Country ISO2
Global
|
|
|
activity

News Release No. 2008/6

In Washington:
Cathy Russell, tel. (+1-202) 458 8124 crussell@worldbank.org

Washington, DC – August 4, 2008 – The Australian Agency for International Development (AusAID) made an additional pledge of AUD 35 million (approximately US$33.3 million) to the Global Partnership on Output-Based Aid (GPOBA) to support the program’s efforts to improve delivery of basic services to the poor in developing countries. The first tranche, in the amount of AUD 4.4 million (US$4.2 million), was received by GPOBA in July and the rest will be paid in installments over the next three years.

|
activity

News Release No. 2010/1

In Washington:

Cathy Russell, tel. (+1) 202 458 8124 email: crussell@worldbank.org

WASHINGTON, DC, March 25, 2010—Output-based aid (OBA), an innovative approach that ties payment of aid to the delivery of concrete results, has proven advantages over traditional aid approaches and is helping to improve the delivery of basic services to the poor says a new World Bank study released today.

According to Output-Based Aid: Lessons Learned and Best Practices, output-based aid (OBA) is becoming more popular as a way to deliver energy, clean water, healthcare and other basic infrastructure and social services to the poor. OBA can help to make these services affordable for poor customers while at the same time giving service providers an incentive to offer them.

 

|
activity

Members of the Council of Microfinance Equity Funds (CMEF) and World Bank staff met on October 29 in Washington, DC to launch a consultative process on access to finance and output-based aid.
The meeting was convened by the Global Partnership on Output-Based Aid (GPOBA) and facilitated by Dr. Ira Lieberman, Chairman and CEO of LIPAM International, Inc., and a former head of the Consultative Group to Assist the Poorest (CGAP).
Participants included Acción, the Calvert Foundation, the Center for Financial Inclusion, CGAP, Omtrix, Opportunity International, Triodos, Triple Jump, USAID’s Development Credit Authority, and Women’s World Banking. 
In his opening remarks, Dr. Lieberman, who is advising GPOBA on access to finance, stressed the importance of “linking output-based aid and access to finance to serve the poorest people.”
“This consultative process should help raise awareness of the output-based aid (OBA) approach among potential financiers, and help consider solutions so that OBA and other results-based financing mechanisms can be brought to scale and integrated into broader sector policy,” explained Yogita Mumssen, Senior Infrastructure Economist in the World Bank’s Finance, Economics, and Urban Development Department.
Access to finance in OBA schemes
OBA and other results-based financing mechanisms are gaining popularity in the development context for many reasons, in particular, the desire to link scarce public funding with actual results on the ground. 
Under an OBA scheme, public funding is only disbursed once the service provider has delivered the pre-agreed services or “outputs,” such as connection of poor households to electricity or water networks, or delivery of basic healthcare services.
Experience with OBA has shown that it can help ensure that the poor effectively receive the services, and increase transparency and accountability. However, the service providers delivering the results must have A2F to pay for the initial “inputs,” and such finance is not always available or affordable.
“OBA projects in principle require a mix of finance including project, consumer, and trade financing, but what OBA specifically adds to the equation is a greater working capital requirement,” explained Mumssen.   “Experience has shown this can be a serious constraint.”
Different types of service provider
GPOBA recently published a working paper which outlines some key issues related to OBA and A2F, based on experience with OBA schemes in the energy, health, and water sectors. 
The research shows that the financing requirements for OBA interventions vary depending on the size and type of service provider, and the nature of the output or service.
For instance, in OBA projects with large private or public-private partnership arrangements making extensions from an existing network, the providers have tended to fund their OBA operations from their own working capital or arranged own bank financing. 
An example is a GPOBA-funded project to expand water services in low-income areas of Jakarta in which the service provider, PALYJA (a subsidiary of international water management group Suez), fully pre-financed the OBA subsidy with internal cash.
Smaller service providers, however, often have limited credit history, collateral, and capacity, so they find it more difficult to access the finance they need. 
For instance, in a solar homes system (SHS) project in Ghana, an IDA credit line supports rural bank lending to households for SHS purchase, but the dealers still face working capital and trade finance constraints.
“Access to finance is clearly a more binding constraint for small service providers,” explained Geeta Kumar, a consultant with GPOBA. “But when OBA and other results-based financing projects move to scale, it could be an issue for larger service providers as well.”
Ways to mitigate the A2F constraints
The participants discussed methods used to ease the A2F constraints in OBA projects, such as minimizing payment delays, phasing OBA subsidies, and use of partial credit guarantees. 
An example of the latter is the Kenya Microfinance for Small Water Schemes project which combines an output-based subsidy with commercial finance from a local microfinance bank, K-Rep Bank. K-Rep purchased a partial credit guarantee from USAID’s Development Credit Authority which covers 50 percent of the loan principal, thus providing extra security. 
The CMEF members suggested various ideas for consideration, including factoring (of receivables) and securitization (of expected output-based payments).
“The OBA subsidy scheme provides an ‘order book’ so there should be a way to get a discount,” said Lieberman.  “We need to educate the microfinance institutions as this is not very complex financing.”
He emphasized that as OBA schemes move to scale, the financing requirements will go beyond the capacity of local microfinance institutions, which is why the microfinance equity funds have an important role to play.
The OBA and A2F experts plan to hold bilateral meetings to explore these options further and identify potential pilot projects.
 
