"Development must transform human capacity. …Sustainability has to be the operative word. …These nations...must increasingly become equipped to do these things for themselves" [Excerpt: Ambassador Tobias' speech to InterAction, April 2006]. The day after his designation as Director of Foreign Assistance, Ambassador Tobias voiced that the typical developing country's fight against HIV/AIDS is hampered by weakness in all nine areas of capacity development: strategic planning; NGO registration; financial management; human resources management; networks; monitoring and evaluation/quality assurance; commodities, equipment, and logistics management; facilities; and fund-raising. To overcome these limitations, the President's Five-Year Emergency Plan has committed itself to "…build local capacity so as to provide long-term, wide-spread, essential services…."

In support of the Five-Year PEPFAR sustainability strategy for Zambia, the USG/Zambia plans to compete a new activity for FY 2007, the Local Partners Capacity Development (LPCD) Project. The LPCD will build financial, leadership, and managerial capacities of local HIV/AIDS partner organizations and will complement existing partner technical and medical skill strengthening efforts. The LPCD will focus on institution strengthening and human capacity development for Zambian governmental organizations, NGOs, faith-based organizations, and professional associations currently implementing promising and successful HIV/AIDS prevention, care, and treatment services in preparation for taking on additional responsibilities and resources as international/US partners implement exit and graduation plans. The LPCD institution-building activity will respond to the need for indigenous institutions to embrace financial and reporting systems that ensure accountability, transparency, and efficiency including a set of checks and balances which conform to local laws and donor requirements.

The strengthening of financial, leadership, and management capacities of local PEPFAR partners requires a technical assistance package that incorporates skill transfer, mentoring, and systems building implemented by experts in organizational development, management restructuring, and financial accountability, if donors are to leave behind stronger institutions able to carry on HIV/AIDS service delivery at the close of PEPFAR. This goes beyond the scope of work of current HIV/AIDS partners.

There is a genuine concern that two years is insufficient time for LPCB to strengthen institutions. However, if we take the next two years to strengthen local partners, there will be a greater prospect for the continuation of HIV/AIDS services and activities rather than leaving a gap when international partners return home. In fact, we have witnessed rapid change among local partners once they become aware of their institutional weaknesses and are provided with guidance, including reshuffled membership on powerful boards, improved leadership and management, and stronger financial and reporting systems.

The LPCB project shall be designed to formulate and test a variety of "business models" believed to increase the size of the portfolios under local partner management. As such, LPCB's objective is to strengthen Zambian HIV/AIDS institutions in: executive leadership, skills management, and financial systems. On behalf of the U.S. Mission/Zambia PEPFAR interagency team, USAID will draft a statement of work to build up the financial, institutional, and programmatic capacities of selected Zambian organizations that demonstrate the potential to scale-up successful HIV/AIDS prevention, care, and treatment activities.

The USG will determine the assistance instrument. It could be an IQC work order, an "umbrella" grant, or possibly a formal "twinning" partnership agreement whereby an American university-affiliated or financial institution management advisory team would partner with a Zambian counterpart such as the University of Zambia's National Institute of Public Administration. The twinning approach is most appealing as this will lead to the institutionalization of organization strengthening for those involved in HIV/AIDS within Zambia.

At project startup, the LPCB will survey the Institution Building expertise, systems, and skills of PEPFAR partners/sub-partners to identify: existing initial and post-intervention management assessments; training courses for Board members, managers, accounting staff, and other key staff; systems and tools for financial and service tracking; and

development of business plans, fund-raising strategies, and mentoring. An initial rapid assessment will be conducted for all local partners to identify the most promising.

The USAID Controller's Office will conduct pre-award surveys for the more promising local partners. Their findings would inform the curriculum of a remedial technical assistance and training program. The resulting courses or seminars will include: 1) financial management and budgeting for results, 2) organizational development, effective governance and boards, establishing appropriate organizational charts and staffing structure, and 3) program strengthening, planning, implementation, monitoring, reporting and evaluation. To ensure, local organizations are providing the most up to date HIV/AIDS activities, technical updates and best practices will be shared on prevention, care and treatment, in policy and legal issues, reduction of stigma and discrimination, and in community mobilization.

Some thirty local organizations with prospects to receive direct donor support will be provided with comprehensive technical assistance, mentoring, and training. Another 200 local sub-partners would be provided with training. This would include the training of ten persons per organization (executive board members, managers, accountants, monitoring & evaluation staff, and other key personnel) for a total of 2,000 individuals over a two-year period. Thanks to their upgraded design and management skills, it is expected that at least ten Zambian NGOs will be able to pass pre-award surveys during the second year of LPCB and that participating sub-partners will be able to manage larger amounts of HIV/AIDS resources and thereby help more beneficiaries. In FY 2007, it is anticipated that a total of 90 organizations and 1,000 individuals will benefit from this program.

In FY 2007, it is estimated that $475,000 per year would cover long-term and short-term expert services, mentoring and training. Another $200,000 would be awarded to local organizations on the prime partner track and $250,000 awarded to sub-partners through a competitive process. These funds would be used to update management, accounting, financial, reporting, and program systems and equipment. To kick start business plans, a total of $50,000 will be awarded to the organizations with the most promising ideas for business plans to maintain HIV/AIDS services and activities. It is anticipated that $2 million would fund LPCB over the last two PEPFAR years reaching 200 local organizations and 2000 individuals.

Sustainability may come in many forms. Various indicators would underscore success of an institution building activity: diversification of program income sources, an increase in host country budget outlays, capacity development in terms of checks and balances introduced, training and retention of staff to address managerial or technical deficiencies, more grantee and contractor work plans incorporating sustainability targets, and the transfer of decision-making authorities to local NGOs heretofore only subs. Revised fiscal codes to allow income tax deductions for charitable gifts would be a significant nationwide institutional reform. A related measurement - financial independence in terms of assets held or cash flows from consulting fees and local fundraising - would indicate self-sufficiency.