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Cash on Delivery in Context

Making aid payments conditional on results has intuitive appeal and is an idea that has been given a lot of attention in aid-world in recent years, with the Center for Global Development leading the charge. The tide now seems to have turned, with early enthusiasm replaced by doubts and questions about why, as Duncan Green puts it, there has been so much hype about the use of Payment by Results.

The case against Payment by Results is: first, that the evidence that it produces results is patchy at best; second, that Payment by Results is poorly suited to supporting change in complex systems (also known as, actually existing society); and third, that Payment by Results is motivated by donors’ wish to manage risks and strengthen upward accountability.

I’ve had mixed feelings about Duncan’s post. My initial reaction was positive, glad that the warnings about Cash-on-Delivery Aid that Paolo de Renzio and Ngaire Woods outlined several years ago, particularly around the possible incentive effective of paying by results, were now being heeded. But that feeling quickly dissipated to be replaced by a concern that the criticism of Payment by Results was too black and white; either it (as if there is one way of doing Payment by Results) works or it doesn’t. Development and development assistance is much more shades of grey.

The results agenda, in its various forms, isn’t going away. That’s a good thing. Neither is donors’ need to manage their risks. That is the political reality in donor countries right now. Improving the effectiveness of aid requires taking account of the political constraints to doing things differently, in donor countries as elsewhere. Payment by Results takes account of the political constraints, and, done right, could provide governments with flexible funding that supports their efforts to try, learn and adapt their way to solutions that work in their context. And in some cases – see the comments on Duncan’s blog, for instance from Michael O’Donnell, Jake Allen, Donald Menzies and Florian Schatz – that does seem to be happening.

Duncan’s blogpost provides a potential way forward when he poses the key question: to what extent are the results being paid for any use for learning and improving, or for increasing downward accountability? The challenge then is to design support that is conditional on results and which:

  • has the flexibility needed to  enable and allow for adaptive experimentation and learning, and the emergence of locally-owned approaches that are effective at solving problems and delivering results in particular contexts; and
  • values and incentivizes learning outcomes and improvements in the capacity of country systems for learning, for downward accountability, and for adaptation, as well as about how many kids are vaccinated.

This is a challenge, but it’s a challenge that a number of donors are grappling with, including USAID through its Learning Lab (Collaborate. Learn. Adapt. For Better Development Results).

So, let’s not treat PDIA and Payment by Results, or positive deviance and Payment by Results, as mutually exclusive (see Chris Underwood’s blogpost, welcoming the “take-down” of Payment by Results). And let’s not assume that a focus on results is incompatible with an approach that aims to provide flexibility and space for countries to try, learn and adapt their way toward solutions that work in their context. Instead, let’s experiment and explore whether and how there are ways of putting Payment by Results into practice in ways that allow for and encourage the adaptive learning that is needed to deliver results.

Taking context and complexity seriously, and making the case for doing development differently, must involve engaging with the results agenda, injecting complexity into our understanding of results as Dave Algoso puts it, and shifting the focus to results that are useful for learning and downward accountability.

Thanks to Dave Algoso, Kathy Bain, Owen Barder, Leni Wild and Michael Moses for comments.

A Marginal Revolution? Revitalizing the fight against global poverty

A shorter version of this appeared on the ONE Campaign blog in May 2011 with the title “Bucks, bangs and governance”, but has been lost to the internet gremlins.

Dean Karlan and Jacob Appel’s “More than good intentions: How a new economics is helping to solve global poverty”, and Abhijit Banerjee and Esther Duflo’s “Poor economics: A radical rethinking of the way to fight global poverty” set out a common manifesto for research, policy and practice on global development. This manifesto suggests that: “If we resist the kind of lazy, formulaic thinking that reduces every problem to the same set of general principles; if we listen to poor people themselves and force ourselves to understand the logic of their choices; if we accept the possibility of error and subject every idea, including the most apparently commonsensical ones, to rigorous empirical testing, then we will be able not only to construct a toolbox of effective policies but also to better understand why the poor live the way they do” (Banerjee and Duflo). In an age of austerity and pressures on budgets, there is a ready audience for books that offer a way to make aid more effective and to revitalise the fight against global poverty. So, it is no surprise to see the excitement that the publication of these two books has generated in and beyond the development policy community.

