Local capacity developers: who are they, what drives them and what challenges do they face? Capacity.org interviewed three LCDs from Benin, Tanzania and Vietnam to find some answers.
It is tough for local capacity developers when they have to compete against foreign consultancy firms and subsidised aid agencies that provide capacity development services. Local consultants have local knowledge at their fingertips, they speak the language and understand the people. Why then, do foreign aid organisations and even national governments discriminate against local consultants by considering them only as sub-contractors, or refusing to hire them at all? Heinz Greijn spoke to three LCDs to explore these issues and to find out what can be done to support and nurture the emerging LCD sector.
An adviser on spatial planning, Bentiu, south Sudan.
In your experience, is there unfair competition from foreign aid organisations? Is there evidence that they offer services for free to clients who could in fact afford your services?
Peniel Yes, very much so, although they don’t necessarily do this on purpose. Staff in some organisations have to work a certain number of advisory days and they offer to carry out work that we could do easily and possibly in more depth. They may do the work for free or at heavily subsidised rates, or in exchange for contributions in kind. We try to be as cost effective as possible but we cannot compete with them. I believe these subsidised organisations should work with a skeleton staff and outsource as much work as possible to local capacity builders.
Peniel Uliwa
Match Maker Associates, based in Dar-es- Salaam and Arusha in Tanzania, started in 2003 as a private consultancy and training firm. It focuses on private sector development for small businesses and smallholder farmers by fostering value chain development approaches. MMA works mainly in East Africa – Tanzania, Rwanda, Kenya, Uganda and Ethiopia – a list that will soon include Sudan.
Tam For me it is the other way around. We outcompete them. We provide high-quality services, emphasising learning. Our clients appreciate our methods of coaching. On several occasions we have joined in competitive bidding processes alongside international organisations and the assignments were awarded to us. We speak the language, we understand our people, and this is what gives us a competitive edge.
But I must admit we have also experienced unfair competition. An international NGO might facilitate a training course similar to ours but they would also organise transport for everyone to attend, or even offer training free of charge. We can’t compete against that.
What can and should governments do to improve the LCD sector?
Peniel Giving LCDs preferential treatment would really help. If necessary, yes, bring in foreign experts and their knowledge by allowing LCDs to build consortia with them. What is happing now is that international firms shop around for local firms to work as subcontractors, but all LCDs do is arrange appointments and gather data, which doesn’t build our capacity at all. It should be the other way around: the government should work with local firms and see what is needed to build their capacity so that they are able to do the job themselves.
Nguyen Thi Bich Tam
Nguyen Thi Bich Tam works at the Centre for Community Empowerment (CECEM), a non-profit NGO in Vietnam. The centre has ten staff: seven trainers and consultants, and three administrative staff. ‘Our fees cover staff and office expenditure. We also maintain a special fund for staff and community development.
Do you believe you can compete in terms of quality and price?
Peniel Yes we can, and where we are unable to compete we can cooperate with others. We we can tap into a broad network of international companies to find a partner, in precisely the same way that international companies maintain databases and networks of consultants they use whenever they need expertise for an assignment. International consultancy firms subcontract to LCDs, but it should be the other way around.
Do you think some clients look down on you and believe that being an LCD means you are unable to do more sophisticated work?
Peniel Yes and no. I believe there is a perception among public sector institutions that LCDs do not have an impressive enough track record. Yet from the assignments we have done we do have the experience. Once we are on board and start working, they tend to change their perceptions pretty fast!
Moussiliou Alidou,
Moussiliou Alidou has been running his own one-person consultancy firm for over nine years. Before that, he worked with various organisations, including SNV, where he gained a wealth of experience.
Moussiliou There are local consultants out there providing poor-quality services. Some are prepared to work for low rates, which may explain why they get the job.
That is fine, but another reason why those who provide poor services get government contracts is corruption in public sector organisations. These LCDs are prepared to bribe officials to get the job. On many occasions I have spent a lot of time and effort preparing and submitting a proposal, only to discover that the contract had already been given to somebody else, under the table. They needed my proposal to cover the official’s back and provide evidence that they had followed ‘proper procedures’. One thing governments could do is to support the emergence of a healthy LCD sector to put an end to this type of corruption.
Tam We face competition from other LCDs providing poor quality training courses that carry the same labels as ours. On the one hand, it is a challenge for us to improve the quality of our services. We aim for the high end of the market. We offer high quality for a high price. We have to convince our clients that despite our prices it is still cost effective to work with us because the difference in quality will pay off.
On the other hand, it can be difficult for the client to assess quality at face value. Objective quality standards or certificates to help prospective clients distinguish between high and low-quality capacity development providers do not exist. The government could initiate a system of licensing whereby only providers that meet certain quality standards can offer their services on the market.
The government could also allow LCDs to compete with their own internal training centres. Some ministries run their own programmes to train thousands of their own staff. They should consider outsourcing this work and giving LCDs the chance to come up with competitive bids that may well be more cost effective.
What can foreign aid agencies do to improve the LCD sector?
Moussiliou I believe the LCD sector would benefit enormously if allowed to participate in training events and conferences as NGOs do. However, the fact that LCDs are often also private companies seems to be a problem for foreign aid agencies. They may be willing to support you, but they want you to be an NGO, while I want to run a business. Foreign organisations assume that LCD fees should be lower than than those charged by foreign consultants, even though the quality of the work is often the same or better.
Tam Yes, helping us develop our own capacity is certainly an area in which we could use more support from foreign aid organisations.
Another issue that needs to be resolved is the ‘cost norm’ system used by the European Commission, the UN and other donors to select consultants and determine their fees. It is based on qualifications and how many years experience a consultant has. Yet this system does not necessarily ensure good quality consultancy services and it discriminates against LCDs. The system needs to be updated to ensure that only the best consultants are hired.
Peniel Some organisations, including SNV, are very active in finding out what policies are needed to create a more enabling environment so that a strong LCD sector can emerge. So far, however, there has been little coordination or collaboration, and hardly any discussion with public sector institutions on how to address the issue. In Tanzania, we are exploring this issue with those involved in value chain development. We are starting to identify and share good practice in terms of involving LCDs. Such coordinated action is also required in other areas of expertise.
Interviews by Heinz Greijn
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