Localisation and Tech: Interlinked issues faced by UKAID, Primes and Local Agencies

Introduction

Localisation – the commitment by major donors to shift a significant portion of humanitarian funding and decision-making power to local and national actors – is set to significantly shake up and disrupt the UK aid sector.    

The origins of the current push on localisation and flurry of papers, workshops, round tables, (and yes blogs), can be traced to the ‘Grand Bargain’ an agreement struck at the World Humanitarian Summit in Istanbul in 2016 between donors, multilaterals and major international NGOs.  It’s been turbocharged by the commitment of USAID to allocate at least 25% of its funding to local partners by 2030. 

But it’s worth noting that localising initiatives have been around for many years – whether through the adoption of locally led steering mechanisms, or by building local capacity and bolting it onto host country government in the form of reform units, secretariats and the like.  But previous approaches have tended to be short term with capacity dissipating as programmes end.  What’s interesting in the current phase of localisation is the shift of focus away from government and towards the local private sector ecosystem in the search for sustainable capacity development.

In the UK the exact contours of what I’ve taken the liberty of calling Localisation 2.0 will look like, and how it will be defined and applied are still very much up in the air as donors, primes and local agencies wrestle with the concept of ensuring that delivery of aid and humanitarian action is, in the words of the Grand Bargain communique,  as local as possible and as international as necessary.  But lots of issues and conundrums are already beginning to rise to the surface as elements of localisation are introduced in an ad hoc fashion across existing programmes.

But the shift is ongoing and real: I was particularly struck, as a statement of intent by a FCDO programme’s October 2024 call for firms to express interest in providing complex technical assistance for a major West African Economy – by the mandated focus on:

‘Encouraging participation by firms which don’t usually do much work on FCDO funded projects, or which are SMEs, women-led or based in the recipient country’.

There’s whole range of practical and operational issues to be considered in the pursuit of this aim.   In my blog I explore the issues and challenges from the perspective of the FCDO, Prime Contractors and Local Agencies with a particular focus on issues to do with data, capacity and information flows.

In doing so I’d like to generate some thinking and discussion on key questions:

• What should be the offer of UK Primes in relation to localisation?
• What should FCDO ask of Primes and what role should they play in driving and supporting the policy of localisation?
• What do government counterparts in recipient countries make of the localisation strategy, the progressive values that underpin it and the possible narrowing of the range of expertise available to them.
• What institutional and financing arrangements will work best and who sets them up: funding vehicles, grants programmes, networks, hubs, communities of practice…?
• How to categorise local agencies and define their roles in light of the rapidly expanding lexicon of localisation best practice from ‘Anchor Organisations’ through to ‘Community Based Local Actors.’
• What targets should be set and how will localisation be measured and assessed by primes, donors, and oversight agencies?
• How can technology facilitate the transfer of expertise and data and help build permanent and sustained local capacity that survives funding and programme cycles?

The issues at donor, prime and local level

Donor/FCDO

What sorts of issues will donors such as the FCDO be trying to address to make localisation work and how could technology help address that set of issues, problems, and constraints?  The FCDO, we think, faces challenges on:

• Capturing data on capabilities and performance of local agencies and networks.
• Categorisation of local suppliers by registration, location, ownership etc
• Mitigating the fiduciary risk of localisation and delegation of spending authority through local agencies and supply chains.
• Loss of data on local capacity and networks at programme end and/or between phases.
• Lack of consistency in the collection and use of data on local capacity and networks
• Lack of access for local agencies to communities of practice, best practices and other resources, templates etc.
• How to determine targets for localisation and how to collect and collate data on localisation spending by category of agency to support measurement of localisation at project, programme, and country/regional/global level.

Primes

What then of Primes?  It is clear from the various programmes that MetricsLed already supports that Primes such as ASI, Chemonics, Palladium will be required to adopt and consistently apply a whole new set of policies, compliance procedures, and reporting requirements in relation to localisation.

The initial challenge Primes face is to demonstrate that they have an approach to localisation that is better than that of the competition so that they can win the relevant tender.  Skilled at drafting narratives on and methodologies for mainstreaming of GESI, or achieving VFM, Primes now need to set out their stall on meeting localisation requirements and targets.

Second order issues to be solved are the actual delivery of localisation and increased used of local firms and agencies to deliver the programme without affecting quality, impact, and outcomes AND to a sufficiently attractive profit margin to make the programme worthwhile.

