OBA to date:Lessons, Challenges and

Mainstreaming

Yogita MumssenInfrastructure EconomistGlobal Partnership on Output-Based Aid (GPOBA)Finance, Economics and Urban Development DepartmentWorld Bank

February 21, 2008SDN Week 2008

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Preliminary LessonsPreliminary Lessons

EvaluationCriteria

Design features mostly used in Pilots

Targeting: - Mostly geographic targeting to poor communities

Accounta-bility

- Mostly ex post connection payment tied to service contract

Innovation & efficiency

-Competitive bidding on lowest subsidy required; benchmarking when incumbents- Providers paid bid price but free to design (but need to ensure quality for life of asset -- a challenge)

Mobilizing private sector

- Local private sector playing a larger role- Extent of “leveraging” dependent on sector and country/region

Sustainability

- Most projects involve a one-time connection subsidy (but part of payment with-held until several months of service delivered)

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Key Challenges and IssuesKey Challenges and Issues

• Who has the incentive to deliver outputs?• Access to finance to pre-finance outputs• Minimizing subsidy payment risk once outputs delivered• Supportive regulatory framework (subsidy policy,

tariffs)• Targeting of poor beneficiaries• Monitoring of outputs -- local capacity, corruption• Initial transactions costs: “learning”; pilots small by

nature• Bank procurement: moving from input-based to OBA

(but, there are no official impediments)• Mainstreaming OBA: going beyond pilots

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To become part of the “DNA of development” finance? How?

• Scale-up/replication of on-going pilots• TA to structure OBA funds with Government and/or

other Donor funds• Center of expertise: GPOBA advisory services to

development partners • Mainstreaming OBA in Bank processing:

– Guidance note to staff on how to structure OBA in Bank operations

– Guidance notes on procurement and financial management aspects

Mainstreaming OBA in the Mainstreaming OBA in the BankBank

Thank you.Thank you.

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