Pathways Towards Effective Locally Led Development Co-operation

5. Adapting management processes and delivery practices

Abstract

This chapter discusses how to adapt management processes and delivery practices for a development co-operation that is more locally led. It first analyses contextual influences and constraints such as the tendency to limit the role of local actors to implementers, top-down accountability and learning mechanisms, and risk aversion of members of the Development Assistance Committee (DAC), driven by domestic accountability pressures. It then identifies four enablers, namely i) increasing local agency and knowledge in programming including by recognising the power of local innovation and knowledge, ii) promoting collective accountability and learning reinforced by locally designed accountability frameworks, iii) fostering a broader understanding of risk, and iv) streamlining compliance and procurement. For each enabler, the chapter identifies good practices.

Contextual influences and constraints

Whilst local actors often play a central role in programme implementation, their role in the design of strategies and interventions is often limited to consultation. Local civil society organisations (CSOs) in particular, tend to access funding through pre-defined calls for proposals that limit their role in the design of projects, particularly in the areas of goal setting, and identifying sectoral and thematic areas of focus1 (as identified during the deep dives in Ethiopia and Nepal). Some DAC members are particularly constrained in this area because budget allocations are driven by institutionally set targets in specific sectors (e.g., health, climate, food security), rather than country or regional strategies. There have been efforts to move towards more collaborative design approaches, for example the United States Agency for International Development‘s (USAID) use of co-creation workshops, but these still tend to place local actors in the position of partners rather than leaders of projects.2 This limits opportunities to draw on local knowledge in the design of programmes and innovations, which is already constrained by knowledge hierarchies that put the Global North in the position of knowledge producers and the Global South as knowledge consumers (OECD, 2024[1]). Innovation efforts led by people in low-and middle-income countries have been of vital importance to local and national development processes over the past decades (Hoffecker, 2018[2]) and more recently, in the responses to the COVID-19 pandemic (Ramalingam and Kumpf, 2021[3]). But significant gaps remain with regard to innovation management; and a review of DAC members’ innovation capabilities in 2020 showed a widespread lack of genuine and sustained engagement with partners from the Global South (OECD, 2021[4]). Language barriers compound the challenge of engaging in design processes, with some local organisations investing heavily in translation services for proposals with no guarantee of their success as observed in Nepal and Ethiopia. Artificial intelligence (AI) translation services may be one avenue for addressing such language barriers.

Accountability and learning mechanisms are often considered top-down by local actors, with little space for co-design. DAC members are increasingly experimenting with more accessible and tailored monitoring, evaluation and learning approaches. These include oral reporting approaches through videos, and opportunities to report in local languages. However, this area of programme management can be particularly skewed towards DAC member institutional compliance objectives, rather than the priorities of local actors, their learning and accountability to local constituents (OECD, 2023[5]). Local actors in Ethiopia identified monitoring, evaluation, accountability and learning (MEAL) frameworks as “cumbersome and complex”, lacking “contextualisation”, with gaps in active collaboration with local actors to adapt MEAL frameworks to align with local contexts, capacities, and priorities, as well as limited use of local evaluators.3 The research in Nepal further found that existing learning and accountability mechanisms do not facilitate learning between DAC members and local actors who are not already part of the development co-operation system, and there are limited opportunities for peer learning on locally led development amongst DAC members at the country level.

A central challenge is the perception that working more directly with local partners poses additional risks, particularly fiduciary risks. While there is variation in terms of risk tolerance and appetite, most DAC members are highly averse to fiduciary risk due to their domestic accountability to taxpayers. Playing an important accountability role, domestic stakeholders such as parliaments and the media in DAC member countries often focus their attention on risks of corruption and financial mismanagement (OECD, 2023[5]). The reputational risk connected to the mismanagement of development support can lead to decisions not to fund local actors. Where there is a perceived high risk of public sector corruption, for instance, members may avoid, or have policies in place that prohibit, government-to-government partnerships. As a result, DAC members have in place programme management systems and funding requirements that are primarily designed to avoid risk, rather than take risks strategically in order to achieve impact (OECD, 2023[5]). These requirements, including heavy due diligence processes, can be challenging (if not impossible) for local actors, particularly smaller less formalised organisations, to meet (Pinnington et al., 2024[6]). The perception that partnerships with local actors are inherently riskier can also damage trust and the prospects for equitable partnerships (Baguios et al., 2021[7]). In fact, research has found that the increased risks associated with direct funding are more often based on perception than evidence (Barbelet et al., 2021[8]). The security, legal and political risks posed by fragile and conflict-affected contexts also shape the approach to risk management and level of risk DAC members are willing to tolerate. At times, these risks can lead members to favour working through multilateral agencies, for example in the West Bank and Gaza Strip and Ethiopia.

Enablers

Good practices that DAC members are implementing in relation to management processes and implementation practices to enable locally led development co-operation focus on: i) increasing local agency and knowledge in programming; ii) promoting collective accountability and learning; iii) fostering risk appetite; and iv) streamlining compliance and procurement.

