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Localisation and systems approaches


Localisation has become a prominent feature of development discourse in recent years.

In this short note, we offer one perspective for how localisation could be interpreted by practitioners who employ a systems approach to development intervention, with particular focus on the market systems development (MSD) approach.

This note argues that the conventional wisdom of equating localisation with localised delivery is misguided. The relevance and parameters of localisation vary widely based on context – so, setting localisation as a normative target can actually undermine good development. While localisation is generally associated with delivery or implementation, MSD associates it with localisation of impact. Programmes using the MSD approach – irrespective of who funds, who implements and who benefits – are oriented towards market actors (public, private and civil society) taking ownership of the changes instigated through intervention, and implementers removing themselves from the market. MSD programmes have classically looked to ensure that the solutions demanded by target groups and local actors alike are rooted in local systems so that the impact is sustainable and scalable in the local context. Hence, MSD programs are, by design, geared towards localised impact However, the characteristics are rarely as clear-cut or evident as they are often presented in MSD theory and some of these nuances are explored below, with a view to arguing that off-the-shelf prescriptions for who does what (and who funds what) are rarely the best way to deliver on the objectives of sustainability, scale and development impact.


Clarifying the dynamics

Much of the discussion around localisation does not adequately situate itself within the political economy of development. This means that many dynamics are conflated: who benefits, who implements and who funds? To properly evaluate the merits of ‘localisation’ it Is important to understand these various characteristics and to whom those characteristics apply, and then define the outcomes you want to see, when, and for whom. Figure 1 captures the different constituencies who play a role in the aid system with three different characteristics or attributes which appear to be conflated in the localisation debate i) their degree of permanence within the system, ii) their position within (or outside of) a system and iii) their perceived nationality as local or foreign.


Localisation Of Impact – the MSD theory

In one sense, localisation has always been a core part of the MSD approach. With the mantra your exit strategy is your entry strategy, MSD initiatives use their time-limited period to facilitate a local system to sustain and continue to create impact for the intended target group. The stated intention is to leave behind a “new or improved system” that can itself deliver better for the needs and aspirations of the target group without further intervention from the implementer being necessary.

Typically, MSD initiatives are implemented by an “external” implementer. The involvement of the implementer vis-à-vis the local system is meant to be temporary; the implementer ensures impact and the processes to generate further impact are embedded in a local system before removing themselves from it. These local systems are, of course, embodied by local actors – public, private, and civil society. These actors have a stake in how the new-look system works. The implementer partners with or influences these actors to behave differently in ways that ultimately produce impact for the target group and, because of the incentives of those involved, for these behaviour changes to become “permanent”. The MSD approach talks about permanent roles for local actors within the system and temporary roles for the implementer who is external to the system – simple in principle, but not always borne out in reality.


Localisation of aid implementation – the development convention

Across the development community, localisation is most often couched in who the funder and the implementer are; who within their ranks is leading and deciding on what development interventions take place and how funds are spent, and whose interests are being represented. On these fronts, the MSD community is deliberately neutral. The word “external” in the MSD approach refers to an implementer’s position as being outside of the local system and this is, following the approach, to avoid the implementer becoming a part of the local system, and ultimately, to avoid the target group or market actors from becoming dependent on the implementer. External does not mean that the implementer, nor the individuals employed by the implementer, must be “foreign”. It is possible to be a local implementer that remains external to/outside of the local system in which they are tasked with intervening. With respect to the funder, they are often a “foreign” multilateral or bilateral development agency, philanthropic organisation, or NGO. Crucially, however, they do not have to be; the MSD approach does not require the funder to be “foreign”.


A clear Conclusion?

When presented with these contrasting paradigms of localised impact versus localised delivery, the theoretical arguments supporting the MSD approach are very strong. Further, if one agrees that localised impact is the priority and not localised delivery, then it is clear that decisions on delivery should be made according to meritocratic assessment rather than normative prescription; choosing who’s best for the job not who’s closest to where the job is being done.

However, the door opened by examining the MSD perspective on localisation gives an opportunity for some introspection about the nuance in this binary prescription and it is on the unpacking of these characteristics that the remainder of the article focuses.


Translating theory to reality

While the theoretical merits of MSD’s localisation of impact approach are clear, unpacking some of the prescriptions and reflecting on their application on the ground presents challenges to these binary prescriptions. Target groups are permanent, local, and internal – this is unequivocal. However, the characteristics of the other groups and how these vary can help to move the localisation debate forwards.


Compounding fallacy 1: Local versus foreign

In theory, MSD is ambivalent to the nationality or origin of an organisation with often cited pros and cons to each. Foreign implementers are often seen to bring better systems for compliance, experience, and the manifestation of funder values. In partial contrast to this, there is often the express wish for “local knowledge” – insights, networks, and so on – and such knowledge being a reasonable proxy for being equipped to produce better and more relevant development results. Foreign implementers routinely pair-up with local “co-facilitators” in response, but here there can be valid questions concerning power dynamics.

