Making Services Work for Poor People world development report 2004 Making Services Work for Poor People

WDR 2004 Messages Services are failing poor people. But they can work. How? By empowering poor people to Monitor and discipline service providers Raise their voice in policymaking By strengthening incentives for service providers to serve the poor Too often, services are failing poor people—in access, quantity, quality. But governments, citizens and donors can make them work—by putting poor people at the center of service provision—in three ways: By empowering poor people: To monitor and discipline service providers Raise their voice in policymaking By strengthening incentives facing service providers to serve the poor.

MDGs—Global aggregates Eradicate poverty and hunger Universal primary education 1. We begin with the MDGs, and consider global aggregates only. For income poverty we are on track. Of course, this is because rapid growth in India and China, the two most populous countries, is reducing poverty at a rapid rate. This global aggregate doesn’t show that in Africa, we’re off track on the poverty goal too. [All these numbers come from the MDG website www.developmentgoals.org] 2. But for the HD goals, we are seriously off track, even at the global level. Source: www.developmentgoals.org

Outcomes are worse for poor people Percent aged 15 to 19 completing each grade or higher Why are these outcomes worse for poor people? Why are we falling short of the health and education goals? Is it simply because there has not been enough economic growth? Source: Analysis of Demographic and Health Survey data

Similar changes in public spending can be associated with vastly different changes in outcomes What this means is that countries that spend the same amount could have vastly different outcomes (e.g., Ethiopia and Malawi). Sources: Spending data from World Development Indicators database. School completion from Bruns, Mingat and Rakatomalala 2003

A framework of relationships of accountability Policymakers We call this the long route of accountability. The client influences the policymaker (politician or bureaucrat), and the policymaker has to exert power over the provider. This “long route” is where services break down. But we can also strengthen them by strengthening the two relationships. Poor people Providers

A framework of relationships of accountability Policymakers Let’s start with the citizen-policymaker link. Citizens can exert power over policymakers through elections, and through other means of expressing their “voice.” But even in democratic societies, the provision of (free or subsidized) public services becomes the currency of political patronage and clientelism. Politicians don’t locate pro-poor programs where poor people live necessarily; they locate it where people who vote for them live. Poor people Providers

PRONASOL expenditures according to party in municipal government This can be explained by looking at the amount of per-capita PRONASOL expenditures, according to the party that the municipality voted for. This can happen in democratic societies as well as one-party states. And it can work in both kinds (Cuba, China, Sri Lanka, Costa Rica). But the important lesson is that we need to be aware of whether or not the politics in the country will be “Clientelist” or “pro-poor” before designing service delivery mechanisms. Source: Estevez, Magaloni and Diaz-Cayeros 2002

A framework of relationships of accountability Policymakers This is a problem for two reasons: The provider may not have incentives to provide the service. His pay is unaffected by whether or not he provides the service. Absenteeism rates in schools and clinics is an example of this. One way to improve upon this is to make the provider’s pay depend on the service—as in a contract. A good example is from Cambodia. Poor people Providers

Policymaker-provider: Contracting NGOs in Cambodia Contracting out (CO): NGO can hire and fire, transfer staff, set wages, procure drugs, etc. Contracting in (CI): NGO manages district, cannot hire and fire (but can transfer staff), $0.25 per capita budget supplement Control/Comparison (CC): Services run by government 12 districts randomly assigned to CC, CI or CO An example of where this was overcome is in post-civil-war Cambodia. The government needed to get a health program going in a hurry. So they decided to experiment with three different types of arrangements, two of which used NGOs. In fact, they used two different types of contracts, namely contracting out—where the NGO can use whichever staff they desire; and contracting in, where they NGO had to use existing staff, but could manage them as they wished. Finally, and importantly, they had a control group where the services were run by the government. Before showing the results of this exercise, I want to point out that the Cambodian government decided to randomly assign districts to the different arrangements. This was an explicit case where the government wanted to be able to learn from the experiment in a systematic way. This is an example of a more general theme that is recurring in the WDR. If we are to scale up, we need to be able to learn from these service-delivery innovations in a systematic way.

Utilization of facilities by poor People sick in last month The results are quite dramatic. But contracting out is not always feasible. For one thing, you cannot specify exactly everything in a contract. You can’t specify exactly what teachers teach in the classroom, or what the doctor does in the clinic. In fact, it could be unproductive to do so (as when Parisian taxi drivers bring traffic to a halt in the French capital by following the rules exactly). In this case, you could choose providers who will have an incentive to serve the poor. Faith-based NGOs in Uganda work for 28% lower salary, but provide better quality health services than the public clinics. But the bottom line is that policymakers can best get the incentives right when they can monitor the service provider’s actions and results. When they can’t monitor, however, we should remember that the client can often be the monitor. So we may want to return to the short route of accountability. Source: Bhushan, Keller and Schwartz 2002

A framework of relationships of accountability Policymakers Finally, we turn to the relationship we started with, the “short route”—between client and provider. For even though these are non-market transactions, there may be ways to increase the client’s power over the provider by giving him increased choice and the chance to participate. Poor people Providers