New large programmes being tendered by FCDO will expect tenderers to be able to demonstrate that they have a methodology and processes for, inter alia, the following:

• Identify, verify, and map local firms and agencies with a particular focus on encouraging participation by firms which have expertise in providing TA, but which don’t usually do much work on FCDO funded projects – or which are SMEs, women-led or based in the recipient country.
• Assess the capabilities of individual local firms and agencies: As a 2024 FCDO report commissioned on localisation for the Aid for Northern Syria (AFNS) Programme states: ‘The aim is not just to identify these actors, but to understand their areas of expertise, geographic reach, the networks they are part of, and their ambitions and willingness to learn and grow. This process also involves an on-the-ground understanding of the political dynamics that these actors navigate.’
• Formally categorise all interested firms and agencies into 3 (and sometimes more) categories to reflect the extent of their local credentials, ownership etc.
• Assess the financial depth of local firms and agencies and their ability to recover overheads etc.
• Pre-qualify and register local firms and agencies and maintain that register with due regard for data protection legislation and best practice.
• Build the capacity and capabilities of local firms and promote and connect these local agencies and networks.  A recent FCDO report on localisation states: After identifying and understanding the local actors, the next priority is to facilitate their interaction and collaboration. This is achieved through the creation of a digital platform or forum and, based on need and requests, the organisation of regular networking events. The platform serves as a perpetual resource and communication channel, enabling both CSSPs and local actors to share information, opportunities, and best practices.  Helping stand up, support and strengthen local networks is emerging as a key focus of the broad policy.
• Share information equitably and in a timely fashion with local firms and agencies.
• Report on the performance of local firms and agencies Track, collate and report on the proportion of spending by the various categories of local agency.
• Support the formal involvement in design and decision making of local firms and agencies through innovative decision-making, consultation, and steering mechanisms.

Network/Community/Local Firms

What then of the challenges face by local agencies?  At the local level many of the problems faced are to do with a lack of data, and an asymmetry in the availability of and access to information for local firms and agencies.

1. One of the major challenges is both the lack of local capacity and the lack of reliable information on what local capacity does exist: this hinders the development of local communities of practice and makes the provision of support to strengthen the local ecosystem challenging.
2. Second order problems include passive management of existing data, and the lack of active communications and information sharing with existing local firms and agencies.
3. A final problem is the challenge of compliance that local actors face. Having to fill in hundreds of forms to register for different programmes and grant funds and having to register repeatedly for new programmes.  This increases transaction costs and drives down engagement.  

This lack of data feeds a circular and self-reinforcing ‘doom loop’.  The lack of information pushes donors to set higher and higher compliance requirements, which in turn drives down engagement, which lowers local involvement.

It doesn’t have to be this way. MLP has set up significant numbers of portals for FCDO programmes for registration of local firms and agencies and holds data on some 25,000 agencies that have been used by FCDO to deliver UKAID over the last decade. 

Hugely valuable current and live information is held for example on CSOs in Ukraine, Somalia, and Northern Syria.   ML also holds information from large global programmes such as the UK funded PACT programme, and on global ‘last mile delivery’ humanitarian CSOs in use by the FCDO’s Humanitarian and Stabilisation Operations Team (HSOT).  This data is valuable but could be used even more actively to drive communication, share information, and develop shared communities of practice.  But in the current operating environment most data is lost at the end of the funding programme. 

It’s clear from the recent FCDO case studies of programmes such as the Aid for Northern Syria (AFNS), and the Somalia Stability Fund that the development and support of local networks, ‘communities of practice’ is core to the thinking on localisation and key to its sustainable impact beyond project and funding cycles.  As the AFNS report states:

Promote and connect these actors and networks – After identifying and understanding the local actors, the next priority is to facilitate their interaction and collaboration. This is achieved through the creation of a digital platform or forum and, based on need and requests, the organisation of regular networking events. The platform (hosted at the AFNS website) serves as a perpetual resource and communication channel, enabling both CSSPs and local actors to share information, opportunities, and best practices.

Digital delivery platforms such as MetricsLed’s ML PROJECT should seek to develop new tools/interfaces and capabilities that encourage local firms and agencies who register on FCDO programme portals for new grant facilities or programmes to register to allow their data to be used actively to:

• develop a basic verified profile for use by HMG and HMG suppliers.
• accredit local suppliers for their capabilities and experience.
• receive guidance on how they can comply for HMG bids and access local/regional templates and guidance on compliance and back-office issues and access to smart resources and tools: for example a quick 10 question type ‘bot’ to walk you through ‘is my company ready to bid for HMG work?
• receive information on procurement and other market intelligence, support on cost recovery and overhead calculation and access technical hubs and communities of practice.

Clearly the smart use of data is at the core of moving beyond the project cycle and towards creating sustainable national and local communities of practice.

Why have I prepared this blog?

At MetricsLed we’re deep in the process of designing the next version of our MetricsLed PROJECT delivery platform: ML-PROJECT 3.0.   We’re chuffed that the existing ML-PROJECT platform is already supporting localisation on highly regarded FCDO programmes such as the ASI delivered Aid for Northern Syria which has recently featured as a case study in an FCDO commissioned review of localisation best practice.

So we’re looking to develop, build and integrate a series of new tools and capabilities for MLP so that it can be used to accelerate the localisation agenda and help solve and provide solutions to the range of interlinked problems and challenges that localisation faces at donor, prime, programme, and local market ecosystem level.  To do this successfully we’re looking to engage with core stakeholders at donor, prime and field level to try and understand and anticipate the challenges faced so that our platforms can be responsive to these challenges, meet real needs and support a localisation push that strengthens and improves programme delivery and development outcomes.