GPOBA-Gates Foundation Workshop at World Water Week
How can the benefits of water development projects reach the poorest communities?
This was the question addressed during a spirited panel discussion titled “Using results-based financing to connect the poor: who, where, why?” convened by GPOBA, with representatives from the Bill and Melinda Gates Foundation and the Government of Ghana at the annual World Water Week Conference (August 21-25) in Stockholm.
The panel discussants examined how a results-based financing (RBF) approach can be an efficient and practical tool to expand water services to the world’s poorest communities, as well as bridge the investment gap needed to connect households; it was also recognized as providing greater accountability compared to traditional development financing, thus ensuring that subsidies benefit the targeted population. Innovation was also attributed to RBF, citing a quote from economist Steven D. Levitt: “Human ingenuity—when given proper incentives—is bound to be larger.”
RBF’s suitability as a financing tool was also discussed, alongside its limitations in cases where outcomes are difficult to measure. Another advantage attributed to RBF was the lower overall cost to service providers who pre-finance projects; as local providers might often face difficulty in obtaining financing at reasonable interest rates, they can resort to a blend of RBF subsidies and commercial financing. The success of RBF projects can also attract subsequent flows of private capital in underfunded regions, and enhance the visibility of public-private partnerships as success stories. Audience members engaged with the discussants on the applicability of RBF on a larger scale, as well as its use in conjunction with a wide array of project designs, given its flexibility to fit each project on a case-by-case basis.