Update: Since this news item was written, the CMEF is now the Financial Inclusion Equity Council (FIEC).
 

|
activity

Output-based aid (OBA) is highlighted in the first issue of Handshake, the quarterly journal of the International Finance Corporation (IFC) on public-private partnerships (PPPs), as an approach supports PPPs by facilitating access to basic infrastructure and social services for the poor through subsidy funding. The new peer-reviewed publication is published by the Advisory Services in the Public-Private Partnerships department and explores pragmatic and innovative solutions that the public and private sectors can create together to address complex development challenges. The debut issue, “Tapped Out,” looks at public-private partnerships in water scarcity and distribution.

Read the articles on OBA (p19, p32)

(updated Nov. 12, 2020)

|
activity

"Still image from WB Video "Improving Lives in Morocco Extending Water and Sanitation"
 
Donors renewed their support for the Global Partnership on Output-Based Aid (GPOBA) and the Public-Private Infrastructure Advisory Facility (PPIAF) at GPOBA and PPIAF’s first joint program council meetings in Casablanca.  The two programs also organized a workshop for their donors on “Improving Access to Basic Infrastructure Services through Output-Based Aid (OBA) and Public-Private Partnerships (PPP),” and a site visit to the OBA urban water and sanitation pilot in Casablanca. 
 
Discussions with PPIAF’s donors

Donor representatives from Australia, Germany, the Netherlands, Sweden, Switzerland, the United Kingdom, and the World Bank (also representing IFC) attended the PPIAF program council meeting on June 15, 2011. 

The donors expressed their support for PPIAF’s work to encourage PPP initiatives in fragile states.  Demand is great in countries such as Burundi, Guinea, and Sudan, and in sectors such as telecommunications, where a legal and regulatory framework needs to be in place to attract investors.

PPIAF’s donors also appreciated the innovative PPPs and sub-national technical assistance transactions that the program is supporting.  Examples include an irrigation project targeting small subsistence farmers in Ethiopia and a scheme to increase access to commercial financing for sub-national entities in Peru. 

A good piece of news from the meeting is that the declining trend in financing for PPIAF has been reversed.  This should enable the program to build a stronger pipeline and continue providing technical assistance to governments to support the creation of an enabling environment for the provision of basic infrastructure services by the private sector.

GPOBA’s strategy for 2012-2013

Donor representatives from Australia, the Netherlands, Sweden, the United Kingdom, and the World Bank (also representing IFC) took part in GPOBA’s program council meeting on June 17, 2011.

The donors endorsed GPOBA’s strategy for 2012-2013, under which GPOBA will continue to fund, design, demonstrate, and document output-based aid (OBA) approaches to improve delivery of basic infrastructure and social services to the poor in developing countries.