Table 5.1. Enablers: Management processes and implementation practices

ENABLERS	GOOD PRACTICES	EXAMPLES
Increasing local agency and knowledge in programming	✓ Sensitising actors to overcome bias, and to respect, elevate and integrate local knowledge and expertise ✓ Designing policies and programmes that support co-production of knowledge ✓ Enabling local actor agency through flexibility in designing multi-year country strategies responsive to local priorities ✓ Designing projects that align with existing local systems ✓ Investing in local innovation ✓ Holding regular co-creation workshops to promote local actor agency in design	New Zealand: Commitments in strategic framework
Promoting collective accountability and learning	✓ Collectively reflecting on decision making power across programmes ✓ Establishing locally responsive and designed accountability frameworks ✓ Fostering collective accountability through multi-stakeholder and participatory approaches ✓ Leveraging and supporting local capacity in accountability and learning ✓ Enabling innovative and local approaches to better evaluate social change ✓ Systematising learning through investing in local monitoring	Australia: Edge Effect reverse accountability tool
Fostering risk appetite	✓ Adapting risk management systems to better support locally led development ✓ Engaging in efforts to reframe and better articulate approaches to risk ✓ Adopting more collaborative approaches involving local actors ✓ Standardising tailored risk management in decision-making ✓ Sensitising stakeholders on risk in development co-operation	Canada: Grants and Contributions Transformation Initiative
Streamlining compliance and procurement	✓ Increasing local accessibility by addressing systematic barriers ✓ Streamlining and harmonising compliance and procurement systems ✓ Providing accompaniment in selection and orientation processes	Charter for Change: Due diligence passporting tool

Increasing local agency and knowledge in programming

Sensitising actors to overcome bias4 and to respect, elevate and integrate local knowledge and expertise contributes to addressing knowledge hierarchies. Progress towards valuing knowledge from Indigenous groups has been largely sectoral and substantially linked to climate adaptation, biodiversity and the environment.5 For example, the locally led adaptation approach centres on the knowledge, agency, and needs of local communities when crafting and executing climate adaptation strategies (World Resources Institute, n.d.[9]). By focusing on context-specific solutions and leveraging Indigenous and community expertise, locally led adaptation can increase community agency in decision-making and increase local access to essential resources for addressing climate change impacts (Soanes and Steele, 2017[10]; Patel et al., 2020[11]). Similarly, multiple DAC members including Norway, Germany, Sweden, Netherlands, the United States and the United Kingdom are proponents of community-based natural resource management. For example, Sweden’s collaboration with the International Fund for Agricultural Development, is supporting Indigenous people to use their traditional knowledge to identify self-driven and innovative solutions to challenges including climate change and biodiversity loss.6 There is therefore a growing body of good practice from DAC members supporting the integration of traditional and Indigenous knowledge with contemporary approaches whilst navigating power dynamics. Some DAC members are leveraging experience from their own domestic contexts. For example, the 2023 DAC Peer Review found that New Zealand’s Strategic Framework grounds its foreign policy in the principles of partnership and mutual respect, as a foundation for integrating Indigenous worldviews and Māori knowledge into its development co-operation (MFAT, 2021[12]; OECD, 2023[13]). Further, New Zealand is elevating Indigenous knowledge in multilateral fora, and is using Pacific‑based research methodologies to inform learning and project design (OECD, 2023[14]). Its Hineaoana Halo project integrates Indigenous knowledge with scientific knowledge to develop high-impact, ocean-based solutions.7 However, operationalising principles like locally led adaptation to leverage local knowledge and expertise can be subject to the tensions and challenges that arise when values, evidence standards and requirements do not align (Mbabazi and Pinnington, 2024[15]).

Box 5.1. Leveraging local knowledge in climate programming: Experience from Switzerland

The integration of scientific knowledge with local knowledge and understanding is crucial in countries where Switzerland is supporting climate adaptation and mitigation through its Climate, Disaster Risk Reduction, and Environment Programme. For example, in Peru, the Swiss Agency for Development and Co-operation (SDC) collaborated with local actors to effectively translate and integrate scientific knowledge with local traditional beliefs. Switzerland also regularly partners with national universities and research institutions to implement climate activities, to leverage local expertise and contribute to institutional capacity strengthening. An independent evaluation of SDC’s engagement in Climate Change Adaptation and Mitigation Action Plan (2015-20) further highlighted that half of SDC’s projects involve supporting local communities to organise and manage resources for their long-term benefit, drawing upon the Nature-and Community‑Based Solutions approach.

Source: OECD (2024[16]), Peer learning on Locally led development – DAC members deep dive: Switzerland, https://one.oecd.org/document/DCD(2024)26/en/pdf; OECD (2024[17]) Switzerland’s approach to leveraging local knowledge in climate programming in Peru, https://oe.cd/5GS.

Supporting the co-production of knowledge whilst avoiding extractive practices increases local agency in programming. This means mediating the tensions between different expectations, between extraction and empowerment, and the varying perceptions over the use of knowledge by emphasising collaboration and partnership (Wilmsen, 2007[18]). DAC members have been strengthening local agency in framing and designing development co-operation by establishing policies, strategies, and guidance on the co‑production of knowledge that is of mutual benefit. Similar to the comprehensive set of strategies employed by New Zealand in partnership with the Māori, USAID’s Indigenous People’s Policy outlines specific policies and operating principles guiding how to identify, analyse, engage, safeguard, and establish partnerships with Indigenous people (USAID, 2020[19]). The United States Government’s broader 2022 Guidance on Indigenous Knowledge recognises Indigenous knowledge as “one of the most important bodies of knowledge that contributes to scientific, technical, social, and economic advancements” (Executive Office of the President of the United States, 2022[20]). It calls for the co‑production of knowledge as a research framework based on equity and the inclusion of multiple knowledge systems. In the climate sector, Switzerland has been leveraging local knowledge and co-designing adaptation initiatives with local actors, including those that act as cultural translators between traditional and scientific knowledge to facilitate exchange (See Box 5.1). Platforms can facilitate the sharing and integration of diverse forms of knowledge. For example, the Pacific Community Pacific Data Hub,8 supported by New Zealand, strengthens regional data capacity, integrates Indigenous data into its monitoring systems, and acts as a single, authoritative point of entry for all Pacific data, information and publications. For the last three decades, Spain has engaged in a programme with Afro-descendants and local communities in Latin America and the Caribbean that works directly with Indigenous peoples' organisations to strengthen mechanisms for free, prior and informed consultation and the development of their own life plans.

