The year of 2021 marked an important shift in development assistance policies for both the US government and the European Union. In this year both USAID and EU announced a significant refresh to their development assistance policies, with important implications for CSOs in the global south. While EU set forth a new European-centric international development model to better position European companies and interests in the global south in December 2021, in the same year, in December 2021, USAID was doing just the opposite by expanding a localization strategy.
The fact that USG and EU development assistance policies ultimately converged in 2025, holds implications for local groups as this convergence undermines the prospects of localization in a new push to decolonize development theory and practice. These are consequential issues on which I have written, extensively.
The story began in December 2021 when the European Union (EU) announced the new Global Gateway (EC/HR, 2021) setting out a shift in development assistance direction. A geostrategic initiative to mobilize €400 billion by 2027 in investments for sustainable, high-quality infrastructural interventions in the global south through a European designed global gateway. New intervention areas of investment included digital, energy, transport, health, and education, to be implemented through public private partnerships (PPPs) with European private sector enterprises in the drivers’ seat, seeking out business partnerships with national governments and private sector bodies across the global south. This new EU direction represented a shift away from previous models of social-led development implemented through grants to local CSOs cascaded down by European implementing partners. The implementing model under the Global Gateway focused on blended models characterized by fewer grants, significant loans and mix of investors Public-private business relationships.
Since the 2021 launch of EU Global Gateway mechanism, EU Calls for proposals for both mature and early state European investors have identified Nigeria as an important country for investment. The most recent call with a budget of €40,583,770, identifies Nigeria as a beneficiary country. Similarly, a recent Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) GmbH call by the German Federal Ministry for Economic Cooperation and Development (BMZ) within a Global Gateway framework, with an award ceiling EUR 2,000,000 and closing on 31st March 2026 also focuses on Nigeria.
The USAID story is a different one. In December 2021 USAID articulated 2 high-level Agency-wide targets signalling a departure from a Global North designed, top-down DC development model to a new focus on localization and local level CSO engagement captured in two broad commitments:
- To direct a quarter of its funding directly to local partners by the end of Fiscal Year (FY) 2025; and
- To ensure at least half of USAID programs create space for local actors to exercise leadership over priority setting, program design, implementation, and defining and measuring results by 2030.
Between 2021 and 24th January 2025, when USAID issued the Stop Work Order (FAR clause 52.242-15), USAID developed a comprehensive AID policy framework to achieve its new mission of Locally Led Programming. New localization policies included USAID’s Locally Led Humanitarian Assistance Policy; a new Local Systems Position Paper; the Local Capacity Strengthening Policy; USAID’s Resilience Policy; The Knowledge Management and Organizational Learning Policy; USAID’s Cost Effectiveness Position Paper; and USAID’s new Vision Statement for Investing Locally.
In Fiscal Year (FY) 2024, USAID made US$1.3 million in Innovation Incentive Awards (IIAs) to local actors, mainly in the global south. The IIAs which rolled out in 2017 was expanded by USAID in 2022 to support its localization agenda. The expanded pay-for-results Innovation Incentive Awards was a mechanism offering unrestricted funds up to $500,000 to local individuals, organizations, businesses delivering results in line with USAID’s localization strategy. In FY 2023, 90 percent of all Innovation Incentive Awards went to local actors. To improve its tracking of localization results, by FY 2024, USAID moved forward to introduce new Agency-wide data tracking set of indicators to monitor progress towards local leadership at each stage in the programming cycle – design, implementation, monitoring and evaluation. By FY 2024 USAID had awarded $2.1 billion globally and directly to local non-governmental, private sector and government partners. This figure amounts to 12.1% percent of USAID’s funding, $1.9 billion of which went to local non-governmental or private sector partners.
In Nigeria, USAID’s localization strategy was an accelerated one with ambitious targets. USAID’s localization strategy in Nigeria aimed to shift funding and power to local actors, targeting 25% of funding to local partners by 2025 to foster sustainable, locally led development. This includes direct funding to Nigerian NGOs, strengthening local capacity, and prioritizing Nigerian-led humanitarian and health responses, particularly in health sectors like HIV/AIDS and malaria.
Consistent with its new localization policy for Nigeria, by the time USAID/Nigeria closed out its programming in early 2025, almost all Notices of Funding Opportunities (NOFOs) expressly called for applications from local Nigerian organizations. For example, NOFO 72062025RFA00005 posted in December 2024 stated that: “The United States Agency for International Development in Nigeria (USAID/Nigeria) is issuing this Notice of Funding Opportunity (NOFO) for potential local organizations to provide concepts for two (2) Global Health Security (GHS) activities that are focused on 1. Global Health Security Coordination and Response and 2. Global Health Security Capacities Strengthening. These activities will support the Government of Nigeria’s (GON) Health Sector Renewal Investment Plan”.
With USAID’s gone, opportunities for increased funding and local leadership in development for Nigerian NGOs has also ended. No new funders have stepped up to the table to fill the gap left by USAID and with the US government’s new development focus on “Commercial Diplomacy” there seems virtually no hope for a return to a funded locally led development strategy. As explained by the Trump administration, Commercial Diplomacy focuses on bilateral deal making to advance the American First policy, encouraging private sector engagement and demanding performance-based results from U.S. diplomats, with deliberate aim countering competitors.
Notwithstanding this altered reality, there are still catalytic opportunities for development partners rolling out new programs such as the MacArthur Foundation to mainstream localization into new country portfolio by incorporating more local groups, especially at the grassroots level. This may well mean revising grant award mechanisms to encourage a strong sub-granting component, would call for network building and new forms of expanded engagements to cascade down grant impact to multiple beneficiary NGOs. Such an approach would require development partner program officers to use new skills and sensitivities to identify and support bottom-up designed innovations with sustainability components and an intentional learning agenda. As Nigerian NGOs struggle to keep the third sector, salient, active and a partner in the nation’s progress CSOs networks such as those supported by International IDEA CSO- BRIDGE project, would no doubt find it necessary to take up new roles as advocates shaping CSO sector design and donor country programs.
