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Overview

Around the world, millions of people live without access to basic infrastructure and social services such as electricity, clean water, and education – the very drivers that can help to lift them out of poverty. Governments and development partners who are working to support quality service provision face multiple challenges: budgetary shortfalls, conflict, political instability, and limited local capacity are just a few. Even where these challenges can be addressed, the incentive to serve poor communities is often lacking. In recent years, governments, donors, and development partners have recognized that if these growing needs are to be met, innovative solutions are required alongside traditional aid delivery.

GPOBA was established to explore output-based approaches to basic service provision. It is housed within the World Bank’s Social, Urban, Rural and Resilience Global Practice (GSURR), which works to create more sustainable, inclusive, and resilient communities. Over its 13 years in operation, GPOBA has built a diverse portfolio comprised of 46 subsidy projects totaling $234 million. In parallel, it has evolved into a Center of Expertise on output-based aid (OBA) and other forms of results-based financing (RBF), building a repository of lessons and experience as reflected in its portfolio of subsidy projects, technical assistance, and knowledge activities.

OBA projects work to improve access to basic services for poor and marginalized populations. With OBA, the delivery of a service – such as household connections to the water supply or the electricity grid, the installation of renewable energy systems, or solid waste management – is contracted out to a third party, either a government or private sector entity, who receives a subsidy to complement or replace user fees. The service provider is responsible for pre-financing outputs and services, with the subsidies paid out only upon the delivery and verification of specific outputs; this is a crucial difference between OBA and traditional aid, which disburses money against expenditures or contracts. By linking the payment of subsidies with actual measurable results, OBA can help to ensure quality and accountability in service provision. Additionally, OBA creates financial incentives for providers to extend services to the poor while making access to those services affordable for low-income consumers, thus promoting social inclusion of populations who may otherwise be left out of the development that underpins economic growth and improved quality of life.

OBA can be used in a range of contexts. Projects may be stand-alone or work as part of much larger schemes utilizing other forms of results-based financing or traditional aid. They have been implemented in urban, peri-urban, and rural areas, and have delivered results in a range of environments, including those facing challenges arising from conflict or natural disaster. OBA projects have used public and private operators, non-governmental organizations (NGOs), and community organizations as implementing agencies and service providers, and have worked within successful public-private partnerships. Over half of GPOBA’s activities to date are in the energy and water sectors, though it works across seven sectors and is actively testing new sectors for OBA/RBF interventions. The results to date have demonstrated that OBA can be an important element in a range of innovative financing instruments that contribute to real development solutions for the world’s poor and marginalized.

The Role of GPOBA

GPOBA is a global partnership created in 2003 by the United Kingdom’s Department for International Development (DFID) and the World Bank, and administered by the World Bank. Originally designed to help prepare OBA projects and document and disseminate lessons learned, GPOBA began funding subsidy projects in 2006 through additional donor contributions. GPOBA also functions as a Center of Expertise on OBA/RBF approaches. Drawing on the knowledge and experience gained from project design, implementation, monitoring and evaluation, GPOBA shares lessons and best practices with development partners and governments who are interested in the application of OBA and RBF.

This report reviews GPOBA’s progress towards its objectives during the last fiscal year, July 1, 2015 through June 30, 2016.

Figure 3 GPOBA's Number of Beneficiaries
Figure 3
Figure 4 GPOBA Project Partners
Figure 4

GPOBA's Global Reach

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