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Ottawa should consider new foreign aid model: cash-on-delivery

Cash-on-delivery aid is an innovative way to improve the effectiveness and accountability of overseas development assistance. The model places the onus on the recipient country both to design an aid program and to show that it works. Only then does a donor country agree to financing.

Ottawa, which has already undertaken important reforms in aid delivery including streamlining its list of recipient countries and priorities, should take the next step and implement a pilot program based on this new model, which offers results that are more clearly defined and verifiable.

"It is designed to create accountability from the recipient country, instead of from the donor. Donors also avoid interfering with the local government's policy choices," notes James Haga, with Engineers Without Borders, a non-governmental organization that presented this idea to the standing committee on foreign affairs and international development.

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Cash-on-delivery aid reflects the changing global dynamic around development assistance, and the desire for recipient countries to develop their own poverty-reduction initiatives. To guard against corruption, an independent third party evaluates progress made toward a program's outcomes. This year, Britain was the first country to launch a program based on this model; it will disburse a certain amount to Ethiopia's education ministry for an increase in the number of students who sit for or pass the national grade 10 exam (with an additional payment for girl students).

By shifting away from measuring inputs, toward paying for outcomes, donor countries can help strengthen a recipient country's local leadership and political institutions. Cash-on-delivery also helps reduce the excessive compliance requirements that burden aid projects currently funded by the Canadian International Development Agency.

Of course, this delivery scheme is not a panacea. In fragile democracies, or in the case of civil war or severe drought – such as the one in the Sahel region of West Africa where one million children are at risk of severe malnutrition – prompt, short-term relief is most effective. Yet as aid budgets shrink – Canada's $5-billion budget underwent a $380-million cut this year – it is an idea worth considering. To improve aid effectiveness, Ottawa needs to embrace experimental approaches and be open to change.

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