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This paper examines the issue of localization or the replacement of expatriates with host country staff following a period of staff development in a developing country, namely Papua New Guinea (PNG). Whilst the use of expatriates appears to be increasing in the PNG private sector, ineffective employer localization programmes remain in PNG. This situation demands operational interventions. The aim of this study was to determine obstacles to localization in private sector organizations in PNG. A total of 114 PNG senior managers responded to a survey designed to determine the factors that were perceived to hinder localization practices. Results suggest that a significant number of managers identify the prevalence of said obstacles, which were categorised into (i) socio-economic circumstances; (ii) recruitment and selection; (iii) local staff performance; (iv) lack of training and development; and (v) compensation. A diagnostic model of localization has also been proposed. The model provides a detailed process for redesigning a localization programme for a developing country. Policy recommendations are also offered for implementation of a more strategic localization programme.