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Economic development, institutional analysis, health systems, corruption, evaluation
Bill Savedoff is a senior fellow at the Center for Global Development where he works on issues of aid effectiveness and health policy. His current research focuses on the use of performance payments in aid programs and problems posed by corruption. At the Center, Savedoff played a leading role in the Evaluation Gap Initiative and co-authored Cash on Delivery Aid with Nancy Birdsall. Before joining the Center, Savedoff prepared, coordinated, and advised development projects in Latin America, Africa and Asia for the Inter-American Development Bank and the World Health Organization. As a Senior Partner at Social Insight, Savedoff worked for clients including the National Institutes of Health, Transparency International, and the World Bank. He has published books and articles on labor markets, health, education, water, and housing including “What Should a Country Spend on Health?,” Governing Mandatory Health Insurance, and Diagnosis Corruption.
In the world of international aid, performance payments are a hot topic. But when it comes to signing performance payment agreements, most funders have been reticent. One of the reasons is a fear of “Double Counting” – paying once for investments to achieve outcomes and a second time when the outcomes are delivered. This concern ignores the complexity of achieving development goals and the intangible assets invested by recipient countries. When funders do agree to performance agreements, they end up ignoring the burden on recipients of “Double Demanding” – disbursing when outcomes are achieved and then setting restrictions on the use of those funds. All this confusion gets in the way of designing effective aid programs.
Creating an evidence base requires good research, but how can we know if evidence is strong or weak … or even misleading? The process by which researchers conduct, document, and share their work is essential to winnowing out weak studies and to improving, honing and disseminating strong ones. At the risk of taking the metaphor too far – can we make research so transparent that anyone can see right through it?
In 2010, Norway and Indonesia signed a US$1 billion performance agreement to reduce greenhouse gas emission from deforestation. The experience holds lessons for international cooperation in addressing climate change and other global challenges.
Results-based aid (RBA) is a form of foreign assistance in which one government disburses funds to another for achieving an outcome. This paper distinguishes four different theories used to justify RBA programs and analyzes four case studies – from GAVI, the Amazon Fund, Ethiopian Secondary Education and Salud Mesoamérica.
By Nancy Birdsall, William D. Savedoff, and Ayah Mahgoub
Summary: Accelerate progress toward universal primary education by offering a contract to low-income countries which pays a specific amount for every additional child who completes primary school without restrictions on how funds are spent.
The Problem: Despite shared interests in educating children, improving health, and reducing poverty, donors and recipients tend to repeat ineffective approaches because, in addition to these shared interests, they also have competing goals for foreign aid and lack reliable information about implementation and outcomes. Consequently, foreign aid programs are weakly accountable – to donor country citizens who finance them, to recipient country citizens who are supposed to benefit, and between donor and recipient governments as well.
Recipients regularly criticize donors for being inflexible, unresponsive, and providing unpredictable funding, while donors criticize recipients for lack of transparency and failure to fulfill obligations. These problems are exacerbated by the involvement of multiple donors with different budget cycles and reporting requirements, which dilutes the recipient’s accountability to any single donor, raises transactions costs, and increases the administrative burden.
The Proposal: We propose that donors offer to pay recipient governments a fixed amount for each additional unit of progress toward a commonly agreed goal, e.g. US$200 for each additional child who takes a standardized test at the end of primary school. That is, the donors pay “cash” only upon “delivery” of the agreed outcome. The key features of this proposal are: (1) the donor pays only for outcomes, not for inputs, (2) the recipient has full responsibility for and discretion in using funds, (3) the outcome measure is verified by an independent agent, (4) the contract, outcomes and other information must be disseminated publicly to assure transparency, and (5) this approach is complementary to other aid programs.
The Advantages: This proposal focuses exclusively on outcomes which improves accountability; gives recipients sole responsibility and rewards for achieving progress which increases local ownership; directs attention to measuring progress rather than monitoring inputs which promotes learning by doing; increases transparency by reporting valid policy-relevant information; and can be introduced as additional to current aid flows in a particular recipient country without disruption to existing programs. Though other forms of aid achieve one or more of these features to varying degrees, this COD Aid proposal combines all five of them in a way that strongly emphasizes these features and, in the process, fulfills many of the aims stated in the Paris Declaration for improving aid effectiveness.
Implementation: The key steps to implementing COD Aid are to negotiate and sign a contract, collect and report data, arrange for independent verification of outcomes data, and effect payments in proportion to progress. In parallel, an independent evaluation of the effort is needed to assess whether COD Aid is, or is not, an improvement over other aid modalities.
CGD engaged background research and consultation with governments and private foundations to develop a model contract for COD Aid. The resulting documentation explains how COD Aid could be implemented. CGD is advising several developing country governments, official aid agencies, and private philanthropic foundations that have expressed interest in such a proposal. We welcome feedback and inquiries from interested individuals, researchers, organizations and governments.
For more information contact Rita Perakis (email@example.com) or go to our COD Aid initiative page.
Can aid donors find a better way to deliver aid? My guest this week is Nancy Birdsall, president of the Center for Global Development. Along with William Savedoff and Ayah Mahgoub, Nancy is working on a potential new way of disbursing foreign assistance called Cash on Delivery Aid. COD Aid seeks to devise simple, results-based contracts that reward developing countries for making progress towards previously agreed goals—such as increased primary school completion rates, vaccination coverage, or access to clean water.
In the podcast, Nancy explains that the traditional mode of giving aid, in which donors often take an active role in prescribing which actions recipient governments should take, can undermine incentives for governments to identify problems and design and implement locally appropriate solutions. "We have to create a system in which outside resources actually help the developing country governments find out what works in their particular setting," says Nancy.
Politicians and agency officials are always morally indignant when it comes to corruption in foreign aid, pointing to elaborate procedures and investigative offices to prove that they are “tough” and calling for zero tolerance (most recently here and here). However, for most governments and agencies, corruption is only a problem when it is discovered. That is when it becomes an obstacle to disbursing funds and keeping business moving.
Saturday was World No Tobacco Day which prompted me to ask: “What’s new?” After looking at the press releases, I decided that the most significant thing that happened last year was that another 30 million young people have started smoking around the world. Of these, 25 million are in low- and middle-income countries and about 12 million of them will die prematurely from disease linked to tobacco – 10% of them because of second-hand smoke. This epidemic is not caused by a virus or spread by mosquitoes. It is intentionally planned and profited from by large tobacco companies – for-profit multinationals as well as state-owned monopolies.