Krakow, Poland September 24-26, 2014 Results-Based Financing Approaches

  An approach to link the delivery of infrastructure and social services to performance-based incentives, such as rewards or subsidies.   Starting with the design, the focus is on results   Innovation as problem solving is shifted to those best able to develop a solution for the context and situation   Verification confirms the intended results   Funding conditional on achieving pre-determined actions or results What is Results-Based Financing?

RBF: Core Concepts Funding is conditional based on recipient undertaking pre-determined actions or achieving pre-determined results Funding disbursed against demonstrated and verified results that are largely within control of recipient

Access to basic infrastructure and social sectors Service providers reimbursed through subsidy for pre-financing of outputs Output-Based Aid Combines construction, rehabilitation, and maintenance in one contract Service provider paid a fee by Govt. based on quality of road Performance-Based Contracting Improvement in efficiency of assets, eg, reduction in non-revenue water Explicitly links cost of output (unit cost) to amount of financing Typically pre-financed by Govt Output-Based Disbursement Includes a number of results-based approaches, such as incentive payments to health workers, health insurance, CCTs, and OBA. Results-Based Financing in Health Reduction in carbon emission Carbon Finance Incentive payment for desirable behavior Paid to poor households Conditional Cash Transfers Pay-for-performance contract in which government/donor pays investors financial returns based on social impact produced on the ground Social Impact Bonds Payment to recipient government after measurable progress Cash on Delivery Achievement of programmatic results Program for Results Results-Based Financing Instruments

Design differences in RBF approaches Demand side (consumption) incentives (CCTs, some types of PBFH) focus on beneficiaries (individuals, households, families)   Rewards for consuming services (e.g., enrolling in school, visiting clinics for regular vaccinations or medical check-ups) Supply side (provision) incentives (OBA, SIB/DIB, OBD, some types of PBFH, COD, AMCs, CF) focus on service provider (e.g., schools, utilities, municipalities, contractors) 1 1

Design differences in RBF Approaches Unit costs and disbursements reflect the actual cost of service   RBF mechanisms such as Output-Based Aid, Output-Based Disbursements Output delivery or achievement of specific indicators or measured outcomes are used as a condition for funding without the unit cost linkage   RBF mechanisms such as Cash on Delivery, Conditional Cash Transfers and Carbon Finance 2 2