The organisations with which the authors are primarily associated – Innovations for Poverty Action (IPA) and the Abdul Latif Jameel Poverty Action Lab (J-PAL) – have a shared heritage and agenda which each of the books pushes in complementary ways. The three key messages are:

  • First, there is a need to revitalise the fight against global poverty. Grand debates about whether or not aid works – with Easterly vs. Sachs the classic – have been unproductive, polarized, “train wrecks” (Karlan and Appel, pp.4-5). It would be more useful to think about concrete problems that might have specific answers.
  • Second, there is a need to better understand the reality of poverty, with more attention given to how people experience poverty. As Banerjee and Duflo put it: “To progress we have to abandon the habit of reducing the poor to cartoon characters and take the time to really understand their lives, in all their complexity and richness.”
  • Third, there is a need to be innovative in coming up with solutions and then rigorous – with Randomized Controlled Trials (RCTs) regarded as the gold standard of rigor – in testing what works, in order to learn. By proceeding methodically, step-by-step, progress can be made (Karlan and Appel, p.38).

Lessons and recommendations

Both books offer a series of more specific lessons or recommendations. For Banerjee and Duflo the five key lessons are that: i) poor people lack information, but can be provided with more and better information; ii) poor people bear a lot of responsibility for making decisions about their lives and can be helped – nudged – to make better decisions; iii) there are good reasons why markets don’t always work for the poor, and government intervention can be necessary to deal with such situations; iv) poor countries are not doomed to failure – they are poor mainly because of poorly-informed policy; and v) expectations about what people can do often turn into self-fulfilling prophecies. Karlan and Appel in their resolutely practical recommendations set out – as does IPA’s “Proven Impact Initiative” – seven interventions that their evidence suggests are effective. These are: micro-savings initiatives; reminders to save; prepaid fertilizer sales; de-worming; remedial education in small groups; chlorine dispensers for clean water; and, commitment devices that help people to make choices that enable them to reach their longer term goals.

Questions: Gold Standards and a Quiet Revolution

There is much to like in the books. The authors bring debates about how aid can be made more effective to a wider audience and do a great job of moving beyond what have become sterile debates about whether aid works. There is a need to revitalise the fight against global poverty, to better understand the nature of poverty, to be innovative and to learn about works and what does not. And the focus on information gaps and nudging incentives suggests some very promising ways forward. However, there are questions to be asked, first about methods and second about focus.

In terms of methods, it is not clear that RCTs – the method that both books regard, to varying degrees, as the gold standard of rigor – can shed much light on why development interventions work or do not work. Relatedly, there are question marks about the extent to which an RCT can provide useful information about whether an intervention that works in a particular context is likely to work in a different context. This debate – a sub-set of a wider debate about how best to learn about what works in terms of development interventions – is a live one, with a number of development economists and other social scientists reacting against the apparently revolutionary and arguably reductionist claims of the randomistas. RCTs are an important response to one of the problems that besets efforts to tackle global poverty; in many areas, not enough is known about what works. But, they may be of limited use when it comes to understanding complex interventions and the ways in which policies play out in particular contexts.

In terms of focus, Banerjee and Duflo are very persuasive when they suggest – for instance, in a must-watch presentation by Esther Duflo at the Center for Global Development – that: “It is possible to improve governance and policy without changing the existing social and political structures.” The micro-institutional approach that they propose has much appeal when considered alongside the history of largely failed attempts to support macro-level changes to political structures and governance. But, the lives of the poor are shaped by politics and governance at the macro-level as well as by policies and institutions at the micro-level. Banerjee and Duflo acknowledge this, but are perhaps too ready to adopt an exclusive focus on the micro. Tackling poverty in scalable and sustainable ways requires that we understand, build and leverage the links between the micro and the macro, the local and the global. This might entail, for instance, working to develop global norms on budget transparency, while simultaneously enhancing the availability of information at the local level so that people can hold their leaders – at local and national levels – accountable for their actions.

These questions should not however detract from the books’ central and crucial message; that we need to listen, innovate and – perhaps most importantly – prioritise learning about what works. As Karlan and Appel put it: “Anyone acting on good intentions deserves praise, no matter how far from optimal their actions may be. But how much more good could we do in the world if impact-informed giving came to be seen as the coolest kind of all?” (Karlan and Appel, p.18). That is an agenda that we should all get behind.

Alan Hudson, Senior Policy Manager, Governance, ONE

31st May 2011

Promoting Democracy?

Comments provided to the Africa All-Party Parliamentary Group, 10th July 2013 as part of their inquiry into Democracy and Development

1. Democracy matters for development. Democracy may not be necessary for economic growth – Rwanda and Ethiopia are perhaps the most prominent examples of African countries that are witnessing impressive economic growth, with what, by any measure, amount to only partial democracies. Indeed the causal arrow may well run the other way, with democracy a result rather than a cause of economic growth. But for development that is sustainable, equitable and inclusive, citizen participation and effective political representation would seem to be essential.

