Ahmed, Tashrik, Tashrik Ahmed, Aneesa Arur, Damien De Walque, and Gil Shapira. 2019. Incentivizing Quantity and Quality of Care: Evidence from an Impact Evaluation of Performance-Based Financing in the Health Sector in Tajikistan. Washington, D.C.: The World Bank.
Project website
World Bank project information
GPRBA's $3.3 million subsidy is supplementing the Liberia Reconstruction Trust Fund's $ 6 million to the ongoing Cheesemanburg Landfill and Urban Sanitation (CLUS) project in Monrovia, Liberia.
This additional financing is recognized as a critical intervention to enhance the resilience of the residents of Monrovia to the adverse effects of the COVID-19 pandemic.
Improved solid waste management can also create skilled and unskilled jobs in the areas of waste collection/processing and recycling, and has the potential to achieve increased levels of social cohesion through engagement and behavior change.
By working toward improved quality waste-related services, a local economy has a greater chance of thriving and enhancing public spaces to be enjoyed by all.
Such public services must be a part of a community’s efforts to protect public health and the environment, as outlined in UN Sustainable Development Goal 11.
“Evidence shows that results-based financing has a significant impact – saving lives and expanding access to quality, essential health services for the poorest women and children in developing countries”. Jim Yong Kim, World Bank Group President
Using our guide for effective results-based financing approaches
Results Based Financing (RBF) can be broadly defined as a financing arrangement in which payments are contingent upon the achievement of pre-defined and verified results. A variety of RBF instruments exist to address a range of challenges, from improving access to basic services like water and energy for low-income communities, to decreasing unemployment and improving education outcomes.
The use of RBF approaches within the international development finance community is growing rapidly. In the last decade alone, at least $25 billion of development spending has been tied to results, an increase from just a few billion the decade before.
Despite the increase in the use of RBF approaches, the practice in certain thematic areas remains emergent and insufficiently documented. With an assortment of RBF instruments available, it is important to understand how the principles and requirements of the different approaches vary in their application.
Commissioned by GPOBA and written by Instiglio, the report serves as a guide and diagnostic tool for practitioners interested in using RBF to meet their development objectives, helping funders to understand where and how they can best use different RBF instruments to deliver impact. It draws on lessons and examples of RBF projects in varied contexts and sectors implemented around the world.
The report specifically looks at questions that are critical to building a mature practice of RBF, including:
Read more here: Guidebook for Effective Results-Based Financing Approaches
Access the RBF Database noted in the Guidebook.
Photo: Saul E Gonzalez / World Bank
Despite increases in access to electricity over the last two decades, approximately 1.1 billion people—still lacked access to electricity in 2014. While urban areas tend to be more electrified due to their proximity to grid connections, most of the world’s population without access to electricity lives in rural areas.
The Sustainable Development Goals adopted in 2015, strives to have universal access to affordable, reliable, sustainable and modern energy for all by 2030. The Global Partnership on Output-based Aid (GPOBA) supports this energy access goal using innovative financing solutions that link funding to actual results achieved. Results-based Financing (RBF) approaches provide access to basic services like energy for low-income families and communities that might otherwise go unserved.
Experience from GPOBA work suggests designing subsidies focusing on results encourages efficiency through good targeting of subsidies and creating incentives for Service Providers to deliver in a timely manner and at lowest cost. Therefore, by bringing together public and private sector funders to maximize resources, and designing effective incentives for service providers to reach underserved low-income communities, results-based financing approaches can give people the chance to improve their life.
GPOBA has been supporting projects using renewable energy to expand access to low-income communities since 2005 and has achieved results and lessons that are being used to design similar projects in different countries.
In Bangladesh, GPOBA has partnered with the Government of Bangladesh, the Infrastructure Development Company Limited (IDCOL) and other donors to increase access to clean energy for targeted rural areas through different renewable energy technologies. The project makes clean energy affordable to low-income households through off-grid solutions by buying down the capital cost of solar home systems (SHS) and mini-grid connections and facilitates investments in solar-pumped irrigation to farmers, reducing the negative fiscal and environmental impact of diesel pumps. While the solar-based aspect is the main feature of this project, the grant also helps improve family health by providing clean cooking solutions through biogas plants. The project has already impacted the lives of 3.6 million beneficiaries in Bangladesh and has served as a lesson for many other countries.
