Review of Results-Based Financing (RBF) schemes in WASH : a report to Bill and Melinda Gates Foundation

This report investigates what works where, and why, in Results-Based Financing (RBF) in Water, Sanitation, and Hygiene (WASH). In so doing, it also uncovers what does not work. It aims to create guidance for future interventions, and identify areas for further research.

Results-Based Financing (RBF) is an aid mechanism where payments are made upon verification of the delivery of desired outputs, or the performance of desired behaviours. RBF has been developed in the hope that it might deliver better results, at least in some settings, than conventional, input-based aid.

This report begins with a definition of and categorization of RBF (Section 2). Section 3 explains this report's methodology. Section 4 presents the types of RBF used in WASH, and the sample of RBF projects examined in this assignment. Next, Section 5 presents common design features of RBF in WASH.
Chapters on the performance of RBF in WASH follow. Section 6 shows that RBF projects are often effective in terms of delivering target outputs, and that they seem to deliver the intended impacts (although data on impacts are limited). Then, Section 7 shows that RBF in WASH generally serves a small number of people relative to the scale of global gaps in access to WASH services. Section 8 shows that RBF projects may be as efficient as conventional aid projects. Section 9 presents data on the sustainability of RBF in WASH. The quality of services provided by RBF projects is discussed in Section 10.

The next chapters discuss what works well where, and makes recommendations to improve performance of RBF. Section 11 shows what works well for different types of RBF projects: those with public or private providers, voucher projects, and projects that aim to change sanitation behavior. Section 12 shows that the transparency of RBF projects is poor. Knowledge gaps that should be filled are presented in Section 13. Section 14 makes recommendations to fill those gaps. Lastly, Section 15 presents conclusions and guidance for future RBF interventions in WASH.

The bibliography is presented in Section 16. Appendix A shows the sources that were used to create the definitions of types of RBF used in this report. Appendix B lists tests of potential factors of success for RBF that had inconclusive results. The Terms of Reference are in Appendix C. Appendix D shows reports on RBF from other sectors that were reviewed for this report. Appendix E shows the projects studied in the sample, and some basic data about them. Lastly, Appendix F shows the theory of change from the Hibah project in Indonesia.

The report was prepared by Castalia Advisers, on behalf of a group of WASH donors interested in better understanding RBF in WASH (including DGIS, DfID, USAID, GPOBA, SIDA and others). The study was managed and financed by the Bill & Melinda Gates Foundation.