Ghana provides electricity for 83% of its population, the second highest rate in Sub-Saharan Africa, but connecting isolated areas to the grid has proved very difficult. The solution: investing in solar-powered mini-grids like this one, built with support from IDA, the World Bank Group's fund for the poorest.
Imagine if you could bring private sector resources and skills to social projects. Impact Bonds (IBs) are an innovative Results-Based Financing (RBF) mechanism that tie financial returns and payments to specific results incentivizing investors and service providers.
In Ghana, output-based aid (OBA) was used to improve affordability for households in crowded low-income areas of the Greater Accra Metropolitan Area (GAMA) to invest in improved household toilets. OBA was provided as a subsidy to reduce the upfront cost for toilets and stimulate demand, which in turn made it more attractive for financial institutions to enter this market.
In Ghana, blended finance helped improve affordability for rural Ghanaian household investments in off-grid renewable energy technologies. Local banks extended credit blended with concessional finance from the World Bank to rural low-income households for acquisition, installation and maintenance of solar home systems (SHSs).
Given the significant financing gap to meet the needs of developing countries and achieve the United Nations’ Sustainable Development Goals*, governments, multilaterals and other development partners are increasingly looking to the private sector to help fill this gap.