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Outcome-based conditionality: Too good to be true?

13 February 2008

Citizen groups demanding more and better aid have increased public debate about development funds. Citizens in the North and the South want to know whether public money is paying for development and whether it is lifting people out of poverty. In response to these demands, governments at the Rome and Paris aid conferences agreed to adopt a results agenda. Since then, ownership and mutual accountability have become the new development mantras. However, the continued use of old-fashioned conditionality on development finance operations undermines the implementation of these principles.

The failures of traditional policy-based conditionality have been recognised, leading to several proposals for new approaches which strengthen ownership and development effectiveness. One promising approach, which suggests linking disbursement to achieved or pledged development results, encompasses, in principle, the potential to increase government ownership and link development programs to their impact on poverty reduction. It would also help measure the effectiveness of aid in delivering the internationally agreed Millennium Development Goals.

This report analyses new approaches to contractual relations in development aid as explored and used by the World Bank, the IMF and the European Commission. It also assesses the experience by the European Commission, the only multilateral which has implemented outcome-based conditionality. The report features analysis and opinions on the pilot operations in three African countries: Burkina Faso, Mozambique, and Tanzania.

Outcome-based conditionality: Too good to be true? : 769 Kb