Strengthening National Health Systems through Performance-based Aid: Results to Date

Purpose - This work identifies the advantages and disadvantages of using incentive-based or performance-based aid schemes in the development of national healthcare systems in developing countries, compared to traditional forms of aid. Traditional aid includes direct aid on budget, project-based aid, loans, and technical assistance. Developing countries receiving these types of assistance typically do not have to show measurable progress toward achieving goals to continue receiving aid.

Performance-based aid (PBA) changes this dynamic. PBA recipients must show progress toward agreed upon goals. Success can lead to donors to increase funding levels. Failure may result in the donor reducing the amount of aid or cutting it off entirely. PBA thus introduces a new concept into the donor-recipient relationship – incentives.

Data - Data and information used is qualitative (donor and aid recipient reports, independent evaluations of PBA programs, interviews with staff of PBA organizations and recipient countries) and quantitative (analysis of PBA funding levels relative to traditional aid, analysis of recipients' performance toward goals).

Methods - Combination of literature reviews (project reports, independent evaluations), phone and in-person interviews (donor staff and recipient country staff).

Results - Preliminary findings suggest that incentivizing aid is not the long sought solution to successfully building the capacity of national health systems. The conditions that sometimes accompany PBA - regular report submission, verification of results by auditors, special conditions to be met before funds are disbursed – can negatively affect the performance of Ministries of Health and national health systems in general. Additionally, countries with extreme poverty and substantial capacity gaps also find it difficult to meet these requirements. Countries with a minimum level of capacity and expertise have been shown to take advantage of the incentive structure and use it to their advantage to further build their health systems.

Recommendations - Performance or incentive based aid should continue to be used by development agencies. Donors should carefully assess whether recipients have the initial capacity to handle the intense reporting requirements associated with PBA. PBA should be geared towards countries with a minimum amount of capacity from the outset. Those without minimum capacity should continue to be served by more traditional forms of aid.