Agora Global

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 Figure 1: Constituencies and their
which appear to be conflated in the localisation debate i) their characteristics in the localisation
degree of permanence within the system, ii) their position debate
within (or outside of) a system and iii) their perceived nationality as local or foreign.

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LOCALISATION OF IMPACT – THE MSD THEORY

In one sense, localisation has always What’s MSD?
been a core part of the MSD approach.
With the mantra your exit strategy is Three pillars:
your entry strategy, MSD initiatives use • Sustainability – the effect of intervention, and
their time-limited period to facilitate a the mechanism for producing those effects,
local system to sustain and continue has to last after external funding has ended.
to create impact for the intended • Scale – the intervention has to impact as
target group. The stated intention is to many people as possible and far more than
could be directly reached for the same
leave behind a “new or improved
money.
system” that can itself deliver better • Impact – it has to measurably achieve a
for the needs and aspirations of the development objective – improving rather
target group without further than magnifying market inequalities.
intervention from the implementer To achieve this, there are common characteristics of
being necessary. Typically, MSD MSD programmes:
initiatives are implemented by an
“external” implementer. The • Long-term – typically 5+ years
• Collaborative interventions – working through
involvement of the implementer vis-à-
public, private and civil society partners rather
vis the local system is meant to be than directly intervening with beneficiaries.
temporary; the implementer ensures • Focusing on systemic constraints rather than
impact and the processes to generate fixing immediate problems.
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”.

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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.

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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.

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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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