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Cash on Delivery is an approach to foreign aid that focuses on results, encourages innovation, and strengthens government accountability to citizens rather than donors. 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. CGD is working with technical experts and potential donors and partner countries to design COD Aid pilots and research programs.
Cash on Delivery Aid is designed to overcome the problems of traditional aid, which often focuses more on disbursements and verifying expenditures than on results, undermines a government’s accountability to its citizens, and undervalues local experimentation and learning. COD Aid’s advantage is in linking payments directly to a single specific outcome, allowing the recipient to reach the outcome however it sees fit, and assuring that progress is transparent and visible to the recipient’s own citizens. These features rebalance accountability, reduce transaction costs, and encourage innovation.
COD Aid can be applied to any sector in which donors and recipients can agree upon measurable, verifiable outcomes and commit to making progress toward those shared goals. The approach is fully explained in Cash on Delivery: A New Approach to Foreign Aid (CGD, 2010). Listen to more about COD Aid in these Wonkcasts.
This post originally appeared on devpolicy.org and devex and is based loosely on a February 10th talk at the Development Policy Center at Australian National University’s Crawford School and a March 1st speech at The International Development Research Centre in Ottawa..
The maxim that armies are always fighting the last war might just as aptly apply to development agencies: they are too often tackling yesterday’s problems with an outdated set of tools. If our development policies and agencies are to serve our interests, then we need them to both live in the present and prepare for the future. So, what then might development policy look like, say, a decade from now? What should we be thinking about now to get ready? Here are three big trends I think will be shaping the development future:
This brief examines options for a COD Aid contract in Pakistan’s education sector and its potential benefits for improving the relationship between official donors and the government of Pakistan, and for increasing the effectiveness of aid spending in Pakistan.
The UK Department for International Development is getting down to real business on adopting results-based approaches to aid. It will allocate future resources across country and regional programs on the basis of “results offers”, as explained here. (DFID spends annually almost 3 billion pounds, about $4.5 billion, on these programs – exclusive of its allocations for humanitarian assistance and for support of multilateral programs.) DFID recently wrapped up one step of the process, in which all country and regional teams set out their “results offers” for the period 2011/12 – 2014/5 (“indicative results teams proposed to deliver” ) for review and evaluation (and some sort of ranking we assume) by internal advisers and a panel including external experts. The reviews were asked to assess the extent to which the results offers are “realistic and evidence-based”. Now ministers will consider them as they determine their aid allocations for the next four years. According to an earlier press release the results offers will cover about 90 countries.
This is a joint posting with former CGD special assistant Rena Pacheco-Theard
Last week, CGD was honored to host Tanzanian President Jakaya Mrisho Kikwete and senior officials in his government for a discussion with a small group of development experts on Tanzania's recent education and malaria control activities.
The importance that the government places on core social sectors is unmistakable – and continues a long Tanzanian tradition. Minister for Education and Vocational Training, Jumanne Maghembe, noted that, "Education is the highest priority, and the foundation of any social development venture." In fact, the education sector – primarily teacher salaries – accounts for a full 17% of the national budget. Over the past few years, the country has consolidated progress toward universal primary education and has increased secondary school enrollment by two and a half times (from a very low base). The Minister also reported on expansion in post-secondary education, including universities and vocational training centers. Attention is also being given to the early years. Zanzibar's Minister of Education, Haroun Ali Suleiman, stressed the importance of pre-primary education.
As the sector expands, the challenges are profound. The most obvious is the shortage of teachers. Historically, secondary schooling has been so limited that there simply aren't enough graduates to train as teachers. In response, at least for the near term, the government has implemented programs to bring in teachers with non-traditional training, and is looking at distance education technologies.
I’ve been working on the idea of Cash on Delivery (COD) for some years under the hypothesis that if we could define good outcome indicators, someone would step forward to buy them. So what would happen if an organization came forward with a plan to supply a verified outcome in return for a set unit payment after delivery? In a sense, this is what Dispensers for Safe Water, an Evidence Action program, is currently doing.