Priorities are to fund new OBA subsidy schemes and to develop GPOBA’s role as a center of expertise.  The goal is to mainstream OBA approaches with governments and other development partners.  GPOBA will also provide technical assistance for other results-based financing projects, in line with donor priorities.

One recommendation that came out of both meetings was for GPOBA and PPIAF to improve communications and collaboration with their donors’ country offices. 

Improving access to basic infrastructure services

On June 16, 2011 PPIAF and GPOBA held a workshop in Casablanca for their donors and Moroccan development partners on “Improving Access to Basic Infrastructure Services through OBA and PPPs.”

The event was opened by Ms. Zoubida Allaoua, director of the World Bank’s Finance, Economics, and Urban Development Department, and Ms. Adriana de Aguinaga, program manager of PPIAF and GPOBA.

Innovative PPPs in water, sanitation, solid waste, and renewable energy were discussed in the first session which highlighted experiences in Morocco and other countries.  The development of solar energy in Morocco, which the World Bank is supporting, elicited a lot of interest from the participants.

The speakers at the PPP session were Mr. Abderrahmane Semmar (Ministry of Economy and Finance of Morocco), Mr. Jacques Labre (Suez Environnement), a representative of the Moroccan Agency for Solar Energy, and Ms. Bianca Denfeld (KfW).

The second session focused on improving access to water and sanitation services using OBA approaches.  GPOBA showed a new documentary film on the Morocco OBA urban water and sanitation pilots, which it is funding, followed by a panel discussion with the project partners.

Speakers and panelists at the OBA session included:

  • Mr. Abdeljalil Benhayoun, RADEM;
  • Mr. Jean-Pierre Ermenault, LYDEC;
  • Mr. Thomas Hascoet, Veolia Environnement Maroc;
  • Mr. Abdellah Jahid, Office National de l’Eau Potable (ONEP), Morocco;
  • Mr. Mohammed Kadiri, Governor of the Kingdom, Morocco;
  • Mr. Naoufal Salama, Amendis;
  • Mr. Khalid Sbia, Ministry of Economy and Finance, Morocco; and
  • Mr. Mario Suardi, GPOBA.
Meeting project beneficiaries

In the afternoon of June 16, GPOBA took the donors to meet beneficiaries of the OBA urban water and sanitation pilot project in Casablanca.  This project, which is also being implemented in Meknès and Tangier, has provided water and sanitation connections to over 50,000 people so far.


Ms. Fatima Louada, who appears in the documentary film, and her neighbors welcomed the donor representatives to Lamkensa, an informal settlement on the outskirts of the city which has benefited from the project. 

The donors greatly enjoyed the visit which allowed them to see for themselves how the OBA water and sanitation connections are improving people’s lives.

 

|
activity

 

The International Year of Sustainable Energy for All (the Year), officially launched on January 16, 2012 at the 2012 World Future Energy Summit (the Summit) in Abu Dhabi, aims to focus the world’s attention on the critical role energy plays in sustainable development. Access to energy remains a global challenge, especially for the world’s poorest people. In fact, access to modern energy sources is considered key for the achievement of the Millennium Development Goals.

 This short video highlights the challenges and opportunities

In his keynote address at the Summit, United Nations (UN) Secretary General Ban Ki-moon shared his own experience of growing up without electricity during the Korean war. The UN has identified three key objectives for sustainable energy access, with a goal that all three be achieved by 2030:

  • First: to ensure universal access to modern energy services;
  • Second: to double the rate of improvement of energy efficiency; and
  • Third: to double the share of renewable energy in the global energy mix.

Energy is one of the priority sectors for the Global Partnership on Output-Based Aid (GPOBA)’s efforts to make access to basic services a reality for the poor, using output-based aid (OBA) approaches. OBA links the payment of aid to the delivery of “outputs” like connection to electricity grids, water and sanitation systems, or healthcare services. Service delivery is contracted out to a third party, which receives a subsidy to complement or replace the user fees. Service providers pre-finance the project until outputs are delivered, shifting the risk of non-delivery from the public funding body or donor. Explicit targeting by income or geography helps ensure that OBA subsidy payments reach those who need it most--the poor.

