While this concept takes on many names – including localization, LLD, country or local ownership, community-led development – it means that the people closest to development and humanitarian challenges should drive how foreign assistance is utilized in their communities.
Locally led development assistance is effective and efficient for many reasons:
In recent years, U.S. foreign assistance has begun to work towards locally led development, with PEPFAR committing to 70% local implementation by 2020 and USAID initiating USAID Forward in the Obama era, the Journey to Self-Reliance in the Trump era, and now the New Vision for Inclusive Development from the Biden administration with clear localization commitments. However, much work remains to make real localization of U.S. foreign assistance a reality.
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As the largest and primary U.S. development agency, USAID pledged in 2021 that 25% of its funding will be implemented through local actors by 2025 and 50% of its programming will be shaped by local voices by 2030. These targets mark an important step in advancing localization, including building local entities’ program and organizational infrastructure and ensuring co-creation, feedback loops with local partners, and other ways for communities to influence prioritization and programming.
MFAN believes it is vital that USAID share a public strategy and vision for how it plans to achieve these locally led development targets, with coherence across the agency and in program and funding cycles. Clear definitions of “local” and clear metrics and transparent reporting against their targets will be paramount to effectively measure and track data on localization.
Advancing localization and achieving the gains it offers for impact and cost-effectiveness will require additional resources and reforms within U.S. foreign assistance agencies. The resources needed to make true localization possible include the expansion of the number of contracting officers, better utilizing the cadre of experienced USAID local staff (CCNs and FSNs), flexible funding options, and longer project time-horizons. USAID should simplify proposal processes and requirements and accelerate procurement and acquisition instruments to create more space for local organizations to respond. INGOs should also be encouraged and incentivized to provide greater technical support to local actors and donors should ensure that local institutions have strategies and funding to mitigate risk.
If development initiatives are to be sustainable and successful, partner countries -- including the government, private sector, and civil society -- must have a clear stake. This means that local entities should play a role in shaping development programs and in funding and implementing them. Strengthening the capacity of partner governments to mobilize and manage domestic resources is critical to boosting countries’ investments in the well-being of their populations and economic growth. Greater public revenue, when managed well, reduces the need for aid, strengthens fiscal sustainability, enhances countries’ stability, and increases citizen capacity to hold governments accountable.
While local financing can take many forms and include private sector resources, the key component must be sustainable public investment – known as Domestic Resource Mobilization (DRM). As USAID defines it, DRM is “the process through which countries raise and spend their own funds to provide for their people – [and] the long-term path to sustainable development finance.” MFAN is a strong proponent of DRM and has encouraged the U.S. government to invest in the capacity of partner governments to enhance domestic resource mobilization and to identify new and/or alternative sources of funding to gradually increase their financial contribution to their own development priorities.
USAID provides the most (albeit limited) U.S. financing for domestic resource mobilization, but other agencies such as the Treasury Department and, in some cases, the MCC are also engaged in promoting these objectives. In addition to increasing U.S. government support for DRM, a comprehensive and harmonized U.S. approach to DRM is needed. To that end, MFAN advocates for a whole-of-government DRM strategy by USAID, the State Department, the Treasury Department, and the MCC. DRM should also be an integral part of USAID’s localization agenda, with sufficient funding, staffing, and programming support.