. How would we regard U.S. political parties who received funding and training from the government of China or Russia? Why do we empower the Internal Revenue Service to determine whether an organization is too political for tax-exempt status?

The temptation to adopt a holier-than-thou attitude about toleration for dissent ought to be considered in light of our own history of red-baiting, blacklisting, infiltration and surveillance.

Stay tuned for part 4 of our seven-part series "Foreign aid effectiveness: A radical rethink," written by Diana Ohlbaum, and share your thoughts by leaving a comment below.

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About the author

  • Gsw diana 3

    Diana Ohlbaum

    Ohlbaum is an independent consultant, an executive committee member of the Modernizing Foreign Assistance Network and a principal of Turner4D, a strategic communications firm. She has served as senior associate with the Center for Strategic and International Studies, a senior professional staff member of the U.S. Senate Foreign Relations Committee and the House Foreign Affairs Committee, and a deputy director of the U.S. Agency for International Development's Office of Transition Initiatives.