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

2. Messages Services are failing poor people.
But governments, citizens, and donors can make them 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.

3. 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
2. But for the HD goals, we are seriously off track, even at the global level.
Source:

4. MDGs—Global aggregates
Promote gender equality
Reduce child mortality
Furthermore, we are off track because these aggregates are even worse for poor people.
Source:

5. 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

6. Growth is not enough Percent living on $1/day
Primary completion rate (percent)
Under-5 mortality rate
Target
2015 growth alone
East Asia 14 4
100 19 26
Europe and Central Asia 1 15
Latin America 8 95 17 30
Middle East and North Africa 96 25 41
South Asia 22 99 43 69
Africa 24 35 56 59
151
If we look at how close we will come to reaching the MDGs based on growth alone, we find that:
In five of the six regions we will reach the poverty goal. The only one we won’t is Africa.
But relying on growth alone, we reach the education goal in only two regions.
And we will hit the child mortality goal in none of the regions by relying on growth alone.
Clearly, we will need more resources to accelerate progress in these areas. But we know that more resources—or more public spending for that matter—will not be enough. Governments need to improve the way they use their spending.
Because services are failing poor people.
Sources: World Bank 2003a, Devarajan Notes: Average annual growth rates of GDP per capita assumed are: EAP 5.4; ECA 3.6; LAC 1.8;
MENA 1.4; SA 3.8; AFR Elasticity assumed between growth and poverty is –1.5; primary completion is 0.62; under-5 mortality is –0.48.

7. 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

8. Expenditure incidence
Health
Education
If you look at health and education spending—usually thought to be pro-poor. In Guinea, 48 percent of public spending on health goes to the richest quintile, while less than 8 percent goes to the poorest.
This is one of the areas where we updated the data (most recently available, credible studies)
This anti-poor expenditure incidence is reflected in data about access to public facilities.
Source: Filmer 2003b

9. How are services failing poor people?
Public spending benefits the rich more than the poor
Money fails to reach frontline service providers
In Uganda, only 13 percent of non-wage recurrent spending on primary education reached primary schools
Even if we can improve the allocation of resources, and build facilities closer to poor people, there is a problem that the money doesn’t reach the frontline service provider.

10. How are services failing poor people?
Public spending benefits the rich more than the poor
Money fails to reach frontline service providers
Service quality is low for poor people
And even if the money reaches the frontline provider, the incentives for delivering good quality services are weak.
The clearest manifestation of this is the high levels of teacher and health-worker absenteeism we find in low-income countries.

11. Examples of low service quality
Bangladesh: Absenteeism rates for doctors in primary health care centers: 74 percent
Zimbabwe: 13 percent of respondents gave as a reason for not delivering babies in public facilities that “nurses hit mothers during delivery”
Guinea: 70 percent of government drugs disappeared
To understand these failures in service provision, as well as some of the success stories (which I will tell you about shortly), we need a framework.

12. But services can work
Infant mortality and malnutrition reduced in Ceará, Brazil
Citywide services in Johannesburg, South Africa reformed
Cash transfers to households in Mexico increased enrollment, lowered illness cases
Citizen report cards in Bangalore, India
Public information campaign to reduce leakage of education funds in Uganda
A program in Ceara, by recruiting, training and deploying community health workers, and introducing the Ceara Municipal Seal of Approval award for “child-friendly” municipalities, reduced infant mortality from 100 per 1000 in 1980 to 27 per 1000 in 2001.
In 1997, Johannesburg declared bankruptcy. They rationalized the many services—sold some (airport, produce market, etc.), contracted out waste management, sanitation, electricity, etc., and corporatized the zoo. By 2000, the city was solvent and services improved.
PROGRESA , covering 40 percent of rural families in Mexico, lowered illness rates by 20 percent among children, and increased enrollment rates by 8 percentage points for girls, 5 for boys.
An NGO introduced citizen report cards in Bangalore, which were widely publicized in the press, leading to a response from the state government. These cards have now been launched all over India, and in Ukraine, Philippines, Vietnam.
The discovery that only 13 percent of the money reached primary schools led to a campaign that tracked the flow of funds monthly in the newspapers, accompanied by public announcements by Museveni, all of which helped double enrollments in Uganda.

13. 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

14. 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

15. Citizen-policymaker “Pro-Poor” vs. “clientelist” politics
Universal vs. narrowly targeted services
Capture
Role of informed voting, social polarization, credible politicians in making services work for poor people
Role of information

16. Mexico’s PRONASOL,
Large social assistance program (1.2 percent of GDP)
Water, sanitation, electricity and education construction to poor communities
Limited poverty impact
Reduced poverty by 3 percent
If better targeted, could have reduced it by 64 percent
In the late 1980s, Mexico introduced a social assistance program aimed at delivering services to the poor. But the program had a limited impact on poverty. Why? The bureaucrats chose to reward those municipalities that voted for the majority party, which was PRI.

17. 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

18. Increase in primary school enrollments in Uganda
Ugandans did not vote regionally in the 1996 election vs. Malawi
Museveni’s promise of UPE resonated
Education was a salient issue for Ugandan voters – candidates to believe they will be judged on whether education promises are fulfilled, education must be important for voters
Voters had access to information about performance – press
Success in UPE contributed to Museveni’s continued success
Afrobarometer: 87% said their government was handling education well, while African average was 59%
Macro stability precondition vs. Malawi
The power of information
Source: Murphy, Bertoncino, and Wang 2002.

19. 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)

20. 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

21. Policymaker-provider
Delegation, finance, performance, monitoring, and enforcement
“Hard to monitor” versus “Easy to monitor”
Information for monitoring
New type of micro surveys

22. 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.

23. 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

24. 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

25. Client-provider Strengthen accountability by: Information Choice
Participation: clients as monitors

26. 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

27. 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

28. Eight sizes fit all?
Difficult to monitor
Easy to monitor

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

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

31. 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.

32. 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.

33. 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.

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