Direct aid to local NGOs is working, report

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DIRECT AID TO NGOs RISKY: DR. Alex Coutinho, Former Executive Director of the Infectious Disease Institute at Makerere University

 

A new report suggests that the shift by major aid donors to channel money directly to governments of developing countries and local non-governmental organizations instead of passing it through intermediaries is paying off.

According to the report published by the US-based Global Finance Strategies (GFS), the aid reaches its intended recipients with the desired impacts. The report however notes that the aid localization model has created operational and financial difficulties for agencies on the ground struggling to effectively absorb aid.

GFS is a consulting firm on helping NGOs and companies build operational capacity in developing countries. GFS is an affiliate of Global Health Strategies and has its Africa office in Nairobi, Kenya.

The report, titled “Going Local: The Promise and Challenge of Aid Localization,” surveyed 52 leaders in the international development field, including 19 donor representatives and 33 representatives of aid recipients.

It was presented at a panel discussion in Washington DC recently, and it found consensus that localization is occurring in a significant way, with 68 percent of aid donors and 94 percent of aid recipients agreeing with the trend. The report also found enthusiasm for localization among both major donors, such as USAID, and aid recipients in developing countries.

Dr. Alex Coutinho, the former Executive Director of the Infectious Disease Institute at Makerere University, told this website that the trend toward localization and utilization of indigenous NGOs comes with risks, but it will ultimately lead to capacity and sustainability within Africa and other developing countries.

Dr. Coutinho, also the former Executive Director of The AIDS Support Organization (TASO), added that small NGOs in Africa often face real challenges in managing direct aid, including finding the right people and skills to provide proper oversight and governance by their boards of directors and audit committees.

Linn Dorin, the lead author of the report and the Principal of Global Finance Strategies, said localization is happening, and we have to do everything possible to prepare now to make sure it fulfills its promise of empowerment and increased efficiency.

Dorin stressed new approaches are necessary to help local aid recipients effectively absorb and manage the funds.

The authors identified a number of actions that donors are taking to alleviate this operational burden, including directly funding recipients’ operations departments, creating regional technical support hubs for aid recipients, and streamlining project reporting requirements. The report also called on donors to do more to harmonize reporting requirements in order to minimize the burden on aid recipients.

The findings resonate with Uganda where major donors have been bypassing the government and dealing directly with indigenous NGOs and grassroots organizations mainly because of concerns over corruption, transparency and accountability.

David Walakira, the Budget and Policy Specialist at Uganda’s Civil Society Budget Advocacy Group, said localization of aid has the potential of producing great results but only if well-managed. He said the government has, in many instances, fallen short of delivering on programmes heavily supported by donors.

According to Walakira, in Uganda the major donors seem to prefer the local NGOs over the government, a trend, he said, should not be encouraged because the government has the structures to do better if well managed.

Julius Kapwepwe, the Director of Programmes at Uganda Debt Network, said the most important thing is correct management of the funds and not the channel.