Outcomebased conditionality: Too good to be true

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Outcome-based conditionalityToo good to be true?

• Brussels, 29 January 2008

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Policy conditionality is both an infringement on
sovereignty and ineffective Africa Commission,
2005

• True partnership supposes autonomy of
  beneficiary countries in requesting aid and in
  determining its objectives Often programs are
  imposed on us, and we are told it is our
  programPeople who have never seen cotton come to
  give us lessons on cotton No one can respect the
  conditionalities of certain donors. They are so
  complicated that they themselves have difficulty
  getting us to understand them. This is not a
  partnership. This is a master relating to his
  student.

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World Bank Conditionality Review, 2005

• Traditional conditionality in policy-based
  lending has often been criticized as being
  ineffective and intrusive
  

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But what do we mean when we talk about results?

• Outcome-based conditionality means different
  things to different people
  
• Senior IMF official

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Outcomes a la IMF
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The WB and the EC logics compared
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For the purpose of this study

• Outcome-based allocations or conditions refer
  to
  
• disbursements linked to performance measured by
  indicators at the outcome level
  
• which refrain from spelling out concrete policy
  measures that should be adopted in order to
  obtain certain results and
  
• which refer to outcomes in areas clearly linked
  to human development and poverty reduction.

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The ECs shift to outcome-based conditionality

• Drawing on lessons from previous structural
  adjustment programmes and the recognition of the
  central importance of ownership, the European
  Commission has moved to an approach based on
  linking their aid to poverty reduction results

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ECs expectations for outcome-based conditionality

• - Encourage a focus on results by using
  indicators of
  
• service delivery / poverty reduction
• Protect the political space for governments to
  determine policy
  
• Streamline conditionality
• Promote domestic accountability
• - Stimulate demand for quality data on poverty.

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What has been the impact of outcome-based
conditionality?

• Positive effects
• 1. Outcome-based conditionality has pushed a
  results based approach
  
• 2. It has managed to streamline conditions
• 3. It has managed, generally, to refrain from
  spelling out economic policy conditions
  
• 4. It has been a catalyst to increase
  governments focus on poverty reduction results.
  

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Operational challenges too soon or too hard to
tell?

• The not so good news
• Not enough funds to make a difference
• Cryptic data failing to improve downwards
  accountability
  
• Outcome indicators cure or curse?
• The problem of attribution
• Mechanistic links to disbursement
• Time lags
• Limited CSO participation.

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Political challenges letting go of the reins

• Opening-up policy space contextual burdens or
  business as usual?
  
• The problem of conditionality baskets
• The problem of creating incentives
• The other side of the coin not enough buy-in
  from Southern governments
  

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Conclusions and Recommendations

• Outcome-based conditionality can be based in
  internationally agreed development goals
  increase policy space and put results in the
  spotlight. To fully unleash this potential
• The process of choosing outcome indicators should
  be much more inclusive and genuinely led by
  recipient countries
  
• Indicators should also try to grasp qualitative
  aspects
  
• Data should be collected and displayed to
  strengthen downwards accountability
  
• Assessments with financial implications should
  take place on a multi-year basis
  
• A less mechanistic link between targets and
  disbursement
  
• Avoid double-conditionality

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• By Nuria Molina-Gallart
• EURODAD
• nmolina_at_eurodad.org
• www.eurodad.org