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Managing for results

Uncharted territory

by Hans Dembowski

In brief

After delivery: a young mother who was given professional medical care in a slum clinic in Nairobi thanks to a maternal care voucher subsidised by the German aid agency KfW Entwicklungsbank

After delivery: a young mother who was given professional medical care in a slum clinic in Nairobi thanks to a maternal care voucher subsidised by the German aid agency KfW Entwicklungsbank

Results-based aid is an innovative approach to fund developmental measures. Donor governments are excited about the potential advantages. Pilot projects are under way.

Britain’s Department for International Development (DfID) is starting three pilot projects to test results-based development financing. In Ethiopia and Rwanda, DfID will disburse funds provided that its partner countries meet certain school enrolment targets. In Uganda, another pilot project will focus on maternal health and the wellbeing of children under five years. DfID officer Ellie Cockburn says the idea is to find out how such programmes work. So far, only a “small proportion of our bilateral programme” is earmarked for aid-on-delivery.

Germany’s Ministry for Economic Cooperation and Development (BMZ) is equally interested in the concept. Gudrun Kopp, the BMZ’s parliamentary state secretary, sees urgent need for action. Far too often, she says, development debate focuses only on money, neglecting results. She insists that results must be visible and measurable, so keeping track of them will serve the purpose of transparency. For obvious reasons, political leaders in donor countries are keen on telling taxpayers what they achieve with aid money.

Germany is currently involved in two schemes in which aid money is disbursed after results are proven, Kopp reports. One is about selling subsidised maternal care vouchers to expecting mothers in Kenya (see Nancy Ndungu: “Payment after delivery” in D+C/E+Z 2011/5, p. 210 f.). The other programme is designed to stem deforestation in the Amazon region. Norway and Germany have pledged money to Brazil if the country manages to meet a specific target for reducing its deforestation rate. Both donor governments are also involved in setting up a monitoring system designed to precisely assess deforestation.

Results-based aid is a new approach. It hinges upon a new contractual relationship between a donor institution and a recipient government, explains Stephan Klingebiel of the German Development Institute: the aspired result has to be clearly defined, and money only flows once it is really achieved. Accordingly, the approach depends on reliable data and on sensible development indicators that can serve as meaningful targets.

Klingebiel points out that, to some extent, multi-donor budget support was often handled as results-based aid in recent years: donors would withhold funds when the government of the developing country concerned did not meet agreed targets.

Obvious benefits

According to Klingebiel, results-based aid, has some obvious advantages. For instance, there is a clear nexus between actions and aspirations, which makes evaluation easier (please note essay on
p. 433 ff.). At the same time, Klingebiel argues that the new approach is no panacea. For instance, it does not suit all sectors equally well. While it is relatively easy to define meaningful targets for maternal health, for instance, it would be close to impossible to do so for judicial reform, a sector in which the quality of judgements would have to be taken into account.

Results-based aid, Klingebiel suggests, should not be confused with results-based service delivery, which is basically about governments of developing countries cooperating with civil society organisations and private sector companies to improve social services. Donor governments have been supporting approaches of this kind for about a decade, Klingebiel says. Another common term for this practice is “output-based aid”.

African concerns

Ronald Nkusi of Rwanda’s Finance Ministry sees merit in results-based aid. On the other hand, he worries about the implications. To achieve certain goals, developing countries have to invest, he points out. If they want to improve primary education, for instance, they must build schools. In the past, they could rely on donor funding. But what if aid money were only to flow once results are achieved? Nkusi wonders if big enough sums will be disbursed to cover interest payments on the loans that developing countries may need in order to invest in relevant facilities.

In Nkusi’s view, moreover, it is essential to rely on developing countries’ own institutions and procedures for assessing results. Otherwise, he argues, aid will not help to build the institutions a developing country needs to eventually graduate from depending on donors. Nkusi shared his concerns during a panel discussion in Berlin in late September. It was part of an international workshop on “managing for results” that was organised by the GIZ on behalf of the BMZ and the OECD ahead of the High Level Forum on Aid Effectiveness in the South Korean town of Busan in November.

In regard to results-based aid, Rui Conzane, a member of Mozambique’s parliament, raised another critical question: What happens with the aid money after it is disbursed? Obviously, it was not needed to achieve the result. To ensure that aid money is not wasted, Conzane demands more dialogue on development issues and more governmental accountability.

In the eyes of Joelle Tanguy, results-based aid makes sense. She is the managing director for extern relations at GAVI, the Global Alliance for Vaccines and Immunisation, and points out that her entire institution is results-based. GAVI provides funding to kick-start vaccination campaigns, and afterwards disburses money per vaccinated child. In the past ten years, around 270 million children got health protection because of GAVI efforts. Tanguy says that the approach is promising and that it can help poor countries to make progress fast. The downside, according to her, is that it is hard to reach the last 20 % of children who are not vaccinated yet. Doing so requires a lot of effort, and accordingly massive incentives would be needed.

Hans Dembowski