Public and political pressure on budget allocations, coupled with the genuine need to make aid more effective to tackle the global poverty crisis, have resulted in a renewed focus on results. Several donors are promoting the use of aid to reward the achievement of predetermined performance targets. Though this is a recent trend, in 2010, total disbursements for results-based approaches broke the $5 billion barrier.
Results-based approaches make part or all funding conditional upon verification of progress. Donors like this because it allows them to point to tangible outcomes of aid expenditure, and, proponents argue, this will lead to more effective aid. But is this the case?
In this report we assess the potential of results-based approaches to deliver long-term and sustainable results by measuring the performance of different initiatives against widely agreed aid effectiveness principles. These principles – developed and agreed by all donors in four high level summits -were a response to the failure of project-based approaches that increased transaction costs, failed to have sustainable impact on recipient countries’ systems and often collapsed once funders moved on. They were an important attempt to move away from donor-driven aid that tended to promote the foreign policies of donors rather than focusing on poverty reduction.
Eurodad examined the following six major results-based initiatives and assessed their performance against four key internationally agreed aid effectiveness principles: ownership; accountability and mutual accountability; harmonisation; and alignment and use of country systems. We also examined whether they had a ‘broad’ scope or a ‘narrow’ one, in terms of: how specific the objectives are; the level of funding (from national to local); and the flexibility with which the recipient can use the money.
- The European Commission’s Millennium Development Goals Contract (MDG-C).
- The GAVI Alliance (GAVI) Health System Strengthening support and Immunization Services Support (due to their similarities both initiatives have been these two initiatives have been depicted together in the tables examining their alignment with aid effectiveness principles.).
- The Millennium Challenge Corporation’s (MCC) Threshold and Country Programs.
- The Global Fund to Fight AIDS, Tuberculosis and Malaria (GFATM).
- The Global Partnership for Output-Based Aid (GPOBA).
We then assigned each a traffic light score against each key principle. Green means that there is a good level of alignment with the principle, orange means average and red low.
The main findings of this research are:
- In general, results-based approaches are not particularly good at supporting aid effectiveness principles, with the exception of the MDG-C. However, broader approaches do appear to be better aligned with aid effectiveness principles.
- Ownership tends to be higher when the responsibility for designing programmes falls on recipient governments. This does not mean that donor led approaches such as the MCC cannot achieve significant degrees of ownership, but results are likely to be less consistent, have higher costs and impose a significant burden on host governments and civil society.
- Results-based approaches tend to reinforce accountability to donors and in doing so, undermine mutual accountability. In general, the problem is less acute with country wide initiatives and it is most pressing when working through third party service providers.
- The level of harmonisation of results-based approaches is low because of their widespread use of parallel structures. Donor harmonisation seems to be higher the broader the approach, with the MDG-C being the best performer.
- Only two of the approaches examined in this report use country systems to a significant extent: MDG-C and GAVI. Even in these cases there are significant eligibility and public financial management criteria that influence and limit the type of country systems that recipient countries can implement.
In addition to these concerns, one of the most important findings is that there is little evidence or evaluation of the strengths, weaknesses and impacts of different results-based approaches. Therefore, it seems reasonable to use results-based approaches with a degree of caution.
Read the full report: Hitting the Target? Evaluating the Effectiveness of Results-based Approaches to Aid