Schools in Uganda received more of what they were due First, strengthen poor people’s voice in policymaking by increasing their access to information. In the early 1990s, primary schools in Uganda were receiving less than 13 percent of the money they were allocated for textbooks, equipment, and the like. Poor schools were receiving nothing. To improve this dismal performance, the Ministries of Finance, Education and Local Government jointly launched a public information campaign on fiscal transfers. This created a groundswell of activity to increase the share going to primary schools. The newspapers published the funds flowing to schools on a monthly basis (they still do), and school principals had to post the entire school budget on the schoolroom door. The result was that the share increased from 13 percent to 80 percent. Source: Reinikka and Svensson (2001), Reinikka and Svensson (2003a)

Client-provider: EDUCO Program in El Salvador Parents’ associations (ACEs) Hire and fire teachers Visit schools on regular basis Contract with Ministry of Education to deliver primary education

EDUCO promoted parental involvement… …which boosts student performance One of the ways this worked was through a reduction in teacher absence—1.2 (Educo) versus 1.4 (non-Educo) days per month—which resulted in fewer student absences—3 days fewer per month in Educo schools than in Non-Educo schools. Source: Adapted from Jimenez and Sawada 1999

Eight sizes fit all? Difficult to monitor Easy to monitor

Eight sizes fit all? Difficult to monitor Easy to monitor Heterogeneous clients Homogeneous clients Emphasizes the heterogeneity of poor people (disabled, women)

Eight sizes fit all? Difficult to monitor Easy to monitor Heterogeneous clients Clientelist politics Pro-poor politics Homogeneous clients And the politics

Eight sizes fit all? Difficult to monitor Easy to monitor Heterogeneous clients Clientelist politics Pro-poor politics Homogeneous clients Government provision or contracting Let’s consider two polar opposite. If the service is easy to monitor (e.g., vaccinations), the government is pro-poor (such as Cuba or Costa Rica or Sri Lanka), and the clients are relatively homogeneous (such as Norway), then central-government provision will work (as will any other arrangement). But if the service is difficult to monitor, such as school teaching, the clients are heterogeneous, and there is evidence of political patronage, such as education in India, then demand-side interventions (such as FSSAP in Bangladesh) coupled with increasing the power of citizens to monitor the provider, such as EDUCO, may yield better results.

Eight sizes fit all? Difficult to monitor Easy to monitor Heterogeneous clients Clientelist politics Pro-poor politics Homogeneous clients Central-government provision Government provision or contracting Let’s consider two polar opposite. If the service is easy to monitor (e.g., vaccinations), the government is pro-poor (such as Cuba or Costa Rica or Sri Lanka), and the clients are relatively homogeneous (such as Norway), then central-government provision will work (as will any other arrangement). But if the service is hard to monitor (such as student learning), then with homogeneous population and pro-poor politics, you may want to have government provision. This is the situation in Scandinavia. Example of homogeneous becoming heterogeneous—immigrants in Sweden. But if the service is difficult to monitor, such as school teaching, the clients are heterogeneous, and there is evidence of political patronage, such as education in India, then demand-side interventions (such as FSSAP in Bangladesh) coupled with increasing the power of citizens to monitor the provider, such as EDUCO, may yield better results.

Eight sizes fit all? Difficult to monitor Easy to monitor Heterogeneous clients Clientelist politics Demand-side subsidies, co-payments by households Pro-poor politics Local-government provision Local-government with contracting Homogeneous clients Central-government provision Government provision or contracting But if the service is difficult to monitor, such as school teaching, the clients are heterogeneous, and there is evidence of political patronage, such as education in India, then demand-side interventions (such as FSSAP in Bangladesh) coupled with increasing the power of citizens to monitor the provider, such as EDUCO, may yield better results. So what does this imply for action? We took your advice and made some bold claims in the report. I’d like to share some of those. Without bold actions, we won’t have scaling up.

WDR messages to donors Harmonize policies and procedures around recipient’s systems Where possible, integrate aid in recipient’s budget Finance impact evaluation of service delivery innovations $300 million a year in Bank projects allocated for evaluation Actively pursued right now by donor community A lot of harmonization efforts around donors, we recommend harmonizing around the recipient systems. Budget support where possible. Creates incentives to improve recipient’s systems Rigorous impact evaluations rare. Public sector agencies, including aid agencies, have a tendency to be input-oriented. We have to work doubly hard to overcome it.

Donor fragmentation on the rise Harmonization efforts are new and do not yet show in the data. Fragmentation is on the rise.

What are we up against when attempting to improve aid efficiency? Aid agencies need to identify their own contributions, hence they prefer projects, to facilitate feedback to taxpayers and sustain political support for aid flows. A new hospital is easier to showcase than the outcome of policy reform or budget support. Aid agencies face disbursement pressures and need to show quick results to taxpayers. · Politicians and policymakers in donor countries cannot dismiss the interest groups that support them, groups that may place a high priority on funding like-minded groups in developing countries. ·     Many donors limit the market for aid services and supplies to their own nationals (tied aid). Foreign aid sustains a large consultancy industry in OECD countries—estimated at $4 billion a year for Sub-Saharan Africa, or 30 percent of aid to the continent. ·     Fiduciary concerns and incentives in aid agencies cause donors to focus on monitoring inputs and processes. ·   Bilateral donors distribute their aid budgets across a large number of recipients and sectors, to increase the visibility of their programs or to leverage diplomatic support from recipient nations. The mean number of ODA recipients for each of the 22 major bilateral donors was 95.