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Self-financing Promotes Accountability

Several of the case studies in the GDN project found a significant effect of alternative financing sources on accountability and performance.

Direct Payment for Services Enhances Accountability and Performance

As already mentioned, several GDN case studies found that payment for services was associated with better quality and higher user satisfaction.41 As an example, water price was found to have a positive effect, though statistically weak, on water service coverage across Peru districts. Similarly, the study on india found that private provision in education and health lead to better outcomes and, as a consequence, families prefer to send their kids to private schools, in spite of their higher costs. In several African studies, satisfaction levels were higher among users who pay for their services.

Two channels may be at play behind the positive relation between outcomes and payment of tariffs, fees or tolls. On the one hand, providers may be better financed, and thus more able and willing to supply a better service. On the other, users may be more eager to demand results for their payment, either through exit (especially when there is competition among providers) or voice.

As an illustration of the second channel, the case study on water provision in uganda found that respondents who regularly contribute to the maintenance of the local water source are more likely to report back problems associated with water delivery, as compared to those who do not usually contribute. This suggests that those who pay are more likely to demand accountability.

 
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