2. “The West” should be modest and cautious in promoting democracy. External players should recognise that in Africa as elsewhere, domestic dynamics are the primary driver of political change. They also need to acknowledge that the political systems that they favour in their own contexts are unlikely to work effectively in different contexts – one-size will not fit all. And they should be mindful of the patchy success of programmes focused on strengthening parliaments and political parties rather than the wider accountability ecosystems – including civil society and the media – of which they are part. “The West” must also accept that democracy will sometimes deliver outcomes that they are uncomfortable with and must be mindful on questions of legitimacy.

3. “The West” should nevertheless consider its impacts. Promoting democracy and exporting specific models of democracy is problematic. And the scope for shaping domestic political dynamics is limited. But, as money, ideas, goods and people cross borders, external players can and inevitably do have an impact and can play an important role in supporting reformers or helping to protect and create the space for reform. In terms of aid, donors need to remember that all aid has political impacts, even when it is not used explicitly to encourage political change. “The West” must also give attention to the impacts of its non-aid policies as it thinks about whether and how to nurture development in Africa. External players – while maintaining realistic and respectful ambitions – must be mindful of the impact of their actions and inactions.

4. Donors should be realistic and cautious on conditionality. Donors have a long and chequered history of attaching conditions to aid. Such efforts have rarely succeeded in influencing governments who have no interest in democratisation or better governance and can undermine the country ownership that is fundamental to aid effectiveness. The availability of non-western sources of finance and the fact that aid is for many countries a diminishing slice of the pie, should give further pause for thought.

5. However, donors may wish to attach conditions because they, or taxpayers with concerns about aid being wasted, feel it is fundamentally wrong to provide funds to a country or government if particular conditions – on human rights, for instance – are not met. If donors do attach conditions – and many will and do – they should make sure that such conditions: i) are transparent, adapted to country context and based on country-level dialogue; ii) include both minimum standards and a graduated approach to promote improvements; and iii) are part of a package aimed at promoting greater reform.

6. The transparency agenda may hold more promise. Putting our own house in order is the best thing that “the West” can do in terms of promoting better governance in African countries. This should include making aid transparent (reporting information about aid flows is reported in line with the International Aid Transparency Initiative), making the extractives industry more transparency (e.g. requiring extractives companies publish what they pay to African governments to exploit their resources), tackling Phantom Firms (ensuring that information about who owns and controls companies and trusts is publicly available) and tax transparency (ensuring that tax authorities automatically share information). The G8 Summit made very good progress on these issues.

7. However, the ability of external players to promote transparency and better governance in developing countries is limited. There are no silver bullets. But taking a more micro focus on transparency and accountability in relation to particular sectors, empowering people with information to better see and collaboratively solve problems in ways that work in specific contexts, offers more promise – perhaps supported by innovative mechanisms for accountability and incentivising better service delivery (cash-on-delivery aid; social impact bonds). In this way external players can encourage experimentation, feedback and learning, responding positively and constructively to citizens’ demands for greater transparency, openness and more effective governance.

8. The Open Government Partnership and the Post-2015 process are key opportunities. The development debate in the UK remains dominated by discussions about aid. Too much so. There is value in considering whether and how aid can be used to promote better governance in Africa. Sometimes, in some contexts, done right, it can. In others, while there is no doubt that aid provides an indispensable and effective means of supporting the delivery of essential services, it risks undermining domestic accountability and exacerbating governance problems.

9. Looking beyond aid, there are two key opportunities for the UK, acting at the international level, to promote more effective governance. First, the Open Government Partnership. This forum with 60 countries signed up, including a growing number from Africa, provides an excellent forum for joint learning (in all directions) and action to improve governance and promote prosperity in Africa and across the world. The UK should do what it can to ensure that the OGP builds on the transparency wins secured at the G8. Second, the post-2015 process. Here too, the UK should continue to use its influence to make sure that governance – and specifically transparency and accountability – are central to the post-2015 development framework.

Recommended Reading

Matt Andrews (2013) – The limits of institutional reform in development (book review by Alan Hudson)

Owen Barder (2012) – Development and complexity

Hilary Benn, Sec. of State for International Development (2006) – Making politics work for the poor: Democracy and development

David Booth (2011) – Aid effectiveness and country ownership, bringing politics back in.

Thomas Carothers (2013) Politically smart aid? Of course! Political aid? Not so sure!

DFID (2011) – Implementing DFID’s strengthened approach to budget support

Marta Foresti (2012) – Human rights as conditions for aid: How long is a piece of string?

Alan Hudson (2009) – Aid and domestic accountability

Alan Hudson (2012) – The Golden Thread development narrative: What’s hot, what’s not and how it can be improved.

Alina Rocha Menocal (2007) Analysing the relationship between democracy and development.

Richard Youngs (2010) The end of democratic conditionality. Good riddance?

