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OUTPUT BASED AID (OBA)

OUTPUT BASED AID (OBA). Financial Management Perspective. Washington March, 2008. Saidou Diop Financial Management Specialist Senegal and The Gambia Co AFTFM The World Bank. Why Growing Interest in OBA?. Growing Interest in OBA .

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OUTPUT BASED AID (OBA)

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  1. OUTPUT BASED AID (OBA) Financial Management Perspective Washington March, 2008 Saidou Diop Financial Management Specialist Senegal and The Gambia Co AFTFM The World Bank

  2. Why Growing Interest in OBA?

  3. Growing Interest in OBA • Definition. OBA is one method for improving the delivery of basic services such as water, sanitation and electricity, when the inability of users to pay full cost would justify performance-based subsidies to complement or replace user fees. • Main Aspects of OBA : • Focusing project implementation on results ( i.e, outputs) • Reducing transaction cost, particularly for high capacity borrowers • Providing innovative and efficient means for disbursing, using new designs that remain consistent with Bank policies and procedures.

  4. Does OBA change Fiduciary approach ? All Bank Fiduciary and Safeguard policies required under investment lending apply to OBA operations: • Financial Management/Reports, Audit, Disbursement (OP 10.02), expenditure eligibility (OP 6.00) • Disbursement– question of expenditure-based vs OBA approach performance-based – definition of eligible expenditures/allocation • Procurementstandards (OP 11.00) - OBA Projects are not exempt from Bank Procurement requirements –- distinguishing:(a) OBA through competitive selection of service providers; and(b) OBA through direct arrangements with incumbent service providers.

  5. SO, What Fiduciary Arrangements for OBA ? How do we get there? Fromdesign to Implementation

  6. Fiduciary Processes in OBA : Areas of focus (1) • During Appraisal and Preparation • Project Components. Define classes of Outputs, estimated their Unit cost and OBA subsidies • FMA. Assess reliability on providing credible data on unit cost of output • FMR/IFR. Include certified list of outputs completed and delivered, form basis for disbursement • Audit TORs. Specify sampling review of outputs and UC and reporting on reasonableness

  7. Fiduciary Processes in OBA : Areas of focus (2) • During Implementation • Supervision. Sample-verification of physical delivery of outputs and their technical quality as complement to recipient reporting on output completion • Disbursement. Payment based on output delivery - upon independent verification of pre-defined output(s), in pre-agreed amount for the specified service – regardless of actual cost • MTR. Adjust unit cost if deem necessary after independent review (UC variances).

  8. GPOBA Advance ceiling Quarterly replenishment Quarterly IFR MEF AGETIP Validated RP ONAS RP CFP OVC OVR Seed fund Quarterly reimbursement PIR PIP AGETIP ONAS Quarterly RP Payment Invoices Invoices Payment OVR Firms / OCBs/consult. Auditors/ consultants Senegal On site sanitation – A GPOBA structuring Project

  9. Sample of IFR (1/2)

  10. Some Examples • Morroco Social Priorities Program Basic Education Project (P005501) • Mexico Decentralized Infrastructure Reform Loan (P0800149) • Albania Health System Modernization Project (P082814) Link to OBA - www.gpoba.org

  11. Salient Challenges • Complexity in determining and monitoring unit costs • Joint capacity assessments in OBA Project involving other Donors • Using the borrower’s fiduciary systems • Securing agreement among stakeholders (Service Providers, CBO/NGO) • Elaborate FM Guidance note for OBA

  12. Conclusion OBA operations are responsive to the Bank’s heightened focus on beneficiary ownership, stronger partnerships and results, while continuing to meet the Bank’s fiduciary obligations. Challenge is to scale up and implement in collaboration with borrowers and development partners in ways that will support a country´s poverty reduction agenda.

  13. Some Outputs of Senegal OBA Shower+TCM TCM: Manual Discharge Toilet Shower+BALP Shower Toilet

  14. Thank you.

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