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CGD president Nancy Birdsall and Tanzanian President Kikwete in DohaLast week at UN Financing for Development Conference in Doha, Nancy Birdsall and I presented our Cash on Delivery Aid proposal for improving and scaling-up aid for education. The discussion, co-hosted by President Kikwete of Tanzania, the Hewlett Foundation, the African Center for Economic Transformation, the Education for All -- Fast Track Initiative, and the UK Department for International Development, attracted more than 70 leaders from governments, development agencies, private foundations, think tanks and civil society organizations around the world.

Smita Singh, chair of the meeting and the director of the Global Development Program of the Hewlett Foundation, noted that there have been fewer innovations in education financing than in other sectors, especially health. Developing country officials made the case for more education aid, and aid that rewarded results. Many of the countries represented have made progress towards universal primary education (one of the Millennium Development Goals), gender parity, and the improvement of educational facilities. Officials from these countries said that they would prefer the limited, constructive engagement of donors in Cash on Delivery Aid over current arrangements, whereby donors typically dictate how their aid is spent and exercise de facto control over the recipient's education plans.

Though donor agency representatives praised the principles of the Cash on Delivery approach, in general they had more reservations then the potential recipients. They worried that the approach would not work in fragile states, that the ex-post funding offered might displace ex-ante funding, and that focus might shift to throughput instead of quality. They also worried that the approach may not be significantly different from existing forms of aid. They expressed reluctance about committing resources to such an innovative approach without knowing with certainty that it would affect substantial change.

Although donors are right to pose these questions, it is interesting to note that many developing countries are willing to try Cash on Delivery Aid, despite the risk that they might receive little or no additional aid through this approach. Donors, on the other hand, were reluctant to commit to a new approach that would limit their involvement and commit them to paying only upon achievement of concrete results.

A number of donor representatives acknowledged that donor agencies are reluctant to try innovative approaches to aid delivery. And those who are willing to try something new tend to be more interested in innovative ways of raising funds rather than innovative mechanisms for spending them.

Innovation aversion is understandable: trying something new can impose significant up-front costs. For some donors there is a lack of incentive to bear the cost of innovation, and for others there is a concern about the opportunity cost of trying one innovation over another that may be more visible or trendy. Pierre Jacquet, the senior economist of Agence Francaise de Développement, proposed that donors consider establishing a multilateral innovation fund. Such a fund would allow donors to share the cost and risks -- as well as the benefits -- of trying innovative approaches.

Although we address some of the donors' concerns in the papers and notes on our Cash on Delivery initiative page, some can only be addressed when and if stakeholders develop the approach in specific countries. Therefore, our next steps will likely include holding a workshop with donor agencies working in one or two specific countries, with government officials, civil society representatives, and technical experts to work out aspects of the approach that are context-specific.

President Kikwete, Tanzania's education minister Jumanne Maghembe and a number of other developing country officials announced that they are ready, willing, and interested in hosting such discussions and participating in a pilot (although some have expressed reasonable concern that Cash on Delivery Aid be integrated with existing programming – for example with Fast Track Initiative or other similar programs – rather than add another set of transactions).

Stay tuned for more information on our next steps. In the meanwhile, we welcome any additional requests from interested developing country governments and donor agencies, and we look forward to comments and feedback posted on this blog, on the blog on Cash on Delivery Aid posted by the CEO of the Agence Francaise de Développement Jean-Michel Severino on Ideasfordevelopment.com. You may also contact us directly by writing to me at amahgoub@cgdev.org.

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CGD blog posts reflect the views of the authors drawing on prior research and experience in their areas of expertise. CGD does not take institutional positions.