Building Markets

Back to all blogs

Holy Cow! Aid industry gets hit by 8.5 richter scale quake.

Well I just about fell off my chair when hit by an email 20 minutes ago. How can an email nearly shove me off a chair?  It told me that the biggest aid actor in the world was about to open the doors to local suppliers – and I mean non-American suppliers. The free market is free at last, free at last.

For decades US overseas development efforts have been dampened by the requirement that US aid dollars be tied to “Buying American”.  This means that aid dollars must be spent on US suppliers as opposed to being spent in recipient countries.  This has very significantly reduced the impact of US taxpayers dollars.  Imagine if you could spend your aid dollar twice, once on building a school, but once again on using a local contractor to build that school with local goods and services.  Its a massive multiplier.

Well there is a bit of dynamite in the aid industry about to go off next month:

“Beginning Feb. 6, U.S. aid-recipient countries no longer need to jump through hoops to procure goods and resources outside the United States.   After a yearlong public consultation, the U.S. Agency for International Development will adopt a new rule regarding buying goods it needs in the field: The agency can now purchase items from recipient countries and other low-income countries…”

Oxfam blogger Porter McConnell tells us more here:

“A little thing called the Source, Origin, and Nationality regulation, or S/O/N. The S/O/N required USAID to buy all the goods it needed in the field from the US, and submitting to a lengthy waiver process when this was impractical or costly.”

Well the S/O/N is now a bit of a dead duck come 6 February. To all my friends in USAID, and USAID funded projects in Dili, Monrovia, Kabul, Port-au-Prince, Kinshasa, Juba and countless other places – mark your calendars and have a look at this convenient and ready to use local supplier database.

Interestingly, NATO went even further in Afghanistan with a requirement that goods and service be aggressively sourced locally through its Afghan First policy.  This policy – driven by the US Government has had measurable impact in a very tough place.

Tags , , , , , ,


  1. […] On the face of it, USAID, one of the largest international organizations working in Haiti, seems to really be embracing the “buy local” concept. New USAID procurement regulations effective next month should increase the ease and frequency that USAID contractors can procure locally. USAID-funded projects will now be able to source needed goods and services directly from the countries in which they operate. (To see more on the reform, check out Edward Rees’ post here.) […]

  2. […] 1, 2012 USAID recently announced a new rule that has the potential to radically alter the dynamic of its development projects abroad. The agency is no longer required to purchase goods […]

Rss Feed Tweeter button Facebook button Youtube button