OBA Payment Mechanisms and Risk Mitigation

The paper attempts to put the observations made within Mozambique into a broader context, reflecting a wider range of payment mechanisms that have either been employed, or else could be considered, to transfer output-based aid (OBA) subsidies. It hopes to advance the understanding of the different means by which OBA approaches can be operationalised, given its increasing importance within the World Bank’s Private Sector Development Strategy. This was adopted in April 2002 and has elevated the OBA approach from a relatively experimental instrument, used in a handful of pilot projects, to a policy at the Bank Group level. The Strategy proposed special efforts to “focus interventions on the development results, particularly improved access to services, and on improved targeting of government funding schemes”.