Opening Governance to Accelerate Poverty Reduction (What I’m doing at ONE)

ONE’s new Transparency and Accountability Policy Team has a full agenda, spearheading the organisation’s efforts to push for more open, transparent and accountable governance in order to accelerate progress on poverty reduction. Ultimately, our aim is to drive progress towards open development, a world in which people in developing countries have the information and resources that they need to hold their governments accountable and to make well-informed decisions to improve their lives.

As a stepping stone towards that, we are pushing for more transparent and accountable financing for development, so that resources (including but not limited to aid) are spent effectively to deliver improved results in health, agriculture, infrastructure and other issues that are key to the fight against poverty and towards prosperity. Transparency can turbo-charge accountability, encouraging innovation, incentivizing behavior change, transforming political dynamics, and helping to ensure that resources are invested wisely to tackle poverty.

To do this, we’re working on a number of fronts, pushing for natural resource revenue transparency, budget transparency, and aid transparency and encouraging donors to invest more in building the capacity of civil society organisations and other oversight institutions such as parliaments so that they can make use of the information that transparency will unleash, in order to hold governments to account.

To drive progress on these various issues, we’re focused on the G8 in the US, the G20 in Mexico, and the Open Government Partnership. We’re also exploring the potential of new technologies as transparency and accountability game-changers. And, we’re thinking about how best to tackle illicit financial flows, how to boost domestic resource mobilisation in developing countries, and whether a set of post-2015 development goals might incorporate governance, transparency and accountability issues.

Aid Effectiveness – Key pre-Busan readings

Essential reading

1)      ONE’s Policy Pitch (contact me)


2)      UK Aid Network HLF-IV update (October) available here


3)      3rd Draft of the Busan Outcome Document available here


4)      ONE’s comments on the 3rd draft of the Busan Outcome Document (contact me)


5)      ONE’s comments on the Building Blocks on “transparency” and on “results and accountability” (contact me)


6)      The Gates G20 report


7)      Addis Ababa statement on development effectiveness available here


8)      Commonwealth Finance Ministers Statement available here


9)      UK Aid Network – Shaping the future of aid available here


Other useful reading


10)   Tunis consensus on development effectiveness available here


11)   Action Aid – Real Aid 3 available here


12)   David Booth – Aid effectiveness: Bringing country ownership and politics back in (exec sum in attached) available here


13)   Jonathan Glennie / Andrew Rogerson – Global reach is the prize for Busan available here


14)   CABRI Position Paper on aid transparency available here


15)   Brian Atwood – The road to Busan: Pursuing a new consensus on development cooperation available here

My Ph.D. – Globalization, regulation and geography

Due to popular demand, I’m putting my Ph.D. on-line. It was about the relationship between globalization and sovereignty, using tax havens/offshore – a pivotal space in the process of globalization – as the lens to understand that relationship.

I completed it way back in 1996, when it was still possible to read everything that had been written on globalization!

Here it is. Enjoy?!

I’m not sure whether I’m happy or not about the fact that I’m still basically working on issues of globalization, governance and borders. At least I’m now more at the pushing for policy-change rather than “let’s conceptualise place” end of the spectrum.

Tax havens, globalisation and sovereignty

Given the increased interested in tax havens and tax justice, I’ve decided to put the publications that came out of my Ph.D. on tax havens on-line. I wish now, as I wished then, that I’d taken more of a “what are the implications of tax havens and capital flight for developing countries?” line, but the attached may still be of interest both for the detail that they provide about the evolution of the Bahamas and Cayman, and for the way in which they conceptualise the relationship between globalisation and sovereignty and explain the role that tax havens play in that relationship. If you’re interested in seeing my Ph.D., drop me a line.

Reshaping the regulatory landscape: Border skirmishes around the Bahamas and Cayman offshore financial centres,Review of International Political Economy, Vol. 5, (1998).

Placing trust, trusting place: On the social construction of offshore financial centres, Political Geography, Vol. 17 (1998).

Beyond the border: Globalization, sovereignty and extra-territoriality, Geopolitics, Vol. 3 (1998).

Offshores onshore: New regulatory spaces and real historical places in the landscape of global money, pp.139-154 in Martin, R. (ed.) (1999), Money and the space economy, Wiley.

Offshoreness, globalisation and sovereignty: Post-modern geo-political economy?, Transactions of the Institute of British Geographers, Vol. 25 (2000), No. 3, pp.269-283, Royal Geographical Society.

Development 3.0: Disempowering donors?

What role should donors play in helping to improve governance and domestic accountability in developing countries? My starting point in addressing this issue is that accountability in developing countries – as elsewhere – is very important for reasons of effectiveness/learning and fairness/justice and that donors, while recognising that domestic politics is the key driver of governance and accountability, ought to do what they can to support the strengthening of domestic accountability. However, some serious questions need to be asked about the “what they can” in that sentence.

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