Flexibility in designing multi-year country strategies that are responsive to local needs, priorities and perspectives enables local actor agency in framing. This includes working with national governments to align DAC member country strategies with national government strategic priorities and policies, as is the case in Ethiopia where the Ethiopian government is taking the lead in setting the agenda (through its national strategy) and in engaging development partners to garner support for its priorities.9 Ireland develops multi-year country and regional strategies following consultative processes involving a variety of local actors and experts. For example, Ireland’s Southeast Asia regional strategy involved broad consultation with local actors, including from academia, government, and the private sector. The regular assessment of country strategies, through Ireland’s mid-term reviews and end of strategy evaluations, enables country missions to be responsive to changing needs (OECD, 2024[21]). DAC member guidelines for developing and monitoring country strategies are another entry point for integrating locally led development, particularly in relation to local agency and influence in framing and design processes. Spain’s bilateral partnership frameworks (MAPs)10 enables a participatory approach to development co-operation, as illustrated in theOECD Co-operation Peer Review (OECD, 2022[22]). MAPs are reviewed annually for accountability to assist with adaptation as contexts change and reports are shared with all partners. Spain’s notable successes in development work in Colombia demonstrate the benefits of decentralised partner funding systems that empower embassies and technical offices to work closely with local partners and communities. MAPs consultation further builds foundations for trust and continuous dialogue between Spanish staff and local partners, and the valuing of local knowledge and expertise. In addition, USAID’s recently updated Program Cycle Operational Policy places additional emphasis on the importance of engaging local actors early and often throughout the development and implementation of country strategies (USAID, 2024[23]).

Locally led development co-operation is facilitated when programmes and project support already functioning local systems. In Colombia, key informants highlighted that the design of DAC member programmes with sufficiently broad objectives (rather than detailed activities) allowed local actor agency in designing tailored activities that aligned with existing local priorities. Equally, Iceland’s programme-based approaches at the district level achieve this through trilateral agreements between local authorities and ministries that align with existing policies, plans and budgets. District authorities are the key implementing agents and the programme closely follows district development plans and operational strategies; and activities are “on plan and on budget” (OECD, 2021[24]). In Nepal, Finland works in the WASH sector directly with the local government, which has a very decentralised tier structure extending from local municipalities at the top to the user groups, which are a collection of households using WASH facilities in any given area. The user groups have been given responsibility to collect WASH related tariffs (involving the collection of a small monthly payment from the users) and carry out local maintenance of WASH systems. The Government of Finland in Nepal works in WASH sector interventions with these local government systems instead of building their own parallel ones.

Investing in local innovation for long-term and large-scale solutions contribute to shifting from solution providers to enablers. Innovation efforts led by local actors have been of vital importance to local and national development processes over decades and DAC members are increasingly investing in opportunities to test and scale contextually relevant solutions that go beyond single-point solutions and consider local systems. The public sector in low and middle-income countries is playing several important roles in advancing locally led innovation. This includes as a potential agent to adopt and scale solutions; a key entity that shapes rules, regulations, and the enabling environment for local innovation to flourish; an agenda setter to shape the directionality of local Science, Technology, and Innovation (STI) systems; and as a player that proactively searches for (hyper) local solutions. For example, France is supporting the World Health Organisation (WHO) to strengthen the capacity of the public sector in several African countries to better identify and scale up grassroots innovations addressing non-communicable diseases (NCDs) in primary health care. This is implemented by the NCD Lab, a WHO platform that identifies and supports the scale-up of grassroots innovations addressing NCDs in low-resource communities.11 Finland is supporting national and local partners in Southern Africa to strengthen local STI systems and scale up local enterprises that have a viable commercial business model, and that unfold positive impact on people and the environment through the Southern Africa Innovation Support Programme.12 To improve efficient and effective support of low and middle income countries innovation and local ecosystems, bilateral development agencies should reassess their role in light of their specific comparative advantages and in consideration of their general evolution from solution provider to solution enabler. Finally, USAID’s Local Systems: A Framework for Supporting Sustained Development,13 currently being updated, describes USAID’s overarching approach to transforming innovations and reforms into sustained development, which emphasises recognition and engagement with local systems in every context. This approach highlights the important role of local CSO networks in strengthening sustainable and locally led development.

