Performance-Based Aid: Why it will probably not meet promises

Performance-based aid (PBA) is increasingly advocated as a way to improve development aid effectiveness through resolving incentive issues inherent in aid relationships. Some donors use PBA together with performance-based financing arrangements within partner countries. Expectations from PBA are high – yet, while its rationale may look appealing, it is grounded on a restrictive model and flawed when taking account of real-world context. A number of problems associated to PBA have already been advanced as jeopardising its success. More fundamentally, one may question the mere appropriateness of PBA to provide incentives all along the chain from recipient governments to those who are supposed to produce results. Thus believing that PBA can have a mechanistic trickle-down incentive effect seems an illusion.