Aid agencies are investing more in energy projects than ever before, but will they succeed? Not if they ignore the key obstacle to progress: governments that choose the status quo over serious reforms.
CGD Policy Blogs
I’ve been working on the idea of Cash on Delivery (COD) for some years under the hypothesis that if we could define good outcome indicators, someone would step forward to buy them. So what would happen if an organization came forward with a plan to supply a verified outcome in return for a set unit payment after delivery? In a sense, this is what Dispensers for Safe Water, an Evidence Action program, is currently doing.
Now the Government of India and the World Bank have adopted an approach using principles we describe as Cash on Delivery (COD). The program follows three of these principles by linking payments to outcomes, not inputs; independently verifying outcomes; and allowing recipients to take the lead. India has become the single largest payer for outcomes in a nationwide sanitation initiative.
For some time, we’ve been cheering MCC’s interest in pursuing approaches that pay for outcomes and encouraging the agency’s stakeholders to get onboard (here and here). Now we can applaud an important step forward. The agency’s new compact with Morocco, which both partners celebrated at an event last Thursday in Rabat, spells out the potential for a results-based financing component—a welcome development.
Dear Administrator Smith,
In addition to the initiatives you hope to institutionalize in the next 10 months, we hope you’ll also seize the opportunity to put USAID in the forefront of testing a new approach to delivering aid.
A dozen years since it was set up with a remit to reduce global poverty through economic growth, the US government’s Millennium Challenge Corporation recently revealed a new Strategic Plan. Deputy CEO Nancy Lee joined me on the CGD Podcast to discuss how the new plan responds to a very different development landscape.
After more than a decade of operations, MCC has made the shift from innovative start-up to established donor agency. “MCC NEXT,” the agency’s new, much-anticipated strategic plan, takes a hard look at how the poverty and development landscape has evolved over the past decade and stakes out the position a more mature MCC should take in this new context.
It’s quite the buzz phrase: results-based development. But what is actually meant by "results"? Dr. Raj Shah, former Administrator of USAID under President Obama, and Michael Gerson, former presidential speechwriter and Assistant for Policy and Strategic Planning under George W. Bush, have reached across a generational and political divide to share their expertise.
Those who follow CGD will be familiar with our branded meme: “Cash on Delivery” aid, or COD. Many are enthusiastic about COD’s potential to revolutionize aid effectiveness. Yet within some global development organizations, leadership and staff alike express common concerns: is COD practical in the real world? Have you thought about this problem, or that constraint? How would this work in the context of our organization? And if we decided to move forward, how would we design a COD grant?
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?”.