Paying for performance : an analysis of output-based aid in education

Abstract

Over the last decade, growing attention has been paid to emerging mechanisms for results-based financing (RBF) that seek to address the perceived shortcomings of traditional development aid and financing and improve its effectiveness through placing an emphasis on results. In 2003 the World Bank introduced the concept of output-based aid (OBA) through the Global Partnership on OBA (GPOBA) that now includes a consortium of international multilateral and bilateral donors, and in 2012 the World Bank developed a new RBF tool known as program-for-results (PforR). With OBA, service delivery is typically contracted out by the entity providing the public funds to a service provider (for example, a private enterprise, public utility, non-government organization (NGO), or community-based organization), and payments are linked to the achievement of pre-defined service performance or outputs (GPOBA). Mechanisms through which OBA may lead to improved results include: increased transparency (though explicitly linking subsidies to targets), increased accountability of service providers (as funds are disbursed only upon reaching targets), greater private sector engagement, greater opportunities for the service provider to be innovative and efficient (given autonomy provided to service providers), and improvements in monitoring systems. In 2014-2015, results for development institute (R4D) conducted a scoping study on the potential for OBA in education for GPOBA. This report provides the consolidated findings from the study which included: (i) a literature review of RBF schemes in education, (ii) a landscaping and analysis of existing OBA projects in education, and (iii) recommendations for applying OBA in the education sector moving forward.