Rise of local capacity developers

Understanding service environments

To rectify this lack of knowledge of local capacity developers, SNV, supported by the UK’s Overseas Development Institute (ODI), recently explored the situation in five countries – Cameroon, Montenegro, Peru, Tanzania and Vietnam. These initial reconnaissances looked at local capacity development ‘service environments’ in order to understand the role played by various actors in supporting capacity development processes. They also examined how they work, and the demand–supply–financing interactions that seem to steer this work.

This article summarises the findings of these explorations, and identifies common issues that need to be addressed in order to develop a local capacity development service environment. It also refers to wider international policy commitments to stimulate the development and use of local or ‘southern’ expertise.

The ‘service environment’ refers to the market and non-market dimensions of the support system. In line with SNV’s engagement with sub-national actors, the study focused on the degree to which the need for capacity development support at the provincial, district and community levels is actually being served by the emerging support ‘industry’. It examined the nature of the organisations, financing patterns, the types of support or services they provide, and how demand and support relate to each other.

The five countries differ significantly in terms of the nature of their economies, their political systems, the relations between civil society, the private sector and government, the character and speed of decentralisation processes, and their natural environments.

In Peru, for example, there is a relatively strong consultancy ‘industry’, with several thousand professionals serving mainly the private sector and national (semi-)public agencies, and a community of developmentrelated NGOs. In recent years, these two have crossed over into each other’s terrain, with NGOs doing more ‘fee-for-service’ work and private consultants bidding for development programmes.

The findings of the study indicate that the number of LCDs operating as private businesses correlates with the size of the commercial sector. Thus the commercial capacity development sector is relatively strong in Cameroon, with its forestry and oil industries, and is developing quickly in the booming economy of Vietnam. The NGO sector is weak in Vietnam, however, due to its socialist history, but is relatively strong in Cameroon and Tanzania. Semi-public training and research institutes play an important role in capacity development in Vietnam, and have some prominence in Tanzania and Cameroon, but play a minor role in liberalised Peru.

With the recent emphasis on national implementation programmes, international consultancy firms have also started to focus on capacity development through their local offices and affiliates.

Emerging patterns

Despite the very different settings and service environments in the five countries, several patterns emerged:

1. Most money for capacity development is spent on national level programmes steered and implemented from the capitals.

2. Most services are designed at the national level, by funders and service providers, far from the needs of clients at the local level.

3. Capacity development support providers are concentrated in one or two major cities, while at the sub-national level there are small NGOs or programmes with short-term funding.

4. With regard to the type of services provided, most local capacity developers offer standard modular training courses, combined with technical advice and project management services. More advanced services are rare.

5. A large knowledge gap exists between national and local actors, in relation to knowledge about professional capacity development, about the ‘market’ for capacity development-related services and about funding in particular.

6. In terms of prices, capacity development in its present form is expensive for clients at the sub-national level, most of whom cannot afford to pay ‘national’ consultancy fees, subsistence allowances, air travel, etc.

7. For sub-national actors the capacity development market is inaccessible, not transparent, and the quality of services varies considerably.

Although there are considerable variations within each country, these patterns are clearly visible, to the extent that they may be regarded as systemic phenomena created and maintained by the way the aid system and developing societies work.

The service environments in the five countries are clearly ‘hybrid’ in nature, populated by a mix of NGOs, private sector and semi-public actors. They rely on funding from multiple sources – international NGOs, private firms, governments and donors. A number of ‘providers’ may move from the commercial to subsidised market segments, and vice versa. NGOs, as well as commercial or semi-public entities, often depend on similar sources of funding. It is not uncommon for them to combine different legal forms in order to operate in this hybrid environment. Although each market segment is clearly different from the others, overall, the various forms of financing are intertwined, forming one larger market or service environment.

There are enormous differences in the fees for capacity development services. At the national level, it is normal for firms and NGOs to charge US$100 to US$350 a day, or even higher fees for more specialised policy work. Some international NGOs pay US$250 to US$350 a day to preferred consultants – fees that clients at the sub-national and local levels can not afford to pay. Locally, rates are capped at around US$100 day, and are usually much lower. Many local NGOs are dependent on one donor or project, and so have to employ just one or two staff until they can find other sources of funding.

Limited choice, growing demand

The demand for a wider range of higherquality capacity development services is growing. The concept of ‘service delivery’ used by many programmes and providers, however, is disappointingly limited and rather uniform. Most support consists of relatively isolated training sessions or workshops, rather than effective assistance that will bring about longer-term changes at the local level.

In addition, the number of lead actors providing capacity development support for a sector or theme within a country is usually quite limited (often between three and eight). National and international clients often demand a standard repertoire from providers of capacity development services. In roundtable discussions held in the five countries as part of the study, several participants expressed their desire to innovate and think more about outreach. But time and the resources needed to do this are extremely limited.

