Attracting payments for sanitation impacts.
Outcomes-based funding has the potential to attract new funding for sanitation: instead of paying for specific activities, like usual grants, outcomes-based funding pays for what you achieve: you monetise the impacts of sanitation, by measuring proxies such as people served with safe facilities or the quantity of waste removed, with clear costs attached to each.
Providing reliable outcomes at a known cost has the potential to attract payers from beyond the WASH and aid sectors.
Big wins for Fresh Life and SOIL
In 2023, our members SOIL in Haiti and Fresh Life in Kenya launched outcomes-based funding facilities, a significant milestone for the sector. These mechanisms have brought on board bilateral and multilateral funders, set clear targets to expand services and reduce the funding gap, and closely involved authorities.
Structured as performance-based contracts, this funding shows these CBS operators’ maturity to deliver essential services at scale. This will help include CBS as part of development bank-funded projects in the future.
Towards a sector-wide mechanism
To understand the relevance of outcomes-based finance, we engaged Social Finance to look at the potential and limits of outcomes-based funding for CBS in 2023, specifically for a sector-wide mechanism. The report concluded that a sector-wide pooled funding mechanism, grounded in a common metrics framework and demonstrating collective impact and scale of the CBS sector, could underpin a compelling narrative for the sector to unlock additional funding. See their report, Outcomes-based finance for container-based sanitation, to find out more about this and the work needed to put it in place.
Read more:
Bridging the financial gap in Kenya’s urban sanitation sector through results-based financing