Cash on Delivery Aid (COD Aid) is moving from concept to reality as I learned in a recent trip to Europe. In the process we are learning a lot about measuring outcomes and other implementation challenges. While I heard about the ways aid agencies are beginning to try COD Aid or similar initiatives, the internal resistance they face told me a lot about the internal contradictions we’ve lived with in foreign aid for a long time.
My trip involved a workshop “Results-Based Aid: Workshop on implementing Cash on Delivery Aid and other outcome-oriented approaches” which CGD co-sponsored with the German Development Institute–DIE. The workshop was focused on exchanging information among aid agencies, think tanks, and project implementers who have experience with results-based programs of many kinds. We heard from people who are grappling with the challenges of designing results-based programs in sanitation, controlling malaria, expanding education, and improving governance. We discussed challenges faced by aid agencies in adopting new modalities which conflict with existing budgetary and fiduciary mechanisms and require different political framing. We considered how the experiences of the European Commission’s Variable Tranches, GAVI’s Immunizations Services Support, DFID’s development of secondary education programs in Africa and the Amazon Fund (supported by Germany and Norway) reveal the potentials and pitfalls associated with results-based approaches.
One of the most prominent issues underlying all these discussions was the growing disenchantment in Europe with general budget support programs. The main political argument being leveled against budget support is that it can’t demonstrate performance, and the basic response has been to move toward project-specific aid. If European aid agencies move in this direction it will be a shame – throwing out the baby with the bathwater. My hope is that they will see that they can preserve the good aspects of budget support – working through country systems and giving recipients greater ownership – by agreeing to disburse flexible funds in relation to progress on a few key high-level indicators, such as educational attainment, reduced child mortality, better security, less deforestation or cleaner energy.
The discussion of Results-Based Aid is also extremely useful for uncovering the dynamics of foreign aid politics. For example, a key advantage of results-based mechanisms is that they can reduce transaction costs associated with tracking inputs. Nevertheless, we heard several cases in which the measurement of outcome indicators was simply added on top of existing spending control mechanisms. In addition, results-based aid from one government to another should be an opportunity to keep attention on broad high-level goals and leave the recipient with flexibility on how they respond. Instead, it is extremely tempting for the discussion to fall into using the payments to get “them” to do what “we” think they should.
The entire conception of foreign aid is changing – with new actors, new constraints, and new ideas. I think the process of working out these new ideas in practice will show if the system can really be reformed or whether it will be increasingly marginalized.