Results-Based Financing and Output-Based Aid in Education

Nicholas Burnett, Managing Director, Global Education, R4D

Inga Afanasieva, Infrastructure Specialist, World Bank

February 10, 2016

• Results-based financing and its application in education

• How output-based aid is a solution to providing access

to quality education

• Project example: Vietnam Upper Secondary Education

• OBA in education: key takeaways

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Presentation outline

Education sector overview: key challenges

• Access

– 1 in 6 children in low- and middle-income countries will not complete primary school

– 58 million children out of school

• Literacy

– 250 million children failed to learn minimum literacy standards by grade 4

– Adult illiteracy: 781 million illiterate adults

• Learning

– East Africa (Uwezo)

• Over 2/3 of Grade 3 students cannot pass Standard 2 assessments

• 1 in 5 Grade 7 students cannot pass Standard 2 assessments3

Education sector overview: key challenges

• Skills

– Global labor market 2020: 45 million medium skilled worker shortages but 95 million low skilled worker surplus

• Financing gap: $22 billion per year

– Aid for education and for basic education increased initially, then stagnated, now declining

• Growth of private sector

– Increasing number of private sector actors in education. Increases access and promotes competition, but mixed government attitude towards private education in some cases.

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Education sector overview:

differentiating characteristics

Education sector differs in 6 key ways, having implications for RBF and OBA

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1. Public vs. private engagement

2. Costs and user fees vary dramatically

3. Measuring results: access vs. quality

4. Lack of evidence

5. Human resources: Teachers

6. Recurrent costs

Education sector overview: Types of interventions

Education interventions

Provide

information

Reduce costs

Readiness

ResourcesTeachers

Pedagogy

School management

• School lunch

• ECD

• CCTs

• Scholarships

• Subsidies

• Vouchers

• Training

• Provision

• Incentives

• School construction

• Teaching materials

• Innovative

pedagogy

Adapted from: Krishnaratne et al. 2013

Education sector overview: Results chain

Inputs* OutputsIntermediate

OutcomesOutcomes Impacts

• School

construction

• Classroom

materials

• Textbooks

• ICT equipment

• Teachers

• Etc.

• # schools

constructed

• # teachers

trained

• # textbooks

distributed

• Etc.

• Attendance

rates

• Enrollment

rates

• Drop-out

rates

• Test scores

• Literacy and

numeracy rates

• Employment

rates

• Salaries

• Educated populace

• Employment rates

• Income

Example components of results chain in education:

*Highlighted in red are outputs/outcomes to which GPOBA could disburse payments.

Types of Schemes

RBF in education may provide funds to government, service providers, and/or students and families

Targeting national governments

Targeting service providers

Targeting students/households

Cash on Delivery (COD)World Bank PforRDebt-swaps Loan/debt buy-downs

Output-Based Aid (OBA)Social impact bonds (SIBs) and

development impact bonds (DIBs)

Conditional Cash Transfers (CCTs)Performance-based scholarships

RBF IN EDUCATION

Examples of schemes in education:

COD project in Ethiopia (DFID)

World Bank RBF (Brazil, Indonesia, Jamaica, Pakistan, Tanzania)

OBA in Vietnam (GPOBA)

Educate Girls DIB, Rajasthan (UBSOF/CIFF)

CCTs (e.g. Brazil Bolsa Familia)

Scholarships (e.g. Bangladesh)

Growing but limited experience and actors in RBF and RBA in education

Additional developments in RBF in education

REACH: a new Norad trust fund within the World Bank

GPE funding: now 30% results-based

Current LandscapeRBF IN EDUCATION

Definition of OBA in Education

“A form of results-based financing in which service providers are contracted

to improve education access and/or quality, especially for

disadvantaged populations, whereby service providers assume some

degree of performance risk for specific outputs/outcomes upon

which payments are contingent.”

Vietnam Upper Secondary Education Enhancement Project (2010-2013)

Program students demonstrating adequate GPA, attendance, and behavior receive tuition subsidies from schools

EMWF provides funds to schools after receiving reports of student performance

GPOBA provides funds to EMWF

• 12 provinces

• 7,500 students

OBA PROJECT EXAMPLE

Project scoping and analysis

EAST ASIA &

PACIFIC (EAP), 1

LATIN AMERICA &

CARIBBEAN

(LAC), 3

SOUTH ASIA (SA),

11

SUB-SAHARAN

AFRICA (SSA) , 8

REGION

EARLY CHILDHOOD EDUCATION, 2

LOWER SECONDARY, 11

PRIMARY, 11

SECOND CHANCE, 1

UPPER SECONDARY, 10

VOCATIONAL, 6

EDUCATION SUBSECTOR

OBA IN EDUCATION

How has OBA been applied to date

• Subsidize fees

• Incentivize targeting

• School construction

• Program financing

• Incentivize improved enrollment/retention/completion rates

Improve access

• Incentivize improved learning outcomes

• Provide inputs (books, teacher training, etc.)

• Incentivize improved employment ratesImprove quality

• Emphasizes increased efficiency and autonomy through a focus on results Improve system

(e.g. low equity, high tuition or

household costs)

(e.g. low learning levels, disconnect

between education and labor market)

(e.g. inefficiencies, lack of service

provider autonomy or competition)

OBA IN EDUCATION

Key takeaways from scoping study

1. OBA can address a wide range of issues in education

Access, quality, system inefficiencies

2. OBA is a promising instrument for targeting disadvantaged

populations

E.g. poor, girls, orphans, disabled, minorities

3. Government buy-in is a key determinant of project

sustainability

4. M&E is key

Incorporate evaluation into project design

OBA IN EDUCATION

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Recommendations: Areas for OBA application

Subsectors Vocational training (formal)

Skills training (informal)

Secondary education

Early childhood education

Higher education

Target groups Poor and disadvantaged

Disabled

Minorities

Girls

Children of nomadic families

Illiterate adults

Interventions Tuition subsidies or bonus

payments

Learning materials

Teacher training

PPPs

Country contexts Decentralized education systems

Favorable to private sector

High inequity in education

NEW REPORT

Paying for Performance: An Analysis of Output-Based Aid in Education

Interested in learning more about this topic?

Visit: www.r4d.org/obareport

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Questions

Results-Based Financing and Output-Based Aid in Education

Contact information

Inga Afanasieva

iafanasieva@worldbank.org

Nicholas Burnett

nburnett@r4d.org

Questions or follow-up?