In Mali where the rural population remains dispersed, extending the national electricity grid in a financially sustainable manner is a major challenge. GPOBA grant has been used to co-finance Mali’s Rural Electrification Hybrid System Project, which provides incentives to private operators to increase access and make connection packages affordable to the rural and low-income communities using mini-grid and Solar Home System technologies.
Another project in the Philippines supports low-income families in remote and conflict affected areas of the country to have access to solar energy under the Access to Sustainable Energy Project. The project is implemented in partnership with the Department of Energy of the Philippines and the European Union. The project, implemented by the private LGU Guarantee Corporation, in partnership with Electric Cooperatives, selects private contractors to supply and install the solar home systems (SHS) and GPOBA funds disburse upon verification that SHSs have been installed and are functioning.
A recent impact study conducted to analyze the impact of improved access to energy shows that SHS adoption leads to welfare gains, such as: saving money, improving meal preparation conditions, reducing incidence of gastrointestinal and respiratory diseases, expanding study time for children, increasing mobility and security, and allowing more efficient use of time for women.
Related (useful) links
Output-Based Aid for Energy Access (OBApproaches 52)
Bangladesh Rural Electrification and Renewable Energy Development- SHS Project (Lessons Learned 10)
Surge in Solar-Powered Homes Experience in Off-Grid Rural Bangladesh
Output-Based Aid in Bangladesh: Solar Home Systems for Rural Households (OBApproaches 42)
Output-Based Aid in Mali Rural Electrification Hybrid System Project (OBApproaches 45)
The development objective of this programmatic activity was to promote productive use of electricity by the micro and small enterprises (MSEs) and to evaluate the behavioral changes of the MSEs after accessing electricity in targeted urban and peri-urban Zambia.
All the activities have been completed. They were conducted in conjunction with the MSE typology TA described above. The MSE survey had 1,814 baseline respondents, including the control group, 90% of whom were surveyed for the endline. The MSE evaluation concluded that micro-entrepreneurs continued using and paying for the electricity connections obtained under the GPORA project. As regards electricity consumption and purchase of appliances, MSEs from food-related businesses were predominantly buying fridges. Otherwise, electricity was used for lighting, TV/radio and small appliances. The project encouraged transition from more expensive diesel generators and also from wire-tapping, contributing to fire safety and customer regularization. A charcoal/kerosene switching survey of 500 households was added at the endline. It found that the use of fossil fuel for lighting is negligent. As to cooking, the survey found a limited but encouraging evidence of water boiling with an electrical appliance. To heat water for cooking or bathing/washing, 52% use a wood/charcoal stove (Mbaula) while 33% use electric kettles or heating elements. Going forward, 63% were thinking of getting an electrical appliance for cooking.
With GPOBA’s $5.85 million grant agreement signed on February 21, 2018, small-scale cotton farmers in western Burkina Faso’s semi-arid region will receive support for better land management and irrigation practices, procurement and installation of irrigation equipment, and credit financing to stem the effects of climate change and stabilize production. This four-year program (to be launched April 2018) developed in collaboration with IFC is part of the World Bank's Sahel Irrigation Initiative -- is GPOBA’s first project in Burkina Faso and in direct support of irrigation. The collaborative World Bank-IFC-GPOBA efforts seek to optimize the use of available resources to mitigate the negative effects of climate change on cotton sector productivity by training about 1,000 small-scale cotton farmers in land and water management, investing in small-scale irrigation systems, and facilitating farmers' access to credit.
This funding will benefit farmers’ cooperatives affiliated with SOFITEX (Société Burkinabé des Fibres Textiles), which is responsible for more than three-quarters of the country’s cotton production. Burkina Faso is the largest cotton producer in Sub-Saharan Africa, with cotton's being the country's second most important export commodity in terms of revenue generation ---- yet small-scale farmers have been wholly reliant on rainwater for cultivation, leaving harvests’ fate subject to the extremes of either drought or flooding from excess rainfall.
