Making Services Work for Poor People

The weak link between public spending in health and education, and health and education outcomes can be partially explained by the fact that the delivery of services that are critical to human development — health, education, water and sanitation— are widely failing poor people. The money is often spent on private goods or on the non-poor; it often fails to reach the frontier service provider; incentives for service delivery by providers are weak; and poor people sometimes fail to demand these services. This paper examines the experience with alternative mechanisms for service delivery — contracting out to the private and NGO sectors, community participation, co-financing by service beneficiaries — and shows that this, as well as the experience of more traditional public sector provision, can be interpreted by looking at three principal-agent relationships in the service-delivery chain: between policymakers and providers; between clients and providers; and between clients (as citizens) and policymakers. Weaknesses in one or more of these relationships can lead to service-delivery failure, while attempts to strengthen one may not always work because of deficiencies in other links in the chain.