• The Sub-National Governance programme is working to improve the quality of governance at the provincial and district levels in Pakistan. As part of the programme, the District Delivery Challenge Fund finances pilots that seek to reform the way public services in education and healthcare are delivered to communities.
  • Because of the mechanistic set up of the governments in the two provinces where the programme works, a platform such as the fund is needed to inspire and spread innovation within governance.
  • The fund enables the governments to share the risk of investing in innovative ideas and to secure additional funding once innovations prove successful.

Background: Implementing a challenge fund to improve governance

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The Sub-National Governance Programme (SNG) in Pakistan supports the provincial governments of Khyber Pakhtunkhwa and the Punjab to improve basic service delivery, to better meet the needs of citizens, especially the poor, women and girls. The District Delivery Challenge Fund (DDCF), a sub-component of the programme, supports this change through a combination of public sector support and the funding of innovative education and healthcare pilots. Successful pilots are to be scaled up within and across Khyber Pakhtunkhwa and Punjab provinces.

This process aims to develop a practical framework and tools that will enable all districts throughout Pakistan to identify, pilot and evolve bespoke public service solutions after the programme has finished.

The Sub-National Governance programme is funded by the UK government. The District Delivery Challenge Fund component is managed by Coffey.

Using the challenge fund to get past institutional inertia

The District Delivery Challenge Fund’s (DDCF’s) success has highlighted the value in governments’ investment in innovation. The DDCF has also established that an efficient platform within the provincial governments in Khyber Pakhtunkhwa and Punjab is needed to inspire and spread innovation within governance. The governments’ current mechanistic set up stifles any opportunity for innovation. The absence of any viable, alternative options to service delivery models has meant that the government was not challenged into assessing the efficiency of its current models. Therefore, any change processes were slow.

A platform like the DDCF can identify change agents within governments, give them funding through a review process, and let them lead innovation in governance/service delivery. Such innovation can challenge the status quo. Any model that the change agents deliver successfully can be considered for adoption for wider implementation and change. At the provincial level, government can allocate part of its annual development budget toward this innovative platform for testing new models, which are accessible by provincial departments/district governments.

Sharing risk between the fund and the government

The DDCF and local governments have shared the risk of investing in innovative pilot projects. Without the DDCF’s funding, the government would not have invested its time and resources in experimenting with the health and education pilot projects. Thus, the experience shows that a risk sharing mechanism similar to the DDCF can overcome the risk aversion tendency within government. When the pilots showed that they offered better solutions to the current health and education service delivery models, this created pressure for the governments to adopt them.

As the governments have demonstrated their ability to absorb innovative ideas into their service delivery models, the DDCF is also advocating a mainstreaming of these pilots. For example, in Punjab, the provincial Chief Minister, who frequently reviews progress for mainstreaming pilots, has pushed for improving education services. He has stated that part of the DFID funds earmarked for education sector reforms should be directed toward mainstreaming DDCF innovations within the education service delivery mechanism.

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