GPOBA PROJECT COMPONENTS
As irrigation farming represents both a technological and cultural shift for these small-scale farmers, GPOBA and the IFC's Advisory Services will co-finance farmers' training on best agricultural practices for soil fertility and water management, water evaporation reduction, compost preparation, and erosion control. With just over half of the world’s cotton production's relying on irrigation, these farmers are poised to increase their ability to compete on the international market. By making better use of water and increasing soil capacity, land fertility and production over several crop cycles are expected to improve (perhaps as much as 30-80%) -- thereby reducing the risk of desertification -- while potentially boosting cotton production and farmer revenues.
A second project element finances procurement and installation of small-scale irrigation systems (i.e. reservoirs, stone contours, water collection lines, irrigation equipment) for areas up to 3 hectares. Farmers who successfully implement these capital investments and meet project milestones -- upon verification of their functionality, and payment of the first loan installment to their lenders --- can be reimbursed up to 80% of their investment costs.
The project’s third component helps the farmers who apply early to access market finance through a partial risk facility. GPOBA will provide the initial funds for this facility, after which other financial institutions may fill this role. GPOBA’s grant will help mitigate some of the risks such as natural disasters, loan payment default, and incomplete project implementation by compensating up to 50% of the lenders’ losses and commitment to pay up to half of the fees for purchasing market-based risk-mitigation products. The subsidy will also help farmers pay 80% of the interest of the first year’s loan to the lender.
GPOBA looks forward to this project’s success and will be closely monitoring its outcomes, and anticipates this to be a model to be replicated throughout the region and in other types of agribusiness through a blend of public and private financing.
*This program seeks to expand irrigated, sustainable, and productive agricultural that spurs job creation and increases food security in the Sahel’s rural regions. Click here to view a teaser video clip.
Related content: IFC's "Sowing Seeds of a Bright Future for Burkinabe Cotton Farmers"
Still Image from World Bank video "Bangladesh: Women Empowered by Solar Energy"
The Sustainable Development Goal on Climate Action identifies urgent measures to combat the effects and impact of climate change. The United Nations Framework Convention on Climate Change (UNFCCC) has set specific goals and targets that stimulate action in areas of critical importance to combat human-induced climate change and its impacts. The Conference of the Parties CoP22 which took place in Marrakech, Morocco focused on making the voices of the most vulnerable countries to climate change heard, in particular African countries and island states where Climate Change poses the greatest danger to the world's poorest.
Results-based financing (RBF) allows funds to be dispersed upon achievement of predefined results. Climate change mitigation under the Paris Agreement requires countries to set quantified targets defined within their Nationally Determined Contributions (NDCs) as part of their input to address climate change. Therefore, results-based climate finance approaches provide one tool as a means to successfully mobilizing private investment, and helping to create new markets relevant for low-carbon and climate resilient economies. As part of the RBF framework, GPOBA uses the Output-Based Aid (OBA) results mechanism to improve the delivery of basic services to the poor in developing countries.
GPOBA work has contributed to achieving the climate change agenda through subsidy funding using OBA approaches primarily through renewable and energy efficiency projects in low-income areas of developing countries. As part of its strategy to become a center of expertise in RBF approaches, GPOBA has launched a new initiative to showcase opportunities in applying results-based and climate-smart financing approaches, focusing on cities and disaster risk management. In collaboration with the World Bank Climate Change group, GPOBA is mapping the whole range of Results Climate Based Financing (RBCF) approaches. The outcome of this analytical work will present a new platform for engagement in the RBF community of practice.
Over the last 13 years GPOBA has supported clean energy projects using technologies such as natural gas, solar home systems, pico-photo volatic and compact fluorescent lamps, and off-grid electricity systems to provide access to energy for low-income households. These projects in Armenia, Bangladesh, Bolivia, Colombia, Ethiopia, Ghana, Nepal, and Philippines have achieved demonstrable results (see infographic below)..
