So I really want to be enthusiastic about COD (cash on delivery) aid. The idea has been developed by the Centre for Global Development.
COD aid "builds on existing initiatives that strive to disburse aid against results, but it takes the idea further by linking payments more directly to a single specific outcome; giving the recipient country full authority to achieve progress however it sees fit and without interference of any kind from donors; and assuring that the recipient country’s progress is transparent and visible to its own citizens. These features could rebalance accountability, reduce transaction costs, and encourage local innovation and learning."
There is a nice frequently asked questions (FAQ) section on the CGD website that addresses 33 questions.
So why do I have my doubts? My main concern is whether there will be demand for it.
1. Which types of countries will be excited by it?
Countries that are "able but not willing" to prioritise human development are surely not going to be incentivised to become more interested by these relatively small amounts of aid.
For countries that are "willing but not able", where are they going to get the resources from to achieve the outcomes to get the cash?
The FAQ relating to this argues that countries are not starting from blank slates--they have the resources--and COD aid is intended to make sure they make the most of those existing resources. But I think this answer applies best to the "willing AND able" country category.
2. Which countries will want to take the risk of not achieving the outcomes?
Countries cannot have complete control over outcomes. The FAQ response to this states that COD aid is not "all or nothing" and that "a country would be paid a set amount for each additional student that completes primary schooling and takes an approved test, regardless of the level of coverage it reached". Completing school and taking a test seems more like an output than an outcome. The outcome should relate to learning and cognitive achievement. But what happens if the student does not do well in the test? The state cannot be held fully responsible for that, surely.
And are other development outcomes as incremental as education?
It would be good to know if any market research has been done on the demand for COD aid. Obviously demand will depend on the alternatives on offer.
I have not thought nearly as hard about this as the folks at CGD have, and they are smart, so I'm bracing myself for a slew of emails from them.
And one other thing, they really should get another name for this approach. Cod is also slang for "sham". And despite my doubts, COD aid is something to be taken seriously and is definitely not sham aid.