Evidence from Colombia shows that results-based financing is an underused tool for forced displacement response; it can be used to overcome challenges around policy implementation and maximise programme impact and cost efficiency.

In the past decade, roughly 7.7 million Venezuelans have been forced to flee their country and over 2.8 million have migrated to Colombia.[1] Instiglio, a non-profit organisation specialised in supporting the public sector to use results-based approaches, has worked alongside governments, donors and social service providers to implement results-based financing for programmes supporting Venezuelans in Colombia.

Migrants (including refugees)[2] can benefit the communities that host them, if integrated properly. Latin America and the Caribbean broadly stand out for granting formal migration status and making services available to displaced Venezuelans. Nevertheless, millions of forced migrants lack formal migration status, and, as a result, cannot access formal employment and some government services. Many more have formal migration status but face other barriers to their socio-economic integration. Even when policymakers enact integration policies, implementation difficulties hinder these policies from achieving results. Using results-based financing, which involves rewarding organisations if and when agreed-upon results are achieved, is catalysing the impact that programmes have on migrants and host communities, and helping to address common pitfalls in implementing integration policies.

Implementing policies that capitalise on the benefits of migration

Migration brings benefits and costs for migrants themselves, their countries of origin and the host countries. These benefits and costs depend on factors such as the skills and personal qualities of the individual migrant, the circumstances in which they arrive in the host country and the country’s policies in relation to migration. To minimise the costs and reap the benefits of migration, migrants must be able to integrate into the destination country. Migrants’ costs to the healthcare system, for example, are smaller if they can access preventative healthcare. Their contributions are more significant if they have formal employment, use the education, skills and experience they have acquired, and pay taxes. This requires allowing migrants to have documentation, move around the country, acquire formal jobs, have their educational and professional qualifications recognised, and access education and healthcare.

Many countries in Latin America and the Caribbean have implemented socio-economic integration policies to reap the benefits of migration. Chile, Colombia, Costa Rica and Peru have been among the region’s leaders in creating successful integration programmes for migrants. These policies include simplifying registration processes, expediting legal status, recognising migrants’ skills and qualifications when trained abroad, and offering culturally sensitive public services. However, introducing integration policies is only half the battle, as there can be many challenges in implementation.

Barriers to implementing policies aimed at socio-economic integration

Difficulties targeting, tracking and following up
Government databases often do not properly reflect migration flows and characteristics. This is especially true for populations with irregular status, for whom governments may not have any data at all. Cities in many countries are allocated funding based on their population size and, due to migrants being under-counted, may receive a lower budget than needed to provide services. Programmes meant to improve outcomes for migrants may not be properly targeted due to a lack of information on where migrants are based or who they are. Once programmes start, governments face challenges following up on this more mobile population.

Difficulties designing effective integration policies
Governments may be unfamiliar with the specific needs of the migrant population or may simply not know how to serve a population that is different from the one they have historically worked with. Governments may need to give service providers the flexibility to achieve results without being prescriptive. They may also want to replicate models of intervention that have been proven to work for other migrant populations.

Successful small-scale interventions do not always scale up effectively
When interventions work at a small scale governments usually then move to scale them up, but they often find that the same programme at scale does not have the same successful results as it did in a pilot phase. The larger population group may have different characteristics, or it may be harder to maintain the right level of targeting and programme quality at scale.

Introducing results-based financing

Imagine a project that aims to bridge the language gap between migrants and host communities. Traditional government procurement would pay a service provider for completing training sessions and delivering learning materials, or worse, simply for submitting receipts. A performance-based contract, in contrast, would condition at least a part of the payments to improvements in language proficiency. This gives the provider the flexibility to invest in what is making the greatest impact and stop spending on activities that do not add value. Providing flexibility, in combination with incentives, creates an environment for impact.

