GPOBA worked strongly in FY16 to advance its active portfolio of subsidy projects and continued developing several projects in the pipeline to expand the use of OBA/RBF approaches. The new grant agreement signed supporting renewable energy access in the Philippines is the result of ongoing GPOBA work in that country, while the Kenya electrification scale-up builds on the success of an earlier OBA project that helped bring electricity to Nairobi’s informal settlements. GPOBA’s technical assistance activities provided insights and experience that support project design and implementation, as well as contribute to GPOBA’s growing knowledge base of best practices and lessons learned. Four studies explored new opportunities for OBA/RBF interventions in untested sectors, while the energy and water sector studies (discussed in the previous section) deepened the understanding of OBA’s impact in these tested sectors, helping to indicate where and how future interventions might best be undertaken.
Grant Agreements and Scale-ups
Each OBA project has a unique design and financial model tailored to its context which incorporates lessons learned from prior implementation experience, as well as insights gleaned from technical assistance and knowledge work. This year, two new grant agreements were signed, using this informed approach:
Philippines Access to Sustainable Energy
Building on both the World Bank’s and GPOBA’s long-term engagement in the Philippines, which has supported the Government’s establishment of policy and regulatory frameworks and the design of an OBA Solar Energy Facility, this project supports access to renewable energy for poor households in remote communities in the Philippines, mainly in conflict-affected Mindanao. The project is financed by a GPOBA grant of $3 million, from the Sida contribution, as part of the World Bank’s larger Access to Sustainable Energy Project (ASEP), which includes a $12.8 million grant from the European Union under the PV Mainstreaming component. This component of ASEP will reach an estimated 40,500 poor households, benefiting 202,500 people, with the GPOBA contribution accounting for 5,500 households. It will be implemented by LGU Guarantee Corporation in partnership with the private sector under the fee-for-service model, which is aimed at achieving technical and financial sustainability of the solar program. The project aligns with GPOBA’s objectives of providing clean energy solutions, mainstreaming the OBA approach within governments and other development partner systems, and bringing basic services to the poor.
Kenya Electricity Expansion Project-Additional Financing (KEEP-AF).
This project follows on from a successful GPOBA pilot implemented under the larger IDA-financed Kenya Electricity Expansion Project (KEEP) that worked with Kenya Power and Lighting Company to support the connection of low-income households in informal settlements to the electricity grid. The new project is part of the World Bank’s KEEP-AF, with the informal settlement electrification component financed by $10.5 million from the IDA and a GPOBA grant of $3 million, funded by Sida. Output-based subsidies will support the connection of an additional 54,000 low-income households in Kenya. The majority of Kenya’s energy comes from renewable sources – geothermal and hydro – and this project supports increased access for poor populations to renewable energy.
Analytical studies are a key component of GPOBA’s work in testing the applicability of OBA/RBF in new sectors and environments. In FY16, GPOBA finalized one scoping study in urban transport and initiated three other studies, all of which assess how and where OBA/RBF approaches are most feasible and could have the highest potential for impact, and how possible interventions align with GPOBA’s objectives and capacities, as well as with broader sector needs. They determine how OBA/RBF may form part of development finance solutions, aiming particularly at reaching the poor, who are often overlooked in large urban infrastructure initiatives.
Urban Transport. Over the last decade there has been increased interest in public investment in urban mass transit, with implementation of urban rail and bus rapid-transit projects. However, there is little indication of the extent to which the poor are benefiting from these interventions. In FY16, GPOBA completed the Urban Transport study, undertaken in collaboration with the World Bank’s Transport Global Practice. The study analyzed how OBA approaches can help to address the urban transport access challenge for low-income populations in sub-Saharan Africa and South Asia. Three cities in Africa and Asia were identified where OBA schemes are thought to have the highest potential for success and would yield the most telling lessons. Project concepts were developed for pilots in these cities. In addition, the study evaluated options for an integrated public transport fare and subsidy policy and developed a tool to help authorities assess transport investment and financing options that focus on access for the poor. In parallel with this study, a TA activity is assessing the potential for OBA in a City Bus Access project in Thimphu, Bhutan (see under Technical Assistance).
GPOBA is conducting two studies in collaboration with the World Bank’s Urban Analytics Innovation Lab. The Urban Infrastructure study is assessing demand for urban infrastructure services by tracking variations across sectors and cities; it will propose improved methodology for incorporating data on levels and types of demand into the design of urban and infrastructure projects. The Affordable Housing study is reviewing the global experience of private sector involvement in the provision of affordable housing; the aim is to propose a framework for partnering with the private sector to deliver affordable housing using OBA/RBF approaches. These two studies are discussed in greater detail in Box 2. GPOBA is also leading a knowledge initiative on the operational experience of applying OBA and results-based climate-financing instruments in climate-related sectors; this work is being done in collaboration with the World Bank’s Climate Change Cross-cutting Solutions Area. The initiative has assessed experiences across sectors, focusing on cities, with the overarching objective of fostering knowledge exchange and learning on the applicability of OBA/RBF in urban climate-resilient development.
GPOBA’s extensive range of TA activities has underpinned subsidy projects and knowledge work since GPOBA’s inception. In FY16, five new activities were initiated – in transport, social development, solid waste management, and energy – totaling $903,000.
OBA Facility in the Bangladesh Garment Sector. This TA supports the launch of the World Bank’s WEvolve program in South Asia, which is combating gender inequality and gender-based violence. It explores opportunities for OBA/RBF in the garment industry, including a possible OBA/RBF facility that would manage funding to subsidize services targeting women, such as job training, childcare, and safe transportation.
Nepal: Strengthening Audit and Accreditation. This TA supports Nepal’s National Vigilance Center, a government independent verification agent, to implement results-based approaches in the delivery of construction assets under the IDA’s Strengthening National Rural Transport Program. Improved results verification is critical in Nepal for increasing accountability.
Philippines Access to Sustainable Energy (ASEP)-PV Mainstreaming. Focusing on the development of high-level design details, such as documentation structure and bidding criteria, this activity supports the implementing partner in the PV Mainstreaming program.
Thimphu City Bus Access. Undertaken in tandem with GPOBA’s global urban transport scoping study, this TA is assessing the potential for OBA to improve access to quality public transport in Bhutan’s capital, Thimphu, and takes gender, safety, and socially inclusive access into account.
Zambia: Improving Municipal Solid Waste Management. A rapid study of the feasibility of OBA/RBF solutions in the solid waste sector in Zambia, this TA assesses the sector’s existing legal, institutional, policy, and financing frameworks. It uses the municipality of Kabwe as a case study for challenges faced across the country, with a view to developing an OBA/RBF project design which would include private sector participation.