Performance Based Grant Systems: A Comparative Analysis of Experiences in Bangladesh, Nepal and Uganda

Client: United Nations Capital Development Fund (UNCDF)
Faculty: Paul Smoke
Team: Daniel Manitsky, Ashella Ndhlovu, Christine Nganga
Year: 2006
In order to meet the Millennium Development Goals, governments in developing nations will need to substantially improve their ability to deliver basic infrastructure and services. One of the most promising strategies for achieving this is the use of performance-based grants (PBGs). These grants introduce incentives to increase capacity at the local level. This project analyzes the PBG systems of three early-adopting countries: Bangladesh, Nepal and Uganda. Using a case study approach, the study examines factors contributing to the success, or lack thereof, of each system in increasing the performance of local governments. Capstone team members paid special attention to the operationalization of performance measures and strategies for increasing public participation. The political and administrative challenges of implementing PBG systems are also examined. The study concludes with recommendations for further research.