Holding regular co-creation workshops between potential local partners and DAC members promotes local actor agency in programme design. For example, in Nepal, Australia holds periodic reflection workshops to engage local actors in designing programmes. Joint co-design workshops with local partners who pass through the first screening process was also identified as a good practice by local stakeholders in Nepal. This is a practice that USAID is also implementing in Nepal. In this case, the focal person or team from USAID allows the local partner to design their implementation plans, but provides feedback on the design to align with USAID’s broader requirements. USAID's 2022 Interactive Co-creation Guide facilitates the process of co-creating programmes with local actors (USAID, 2022[25]). While co-creation supports local actor agency in design, it can also be a frustrating process for local actors who engage in co-design processes but do not necessarily end up having their ideas funded, especially when they have invested their own resources and time in the process. Appropriately financing co-creation processes to ensure that local organisations are provided with sufficient resources to participate, is one way to address such challenges, and can be particularly important for organisations representing minority or marginalised communities, such as women, youth, or disability focused groups (Mbabazi and Pinnington, 2024[15]). Co-creation can also be supported by the integration of inception phases into funded programmes, which can support contextually informed design processes involving diverse local stakeholders. For example, the UK funded MUVA programme, a women’s economic empowerment action learning initiative in Mozambique, included a 9-month inception phase that involved a series of studies to inform the development of a theory of change and measurement framework that responded to local realities and priorities (Sharp, Riemenschneider and Selvester, 2022[26]).

Promoting collective accountability and learning

Collectively reflecting on decision making power across the programme cycle helps determining where power imbalances persist, including between local actors themselves. This is an important first step in building more inclusive and equitable partnerships and promoting local agency. A new tool, the Decision Mapping Tool (DMAT)allows mapping, reflection and discussion on the allocation of decision-making power across an intervention — from local decision spaces, where local actors are solely responsible and accountable, through partnership decision spaces, to external decision spaces, where external actors are solely responsible for making a decision (King et al., 2023[27]). The DMAT aims to elevate recognition for the role of the “local decision space,” where local actors make autonomous decisions, recognising that decisions made within partnerships can reinforce existing power imbalances (King, 2020[28]). Findings from its application with the Local Coalition Accelerator (LCA) in Uganda highlighted that decision mapping can help depersonalise collective reflection on power dynamics within programmes, enabling different perspectives and experiences to surface constructively (The Share Trust, 10 October 2023[29]). It can also provide space to identify concrete actions to address challenges and barriers. This multistakeholder process can involve the provider in the discussion and enables them to get a better understanding of how decision-making power is allocated in the programmes that they fund, including their own role in decision-making and its effects on power dynamics. The pilot in Uganda took place in the bi-annual “pause and reflect” learning workshop of the LCA, which created a space where a wide range of issues, beyond more narrow reporting on programme implementation and impact, can take place.

Locally designed accountability frameworks can be more locally responsive. This is demonstrated by the German Federal Ministry for Economic Co-operation and Development (BMZ), in their Participatory Development Programme in Urban Areas, which operates in several countries, including India and South Africa.14 The programme aims to improve living conditions in urban slums through community-driven development projects. BMZ, along with implementing partners and local communities, co-designs evaluation criteria and indicators to assess project effectiveness and impact. Likewise, Australia’s Non-Governmental Organisations (NGO) Co‑operation Programme works closely with both the Australian NGOs and their local partners to co‑design evaluation frameworks and criteria that reflect the priorities and context of the communities where the projects are implemented. Similarly, Spain agrees jointly with its partners, including local ones, on the expected results and indicators to be monitored as part of the MAPs. The Netherlands has implemented a collaborative indicator system to report on results in its development efforts for gender equality and the empowerment of women and girls. In alignment with its Strengthening Civil Society policy framework, the Ministry of Foreign Affairs (MFA) introduced "basket indicators”, which are intentionally broad, allowing partners to tailor their reporting systems to their specific programmes, while still contributing to the MFA’s overall evaluation and monitoring framework (OECD, 2022[30]).

Fostering collective accountability15 through multi-stakeholder and participatory approaches contributes to accountability to local actors and support their agency in accountability. Local actors often perceive DAC member accountability to be disproportionately focused on domestic local accountability, without sufficient mechanisms to ensure international agencies are held accountable to partner country local actors (Pinnington et al., 2024[6]). In efforts to put the locally led adaptation principles into practice, the Least Developed Country Initiative for Effective Adaptation and Resilience (LIFE-AR)16 project in Uganda, one of the frontrunner countries, has established a national steering committee (involving government, civil society and academia) in which provider partners are required to report on progress against agreed commitments on a regular basis. This has promoted DAC member accountability to local actors across development co-operation. Efforts within the humanitarian sector to promote accountability to affected people17 also aim to increase the accountability of international agencies, including International Non-Governmental Organisations (INGOs) and multilaterals, to local actors through information sharing, participation in decision-making, and feedback systems. DAC members also have a role to play in incentivising accountability to affected people in their partnerships with international humanitarian agencies (Featherstone, 2023[31]). Reverse accountability tools that have been developed with support from DAC funders can also enable collective accountability. For example, the Diverse SOGIESC (aka LGBTQI+) Partner Appraisal Tool,18 developed by Edge Effect with support from Australian Aid, aims to reverse the flow of accountability by providing smaller, diverse LGBTQI+ organisations with an approach to assess whether larger humanitarian and development organisations have the policies and practices needed for safe, relevant, effective and adaptive work with diverse LGBTQI+ people. Participatory approaches that are integrated into existing local governance mechanisms can also support local actor agency in accountability. For example, in Nepal, Finland is working with the local government system where there is a mechanism of social audit already in place, carried out by local user groups (in this case water user groups). In these social audits, it is the communities themselves that come together and do yearly appraisals of projects. The audit is facilitated by the local government and the user groups who implement the projects, including the provision of logistical support.

