Most of development assistance today is delivered through input finance with no guarantee of successful achievement of results. Now imagine that a government could commission for increased employability among a targeted population, narrowed learning gap between boys and girls, more affordable housing in urban settings, or increased connectivity to economic opportunities.
This paper outlines the potential contributions of impact bonds to the World Bank Group’s Maximizing Finance for Development (MFD) approach. The MFD approach is in part a response by the World Bank Group to the 2030 Sustainable Development Agenda.
Given the significant financing gap to meet the needs of developing countries and achieve the United Nations’ Sustainable Development Goals, governments, multilaterals and other development partners are increasingly looking to the private sector to help fill this gap.
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
With development needs outstripping public sector capacity, private sector finance and expertise are becoming increasingly important. OBA and public-private partnerships (PPPs) are innovative mechanisms for leveraging private sector investment in development solutions. OBA can add value to a PPP by ensuring that private investment benefits poor populations.