Several other organizations such as the Carbon Initiative for Development Ci-Dev are using results-based payments as a vehicle for financing energy access projects. The Pilot Auction Facility for Methane and Climate Change Mitigation uses results-based payment mechanism to set a floor price for future carbon credits in the form of a tradeable output option, which is to be competitively allocated via auctions.
A noteworthy project funded and implemented by the World Bank Group is the Moldova Biomass Heating and Energy Conservation Project. This project helped install 317 new and more efficient boilers in public buildings across Moldova, including schools, hospitals and community centers, contributing to energy savings, lowering greenhouse gas emissions, and creating better living conditions for about 40,000 people. The project is the first in the country to earn certified carbon credits, which are sold to the World Bank’s Community Development Carbon Fund (CDCF) to earn revenue which helps municipalities pay for investment in energy-efficient measures. So far, the project has reduced green-house gas emissions by 89,500 tons of carbon dioxide, equivalent to taking about 19,000 modern vehicles off the roads for a year.
The World Bank’s Climate Change Action Plan highlights the need for leveraging partnerships between the donor community, development banks, NGOs, private sector and other stakeholders to help developing countries accelerate efforts to tackle climate change and deliver on their national climate plans. Results-Based Financing mechanisms, which put funding behind partnerships and innovative market-based Instruments such as GPOBA, the Carbon Initiative for Development and the Pilot Auction Facility are making tremendous contributions to the climate action agenda.
(map below has been updated since this article was published; click map for full-resolution version)
Photo: Dominic Chavez/World Bank
Efficient urban transport systems are vital for economic development, connecting poor and underserved communities to jobs, education, and health services. With rapid urbanization and increasing numbers of urban poor living in informal settlements, a well-connected and affordable transport system can have a transformative effect, reducing poverty, boosting prosperity, and contributing to the achievement of the Sustainable Development Goals.
Over the last decade there has been increased interest in public investment in urban mass transit, with implementation of urban rail and bus rapid-transit projects in cities around the world. However, there is little indication of the extent to which the poor are benefiting from these interventions due to the affordability of the service.
The complexity of urban transport systems makes it challenging to design and deliver one that is affordable to a range of users. As a result, the urban transport sector is usually subsidized to cover either infrastructure investment needs, operator costs, or user’s fees. Whatever subsidy option is used, careful consideration should be given to balancing the affordability of the service to the poor, the quality and quantity of service availability, and the financial sustainability for the government.
The Global Partnership on Output-Based Aid (GPOBA) has championed Output-Based Aid (OBA), a form of Results-Based Financing (RBF), as an innovative financing tool that can bridge the gap between what low-income households can afford and the cost of the service. Many of the short comings of the subsidy systems in urban transport can be addressed by designing or reforming them per OBA principles. OBA uses pro-poor targeting, which aims to reduce the main access-related barriers that affect low-income populations disproportionally, such as affordability, supply, and physical access to service. Pro-poor targeting can be particularly beneficial in the transport sector where subsidies do not always translate into pro-poor impacts—particularly when they are paid directly to operators, resulting in more low- income customers being left out of the system.
When used in transport projects, OBA aims to improve access of low-income populations to economic opportunities and services. OBA financing could be used to upgrade regulated transport services; regulate and improve unregulated services; make transport more affordable for low-income populations; or improve transport infrastructure, which in turn improves the enabling environment for better performance and service delivery making the sector more effective.
In 2017, GPOBA conducted an Urban Transport Study which analyzed how OBA approaches can help address the urban transport access challenge for low-income populations in sub-Saharan Africa and South Asia. Pilot OBA concepts were developed with recommendations on how to identify and prepare projects, as well as to evaluate options for an integrated public transport fare and subsidy policy to make transport more affordable. OBA can be sustained beyond the life of a project through project replication, leveraging of additional financing, or the conversion of a ‘traditional’ subsidy scheme into one based on OBA principles.
Related Resources
Analyzing the Use of Output-Based Aid (OBA) in Urban Transport
Output-based Aid for Urban Transport
Webinar on The Application of Results-Based Financing for Urban Transport