Involving local evaluators contributes to leveraging and supporting local capacity in accountability and learning. Evaluations conducted by Canada’s Evaluation Division of the Women’s Voice and Leadership Programme (WVL) and the Partnership for Gender Equality (Equality Fund) demonstrate how local skills and capacities can be leveraged in approaches to feminist evaluation.19 Rather than a singular role in data collection, local evaluators (connected to women’s rights movements) were given the opportunity to shape the framing of the evaluations, which used co-analysis and co-validation to draw on diverse perspectives. The work applied the principles of learning and social justice to advance feminist principles, break down knowledge hierarchies and enable application of a local lens to determine how programmes are evaluated. The ability to work in this way and explore feminist approaches to evaluation was supported by the policy cover provided by the Feminist International Assistance Policy (FIAP). Another example is Switzerland, where SDC guidelines on evaluation exercises recommend that the team conducting the evaluation includes at least one local evaluator. However, the expectations of external evaluations, both in terms of quality standards and in serving multiple purposes (learning, steering and accountability), can be a barrier for increasing the role of local knowledge and expertise in evaluations (OECD, 2024[16]).

Innovative and local approaches can evaluate social change. Traditional monitoring and evaluation frameworks, which rely on measuring performance against predetermined targets, are inadequate for assessing changes in gender relations and discriminatory social norms. DAC members have demonstrated commitment to innovative evaluation approaches, for example Canada’s contribution to the Global Evaluation Initiative,20 a global coalition of organisations and experts working to leverage their expertise to reduce fragmentation and catalyse collaboration and partnerships. This initiative also seeks to expand guidance and support partner countries to integrate gender transformative and feminist evaluation approaches. Finland, United Nations (UN) Women Nepal, and their partners are developing a mix of tools to better measure social change at the impact level, particularly for the Sustainable Development Goal 5 (gender equality) indicators. The initiative Measuring Social Norms Change through Storytelling, uses storytelling to track and influence shifts in gendered power relations and social norms (OECD, 2022[32]). The storytelling methodology combines qualitative depth with statistical analysis to identify and understand pathways of social change at individual and community levels. This approach creates a feedback loop of evidence and learning, aiding long-term programming to influence social norms and end harmful practices. The project employs tools such as SenseMaker,21 a survey tool used for collecting narratives and identifying societal change or crises to link programmatic efforts to changes in social norms and gender equality, and it is being implemented in four provinces in Nepal (UN Women, 2023[33]).

Investing sufficient resources in local monitoring contributes to systematising learning. Learning from mistakes is identified by several DAC members as critical (e.g., Canada's Failsmart Lab and the Netherlands’ Fail Fest), but there is often insufficient time and resources for partner visits and monitoring, highlighting the need for increased support in these areas. Conducting site visits to understand local partners’ initiatives is a common practice adopted by most DAC members to support learning, where periodic country visits can help providers understand local needs and priorities, to ensure definitions of success and failure are firmly rooted in local realities. However, these visits require sufficient resources and time to be invested for regular and effective monitoring, and ideally should be led by local staff.

Fostering risk appetite

Adapting risk management systems can better support locally led development. Locally led development involves the reframing of approaches to risk, including taking more informed risks in programming, and clearly identifying acceptable risk levels to support locally led initiatives. Moving towards an approach that enables considered and strategic risk taking will involve the simplification of requirements to enable partnerships with diverse local stakeholders, and the introduction of new management tools. For example, Canada’s Grants and Contributions Transformation Initiative, although not initiated with locally led development in mind, is an opportunity to address systemic barriers connected to risk aversion and revamp accompanying project management practices (see Box 5.2). This involves efforts to improve risk assessments and make performance data timelier and easier to share. In addition, Canada is developing a new Risk Management Component to support its commitment to working with local actors. This component aims to merge fiduciary and non-fiduciary risks into an automated tool, aligning with departmental risk appetite, and transfer payment policy frameworks. It aims to offer greater flexibility in assessing risks associated with recipients and projects of varying sizes, promoting information sharing and decision-making within Global Affairs Canada’s (GAC) grants and contributions programmes (OECD, 2024[34]).

Box 5.2. Transforming grants and contributions system in Canada

A multi-year initiative launched in 2022, the Grants and Contributions Transformation Initiative is moving forward with a transformation of GAC’s grants and contributions system for international development co-operation, with the aim of “rebuilding it from the ground up” to ensure it is more responsive, effective, transparent and accountable. At the core of this initiative is GAC’s commitment to involve partners in the co-design of the new system. In May 2023, the initiative hosted its first ever partner forum. This forum convenes twice a year to create a space for partners to share their ideas and concerns about the transformation and for GAC to test out new ideas and approaches to modernise its grants and contributions system. In June 2023, GAC hosted a risk-appetite hackathon, during which over 350 Canadian and international civil society organisations, including local partners, and GAC employees, collaboratively explored innovative solutions for how GAC’s grants and contributions programming could be more risk-aware in managing international support. A strong message from hackathon participants was the need for progress on locally led development and the development of policies and innovative programming to support decolonisation of international development co-operation and facilitate local actors delivering international support.

Source: OECD (2024[34]), Peer learning on Locally led development – DAC members deep dive: Canada, https://one.oecd.org/document/DCD(2024)24/en/pdf.

