This note describes efforts by the government of Kenya, the World Bank and other development partners to improve access to commercial finance for water and sanitation projects, within the context of sector reforms and innovative financing initiatives.
Output-based aid (OBA) is helping low-income households in rural Bangladesh access microloans to invest in hygienic sanitation facilities. The OBA grant subsidizes the cost of the facilities, reducing the overall cost for cash-constrained households, and the microloans help them to spread repayment over time.
Around 95% of Sri Lankans have access to basic sanitation. Yet, the growing urban population and density pose a challenge of ensuring safe sanitation consistently. The Government of Sri Lanka is committed to ensure all people using safely managed sanitation services by 2030. This requires new approaches and smart solutions.
In Ghana, output-based aid (OBA) was used to improve affordability for households in crowded low-income areas of the Greater Accra Metropolitan Area (GAMA) to invest in improved household toilets. OBA was provided as a subsidy to reduce the upfront cost for toilets and stimulate demand, which in turn made it more attractive for financial institutions to enter this market.
In Ghana, blended finance helped improve affordability for rural Ghanaian household investments in off-grid renewable energy technologies. Local banks extended credit blended with concessional finance from the World Bank to rural low-income households for acquisition, installation and maintenance of solar home systems (SHSs).
In 2015, the Global Partnership on Output-Based Aid (GPOBA) approved a US$4.95 million grant to increase access to grid-based electricity services for 22,000 low-income households and 5,000 micro and small enterprises (MSEs) in urban and peri-urban areas through use of targeted subsidies, with the aim of reaching low-income communities who would otherwise have gone unserved.
In 2011, GPOBA provided a grant to the local power utility, Liberia Electricity Corporation (LEC), to ensure broad-based and inclusive access to electricity and significantly improve living conditions among the poor in low-income households in Monrovia.
In Bangladesh, a blended finance approach has been used to extend access to off-grid electricity for rural low-income households. An output-based aid (OBA) grant in combination with microcredit from local partner organizations (POs)—mostly nongovernmental organizations (NGOs) with experience in microfinance—enhances affordability of clean energy technology for low-income consumers.
The project was implemented in five municipalities -- Dhankuta, Ghorahi, Lalitpur, Pokhara, and Tansen -- which met certain operating and maintenance requirements. The project aimed to build upon the municipalities’ existing systems and make them more sustainable, rather than developing new systems.
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.