Print
Share
Nancy Birdsall on Cash on Delivery (COD) Aid
March 28, 2011
A little over a year ago, I invited Nancy Birdsall, founding president of the Center for Global Development, to join me on the Wonkcast to talk about her big new idea, Cash on Delivery Aid (COD Aid), an innovative approach to the delivery of foreign assistance. COD Aid has since gained a lot of traction, so I invited Nancy back to update us on recent developments, including a planned pilot program in Ethiopia.
For those new to the concept, I start by asking Nancy to explain the problems with traditional aid approaches, and how COD aid would solve these. Too often, she says, aid is given based on priorities set by funders who care more about how their money is spent than what outcomes it produces. COD Aid focuses on outcomes by making aid transfers contingent on yearly incremental improvements in an agreed indicator, such as the number of kids who complete primary school and take a test. (For much more on COD Aid, see here.)
Nancy tells me there was initially some pushback to the idea of COD from the donor community, but she insists this is an approach which cannot be overlooked. “[COD] shouldn’t be seen as a substitute for all other aid, but as a compliment to current flows,” she says. “This is an idea that needs to be tried and learned from.”
Lately resistance has turned to interest. Nancy recently returned from London where she presented the approach to the UK’s Department of International Development, which has is preparing to sponsor the Ethiopia pilot.
“In the UK and increasingly in Germany and with some private foundations in the U.S., the discourse on COD Aid is changing from ‘what are the problems’ to ‘we can do this!’” says Nancy.
She explains plans for the DfID pilot program in Ethiopia, which is being designed to increase incentives for teachers to keep girls in middle school and complete their exams successfully. Nancy hopes that the program will encourage officials to get more engaged in figuring out why girls aren’t attending school and to find effective solutions to the problem.
Wrapping up, we discuss some of the exciting ways in which COD has caught fire in other development sectors. Researchers are working on applying the concept to reductions in maternal mortality, anti-tobacco efforts, prevention of HIV/AIDS, and access to clean water.
“The idea…has always been that COD Aid would inspire all kinds of permutations and combinations that focus more on the system and the relationship between donors and recipients,” says Nancy. “We are certainly pleased to see that more people are beginning to focus on outcomes and results.”
My thanks to Will McKitterick for his production assistance on the Wonkcast recording and for assistance in drafting this blog post. If you have iTunes, you can subscribe to get new episodes delivered straight to your computer every week.
Podcast: Play in new window | Download
Possibly related Wonkcasts:
- Good Aid? Bad Aid? QuODA Tracks How Donors Stack Up. Interview with Nancy Birdsall and Homi Kharas.
- Good Aid? Bad Aid? QuODA Tracks How Donors Stack Up. Interview with Nancy Birdsall and Homi Kharas.
2 Responses to “Nancy Birdsall on Cash on Delivery (COD) Aid”
Post a Comment
We value frank and constructive exchanges and encourage you to use your real name in your comments.
March 29th, 2011 at 5:21 pm
Reading Wren Elhai’s proposal on Cash on Delivery transfers for schools in Pakistan, it occurred to me that while the brief presents some quantitative simulations of possible future programs it would also be interesting to test the method by post-casting.
Pakistan has been receiving substantial amounts of cash assistance for several years, particularly during the period of U.S.-Pakistan “Shared Objectives,” with the understanding that spending on schools would increase.
CGD could as a thought-experiment re-run the history of aid during those years, but replacing up-front cash transfers with Cash on Delivery precepts. The question would be: How much would actually have been disbursed on Cash on Delivery principles?
The actual objectives in those years were pretty simple: increased budget levels (rather than learning results). The experiment should retain the actual objectives to make it a fair test of performance against the actual, declared intent.
The difference of course is that Cash on Delivery would strive to increase incentives for performance. If the incentives provided by foreign donors (vs. declared intent) are considered essential, then maybe there is another historical test that is more relevant.
Since the “Shared Objectives” era Pakistan has some experience with Cash on Delivery principles under the Stand-By Arrangement with the IMF, although again there are differences. IMF resources can’t safely be spent as if they were budget support (which they are not), and by the time Pakistan ceased “delivering” under the Stand-By there was less need for incremental IMF resources to supplement foreign exchange reserves, which is their intended use.
Perhaps some combination of events in recent history can be made into a synthetic test of Cash on Delivery. In any case, it would be attractive to be able to appeal to facts as well as to simulations.
March 31st, 2011 at 6:22 pm
Joe: I like this idea of post-casting. But there is no way to know the would-have-been with COD Aid, so compared to what?!
Anyway we wouldn’t want to do it on Pakistan when the shared objective was greater spending more on schools in the federal budget. That was a misguided objective in some ways. (My recollection from earlier work is that that didn’t happen during the 1990s when the World Bank and other donors sponsored the Social Action Program (SAP)– though the donors did keep the money flowing despite lack of apparent commitment by the government). We would want to find an example where the shared objective was closer to a real outcome — in education for example more children finishing school or better increased average levels of learning among all children (in school or not).