'Presidential handshake' is an opportunity to discuss output-based payment reform

By Chrispus Mayora

Since the last few weeks, the media and public discourse has been awash with discussions about the bonus payments given to a team that was involved in the landmark oil case that was won by Uganda at the International arbitration.

Following this court success, the team was allocated up to about 6bn in what has been dubbed the "presidential ‘handshake". Addressing members of the National Resistance Movement (NRM) Caucus recently, H.E. The president of Uganda told his gathering that the much touted ‘handshake' was not the first of its kind to be offered.

The president cited an earlier ‘handshake' that had been extended to a group of geologists who participated in earlier oil exploration processes. While this ‘handshake' has generated moral and ethical arguments, and other forms of sentiments, this concept is not new in government. Around the year 2011, government of Uganda mooted a plan to employ public servants on contractual arrangements.

According to this plan, individual public servants would be offered employment on periodic contracts that clearly spelt terms of reference and performance targets, along which each would be evaluated as a basis for contract renewal.

The Ministry of Finance Planning and Economic Development has been working on a Performance Based Budgeting (PBB) framework and will be rolling this out soon. The PBB provides for funding sectors and ministries based on clearly stipulated performance targets for which the sector can be held accountable before additional funding is advanced.

In the area of health, the challenges of poor health service delivery have partly been attributed to high levels of health worker absenteeism, absence of a strong monitoring and supervision mechanism and broadly the lack of accountability for actions or inactions.

To address these challenges, a proposal for a provider payment reform - Output-based payment (OBP) system - has been under consideration. Under output-based payment, a contract is entered with a health service provider - whether an individual provider or institution - to provide a package of services and only paid upon fulfillment of the agreed performance targets. It is only the achievement of targets that guarantees payment.

In this way, the provider (health worker) is motivated to do their best as an assurance for payment.

Output targets must be measured and verified before payment can be sanctioned. The example of high efficiencies reported across Rwanda's sectors and Departments, which many commentators have often referred to, are a culmination of adopting the performance contract system and performance-based payment arrangement.

A number of pilot studies in Uganda and other countries about output-based financing in health have all demonstrated improvements in service delivery alongside quality as a result of OBP. It is a win-win approach for both the service provider and the purchaser (government).

As a result of these discussions and a series of OBP pilot studies in Uganda, the Ministry of Health has formulated the Health Financing strategy (HFS) that clearly articulates the need to move towards performance based financing in health. Indeed, a national performance based financing framework has been developed.

The current debate on the presidential ‘handshake', in my view, offers us the best opportunity to engage in broader discussions around what reforms are necessary to motivate public servants to deliver on their mandates and improve service delivery.

In this view, a number of issues need to be examined, including 1) whether as a country, we are necessarily getting the best from our public servants and if there may be room to do better, 2) examining the link between productivity of workers and the remuneration (level and form)  or payment system, 3) rethink a public service payment reform with an inbuilt incentive mechanism for providers or public servants to be motivated to perform to their best abilities and with honesty - which are critical elements in improving public service performance, and 4) a payment system based on clear performance indicators may be the best approach to bring out the best of workers and could foster improved service delivery and accountability among service providers. 

The Output-based payment approach - a typical form of ‘handshake' - that has already successfully been piloted in the health sector and is now being scaled up with support from the World Bank, should be implemented across all government to streamline and improve service delivery in Uganda.

The writer is a CARTA PhD Fellow and Health Economist-SPEED Programme, Makerere University School of Public Health