See the guest post below from Oxfam America’s Porter McConnell, Policy Advisor of the Aid Effectiveness team, as she discusses Oxfam’s new paper on effective capacity building for development.  Read about Oxfam’s previous paper on Information here, or read the full Ownership report.

Want to fight poverty? Help countries build their own capacity.

A new Oxfam America report released today suggests that US foreign aid hasn’t always done the best job of supporting capacity building in poor countries. When we rely on US personnel and systems instead of relying on a country’s own people and systems, we forget that fighting poverty starts with helping people in poor countries invest in their own human capital, organizations, and institutions. And we forget that donors don’t do development, people develop themselves.

The report outlines where US foreign aid needs improvement, and concrete steps to make those improvements.

Here’s what happens when US foreign aid doesn’t build country capacity:

• It costs more. In Liberia, a US consultant costs the government anywhere from nearly twice as much as the competition. In Ethiopia, 30 to 40 percent of aid for capacity building on HIV/AIDS stays with US organizations.
• It’s unsustainable. In Kenya, the US uses its own organizations to manage an indoor residual spraying program for malaria, instead of working with the government. Says a health official, “You make it harder for [Kenyans] to do it for [ourselves] the next time. And with malaria control, annual spraying isn’t the only thing you do—[fighting malaria is] about monitoring as well.”
• It reduces accountability for results. In Liberia, contractors are responsive to their contracting arrangement with a US agency, not to what local governments need. Says one government official:  “Contractors have a huge incentive to deliver today, rather than building up systems for tomorrow—that’s what they’re going to be evaluated on.”
• It duplicates efforts. In Kenya, while other donors use the procurement system set up through the Global Fund to Fight AIDS, TB, and malaria, the US uses its own system to buy HIV/AIDS test kits and antiretroviral drugs, which costs about four times as much as the Global Fund’s.
• It’s inflexible. In Afghanistan, government officials see US consultants as “controlled by their contractors,” with little flexibility to change the scope of their work to take advantage of new opportunities. In Cambodia, local organizations note how the long chain of command from US Agency for International Development (USAID) to contractors to subcontractors makes it near impossible to make even small budget changes, which eliminates any possible creativity and flexibility.
• It drains talent away from local institutions. In Kenya, an official in the Ministry of Health noted that the US President’s Emergency Plan For AIDS Relief (PEPFAR) draws qualified staff away from the government by paying them three times as much as the typical government salary.

But there’s hope. Here’s how the US can fight poverty by helping countries build their own capacity:

• Allow USAID missions to take calculated risks to get big poverty-fighting returns
• Talk to locals and identify agents of change
• Make it easier to cut out the middleman and hire a local expert
• Help countries manage their budgets transparently and efficiently
• Use the country systems that are already working
• Work together with other donors on fewer priorities

In even better news, USAID has already started to adopt the changes we’ve recommended with a promising new reform of their implementation and procurement policies. Check out the report, Capacity: Helping countries lead, part of Oxfam’s Ownership in Practice series.