Colombia has become a leader among middle and low-income countries in using results-based financing. The country started by implementing social impact bonds (a results-based instrument that combines public and private funding) to achieve job placement outcomes. It then scaled this experience up to results-based contracts (through which the government hires providers, without involving investors, and ties some of the funding to results) that span multiple millions of dollars and thousands of beneficiaries.

There are national and sub-national entities using results-based procurement in sectors as diverse as early childhood development, addressing homelessness and healthcare. It is therefore no surprise that Colombia has turned to results-based financing to fund and achieve socio-economic integration outcomes for Venezuelan migrants.

Improved data and performance management

Paying for results requires an environment with clear and reliable data on both the target population and on the impact of the programme, as payments depend on this. Furthermore, its success depends on implementing entities having enough performance data to understand midway whether the programme is working and being able to course-correct. This often means that programmes need to ramp up their data collection and performance management capacity at the outset. Engaging in results-based arrangements leaves implementing organisations with data and performance management systems which often outlive the programme’s lifespan.

In Barranquilla, USAID’s Local Health System Sustainability Project, known in Colombia as Comunidades Saludables (Healthy Communities), partnered with Fundación Santo Domingo (The Santo Domingo Foundation), Universidad Simón Bolivar (Simón Bolivar University), the Barranquilla Mayor’s Office and Mi Red Barranquilla (My Network Baranquilla) – the public-private healthcare service provider of Barranquilla – to develop a results-based project called Voy a ser mamá (I’m going to be a Mum). The project aims to achieve improved maternal health results for Venezuelan migrants who, due to their irregular migration status, are ineligible to participate in the national health insurance system. Through this project, launched in 2023, Fundación Santo Domingo signed a contract with the Universidad Simón Bolívar, which in turn signed a results-based contract with Mi Red Barranquilla to deliver pre-natal services to migrant women. Mi Red Barranquilla’s payment varies depending on metrics such as the number of pre-natal check-ups per patient or the timely identification and treatment of mothers affected by syphilis and HIV. Now that the systems are set up, Mi Red Barranquilla and the Mayor’s Office will continue to collect more information on maternal health indicators of migrant women than they did previously – an important legacy of this project.

Identifying optimal integration policies and programmes

Crafting and implementing integration policies is challenging in part due to governments’ and implementers’ lack of experience with migrants and integration programmes in general, as well as a lack of evidence of what works for this population. Results-based financing creates an environment of flexibility and incentives to achieve impact, which fosters data-driven innovation.

In Barranquilla, the health service provider knows how to achieve high adherence to pre-natal appointments among Colombian patients. However, it does not know how to increase that adherence rate among Venezuelan patients, who frequently relocate and change phone numbers, and who may distrust or not understand the health system. Providers have hypotheses on what may work – for example, follow-ups on WhatsApp, reaching out through community-based organisations, or improving coordination with the health systems of nearby municipalities. The results-based contract allows them to test these hypotheses in the quest for better results.

Similarly, in Medellín, the city government has been supporting households in a situation of homelessness to generate a sustainable income. In the past five years, the proportion of participants who are Venezuelan has risen to 70%. During this time, the city has noticed the programme’s declining results but is unsure of the cause or how to best serve migrants. We supported the city in developing a performance-based contract for the provider to create an environment of data-driven innovation to identify an improved strategy. A portion of the provider’s payment will only be paid based on improvements in indicators such as whether families are earning enough to pay rent by the programme’s end. In a situation in which it is not clear which intervention works best, giving a provider flexibility combined with incentives opens room to experiment within established parameters.

Scaling up successful interventions

When programmes work well, governments, donors and implementers work to scale them up to reach a broader population. In doing so, they often find it challenging to maintain the same impact at scale as in smaller pilot phases. Aligning incentives through results-based financing can help ensure programmes are scaled up with fidelity to the original model and also allow for flexibility around the edges of the programme design.

