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Close but No Cigar: Paying for Performance Is Not Necessarily COD Aid

When we make presentations on COD AIDat development agencies, we are frequently told: “Oh, we’re already doing that.” The more we investigate, however, the fewer cases we find where agencies are really disbursing funds against independently verified outcomes in a hands-off fashion. We’re tempted to say “close but no cigar.”

A Critical Moment for COD Aid or “The Trouble with Targets”

As mentioned in our last post, aid agencies are experimenting with programs that incorporate the main features of COD Aid: paying for outputs and outcomes, giving the recipient greater discretion to spend as they see fit, independent verification, and transparency. Once these results-based programs are up and running, they face a critical test when the first results are reported. In particular, most programs create expectations by setting annual targets and are then judged relative to those targets rather than to their baseline. And this means that even successful programs will be viewed as failures (a point also made in an earlier blog). By refusing to set targets, a results-based program can avoid this pitfall. How is it that targets can create such a problem?

A Critical Moment for COD Aid or “How to Be Patient When It Matters”

An increasing number of aid agencies are experimenting with programs that incorporate the main features of COD Aid: paying for outputs, giving the recipient greater discretion to spend as they see fit, independent verification, and transparency. (See our brief and book for more details). We’ve argued that the design of COD Aid programs can be rather easy, though the quality of the indicators chosen and the verification process are certainly critical to success. We have spent less time talking about what happens once the program is up and running. In particular, what happens when you find out how much progress actually occurred?

What Is the Counterfactual for COD Aid?

This is a joint post with Nancy Birdsall.

We often hear criticism of the COD Aid approach from people who question whether a high-level incentive would really alter the behavior of recipient countries. Paolo de Renzio raised this issue in a recent blog, saying that COD Aid is unlikely to work because recipient “[g]overnments have not only insufficient capacity, but also limited political interest in using available resources to maximize development impact.” The question this raises, though, is not whether COD Aid is worth trying. Rather it is questioning whether any foreign assistance can make a difference. The appropriate counterfactuals for COD Aid are existing aid modalities which rely on extensive engagement between funders and recipients on inputs, planning and implementation. The assumption of current aid modalities is that imposing the funder’s views of planning, institutional structures, training, and technical assistance from abroad can achieve progress even when a recipient country is less than enthusiastic about a program. That is the counterfactual against which to consider COD Aid.

Another Call for COD Aid Pilots

This is a joint post with William Savedoff and Ayah Mahgoub.

Shout-out to Duncan Green and Oxfam for commenting on our new book and calling, like Nicholas Kristof, for pilots of COD Aid. Best of all, Duncan noted (as have several others such as Owen Barder in this note among others) that many of the usual concerns about COD Aid (see our FAQs for some) apply as much or more to other forms of aid.

But on one big point we disagree: It’s not true that COD Aid has been tried before.

Pressure to Improve UK Aid – How COD Aid Could Help

This is a joint post with William Savedoff and Ayah Mahgoub.

Lawrence Haddad is the Director of the Institute for Development Studies at The University of Sussex in the UK. In a recent blog post, he poses several challenges for the new UK government on development.

Here’s my take on how Cash on Delivery Aid (COD Aid), an approach the UK Conservatives endorsed in their international development green paper, might address some of Lawrence’s challenges to the new government (using his numbering):

Kristof on Cash on Delivery: Bravo, But It's About Us, Not Them

This is a joint post with William Savedoff.

Of course we agree with NYTimes development columnist par excellence Nicholas Kristof that our proposal for Cash on Delivery Aid should be tried. So we are sorry to quibble, but on a couple of points cannot resist.

First Kristof wrote: “The basic truth of foreign aid is that helping people is far, far harder than it looks.” And he’s right. But a big part of the difficulty is with us, not them.