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Cash on Delivery Aid

Nancy Birdsall What Would the Poor Say: Debates in Aid Evaluation Aid Watch Development Research Institute, New York University February 6, 2009. Cash on Delivery Aid. Aid, institutions, and a proposal. Functional system: taxes for outcomes, with citizen scrutiny

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Cash on Delivery Aid

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  1. Nancy BirdsallWhat Would the Poor Say: Debates in Aid EvaluationAid WatchDevelopment Research Institute, New York UniversityFebruary 6, 2009 Cash on Delivery Aid

  2. Aid, institutions, and a proposal • Functional system: taxes for outcomes, with citizen scrutiny • Aid dependent countries: aid, limited outcomes, no citizen scrutiny • Donor micromanagement: aid for inputs, replaces citizen scrutiny • Cash on Delivery (COD) Aid: aid for outcomes, mechanisms for promoting citizen scrutiny

  3. The idea: Cash on Delivery Aid • Donor-recipient binding contract • Donor guarantees specific additional payment for specific incremental progress, e.g. $200 per child completing primary school and taking an approved assessment exam • Recipient reports on progress and agrees to independent third-party audit • Contract is public information

  4. Essential features of COD Aid Pay for outcomes, not inputs Transparent to the public Hands-off Independently verified

  5. Contract for COD Aid applied to primary education • Recipient government • Implements competency test • Tracks and publicly reports completion figures and test scores • Donor • Contracts independent agent from pre-agreed list to audit government report • Makes payments upon good audit • Payment directly to government budget

  6. Photo: Government of Bulgaria Missions for meetings to discuss the process for the disbursement of the funds for technical assistance for improving the process to receive missions …. Donor Role in Hands-On Approach Traditional Project Aid Identification DesignNegotiationApprovalStartupImplementation Tech. Assist. M & E Final “Evaluation” Outcome Measurement? Donor engaged in almost every phase $

  7. Donor Role in Hands-Off Approach Traditional Project Aid Cash on Delivery Aid Identification DesignNegotiationApprovalStartupImplementation Tech. Assist. M & E Final “Evaluation” Outcome Measurement Donor and recipient agree measure of progress Donor engaged in almost every phase $ Validation of outcomes by third party $

  8. Countries can use fundsfor whatever they think will work best Photo: Anna Lindh Euro Mediterranean Foundation Photo: U.S. Department of State textbooks… teacher training … Photo: Prefectura Municipal de Erechim …Conditional cash transfers… Photo: Pierre Holtz, UNICEF Photo: Horizons Unlimited …early nutrition programs to boost learning outcomes… …improving roads so children can get to school …

  9. Benefits for recipients • Less intrusive; local solutions • Fully transparent to citizens and civil society (“$200 per child”) • Gets finance ministers focused on education outcomes

  10. Benefits for donors • Eliminates complex conditionality • Improves and simplifies monitoring • Makes recipient government visibly accountable to communities, parents, citizens • $200 per child easy to explain to donor legislature and taxpayers • Implements Paris Declaration reforms

  11. Citizens’ role in making government accountable • Government publishes contract • Government could publish what inputs it buys • Results available at local / school level, compared to other localities • Results of testing published at some level

  12. Research Level 1 COD multiplies opportunities to discover what works Country Response COD Aid Politics Economics Institutions Donor Response Schooling Outcomes Specific Programs & Policies Politics Economics Institutions Foreign Aid Policies & Practices Other Factors Research Level 2 Level 1 Counterfactual: Traditional Aid / Compare With other country or sector? Level 2 Counterfactual: Traditional Schooling Project / Compare across schools or districts?

  13. Learning from COD Aid: level 1 “process” evaluation • Local institutions (think tanks/policy research) undertake “process” evaluations (press, civil society advocates) • Do donors behave better? (“coordination”, “ownership”, etc. etc.) • Do recipient governments behave better (i.e. more accountable to citizens)? Does transparency and feedback increase accountability?

  14. Research level 1 • Track COD Aid intervention to understand • Donor(s’) behavior e.g. changes number of missions and the nature of interaction • Recipient behavior e.g. resource transfers more transparent; patronage in teacher appts. Cut; minister of education changed; increased collaboration between ministries

  15. Research level 2 (Esther Dyson) maybe. . . .depends. . . .

  16. Happening in real world? • Recipient governments prefer budget support (but Tanzania . . .) • Donors fear waste and corruption if they don’t track inputs (ignoring fungibility) • Fundamental problem with all innovation: first mover cannot capture all the benefits, and • Donor bureacracies risk-averse all bureacracies

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