The obstacles to localization are the same obstacles holding back USAID as an agency

June 8, 2022
By Justin Fugle
June 8, 2022

In May 2022, the Brookings Institute published a report titled “Locally driven development: Overcoming the obstacles.” This report includes a set of 15 commentaries written by development experts. Justin Fugle, Plan’s head of policy, provided one of the responses. You can read the others here.

At the heart of this debate about whether USAID can successfully advance locally led development (LLD) are two questions about the Agency itself. Does USAID now have the autonomy to follow the evidence to a more successful development approach? Does USAID now have the vision and capacity to return to its role as the world’s leading bilateral development agency? The questions are this fundamental because locally led development has always been central to USAID’s objectives since its founding in 1961. Through mission distortion for national security imperatives and through the devastating 30% staff cuts of the 1990s, that worthy objective has been weakened and delayed, but it remains essential, which is why it keeps re-emerging from USAID’s career staff, alumni and administrators.

USAID’s current efforts to expand LLD build on 20 years of international agreements beginning with the U.N. Millennium Development Goals, as well as 20 years of bi-partisan efforts to increase the impact and sustainability of U.S foreign aid. It also echoes President Kennedy’s speech that founded the agency.

“Our job, in its largest sense, is to create a new partnership between the northern and southern halves of the world … At the center of the new effort must be national development programs. It is essential that the developing nations set for themselves sensible targets; targets based on balanced programs for their own economic, educational and social growth, which use their own resources to the maximum.” It was President Kennedy, speaking in March 1961, who first said that USAID would work, “toward the ultimate day when all nations can be self-reliant and when foreign aid will no longer be needed.”

Adeng was forced to flee her home due to conflict while expecting her first child. Through funding from U.S. Agency for International Development, Plan provided resources for her and her family.

Contrasted with this vision is the overburdened and diminished agency that John Norris wrote about in a 2014 Devex history of USAID, and which he expanded upon in a recent book, The Enduring Struggle. Norris’ book was praised by several USAID administrators and the USAID Alumni Association.

Norris concluded his pieces with one issue that he felt all the modern USAID administrators and every single member of the development community would agree on. Namely, that USAID is “excessively bogged down by rules, regulations, reporting and earmarks imposed by Congress and its own bureaucracy. Requirement after requirement has been layered onto the agency over the years as process has often crowded out substance.” The consequences for USAID’s influence and impact have been severe. Norris concludes, “Navigating that thicket is onerous for USAID staff and draining for the agency’s leadership … This also explains why many of the important assistance initiatives, like the President’s Emergency Plan for AIDS Relief and the Millennium Challenge Corporation, have been placed outside of USAID in recent years.”

Remember that Norris was not writing about obstacles to LLD, but instead writing a history of USAID. Yet, in doing so, he has listed the same litany of barriers frequently cited to question the agency’s ability to advance LLD. Are local organizations capable of complying with USAID’s onerous and multi-layered rules and regulations? Will local organizations be able to complete “complex management compliance and reporting requirements, including safety and environment standards, terrorist and money laundering reporting requirements, reimbursement for rejected or questioned costs, and other U.S. and local rules and regulations”? Will Congress ever really waive its directives so USAID Missions can respond to local priorities or will the “development industrial complex” continue to hold sway over USAID’s budget?

Thus, USAID’s own history shows that if it is unable to pull down the walls that prevent it from advancing LLD, it also will not pull down the walls that prevent it from truly acting like America’s leading development agency. This is also a fundamental question for its future role because other U.S. foreign aid entities have already successfully advanced LLD.

For example, the Inter-American Foundation has safely and successfully invested hundreds of millions of U.S. taxpayer dollars in local NGOs since 1969. The IAF fully complies with the same Federal Acquisition Regulations that USAID must comply with, but without the additional burdens that Congress and USAID have imposed on its funds over the years. The IAF also has a library of ex-post evaluations proving the lasting impact of its investments. IAF programs are structured so they nearly always reflect local priorities and build from on-going locally rooted efforts. Perhaps USAID can tap into some of these methods under its newly approved and more flexible Centroamerica Local initiative.

The MCC has safely and successfully invested billions of U.S. taxpayer dollars in programs that reflected the priorities of partner country governments and NGOs. The MCC also has a large set of rigorous evaluations demonstrating the impact of its approach.

Perhaps the most powerful example of all is PEPFAR. PEPFAR is run from the State Department, but its programs are implemented by the CDC and USAID. Abundant evidence demonstrates that PEPFAR is one of the most effective foreign aid initiatives ever run by the U.S. government, having saved an estimated 17 million lives since 2004; however, it had made few strides towards sustainable locally led programs. That began to change in July 2018 when PEPFAR directed CDC and USAID to reach a benchmark of 40% of their PEPFAR funding to “organizations based in the developing countries where the programs are operating” — in the next 18 months, and to reach 70% local funding in the next 30 months!

At that time, PEPFAR’s data showed that CDC was well ahead of USAID in terms of localization. Despite USAID’s many bureaucratic burdens, under intense pressure from PEPFAR, it made huge strides in local funding in a short period of time and PEPFAR’s studies found that its local implementers generally delivered services as well as the U.S.-based implementers they replaced. While PEPFAR’s journey beyond localization to truly locally led development remains a work in progress, this experience shows that USAID can overcome its many internal obstacles when leadership is heavily committed to that objective.

The current high-profile commitment of Administrator Power and her excellent team combined with support for locally led development in the White House, Congress, implementing community and within the agency — all building on the procurement and process reforms developed under Administrator Mark Green — provide USAID with the best chance in decades to overcome its internal and external obstacles to not only achieve LLD, but to reclaim its role as the premier U.S. development agency.