Where have we got to on ‘results-based aid’, ‘cash on delivery’ etc?

March 26, 2015 8 By Duncan Green

The Center for Global Development churns out any number of new ideas and energetically hawks them round northern COD_Cash-on-Deliverygovernments and multilaterals: the benefits of migration, oil for cash, the Commitment to Development Index and many more (check out the Initiatives tab on their homepage). In recent years, Cash on Delivery aid has been one of their top products, and a number of donors have started to pick up the idea (although just to keep us on our toes, its name keeps changing – to ‘Results-Based Aid’, or ‘Payment by Results’. Apparently this is because what’s happening so far doesn’t meet the full set of COD criteria set out in CGD’s book).

According to the CGD, ‘Under COD Aid, donors would pay for measurable and verifiable progress on specific outcomes, such as $100 dollars for every child above baseline expectations who completes primary school and takes a test.’

The appeal of this approach is that it leaves governments and other recipients to find their own way to achieve good things, based on local contexts, rather than prescribing universal ‘best practice’ that often fails. So it fits well with other currents of thought on complexity and systems, (covered ad nauseam on this blog).

But now CGD researchers Bill Savedoff and Rita Perakis have stepped back and taken a long hard look at where CoD has got to thus far. I attended a discussion of the resulting paper “Does Results-Based Aid Change Anything?” last week, and I think it’s fair to say they haven’t exactly been blown away by what they’ve found.

Firstly, donors have been overclaiming: According to Rita and Bill’s blogpost on their paper ‘instead of a revolution in aid, we found a cautious adaptation of traditional programme approaches’.

PbR figThey found very few programs that actually pay governments for outcomes (four to be precise, although the numbers have risen since they did their trawl). They were GAVI’s ISS (Immunization Services Support) programme; the Amazon Fund (a deforestation programme in Brazil, funded  by Norway); an Ethiopian secondary education programme, funded by DFID) and Salud Mesoamerica 2015 (regional healthcare, 8 countries in Central America, funded by the IADB).

The authors paper identifies four theories for how RBA programmes are supposed to work:

Pecuniary interests. Countries will change their priorities because they need the money.

Attention.  Because funds are linked to outcomes, politicians and bureaucrats will pay more attention to results and manage things differently than they would otherwise.

Accountability. RBA agreements make outcomes visible to citizens in funding and receiving countries, allowing them to hold their governments accountable for performance.

Recipient discretion. By linking payments to outcomes rather than inputs, funders give recipients wider latitude to design and implement strategies of their own making.

Out of the 4 case studies, the authors found that 3  were just about ‘attention’ – getting decision makers to think more about

It's really not that difficult

It’s really not that difficult

outcomes. Only the Amazon Fund went further, including some elements of accountability and recipient discretion, and tellingly, that Fund did not come out of the standard aid agency processes. It was proposed by Brazil in 2007 and picked up by climate change staff in the Norwegian government rather than by NORAD.

Elsewhere, the researchers found a ‘Striking lack of transparency on the results of what were actually quite simple programmes’ and thus no impact on accountability (you can’t hold governments accountable if you have no information on what they are doing).

On the plus side ‘the typical concerns with RBA did not materialize, such as corruption, distortions of incentives, or the sacrifice of long goals’, although that’s hardly surprising given that the programmes are such a timid step towards RBA.

The discussion at CGD highlighted a few other issues:

Time horizon: The standard 3 year programme doesn’t give you time to invest upfront in innovation, so if you need to show results quickly, you play it safe. RBA needs to go to 5 year programmes or longer if it is genuinely interested in promoting innovation.

Sustainability: The Brazilian deforestation study got me thinking. Whether or not your RBA project is responsible, if it coincides with a downswing in the rate of deforestation, the Brazilian government gets lots of cash, and that’s great. But when the project ends, if an upswing takes place, and the trees get chopped down and burnt after all, the net effect on the amount of CO2 in the air is the same (Bill argues that a delay at least buys time to sort out a carbon transition, but that seems pretty thin). So maybe RBA works better for largely irreversible changes (eg educating kids) than for reversible ones?

Which leads on to the link between RBA and institutional strengthening. In the long run, only strong domestic institutions are going to deliver sustainable progress on health, education, deforestation etc, but the link between RBA and institutional strengthening seems pretty tenuous (you may need better institutions to get those short term results). Mind you the whole idea that outsiders can strengthen domestic institutions is pretty debateable – so the question of whether RBA is more/ less likely than traditional aid approaches to encourage stronger institutions is both open and very important.

Finally, this paper is only about aid to governments, and deliberately excludes using results-based performance contracts with other recipients such as NGOs. A BOND survey of NGOs about their experiences to date suggests that version of RBA is pretty disastrous.

And here’s CGD boss Nancy Birdsall explaining COD in ten minutes