Articulating my discomfort with Cash on Delivery (COD) aid

There are a lot of positive things to say about CGD’s innovative Cash on Delivery (COD) aid concept. Go here if you need the basic background. Despite all the great work that Nancy Birdsall and her crew have done to describe how COD aid would work in practice, something about it is deeply discomforting to me.

Before I get to that, here are two obstacles that are important, but that I think could be overcome in due time:

  • The technical feasibility worries me, but not too much. Selection of outcome measures, data collection processes, verification, and more pose surmountable challenges. I’m happy to see how much thought has been put into the details of implementation.
  • The hurdle to political acceptance can be overcome as well. A recipient country government would surely be concerned that COD aid might cut into their other aid streams. CGD conducted feasibility studies in a few countries (MalawiEthiopiaLiberia), revealing some interest among officials. But recipient governments have little incentive to agree to a pilot COD contract unless the funds were purely bonus, and so a contract could only be signed if there’s a “price point” that’s attractive to recipients but at which donors are willing to leave other funding untouched.

Again, these are both surmountable challenges. I mention them merely because I think they haven’t been solved yet.

My major concern with this concept has to do with accountability. COD aid increases accountability to donors. It’s right there in the somewhat flippant name: recipient governments deliver results to the donors. It treats developing country governments like mere contractors.

I fear that this increase in a recipient government’s accountability to donors would be accompanied by a decrease in accountability to its own citizens. CGD’s work on the concept argues the opposite, namely that COD aid will create incentives for increased transparency on results, which will then enable domestic civil society and activists to hold their government accountable. I’m not convinced.

Suppose local groups aren’t happy that the education system is now focused on a narrow metric of success (say, completion rates or test scores). Parents and others want to see a broader curriculum, or more equitable access, or whatever — but their government faces strong financial incentives to stay focused on the narrow measures of “success”, however it’s been defined. If this example sounds familiar to American readers, that’s because this is what the federal government did to the states with No Child Left Behind. At least American voters have some mechanisms for holding the federal government accountable.

In the case of developing countries, pressure from domestic constituencies would have a hard time stacking up against their government’s desire to cash in on the donor’s contract. What then? The COD aid contract might achieve the results promised, while undermining longer term institutional development.

Increasing accountability isn’t always a good thing.

6 thoughts on “Articulating my discomfort with Cash on Delivery (COD) aid

  1. Thanks David for this well-researched and thoughtful piece. Your discomfort on the accountability issue is understandable but there are a number of reasons I think COD Aid won’t be quite as problematic as you suggest. In particular, I would argue that COD Aid is better than the current alternative. Foreign aid comes with all kinds of conditions attached, most of which are invisible to constituencies in developing countries. At least COD Aid pays against only one or a few easily communicated outcomes and requires that the contract be publicly disseminated. If we make the donor-recipient relationship simpler and transparent, it is easier for constituencies in both countries to judge what their governments are actually doing.

    Your specific example from education also demonstrates why the technical design can make a difference. The COD Aid book does not propose to make payments conditional on student test scores. Rather it proposes *paying* for the number of children who get through primary school and take a test and then *reporting* test scores. This disappoints people who want the programs to only pay for proof that kids have learned something, but we thought it was a necessary and pragmatic response to the state of knowledge regarding test scores. Also, the more a COD Aid program focuses on high level common goals that are already broadly supported – like universalizing primary school and reducing child mortality – and the less it focuses on specific attributes or strategies, the more likely it is to strengthen domestic accountability since the recipient governments, and not the donors, will be responsible for designing and implementing their strategies.

    All that being said, though, the proof will be in the pudding. A few pilots are currently being designed and we are doing our best to see that they are carefully evaluated with regard to important issues like this.

    (From co-author of “Cash on Delivery: A New Approach to Foreign Aid”)

    • Hi Bill, thanks for reading and commenting. You make two excellent points that I want to address.

      First, with regard to how accountability under COD compares to current practice: there’s no reason why current aid can’t be made more transparent in the same ways that CGD proposes making COD contracts transparent. That goes for publishing agreements, improving information systems, defining easily communicated outcomes, providing donor-funded audits, etc. Those would all be improvements on the status quo. I like that you’ve packaged them as part and parcel with COD, but we could disaggregate all of them from the actual cash-on-delivery aspect. If a donor and recipient were willing to commit to the transparency entailed by a COD contract, they should be willing to commit to it with cash-in-advance. Then your expected increase in domestic accountability could be achieved all the same. Adding cash-on-delivery to that mix merely increases accountability to donors — tipping the scales further away from domestic constituencies.

      On the education example, I should clarify that my major complaint against NCLB is not that they chose the “wrong” metric. The same problem can arise anytime you tie a big chunk of resources to performance on one or two metrics, whether test scores, assessed completers, or something else. Focusing narrowly on a few outcomes carries risk even if you choose better ones — especially if the only people in the room are donors and government officials, but even if there’s some sort of participatory process. Halfway through the contract, domestic constituencies might change their minds for any number of reasons. That’s their right as citizens. But if the COD contract incentivizes the government to keep focusing on the original metric, then the government will be less likely to respond to its citizens. I see that as a problem.

      Despite my skepticism, I’m glad to see some pilots moving forward. If you can get at some of these accountability issues in your evaluations, I’ll be very interested in the results. I’m happy to be proven wrong!

  2. Dear Dave and Bill, I have raised similar concerns in another blog.

    http://www.healthfinancingafrica.org/3/post/2011/12/value-for-money-in-the-health-sector-not-just-a-donor-agenda.html

    At this stage, they are merely concerns. COD could do harm, but also good in terms of accountability towards citizens of recipient countries. It will depend a lot on the scheme design, formulation and implementation processes and outcomes (e.g. transparency on results).

    Bill, in his post, Dave mentions a feasibility study in Malawi, Liberia and Ethiopia. Could you say a bit more about it? Maybe post your reply here but also on the financing health in Africa blog; you will then reach the members of our communities of practice (African experts, a lot involved in PBF).

    Bill, you will notice that in my post, I make a specific proposition to donors. Would the CGD be ready to contribute to such a consultation process with MPs from recipient countries? One multilateral bank has marked interest.

    Bruno Meessen (facilitator of the PBF Community of Practice & ITM Antwerp)

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