A new report issued last week in Davos by former UN Secretary-General Kofi Annan on behalf of the Africa Progress Panel draws in part on CGD research to argue that Africa is both at risk from the global economic crisis and potentially an important part of the solution.
The report says that experiences of past financial crises suggest that aid to Africa may be cut. But it also sees a silver lining to the crisis: measures to help Africa—including trade and investment initiatives, as well as aid—should be an important part of a global stimulus package in response to the global financial crisis.
"Africa can be an important part in a global economic stimulus plan," said Annan, who chairs the Africa Progress Panel, which is composed of leaders from Africa and high-income countries. "The scope for investment in Africa is vast."
Documenting the economic growth and positive political trends of the last few years, the report states that "Africa's medium to long term prospects are better now than at any time since independence."
However, the report also cautions that "the global crisis could arrest and even reverse steady, and in some cases dramatic, gains that have been made over the last decade." Citing research by CGD research fellow David Roodman, the report warns that despite promises to the contrary, evidence from financial crises shows that rich countries have generally reduced the level of aid in the aftermath of a financial crisis.
The panel report says that "it is more important than ever that Africa's partners honor their commitments" in terms of aid. Alluding to a new aid delivery mechanism being proposed by CGD president Nancy Birdsall called Cash on Delivery Aid, the report suggests that "rich countries can also link aid to outcomes in order to reduce the burden on African governments and improve aid effectiveness."
The report also asserts that "a real partnership between Africa and her supporters is the only way for progress to be achieved." This requires that global governance reforms "include means by which Africans are represented in a legitimate and effective manner."
Annan launched the report at Davos at a session focusing on the State of Africa with leaders from across the continent. Speaking at the session, he said:
"Economic recovery in industrialized countries is needed for Africa—for trade, remittance flows, investment, and aid levels. However, Africa is also integral to immediate efforts to reboot global growth. World leaders must grasp the opportunity to support African development as a means of driving their own economic recovery."
Annan also had strong words about the situation in Zimbabwe, stating that the African Union "did not have the courage" to back the conclusions of its own election observers.
"The crisis in Zimbabwe is man-made, unnecessary, and only getting worse," he said. "The recent cholera outbreak that has taken thousands of innocent lives is only the latest sign of the collapse of a once-thriving nation. Responsibility for this calamity falls squarely on the shoulders of Zimbabwe’s leaders, who have shown great callousness toward their own people and nothing but contempt for the exercise of their political voice and freedoms. Zimbabwe’s neighbors, the African Union, and regional bodies such as the Southern African Development Community (SADC) need to act more purposefully to bring about political change and facilitate recovery and reconstruction."
CGD senior fellow Vijaya Ramachandran served as rapporteur for the 2008 report of the Africa Progress Panel and assisted with the Davos report. "It is extremely important for the urgent issues of infrastructure investment, aid effectiveness, trade, and agriculture to remain as priorities during these times of crisis," she said. "While we are preoccupied with corporate irresponsibility and financial bailouts in the rich world, we must not forget our commitment to economic development and political stability in Africa."
The report urges three steps to mitigate the worst effects of the crisis on Africa, and to enable the continent to become a driver of global economic recovery and stability:
Rich-country governments and institutions must lend strong support to address the problems of climate change by investing in adaptation and in the prevention of deforestation and by increasing funding for renewable energy in Africa.
Africa's own potential for a green revolution in food production must be realized. Technical and financial support is required as well as additional investments in rural infrastructure to ensure farmers’ access to inputs and market outlets.
There has been no progress on multilateral trade negotiations. While pressing for the impasse post-Doha to be broken, an early harvesting of gains in trade liberalization for Africa is needed.
Nancy Birdsall delivered the presentation "Rescuing the MDGs: Paying for results" at the Fighting World Poverty Conference held at New York University. The presentation explores the weaknesses of the current approach to achieving the Millennium Development Goals and introduces a new proposal for meeting the MDG goals on education.