with an application to primary schooling william d. savedoff and ayah mahgoub world bank -...
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With an application to primary schooling
William D. Savedoff and Ayah MahgoubWorld Bank - Washington, D.C. - June 14, 2010
Cash on Delivery: A new approach to foreign aid
Thought Experiment
• How does the Bank buy laptops?• Can we buy “educated children” or
“reduced maternal mortality” the same way?
If everyone wants results, why not pay for them? Sometimes we do …
• Global Alliance for Vaccines Initiative• European Union Variable Tranches• SWAps and Budget Support• Output-Based Aid (GPOBA)
Key features of COD Aid
• Payment for outcomes, not inputs• Hands-off funders, responsible recipients• Independent verification• Transparency through public
dissemination• Complementarity with other aid
programs
Hands-On Approach
Identification
Design
Negotiation
Approval
Startup
Implementation
Tech. Assist.
M & E
Final “Evaluation”
Outcome Measurement?
$
Traditional Aid
funder engaged in
almost every phase
Hands-Off Approach
Identification
Design
Negotiation
Approval
Startup
Implementation
Tech. Assist.
M & E
Final “Evaluation”
Outcome Measurement?
Traditional Aid
funder engaged in
almost every phase
$
COD Aid
Agree measure of progress
Validate outcomes
Great in theory, but in practice?COD Aid for primary schooling
• Shared goal: universal completion of quality primary education
• Unit of progress: “assessed completer” – a student enrolled in the last year of primary school who takes an approved standardized test
• Payment: funder pays $200 per assessed completer beyond base year enrollment
• Transparency: recipient publishes enrollment figures, assessed completers and test scores; funder contracts an agent to conduct retests in a random sample of schools
Questions for applying COD Aid to other sectors• Can funders and recipients agree on a shared objective?• What is the correct way of defining the outcome?• Is there a reasonably precise and relevant indicator that
measures progress for that outcome?• Can it be verified independently?• What payment size would provide a reasonable incentive and
minimal unintended consequences?• What incentives might choosing such an indicator create,
both positive and negative?• Can modifications be introduced to mitigate any problems,
without introducing significant complexity or difficulties?• When and how will COD Aid payments end?
• Predictable funding• Policy freedom• Institution building• More money• Lower transaction costs• Accountability
Possible benefits of COD
Developing countries• Demonstrable results• Innovation & diversity• Long-term change• Money where it works• Lower transaction costs• Accountability
Donors
• Donors renege• Start up costs• No progress no money• Perverse incentives• Opportunity cost
Possible drawbacks
Developing countries• Difficult countries • Bureaucratic resistance• Measurement & cheating• Unintended consequences• Cherry picking
Donors
• Donors renege• Start up costs• No progress no money• Perverse incentives• Opportunity cost
Possible drawbacks
Developing countries• Difficult countries • Bureaucratic resistance• Measurement & cheating• Unintended consequences• Cherry picking
Donors
Current status of COD Aid discussions
• Written requests from Liberia & Malawi• Cabinet-level requests from Tanzania &
Ethiopia• New UK government commitment to
pilot COD Aid• African Development Bank considering
application to education and water• G-8 considering maternal mortality
Practical ideas to try COD Aid
• A global contract offered by WB/FTI• AfDB or WB could create Trust Fund for
education, health or water• Bilateral agency or private foundation
could convene a pooled fund• WB could negotiate buydowns for loans
based on outcomes
Thank you for your interest! To learn more:
• Visit the COD Aid page on our website at www.cgdev.org/section/initiatives/
• Sign up for the monthly email update on the COD Aid webpage
• Email [email protected] or [email protected]