DFID’s Approach to Payment by

Results

Content

1. Results, Results, Results

2. One way to get results - Payment by

Results

1. DFID Definition

2. DFID action

3. Examples of practice

4. Evaluation and learning

3. Not just results but value for money

Results, Results, Results

• Allocations

• Business Processes – decisions, reviews

• Evidence and Evaluation

• Data – results frameworks

• Scrutiny

• Innovative mechanisms

Context: Linking payments

to performance

DFID is increasingly moving away from upfront input financing and linking payments to

results and performance.

e.gs.

• Performance financing (performance tranche)

• Procurement reform

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Input Output Outcome

Performance

based financing

Payment by

results

Traditional

“input”

financing

What is PBR?

1. Payments based on pre-agreed results. Paying for development outcomes, not inputs

2. Recipient discretion on how to achieve results.

3. Independent verification of results as the trigger for disbursement.

=

Recipient Funder

Negotiate a MoU/contract detailing: indicators of results, payment structure,

measurement of unit price

Robust independent verification of results

Shared desired outcome

Disbursement of funds Unit price x results target

achieved = payment £

Publicly disseminate results

Imp

leme

ntatio

n

Inputs

Processes

Innovation

Publicly disseminate contract

Incen

tive

TYPE

WHO

CURRENT

e.g.s

Types of PBR:

DFID pilots

DFID distinguishes different types of PBR depending on who we transfer risk to.

Results based

aid

Results based

financing Development

impact

bonds

Partner governments Service providers Investors

NEWER NEWEST

Design stage Uganda Health £8m

Clean energy fund £30m

Health fund (WB) £110m

Infra’ fund (WB) £37m

Girls’ Education Fund £30m

Ethiopia Education £30m

Rwanda Education

SBS

£9m

PBR in practice: Education pilot Ethiopia

Agree payment structure (unit price)

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Agree indicator of results: • Number of students sitting an exam • Number of students passing exam

Partner

Funder

Aligned development result: Improved lower secondary completion

Independent verification of

results

Disbursement of funds:

Unit price x number of

students sitting exam =

payment £

Time

PBR in practice: Education pilot Ethiopia

Publish and announce MoU

Emrg Non-emrg Emrg Non-emrg

Boys £75 £50 £75 £50

Girls £100 £85 £100 £85

Passer Sitter

Where we are

now!

PBR in practice: Education pilot Rwanda

Agree payment structure (unit price)

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bo

oks

in s

cho

ols

B

uild

ing

new

sch

oo

ls

Pro

vid

e co

ach

ing

for

teac

her

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Agree indicator of results: • Number of students sitting an exam

Partner

Funder

Aligned development result: Improved lower secondary completion

Independent verification of

results

Disbursement of funds:

Unit price x number of

students sitting exam =

payment £

Time

PBR in practice: Education pilot Rwanda

Publish and announce MoU

Where we are

now!

Grade P6 S3 S6

Payment per additional child £30 £100 £30

Additional payment 2014/15 £10 £10 £10

Learning and Evaluation

• Current evidence base is too weak for general conclusions on efficacy of PBR;

more robust, comprehensive and wide ranging testing and evaluation of PBR is

needed.

• DFID is engaged in building the evidence of whether and how PBR works.

• Good spread of PBR pilots developing, across delivery channels, sectors,

countries and various types of PBR.

• Each of our pilots is independently evaluated.

• Evaluations and lessons learnt in design and implementation will provide DFID

with evidence to take informed decisions about how to progress PBR in the

future.

• DFID to develop PBR strategy by Spring 2014.

Evaluation and Learning

Key findings from recent DFID funded synthesis study on evaluation and PBR:

• Start by identifying questions, then consider methodology.

• Most important question might be identifying mechanisms and sets of

circumstances under which PBR approaches may make a positive

difference

• Range of other important questions about PBR identified, e.g. cost

effectiveness and comparison with other potential approaches and

strategies, appropriate size and nature of incentives, exploration of

unintended effects and how they can be avoided/ minimised.

• Need to explore and describe process by which PBR implemented in

practice and reasons why changes from original may be needed.

Final thoughts - not just results – value

for money

• Evidence

• Metrics

• Comparable data

• Understanding cost as well as results

• Incentives

Thank you