From an MSD perspective, the key is that the implementer is an organisation that is able to differentiate itself from that of being a local actor working in the local system. This is, of course, challenging for a local implementing organisation to prove; whilst their role disappears, the local organisation will presumably continue to exist after the initiative comes to an end. The organisation risks embedding itself with partners and continuing to pursue the same (type of) funding stream – the incentives are stacked against ‘temporary-ness’. No matter the brand separation between initiative and organisation, it may be harder for local actors within the local system to distinguish between them. However, “foreign” implementers do not necessarily disappear following the end of an initiative’s funding either. Many previously had or will later open a country or regional office with permanent staff. If an entity was started by foreigners 30 years ago, it bears when its assumed characteristics that make it either more or less attractive become that of a ‘local’, rather than a ‘foreign’ entity.

Beyond implementers, in MSD theory, under a simplistic interpretation funders are foreign and market actors are local. Here too, there is considerable nuance. In many circumstances MSD programmes are now being funded by and engaging with governments and firms in emerging markets – very much local actors. In more traditional programming, MSD programmes engage with actors on a global scale as suppliers and buyers, regulators and service providers.

The notion of local versus foreign, then, is contested and so too is that of temporary versus permanent.


Compounding fallacy 2: Temporary versus permanent

For implementers, disappearing – seen as desirable from a sustainability perspective- would not, from an organisational perspective be seen as success. This statement is as much true of local implementers as it is of foreign implementers. Irrespective of size and geography, funding struggles are commonplace. Both local and foreign implementers pursue revenue diversity as a risk mitigation strategy, though opportunities for diversifying revenues may manifest themselves differently. For example, local implementers may be more prone than others to purposefully (and accidentally) create new commercial or non-commercial roles within local systems in order to survive and grow with a narrower base of fundraising opportunities. For foreign implementers with a seemingly far easier narrative on exit, to say that they had addressed a problem and moved on or that an area was too crowded for further intervention would be to close off a potential revenue stream. Even more practically speaking, for both foreign and local implementing organisations, it is also highly inefficient to disappear in between initiatives.

For funders, MSD theory is predicated on their funding being time-limited. But with the evolution of who funds development projects – including foundations, governments in emerging markets, impact investors and firms themselves, this characterisation becomes clouded.

For market actors, MSD theory might see them as permanent – their engagement is facilitated because they have an incentive to continue to perform that role for the long term. It is impossible to ignore, however, the distortionary impact that aid has on firm behaviours, particularly in some markets, and so despite the theory, evidence shows that in some cases, aid competing aid initiatives can dictate the permanence of a given market actor.

So, while the theory of permanence in different constituencies within the aid system is clear, the reality is far less binary.


Compounding fallacy 3: Internal versus external

The third pillar on which MSD’s position on localisation rests is the notion of things that are either internal or external to a system. Under this notion, the implementer (whether foreign or local) should always be external and target groups, by definition, internal. Market actors should always be considered internal, although the discussion above about the transnational nature of systems and issues defining boundaries can be challenging. Defining the boundaries of a system is never simple in an MSD programme but, given that even the term ‘localisation’ necessitates some notion of geographical origin, it is worth considering how the roles of actors within systems can go way beyond national boundaries and challenge this geographical delineation.

From the perspective of funders, the MSD rationale for its version of ‘localisation’ is that aid funding is always external. Funding can be reduced, repurposed, arrive with more conditions, or be completely cut, sometimes at very short notice – and therefore, if systems can continue to work better in the absence of aid funds, then the likelihood of sustained poverty impacts are far greater. However, it is important to note the pluralistic nature of funding of development interventions and the implications this has for the analysis of systems.

Consider the EU’s financing of roles in local systems for accession countries – they’re external and this is development money, but this funding has been in place for decades and like most development intervention, the incentives which govern its deployment are not entirely altruistic. The EU’s on-going funding of these roles within the system is entirely aligned with their incentives and capabilities to do so. As such, they might be considered internal – performing the financing function within this system.

In another case, consider impact investors. While they are ‘sub-market’ or aid-influenced, they are clearly an embedded and long-term part of the financial systems in which they work. Whether and how they work with or independently of local financial service providers is a moot point if the cross-border system is robust and seen by stakeholders within and beyond the investor community as being part of that system.

Finally, contrast the case of Give Directly with that of PSNP in Ethiopia. Give Directly is essentially an international-to-local provider of social security-style payments while PSNP is the largest social safety net programme of its kind, funded largely by donors but entirely within the government system. Both would not exist without external funding, but one is delivered by a foreign NGO and the other by a national government. Clearly, this presents challenges to how we consider what is internal and what is external to a system.

Our argument here is that a geographical boundary is not the most helpful way to consider whether something in internal or external to a system. Rather a judgement call has to be made and interventions development which give the highest probability of these roles being performed in the long term.


Summary

In this note, we have set out some perspectives on the localisation discussion. Firstly, we contend that the desire for localised aid delivery for its own sake is misguided and conflates the different characteristics and constituencies involved in funding, implementing, and benefitting from development. Localisation as a normative objective has little value and can in fact undermine good development practice. Instead prioritising endogenisation of roles (making them internal to the system) should be the priority to ensure sustainability. Who delivers aid and where they come from, should be irrelevant get the best people for the job. However, we have also sought to unpack the nuance of this rhetorical fait accompli. Internal-external, foreign-local, and temporary-permanent are, in reality, all blurred lines which must be honestly appraised in context. Organisations are rarely entirely one thing or the other and may transition across the two ends of these characteristics over time.


If the principles of sustainability, scale and impact should remain sacrosanct, then off-the-shelf prescriptions for who does what (and who funds what) are rarely the best way to deliver on them.

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