Payment by Results in Aid: A Review of the Evidence

Summary

The EBA Working Paper Series constitutes shorter overviews, surveys, mappings, and analyses that have been undertaken to bring about discussion and advance knowledge of a particular topic. Working Papers are not subject to any formal approval process by the Expert Group. Just as in the EBA reports, authors are solely responsible for the content, conclusions, and recommendations.

This review assesses available literature on payment by results (PbR) in development cooperation. The basic idea of PbR is that the donor transfers – at least part of – the resources after some pre-agreed results have been achieved. The aid contract can be seen as a Principal-Agent relationship, in which the donor is the “principal” who wants to achieve certain objectives, and the recipient is the implementing agency, or the “agent”, who will be rewarded when certain results have been achieved. This report looks in particular at Results Based Aid (RBA), where the principal is a donor and the agent is a recipient country, and Results Based Finance (RBF), where the principals can be donors but also national or sub-national governments or NGOs, and implementing agents can be sub-national governments, private sector organisations or (public or private) service providers, and individuals. It covers almost all sectors in which PbR has been applied (health, education, governance, energy, water), with the exception of the environment (agriculture and forestry).