Promises made in Busan, Accra and Paris and the deepening emphasis on aid effectiveness and sustainability have led major donors to incorporate the localization of aid into their core strategy. The U.S. Agency for International Development, for example, has committed to disburse 30 percent of its aid through country systems by 2015. Most other funding agencies have also pledged to award more contracts to locally incorporated firms.
The growing reliance on country systems, or the approach of channeling aid through institutions and systems of recipient states, means that development activity is more localized throughout the program design, procurement and implementation stages.
In this new competitive marketplace where donor policy and procurement rules target locally incorporated firms for contracts and grants, traditional implementers are rethinking some of their business strategies to thrive. Many development organizations with headquarters in donor countries are doing so by establishing regional, country and field offices in low- and middle-income countries.