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Why we believe in Results-Based Financing

Jessica Lee's picture
 Minna Mattero / World Bank)
Results-based financing can force conversation to focus on developing a theory of change that starts with results. (Photo: Minna Mattero / World Bank)


We just got back from Nepal to see how results-based financing has, or hasn’t, changed the way their education system functions. Over lunch, we asked our counterparts at the Ministry of Education: “What’s been different since the introduction of results-based financing?” Their response: “Oh, we just pay more attention to the indicators.” While this may sound peripheral, it speaks to the power of RBF.

For us in education, RBF is a financing tool that governments can use to strengthen country education systems. This stands in sharp contrast to others who may view it primarily as a way to generate more value for money, or – ultimately – in hopes of achieving ‘smarter aid’.

In our Nepal example, our counterparts’ answer reinforces the idea that RBF can, and does, work to improve country systems. “Paying more attention to indicators”, in this case, has meant that the Ministry of Education needed to upgrade their Education Management Information System (EMIS), such that the data be more robust. It has also forced them to check assumptions when predicting targets, and to be more precise when calculating them, resulting in more reliable data systems that are of greater use to school directors, district officers, and policymakers.

Linked to this, their answer also signals that RBF has the ability to shift things so that everyone both knows about the shared results and makes the effort to measure them. The experience of Nepal is much like others around the world: Dominican Republic; Jamaica; Mozambique; and Pakistan, just to name a few.

Learning from diverse countries, we have discovered that RBF also has the ability to do the following four things:
 

  • Institutionalize Measurement Systems for Lasting Impact

RBF only functions with strong monitoring systems that link information from frontline service-delivery (e.g. teachers) to managers and policy makers who are able to make use of the information, course correct, and re-inform service providers. In many countries, there is limited measurement outside of those indicators collected through EMIS, which themselves are rarely very robust. RBF therefore seeks to strengthen existing  systems, oftentimes through independent verification, which not only fosters capacity but also culture of measurement and monitoring in countries (ideally, education authorities themselves).
 

  • Flip the Policy Dialogue

Rather than marshal through the myriad of inputs and activities related to education, RBF forces the conversation to focus on developing a theory of change that starts with results, prompting actors to work backwards to identify what is needed to achieve the desired outcome. This helps focus the discussion within education ministries, and between the World Bank Group and clients, on which results are truly priority areas for the government.
 

  • Sustain Attention across Crises, Fads, and Changing Governments

Political time horizons and competing short-term urgencies can often supplant a government’s long-term policy agenda. Put another way, the urgent displaces the important. However, sector plans with embedded medium and long-term results that are financially rewarded over time helps keep all eyes on the prize despite the changing political economy. What is more, allocating financing to the achievement of certain results helps authorities signal strategic priorities.
 

  • Align All Actors around Results that Matter

Attaining results most efficiently and sustainably requires the involvement of multiple actors, notably ministries of finance. Examples abound of countries that have increased funding to their education sectors, without the corresponding uptick in performance. RBF helps bring central agents like ministries of finance or planning to the technical table, and shows them why certain bottlenecks need to be resolved (with financing!) to generate larger system-wide effects. Similarly, it aligns donors around the government’s priority targets in a way that traditional financing models don’t.
 
Despite the fact that RBF can change the way we do business, it has been met with both champions and skeptics. While it isn’t always the best financing modality in every country context, it has been able to galvanize people and resources (see, Tanzania) to focus on what matters most. As RBF continues to gain traction, we hope this means our next visit to Nepal yields another kind of answer: more children learning. And this time, they’ll have the data to prove it.
 
(To read more about RBF in education, see our paper "Financing Results to Strengthen Systems" and read about the REACH trust fund)

Find out more about World Bank Group education on our
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