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.