Hunting for Per Diem: The Uses and Abuses of Travel Compensation in Three Developing Countries

Cash is a great incentive. The last decade has seen a boom in various
forms of cash incentive programmes, from the conditional cash transfer
programmes that emerged in Latin America in the late 90’s, providing
cash to budget-constrained households conditional on sending children
to school and for health check-ups, through to results-based financing
and cash-on-delivery programmes, very much in vogue today, whereby
governments only receive funding when they can show an agreed-upon
progress on certain outcomes and results. While the incentives usually
work, the potential adverse and unintended effects need to be kept an
eye on; fertility rates may increase as a result of cash per child, sector
results not in the government-donor contract may be neglected. When
the compensation employees of public and private organisations get for
extra expenses incurred when on workshops and seminars away from
their normal duty station is substantially larger than their actual expenses,
such per diems or allowances gain the same role as ‘conditional cash’.
And while it does ensure an incentive to attend such events, it equally
provides a number of potentially perverse incentives.

Capacity building is a central concern of development efforts in general,
and in Africa in particular. A large portion of development aid is spent on
seminars and workshops to enhance competence and efficiency in state
administrations as well as in civil society organisations. While there can
be little doubt that the government staff, NGO staff and civil society
employees attending such training and awareness-raising events learn
something and upgrade their skills, the effectiveness of these workshops
is a sadly understudied and underreported area. While the effectiveness
of training-workshops is likely to be the subject of a future research
programme of Norad’s Evaluation Department, this study focuses on the
potential abuses of the current mix of per diem and allowances systems.

This report is all the more timely as the last decade has seen a rapid
increase in the amount of donor funds allocated to allowances and per
diem in connection with seminars and workshops. The study makes an
assessment of the origins, operation and potential consequences of per
diem compensation with particular reference to effects on development
programmes, national budgets and civil service delivery.

What are some of the unintended and unwanted consequences of the
current allowances systems? Who are the key external and local actors
among donors and government driving the allowances and per diem
phenomenon? Can the positive aspects of per diems be retained while
minimising the potential negative consequences? Ethiopia, Malawi and
Tanzania were selected as country cases.

The study shows that there is a variation in the three countries with
regard to the way the per diem and seminar systems operate, opening
up the possibility for a variety of methods for misuse or non-optimal use
of the money that has been allocated for seminars.

The study has no conclusive evidence of the precise magnitude of the per
diem problem but gives important insights into the potential for misuse,
and contains a number of recommendations on how donor organizations
and governments can promote a collective approach to improve on the
current systems.

Oslo, April 2012
Marie Moland Gaarder
Director of Evaluation