Yet clients are becoming more demanding, even at the local level. As one local mayor in southern Cameroon observed, ‘One-off training or technical design are not enough. If I want my water department to function better I need somebody to work with that team over a long period, to look at the quality of work practices, the leadership, how they relate to citizens and user groups, their internal organisation. But it is very difficult to get such support, for financial as well as technical reasons’.

In different sectors within a country, capacity development services can be diverse. In agricultural or other commercial market chains, for example, capacity development service providers have developed a variety of ‘business development services’ models that could be transferred to other fields. In the water sector, for example, providers have experience with multi-actor platforms and processes that may be relevant elsewhere. In short, there is considerable potential for improvement through the cross fertilisation of ideas and approaches between sectors.

Below the ‘glass floor’

At the sub-national level, capacity development service providers are predominantly NGOs and individual consultants. Because most funding is available in capitals, clients at the subnational level can only afford the services of subsidised NGOs or individual consultants who charge reasonable fees. Their outreach is therefore limited. This raises a number of questions, such as what strategies or approaches would enable them to enhance their outreach? What measures are needed to increase the number of LCDs operating at this level at affordable rates? Would adopting more ‘networked’ approaches through peer-to-peer and horizontal learning be more effective?

The relational and knowledge barriers between actors that operate in the ‘national arena’ and those at the sub-national level are enormous. In the study, it was difficult to find examples of sub-national LCDs that had won government or donor contracts, even for work in ‘their’ own region where their advantages are likely to be enormous in terms of local presence, knowledge, connections and networks, not to mention their cost effectiveness. Together, these factors seem to create what could be called a ‘glass floor’ (rather than a glass ceiling) in the system.

Capacity development support clearly faces enormous challenges if it is to reach beyond the cities and meet the needs and (potentially huge) demand at the local level.

Ways forward

Improving outreach and quality are important challenges that cannot be met with current funding levels and support strategies. Are there cheaper, more effective networked and ‘peer-to-peer’ or horizontal learning approaches that can be used to improve capacity development support? If so, would they help solve the erratic, poor-quality outreach? In order to move forward and improve the service environments that are so urgently needed, a number of issues need to be addressed.

• A deeper understanding of capacity development service environments is essential. A ‘value chain’ perspective would help open up a range of relevant questions. For example, how does the capacity development support value chain actually work? How do demand, supply and financing meet and interface? What ranges of products and services are already provided, and how adequate are they? What service delivery models work most effectively and efficiently?

• The logic of funding. Funding arrangements must allow local actors to make more deliberate choices on what they need and what will work in their specific settings. Approaches must be promoted that go beyond standard training and ensure more meaningful impacts at the local level. Attention should be paid to ‘brokering’ market information and market relations, ensuring that they become more transparent, accessible and understandable to local actors.

• Current capacity development inputs (especially standard modular training) are not necessarily helping to bring about change at the local level. Better quality and innovative methodologies are needed that will foster and facilitate more effective local solutions.

• Capacity development approaches need to be scaleable. One way to achieve this would involve building on peer-to-peer learning, brokering knowledge, networking, and using modern media. Another would involve adopting methods that influence groups of actors rather than individual clients through, for example, multi-actor processes, strengthening public accountability mechanisms and improving value chains.

• Much stronger support for the professional development of LCDs, especially those working at the sub-national level, is crucial, alongside the new approaches and key elements mentioned above.

Strategic action

Capacity development can help to ensure that poverty reduction ambitions are achieved. Yet many policies and programmes face difficulties in stimulating local change – also called the ‘macro–micro gap’. The SNV/ODI study has shown that this also applies to the ways in which capacity development is supported. In most environments, centralisation, the supplydriven approach, fragmentation of efforts and the lack of outreach confirm this.

Although in many countries a ‘capacity development service industry’ is emerging, in general, policies, funding strategies and (sector) programmes pay only piecemeal attention to the structural improvements that are needed in the service environment for capacity development. This has limited the access and outreach of sub-national actors, and can be regarded as one major reason for the failure to achieve ambitions such as the Millennium Development Goals.

SNV is starting to use the insights gained from the study to engage with local capacity developers as clients, sub-contractors and partners. In a number of countries, we are also establishing local capacity development ‘facilities’ that are jointly funded, locally governed and sometimes sector focused. These facilities use a combination of funding and brokering to stimulate sub-national environments so that capacity development demand, support services and finance meet more effectively. We will report on these initiatives at a later stage.

In the meantime, the challenge is to move away from providing direct support to capacity development towards ways of working that consciously support the emergence of an effective capacity development service environment. Little has so far been done to achieve this. With this article – and indeed this issue of Capacity.org – we are pioneering these new insights and perspectives.

The author invites readers to submit ideas about what can be done to help the emergence of a strong and effective capacity development support sector in developing countries – by donors, international NGOs, governments, and the sector itself.