Innovative Finance
August 1, 2024
Context and Issue
Despite numerous substantial reforms and considerable new funds directed towards public education in East Africa over the past ten years, student academic attainment in the region continues to lag. Results-based financing (RBF) has been implemented in numerous developing nations to motivate educators and other involved parties to deliver improved outcomes.
Solution
Two performance payment designs were created to ensure better learning outcomes and incentivize the teachers. The following are the two designs.
Simple Incentive Design (Proficiency)
The incentive design rewarded teachers based on the number of specific milestones (or proficiency) levels each student could achieve.
Complex System Design (Student test score ranking within a group)
This design first grouped students by baseline test scores and then rewarded teachers based on the rank ordering of each of their students within each
group. Hence, this system rewards teachers based on the gains of their students within the structure of a rank-order tournament.
Impact
Both incentive schemes significantly raised test scores. However, despite the theoretical advantages of the more complex learning “gains” design, the simpler learning “levels” design was at least as effective in raising student learning