Paying for Results Requires Verification and Autonomy

I’m always a little anxious introducing a topic at a workshop without knowing if the presentations that follow will support or contradict my points. So it was with some trepidation that I spoke earlier this month at a SIDA workshop in Stockholm, associated with the Swedish International Development Cooperation Agency’s launch of “Results Based Financing Approaches (RBFA) — What Are They?”.

I emphasized two aspects of pay-for-results programs which I have come to see as essential to effective design and implementation:

• the need to independently verify results, and
• the importance of recipient autonomy.

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Related brief: Shifting the Foreign Aid Paradigm — Paying for Outcomes

My anxiety was misplaced. The subsequent presentations on a solar energy program in Bangladesh and health-care delivery in Africa each highlighted these same two points.

The workshop was intended to introduce the idea of paying for results — a concept which is still unfamiliar to a lot of people working on development issues. Conventional aid programs tend to plan a series of activities and then disburse money on completion of those activities, whether or not they achieve intended outcomes. Paying for results turns this equation around and disburses funds when results are achieved. The details of the program design will vary depending on the goals, sectors, availability of information, and recipients, but the basic logic is very different from conventional approaches. In my research, I’ve come to see the independent verification of results and recipient’s autonomy to be key features of a well-designed and implemented program because these features are most consistent with the way development, innovation and progress typically occurs.

All three presentations explained why independent verification of results is essential. For one thing, the credibility of the program depends on whether or not the results are real. But more than that, the benefits of a pay-for-results program depend on recipients having feedback on how well their efforts are succeeding. If information about results is inaccurate, the feedback loop is severed and progress is less likely.

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Multiple sources of independent information to verify performance of Solar Home Systems in Bangladesh, from presentation by S.M. Monirul Islam, IDCOL, on Oct. 8, 2015, in Stockholm.

The three presentations also explained how recipient autonomy is critical to success. Centralized programs can certainly encourage and support the expansion of a market for solar energy systems or the delivery of health-care services, but they cannot fully realize these aims without relying on local agency and innovation. The presenters showed how well-designed programs that pay for results opened space for exactly this kind of decentralized action and local response to feedback.

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The importance of recipient autonomy highlighted by E. Schoffelen, Cordaid, on Oct. 8, 2015, in Stockholm with regard to results-based financing for healthcare in Africa.

In the discussion that followed, I noticed that the most common concerns related to the possibility of manipulating the reported results and constraining local autonomy. These are valid concerns. However, if the solar energy and health-care programs presented at the SIDA workshop are any indication of the future, new programs will increasingly incorporate independent verification and strengthen local autonomy — which bodes well for the future.