Semillas de Apego (Seeds of Attachment), a programme of the Universidad de Los Andes (University of the Andes), supports parents who have lived through trauma to avoid the intergenerational transmission of trauma to their children. The first version of this programme was started in 2015 with internally displaced people within Colombia. An impact evaluation of the programme at a medium scale found positive results in maternal mental health, child-parent relationships and early childhood mental health. Now, the University is scaling up the programme to benefit Venezuelan migrants and their families. However, as the programme is being scaled up from 450 to 6,000 families, fidelity to the programme may be jeopardised: scaling the programme with new implementing partners may result in higher staff turnover and lower participant retention rates than during the pilot stages. An arrangement in which implementers get paid in part based on keeping turnover rates low and retention rates high helps maintain fidelity to the model during the scale-up phase.

When and how to use results-based financing

Results-based financing can be effective in tackling a specific set of challenges, but it is not a universal solution. Policymakers facing political constraints that limit their choice of interventions may find little relief in results-based financing. On the other hand, when barriers are implementation-related results-based financing can offer a relatively straightforward way to improve results. While this approach requires certain minimum capabilities, such as the ability to collect relevant data, it can also serve as an incentive for stakeholders to develop these capacities.

Once the decision to use results-based financing is made, several design choices will determine the success of the initiative. Some of the choices will be deciding what proportion of funding should be tied to results, selecting the appropriate performance indicators and setting ambitious yet achievable targets for each indicator. Crafting a results-based financing instrument that aligns with the maturity of the intervention, the capacity of the service providers to implement the programme and manage risk, and the level of control these providers have over the outcomes is crucial for ensuring that the initiative succeeds at addressing the challenges at hand.

Recommendations

The world faces mounting pressure to manage migration, minimise the costs and reap the benefits, and to do so with limited funding. Host countries are at the centre of this, as they decide who enters their territory, and what rights and benefits are given to those that arrive. Unfortunately, there is little evidence of what interventions work best to integrate migrants, and, even when policymakers select and fund the best policies, implementing them is never straightforward.

The way in which governments typically contract services – by paying providers for inputs, or even more concerningly, reimbursing them based on receipts that reflect budgeted expenditures – falls drastically short of what is needed to improve results. When it comes to improving outcomes for migrants and host communities, where the needs are immense and the funding is scarce, policymakers must urgently find ways to improve the impact of every dollar spent.

In many instances, results-based financing may achieve improved cost-effectiveness. As demonstrated in Colombia, this approach can foster an environment conducive to innovation, enhance data and performance management practices, and incentivise the scaling of proven interventions with fidelity to their models. As policymakers evaluate which strategies to pursue for better results, leveraging results-based financing can significantly improve the implementation of integration policies and programmes, ultimately benefiting both migrants and host communities.

 

Sebastian Chaskel
Associate Partner, Instiglio, Colombia
sebastian.chaskel@instiglio.org

Gabriela Vargas
Associate, Instiglio, Colombia
gabriela.vargas@instiglio.org

Mateo Zárate
MPA Candidate at the School of International and Public Affairs, Columbia University, US
mateo.zarate@columbia.edu

Ana María Pérez
MPA Candidate at the School of Public and International Affairs, Princeton University, US
ap1647@princeton.edu

Nicolás Hernández Muñoz
Associate, Instiglio, Colombia
nicolas.hernandez@instiglio.org

The authors would like to thank their colleagues, as well as public servants and practitioners across Colombia who work to support the social and economic integration of migrants into Colombian society.

 

[1] See IOM (2024) ‘Venezuelan Migrants Drive USD 529.1M Boost to Colombia’s Economy’ bit.ly/venezuelan-boost-colombias-economy

[2] In this article, we use the term ‘migrant’ to refer broadly to refugees (people who have been granted international protection) as well as ‘distressed migrants’ (people who have moved to another country under distressed circumstances, but who do not have refugee status). This nomenclature is borrowed from the World Bank’s World Development Report 2023: Migrants, Refugees, and Society. bit.ly/migrants-refugees-society

 

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