Real Innovation or Second-Best Solution? First Experiences from Results-Based Aid for Fiscal Decentralisation in Ghana and Tanzania

German Development Institute/Deutsches Institut für Entwicklungspolitik (DIE) Discussion Paper No. 3/2014

65 Pages Posted: 11 Feb 2014 Last revised: 30 Apr 2014

See all articles by Heiner Janus

Heiner Janus

German Development Institute / Deutsches Institut für Entwicklungspolitik (DIE) ; University of Manchester - Global Development Institute

Date Written: February 1, 2014

Abstract

This paper systematically records first experiences with results-based aid for fiscal decentralisation in Ghana and Tanzania. Results-based aid is an innovative aid modality that links funding to the achievement of pre-agreed results, based on a contract between the donor and the recipient country. Observations from Ghana and Tanzania show that the modality holds great potential in incentivising better performance in fiscal decentralisation compared to traditional aid approaches. Yet, a number of challenges emerge during implementation, including trade-offs between country ownership and results-orientation or increased transaction costs, for instance. Therefore, results-based aid is a promising aid modality for fiscal decentralisation, but it should be implemented in alignment with partner-country systems and harmonised with other aid modalities. Results-based aid can be one important element of the aid modality-mix in fiscal decentralisation.

Keywords: Results-based aid, aid effectiveness, development effectiveness, results-based approaches, development cooperation

Suggested Citation

Janus, Heiner, Real Innovation or Second-Best Solution? First Experiences from Results-Based Aid for Fiscal Decentralisation in Ghana and Tanzania (February 1, 2014). German Development Institute/Deutsches Institut für Entwicklungspolitik (DIE) Discussion Paper No. 3/2014 , Available at SSRN: https://ssrn.com/abstract=2394208 or http://dx.doi.org/10.2139/ssrn.2394208

Heiner Janus (Contact Author)

German Development Institute / Deutsches Institut für Entwicklungspolitik (DIE) ( email )

Tulpenfeld 6
Bonn, 53113
Germany

University of Manchester - Global Development Institute ( email )

Oxford Road
Manchester, M13 9PL
United Kingdom

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