Engaging in efforts to reframe and better articulate approaches to risk enables locally led development and impactful outcomes. Locally led development co‑operation, in particular channelling funding to local partners, is seen as an approach that may pose different types of risks but has the potential to achieve greater impact over the long term. USAID’s risk appetite statement prioritises strengthening locally led development for long-term sustainability (USAID, 2022[35]). At the same time, USAID acknowledges the potential threat that this approach can pose to short-term performance. Whilst there is an overall high level of aversion to fiduciary risk, USAID’s statement indicates an adjusted, slightly higher tolerance for fiduciary risks when implementing with local partners. Another example is Global Affairs Canada’s draft Risk Appetite Framework for International Assistance, which will apply to international assistance grants and contributions projects. The framework sets the tone from the top on smart risk taking, determining potential trade-offs between development impact results, and accepting certain increased risks in order to seize opportunities. All project proposals will be assessed against a set of risk appetite statements established according to three risk categories that pertain to the international assistance envelope: programming, fiduciary and financial, and reputational risk. It is anticipated that this will help GAC to increase its ability to achieve Canada’s international assistance priorities and deliver impactful results on the world’s most pressing challenges (OECD, 2024[34]). A portfolio-based approach can further enable impactful risk taking by dispersing risk across different types of investment with varying degrees of risk, recognising that some local partnerships may be unsuccessful, but that impact is still delivered across the official development assistance (ODA) portfolio as a whole (OECD, 2023[5]).

Adopting more collaborative approaches, involving local actors in the identification and management of risk, encourages risk sharing. This approach is particularly valuable in politically constrained contexts, where risks may be higher, including for local actors, and access to information and data more challenging. For example, Switzerland’s Framework for Risk Governance and Adaptive Programming (FRAP), an SDC pilot in third-party monitoring, has allowed it to manage risks differently and partner locally (see Box 5.3). Another example is efforts within the humanitarian sector to promote risk sharing, for example the Inter-Agency Standing Committee (IASC) Risk Sharing Framework (IASC, 2023[36]). Collaborative approaches recognise that locally led development co-operation must avoid local actors taking on more risks on behalf of international agencies, particularly in fragile and conflict affected contexts (Duclos et al., 2019[37]).

Box 5.3. Working with local partners for monitoring: Experience from Switzerland

The Framework for Risk Governance and Adaptive Programming (FRAP) is the first pilot at SDC on an innovative approach to third-party monitoring. It has received an entry proposal for 12 years and a budget of USD 24.4 million. SDC is partnering with a Kenyan organisation (Kulmis) to conduct third‑party monitoring in Somalia, a constrained context with multiple interacting security, fiduciary and programmatic risks. Kulmis is developing a trust-based approach with the local Somali organisations involved in the monitoring, prioritising relationship building that takes time and requires contextual and cultural sensitivity. Due to the heavily constrained context of Somalia, the use of a local (Kenyan) third-party monitoring agent is seen as “increasing fitness for fragility.” SDC aims to use FRAP not only as a risk verification method; it also hopes to build a “third-generation third party monitoring, evaluation and learning” system, based on digital technologies, that will also inform adaptive programming, capacity strengthening, and overall project steering. FRAP aims to improve the performance and sustainability of Swiss Horn of Africa programmes, contributing to stability, poverty reduction and increased wellbeing in the region.

Source: OECD (2024[16]), Peer learning on Locally led development – DAC members deep dive: Switzerland, https://one.oecd.org/document/DCD(2024)26/en/pdf.

Standardising tailored risk management in decision-making can help better identify and address risks. For example, Ireland’s Standard Approach to Grant Management plays a central role in identifying and managing risks effectively, and it has led to more explicit articulation and analysis of risk in Ireland’s development programming. This involves identifying and understanding political, fiduciary, programmatic and organisational risks during the design stage, and putting in place clear protocols and guidelines for dealing with problems if they arise. This has contributed to a shift in Ireland’s approach to risk, with the need to include the rationale for taking risks becoming a more integral part of decision-making. Ireland’s dedicated rules for development co-operation grants compared to other public procurement, recognise that some risk mitigation measures in procurement require adjustments, which can enable more flexible and tailored models for the purposes of locally led development (OECD, 2024[21]). Members can also engage with their control environment to strengthen the understanding of development contexts. For example, the United Kingdom’s Foreign, Commonwealth & Development Office (FCDO) and Global Affairs Canada, set out where challenges lie and explore how standards can best be applied to enable development while preventing violations of rules or even criminal activity (OECD, 2023[5]).

Sensitising stakeholders on risk in development co-operation fosters understanding and trust. For DAC members with less conducive domestic politics in particular, moving towards an approach that empowers considered and strategic risk taking will require more than the introduction of risk appetite frameworks and new management tools. Some members will need to drive a process to sensitise and engage domestic stakeholders, including parliamentarians and the media, in discussions on locally led development co-operation, within a broader dialogue on risk management. This can strengthen the understanding that international partners are not immune to fiduciary and safeguarding risks. At the same time, it enables DAC members to bring attention to the risks for effectiveness, cost effectiveness and sustainability in not engaging local actors, which can also challenge perceptions that partnerships with local actors are inherently riskier (OECD, 2023[5]). Developing new co-operation policies, preparing a new programming cycle, and drafting risk policies and risk appetite statements present good opportunities to trigger such dialogues. For example, in its 2022 development policy, the Dutch government stresses that taking risks is necessary to achieve results and, through examples, makes it clear that risks are not specific to local partners (Netherlands Ministry of Foreign Affairs, 2022[38]). By committing to taking risks and staying engaged in fragile contexts, the Netherlands government was able to sensitise domestic stakeholders by clearly setting out its gradual response to challenges in its partnerships (OECD, 2023[5]; OECD, 2023[39]). DAC governments can also avoid reputational risks arising from a perception of inaction, by regularly informing the public and stakeholders on risks that have materialised. By quickly establishing what has happened and the response taken (building on good documentation of their risk management), governments can demonstrate their ability to effectively handle incidents to domestic stakeholders, including the media. As good practice, Denmark’s Ministry of Foreign Affairs publishes regular reports on incidents of corruption and the response taken, providing the public and parliamentarians with a reliable overview and maintaining trust in the government’s capacity to manage risks (OECD, 2023[5]).