 

In Bangladesh, GPOBA has committed about US$14 million to the Rural Electrification and Renewable Energy Development (RERED) OBA solar home systems (SHS) scheme. The project has already connected over 1.5 million people, living in rural or remote areas, to affordable electricity through SHS. Beneficiaries of the OBA scheme share some of the positive impacts:

 

In the 2 years since Mujib Rehman, a 32-year old father of two, has had the SHS installed, his monthly income has increased by 1,000Tk. Before, he used candles and kerosene for lighting purposes, which had its own challenges including high cost and bouts of bronchitis. 

Hajra Begum, a mother of four, recalls the toxic fumes her family was exposed to from using kerosene before the installation of SHS two years ago. For her family, the SHS can power up to five lights, allowing her children to study in the evenings. For Hajra, the SHS also means she can keep her mobile phone charged, allowing her to keep in touch with her husband who works away from home as a laborer in southwest Asia.

Mustafa owns a barber shop and has had an SHS for 13 months. Before, he  had to ‘borrow’ power from his neighbor at a cost of 200Tk./month to run his business. Despite paying for access, Mustafa had no control over how long or when he could use the power supply. Now, he has full control of his access and the impact on his business has been positive, even allowing him the flexibility to open the shop as late as 9 pm.

The OBA scheme is part of the on-going World Bank RERED project, which is considered to be one of the most successful SHS programs in the world. The overall target for GPOBA’s scheme is to help nearly half-a-million households gain access to electricity through the SHS project, especially those in areas where access to the electricity grid is not a viable option. So far, 300,910 households have been connected.

Links

|
activity

 Washington, DC: On January 24, 2012, the World Bank Board of Executive Directors approved a new results-based lending instrument -- the Program-for-Results (PforR). The new instrument aims offers the Bank's client countries more options for financing specific development programs including access to health care or water and sanitation services.

The instrument was developed over several years and in consultation with a wide range of stakeholders including the Global Partnership on Output-Based Aid (GPOBA), the Bank's client countries, donors, civil society organizations and academics. Like output-based aid (OBA), PforR will only pay after specified results have been achieved and verified. Read more

|
activity

On June 4-7, GPOBA hosted joint meetings in Kampala, Uganda with three other global programs: Cities Alliance, the Public Private Infrastructure Advisory Facility (PPIAF), and the Private Infrastructure Development Group (PIDG). This joint conference was an opportunity to improve synergies between development partners and programs and to share knowledge among partners active in the region.

The conference began with a workshop on the challenges of urbanization in Uganda and on how the four global programs could strengthen their collaboration to support the Government of Uganda. Keynote speakers included the Honorable Maria Kiwanuka, Minister of Finance, Planning, and Economic Development, and the Honorable Daudi Migereko, Minister of Lands, Housing, and Urban Development.

Later in the afternoon, a site visit was organized by the National Water and Sewerage Corporation (NWSC) to the GPOBA-funded project "Kampala Water Connections for the Poor Project". The visit was an opportunity for participants to see up close how outputs installed, how service is provided and paid (public yard tap, metered public water point). Participants were also able to directly interact with community representatives, beneficiaries, and project implementers.

On June 5, another site visit took participants to Jinja, 80km outside Kampala. The mayor of Jinja organized a forum on “managing secondary cities”. Mayors and municipal officials from four towns spoke directly with the national government about challenges they are facing in their municipalities, and discussed the activities supported by Cities Alliance’s “Transforming the Settlements of the Urban Poor: A Secondary Cities Support Program”. In the afternoon, PPIAF organized a site visit to a new potable water treatment facility at Lake Victoria. Another site visit by Cities Alliance included visits to poor neighborhoods to meet with local women conducting income-generating activities, and a new-managed community toilet.

On June 7, 2012, GPOBA held its 8th annual Program Council Meeting, attended by donors including AusAid, Sida, DFID, IFC and DGIS.

Photos were provided courtesy of Cities Alliance

Subscribe to Global