View
1.281
Download
2
Embed Size (px)
DESCRIPTION
The Water Supply and Sanitation (WSS) infrastructure gap particularly affects low-income and marginal areas. Efficient, targeted subsidy mechanisms are needed for sustainable public financing of WSS access.
Citation preview
International Water Conference Dushanbe 2010Roundtable on Sustainable Financing
Output Based Aid: A Financing Tool for Access to Water Service
Pier Francesco Mantovani, Lead Water Supply and Sanitation Specialist,
Europe and Central Asia Region, The World Bank1
Sustainable .
“Need for more public expenditure in water”
• Meeting water supply & sanitation (WSS) access goals calls for increased public expenditure.
• The WSS infrastructure gap particularly affects low-income and marginal areas, where cost-recovery is weak and investment subsidies are required.
• Efficient, targeted subsidy mechanisms are needed for sustainable public financing of WSS access.
2
The Output-Based Aid (OBA) Approach
• An emerging public finance approach by which disbursements are linked to the verification of effective service delivery to targeted beneficiaries.
• Well-suited to promote access to services:
– Shifts the risk to service providers.
– Bridges gap between cost of service and beneficiary’s ability to pay
– Can target poor areas or households
– Leverages commercial finance
3
Mongolia: Access to telecom services
Uganda: Access to health services
Armenia: Access to energy services
Public Financing of Services DevelopmentInput-based vs. Output-based Aid
INPUTMaterials, equipment,
infrastructure, etc.
OBA Public Finance
INPUTMaterials, equipment,
infrastructure, etc.
Service Provider
Service Provider
Commercial Pre-Finance
OUTPUTServices Expected to
Reach End Users
OUTPUTSServices Effectively
Delivered to Targeted End Users
OUTPUT-BASED AIDTraditional
INPUT-BASED AID
4
Public Finance
OBA reimburses providers only after services are verified
OBA Core Concepts
• Targeting : Using incentives to serve low-income communities
• Accountability : Providers must deliver compliant service in order to be paid.
• Monitoring : Output verification is systematic, ensures transparency.
• Leverage: OBA leverages beneficiary contributions and private finance.
• Efficiency : Implicit result and cost guarantee.
5
Bangladesh: Electrification forPoor Rural Households
Where applicable, OBA enables better use of public funds.
Snapshot 1 : Morocco WSS connections in poor periurban areas
• Middle-income country, with large informal settlements around cities.
• No WSS service in periurban settlements, due to cost and challenges of extending networks in informal habitat areas
• No affordable option for households to access utility service.
Key design features:
1. Pilots by public & private operators in Casablanca, Meknes & Tangiers.
2. Upfront assessment of standard WSS connection price in targeted poor areas.
3. Works pre-financed by operators with loans or municipal funds.
4. Elegible households commit to a standard connection fee payable over 7 years.
5. Unit OBA subsidy bridges the gap between the standard connection price and household connection fee (25-50%).
6. Unit subsidy paid after connection (60%) and after 3 months of service (40%).
Snapshot 1 : MoroccoWSS connections in poor periurban areas
Snapshot 1 : Morocco WSS connections in poor periurban areas
8
Main results:
• Pilots successful, after slow start, for both water supply & sewerage service.
• Strong stakeholder mobilization to overcome implementation obstacles.
• Simplification of OBA documentation requirements.
National scale-up strategy in preparation
Snapshot 2: KenyaSmall-scale rural water service development
9
• Rural communities around Nairobi want piped water service.
• Small water operators access microfinance loans supported by GPOBA and Athi Water Services Board.
• OBA subsidy paid upon completed development of simplified water systems.
Snapshot 2: KenyaSmall-scale rural water service development
10
Growing experience with OBA Projects
Education5%
Energy6%
Health24%
Telecom2%
Transport58%
Water & Sanitation
5%
WBG OBA Portfolio by Sector(Total = US$ 3.5 billion)
11
In 2002: 32 projects identified,
$1.5 bn of World Bank funding
In 2009: 131 projects identified
for $3.5 bn of WB Group funding,
+$2.8 bn government funding
+ 66 projects outside WBG
Growing evidence base : 34
projects closed, 78 on-going, in
low and middle income countries
Comparison of Performance: OBA vs. Traditional Projects
0%
10%
20%
30%
40%
50%
60%
70%
80%
Ove
r-ac
hie
ved
Ach
ieve
d
No
t (f
ully
) ac
hie
ved
Un
clea
r
Un
der
ru
n
In B
ud
get
Ove
rru
n
Results Budget
OBA
Non-OBA
12
Lessons Learned: Benefits of OBA Approach
• Explicit identification of outputs promotes targeting
• OBA shifts risk to providers
• Achieve efficiency gains through competitive processes
• So far, $1 of subsidy leverages ~$2 of private finance.
• Forces accurate monitoring by paying on outputs
• Encourages careful subsidy
13
Vietnam: Access to simplified piped rural water supply
Lessons Learned: Challenges of the OBA Approach
• Access to commercial finance or microfinance is essential.
• Capacity to implement and monitor can be an issue.
• Demand risk requires prudent upfront investment by provider
• OBA requires a supportive regulatory environment for sustainability
14
Argentina: Public transportation improvements
OBA remains one component of a wider set of policy instruments, does not substitute good planning & regulation policies.
Moving Forward
• Scale-up OBA approaches where they make sense
• Fund technical assistance for new initiatives and further analysis and evaluation of OBA projects
• Address challenges such as:
– Limited access to commercial pre-finance,
– Documentation and verification capacity
– Contractual flexibility for changed conditions
• Share lessons
15
Thank You
Special thanks to :
• The Global Partnership on Output-Based Aid (GPOBA) , a partnership of donors and international organizations working together to support output-based (OBA) approaches.
www.gpoba.org
16Uganda: Access to Sustainable Water Services for the Poor in Selected Small Towns
Targeting
0%
10%
20%
30%
40%
50%
60%
70%
80%
Geographic Targeting Means Testing Self Selection Targeting No Targeting Identified