Streamlining compliance and procurement

Addressing systemic barriers in compliance and procurement can increase local accessibility. DAC members can increase the accessibility of procurement systems and opportunities for local actors through tailoring and simplifying. DAC members’ adaptations include allowing document submission in local languages and allowing flexible reporting methods, such as oral or video submissions. For example, Canada’s Grants and Contributions Transformation Initiative (see Box 5.2) is seen as a key opportunity to respond to the barriers that burdensome and complex administrative processes pose to more agile, accessible, and locally responsive programming. The initiative aims to maximise the impact of Canada’s international development co-operation spending and minimise the administrative burden on staff and partners, without compromising the values of accountability and the overall legislative framework for delivering international support. Notable approaches to streamline and simplify GAC’s processes under this initiative include: Failsmart Lab, where innovative approaches can be piloted in specific operational contexts; a risk hackathon involving internal and external stakeholders to explore innovative approaches; Artificial Intelligence tools to reduce the administrative burden in reporting; standardised tailoring of risk and due diligence approaches; and streamlined Project Implementation Plans. Another example is USAID’s Acquisitions and Assistance Strategy, an implementation plan that identifies opportunities to reduce barriers and streamline processes to support the agency’s goal of a more diverse partner base (USAID, 2023[40]). Many of the approaches in the strategy are utilised as part of the five-year Centroamérica Local initiative in El Salvador, Guatemala, and Honduras, where USAID is making processes more accessible to prospective local partners (USAID, 2024[41]). USAID Missions have created websites targeted to local actors highlighting opportunities, piloted the translation of key application documents into Spanish and local Mayan languages, and conducted extensive listening sessions with diverse local organisations. Local actors in Colombia, Ethiopia and Nepal also highlighted the importance of wider and more flexible calls for proposals that give space for local ideas, rather than dictating narrow objectives.

Pooling and collaboration can contribute to streamlining and harmonising compliance and procurement systems through. Collaboration among DAC members and other providers can further simplify due diligence for local partners by harmonising requirements and recognising each other’s assessments. Some DAC members are also more efficiently sharing and co-ordinating information they have already received, including across different government agencies. Using standardised third-party certification tools can also ease the burden on local actors; several initiatives exemplify these efforts (OECD, 2023[5]). Efforts such as Sweden’s Code of Practice Initiative and the Charter for Change Due Diligence Passporting Tool22 promote harmonised due diligence. Examples of successful joint assessments include the Public Expenditure and Financial Accountability programme23 and the Multilateral Organisation Performance Assessment Network.24 Switzerland has also successfully advocated for simplified due diligence requirements for Country-Based Pooled Funds in humanitarian contexts, prioritising localisation in strategic discussions with multilateral partners. Similarly, through the new Localisation Strategy for the pooled fund in northern Syria, funding partners, including FCDO, are able to support smaller, grassroots organisations to bypass eligibility criteria (see Chapter 3, Box 3.6). The United Kingdom has also supported the Humanitarian Quality Assurance Initiative25 that provides certified audits against the Core Humanitarian Standards to reduce duplication of donor due diligence requirements. The United Kingdom has been a key donor (with Switzerland, Germany, Denmark and Luxembourg) in testing and piloting the passporting of due diligence systems. The ambition is that audits of national/local NGOs certified by the initiative against the Core Humanitarian Standards would help raise and maintain standards, improve capacity, and be acceptable to donors to reduce further due diligence requirements. Canada’s support for the Equality Fund26 also illustrates how funders can streamline due diligence; the Equality Fund supports women’s rights organisations with core, flexible funding, using a common reporting framework to reduce grantee demands (see Chapter 3, Box 3.10).

Providing guidance and accompaniment to local actors in selection and orientation, especially when working with new partners that are unfamiliar with DAC member systems and requirements facilitates access. DAC members or local intermediaries can provide guidance by being available to prospective partners for questions and support on procurement and compliance processes. Preliminary conclusions from the DAC/SDG Fund study on the localisation of procurement identified that strong engagement with local suppliers is a key factor for facilitating access, including access to information and knowledge (OECD, forthcoming[42]). USAID promotes this type of accompaniment in its Acquisition and Assistance Strategy (USAID, 2023[40]). DAC members can also engage local intermediaries to provide this type of support. For example, in Nigeria, the Adamawa Local Coalition, is supporting smaller organisations to navigate application requirements to access the UNOCHA pooled fund (The Share Trust, n.d.[43]). Similarly, in Nepal, USAID is using local subcontractors to identify CSOs and local issues through formative field visits. Once the CSOs are selected, the local subcontractor guides the CSOs through the procurement process, helping them to better understand how to work with USAID as observed in Nepal. In this context, some local actors mentioned that a complementary way of enabling local agency in development projects is limiting donor branding, with some providers taking a backseat on self-branding.

