The Differences between COD Aid and the EC’s Budget Support: A Response to Duncan Green (and Others)

August 6, 2009

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

As proponents of Cash on Delivery (COD) Aid, we agree that EC performance-linked budget support is a good example of a results or outcome-based aid program — and we wouldn’t want to see any COD Aid program substituting for rather than complementing this approach or for that matter other aid arrangements — certainly not in the short run.

As Green mentioned in a recent blog post, the EC allocates budget support in the form of MDG contracts with both a fixed and a variable tranche. The amount of the variable tranche depends on whether the recipient has met targets for public finance, health, and education, but the EC’s budget support initiative differs from COD Aid in that it contains a relatively large number of indicators, and most of the funds are fixed and not linked to outcomes (more than 90%). COD Aid thus retains most of the positive aspects of the MDG contracts e.g. no policy conditionality and a greater focus on outcomes, but differs in important ways.

What’s different about COD Aid — where’s the added value?

First, the laser-like focus on measuring a single key outcome — and independent verification of reported progress (instead of annual discussion and negotiation over whether enough was achieved on a range of outcomes and outputs).

Second the clarity and transparency of the “contract” to civil society groups and citizens in developing countries — so that they have a tool to make their own institutions and governments accountable to them — rather than to donors for “reporting” on outcomes.

Third the potential for one or more donors, private as well as public, to offer exactly the same contract to one or more developing countries.

By the way, we believe, and discuss in our forthcoming book, that COD Aid can work in many countries considered “fragile”. The key is responsible leadership at the top — not whether there is extensive current institutional “capacity” throughout.

For those interested in learning more about COD Aid please read the frequently asked questions and responses on the initiative page of our website, and read our forthcoming book Cash on Delivery: A New Approach to Foreign Aid with An Application to Primary Schooling.

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1. Olivier Says:
   August 7th, 2009 at 1:11 pm

   A comment about the third point:
   Can you use the same indicators in diffents coutries, with the same goals? Is this not the mistake the IMF and the WB made when they tried to implement the West practices to the Rest?

2. janet Says:
   September 7th, 2009 at 11:38 am

   I am a woman that works helping the rural women in Nigeria. I live in Niger state in Salka Magama local government area. Our Women especially those in the communities are really left backward educationally. The effect of lack of education are many. In recent years I lost a close friend on HIV/AIDS related issue. And since then I became passionate about the issue. Because of that I started making campanys. My goal is to see people are not infected with the same thing I saw my friend died of. Since 1999 and now last year 2008 I went a head to register as an non governmental organization.

   The issue of HIV/AIDS is just like a crop in a big basket. The whole family system needs a reformation. We single help the female gender, children and the aged improve their,environment, healthcare, education, nutrition economic security as a gateway of combating communicable diseases.

   Now we have helped 78 people to get ARV therapy by referring them to ARV center. Though many of the people in the communities are dying on the HIV/AIDS. Even today 7/9/09 we lost a woman. On Friday too I lost a man. This woman was transfused blood at home not by a doctor.

   We do not have a blood screening center we have to travel about an hour before getting to a center that gives that service . And blood transfusion is the order of the day especially during raining season. And this is as a result of malnutrition.

   Being in the remote village we have no access to any help. Most our women are dying of hunger. A woman is HIV positive and no food to eat. she has to go and work on somebody’s farm before she gets food to eat.

   Many of our people are just dying.We need an ARV treatment center nearer. Even this morning a got another case of a widow that lost her husband on the issue and very far from the main road. I have to visit her and transport her to ARV center. Many can not even continue going because of lack of transport fare.

   We are also trying in January 2010 to start a school and a vocational center for our women and children to stop this in the future.

   I am all doing this on a meager resources. Our campaign have not gone far. In our local government it is only our organization that is out on HIV prevention campaign.And we are just doing this with meager resources from our church women contribution and personal gifts.

   We have a group of women that meets once a month to pray for our land and on the issue too. Through their contributions we have been able to help some.

   That is why when a woman gave me this address i have decided to raise the cry for you to come to our aid.

   The name of our organization and address: Family support Initiative
   P M B 11
   Salka Via Kontagora
   Niger State
   Nigerial

   Contact person:
   Janet Amos.

   I believe you are going to give our call a prompt answer.

   Yours faithfully,

   Janet Amos.

We value frank and constructive exchanges and encourage you to use your real name in your comments.