References

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Notes

← 1.  For example, in Ethiopia, local actors highlighted this as a particular problem, and noted that many CSOs apply for calls for proposals, even if these do not align with their organisation's established priorities or the needs of their targeted communities.

← 2.  For example, see: https://www.usaid.gov/co-creation-usaid and https://usaidlearninglab.org/system/files/resource/files/lld_example_-_lld_in_co-creation_2_pager_-_usaid_uganda_and_bha_0.pdf.

← 3.  These testimonies were collected from key informants as part of the country deep dive on Ethiopia.

← 4.  Including the assumption that the Global North are the knowledge producers, and the Global South are the knowledge consumers, which leads to significant bias around the roles of each actor.

← 5.  For example, the Principles for Locally Led Adaptation, endorsed by over 100 organisations, include a principle on: “Informing adaptation decisions through a combination of local, traditional, indigenous, generational, and scientific knowledge that can enable resilience under a range of future climate scenarios.” For more details, see: https://www.wri.org/initiatives/locally-led-adaptation/principles-locally-led-adaptation.

← 6.  For more information, see: https://www.ifad.org/en/web/latest/-/indigenous-peoples-partner-with-ifad-sweden-s-sida-and-packard-foundation-to-build-resilience-and-adapt-to-climate-change.

← 7.  For further information on the Hineaoana Halo Maori project, see: https://www.arcticcircle.org/journal/hineaoana-halo-maori-led-ocean-solutions-and-nature.

← 8.  For further info, see: https://pacificdata.org/.

← 9.  Despite recognising the government’s effectiveness in agenda setting, key informants from the deep dive highlighted that this does not equate to community-centred priority setting and citizen engagement in priority setting was identified as limited.

← 10.  Marcos de Asociación País (Country Partnership Frameworks).

← 11.  For more information on the NCD lab, see: https://knowledge-action-portal.com/en/action/ncdlab.

← 12.  For more information on the Southern Africa Innovation Support Programme, see: https://saisprogramme.org/.

← 13.  For further information on USAID’s Local Systems: A Framework for Supporting Sustained Development, see: https://www.usaid.gov/policy/local-systems-framework.

← 14.  For more information, see: https://www.giz.de/projektdaten/projects.action?request_locale=en_ GB&pn=201021922.

← 15.  Collective accountability moves beyond mutual accountability and is in line with the DAC recommendation on CSOs, theCSO Partnership for Development Effectiveness and its membership in the GPEDC Steering Committee. This reflects a greater openness to include a broader range of stakeholders as partners (CSOs, local organisations, and communities) in development co‑operation and a shift away from two-way accountability between donor and partner country governments.

← 16.  Established in 2019, LIFE-AR is a vehicle for delivering the LDC 2050 Vision for a climate-resilient future. By encouraging a more ambitious climate response, LIFE-AR aims to promote at least 70 percent of global climate finance to be spent directly at the local level, addressing the priorities of communities facing the most significant impacts of climate change. For the locally led adaptation principles, see: https://www.wri.org/initiatives/locally-led-adaptation/principles-locally-led-adaptation.

← 17.  For more information on accountability to affected people, see: https://interagencystandingcommittee.org/strengthening-accountability-affected-people.

← 18.  For more information about the Diverse SOGIESC (aka LGBTQI+) Partner Appraisal Tool, see: https://www.edgeeffect.org/2322-2/#:~:text=Edge%20Effect's%20Partner%20Appraisal%20Tool,and%20 adaptive%20work%20with%20people.

← 19.  For more information on GAC’s evaluations, see: https://www.international.gc.ca/gac-amc/publications/evaluation/index.aspx?lang=eng, while for the specific evaluation of the Women Voice and Leadership Programme, see: https://www.international.gc.ca/transparency-transparence/audit-evaluation-verification/2022/2022-05-wvl-vlf.aspx?lang=eng; and the Formative evaluation of the Partnership for Gender Equality, see: https://www.international.gc.ca/transparency-transparence/audit-evaluation-verification/2024/pge-report-rapport.aspx?lang=eng.

← 20.  Further information on Global Evaluation Initiative can be found here: https://www.globalevaluationinitiative.org/.

← 21.  For further information on the SenseMaker, see: https://narrate.co.uk/sensemaker-about/.

← 22.  For more information on the passporting tool, see: https://humentum.org/charter-for-change-due-diligence-passporting-tool/.

← 23.  Initiated by seven international development partners, including France, Norway, Switzerland and the United Kingdom, and is a means of harmonising assessment of public financial management (PFM) across partner organisations by providing a framework for assessing and reporting on the strengths and weaknesses of PFM, using quantitative indicators to measure performance. For more information, see: https://www.pefa.org/.

← 24.  OECD MOPAN assessments provide a multidimensional snapshot of organisational performance using the recently updated 3.1 MOPAN Methodology. They assess strategic, operational, relationship and knowledge management of selected organisations, as well as their results. MOPAN assessments provide a holistic view of an organisation’s performance across global, regional and country levels. Due to the diversity of organisations’ mandates and structures, MOPAN does not compare or rank entities. See: https://www.mopanonline.org/.

← 25.  For more information on the Humanitarian Quality Assurance Initiative, see: https://www.hqai.org/en/.

← 26.  For further information on the Equality Fund, see: https://equalityfund.ca/.