86487 NOTE NUMBER 4 February 2014 LESSONS LEARNED e Global Partnership on Output-Based Aid Morocco Improved Access to Water and Sanitation Services Output-based Aid Project DEVELOPMENT CHALLENGE the OBA principles, the subsidy was reimbursed to the Although Morocco has good water and sanitation service providers after independent verification by infrastructure, service delivery in peri-urban an Independent Technical Reviewer. For each output, areas remains a challenge. More than 1 million 60 percent of the pre-established unit subsidy was people currently lack access to safe water supply paid upon certification of a working connection to and sanitation services in the outskirts of the an eligible household, and the remaining 40 percent main cities. This has serious health and economic upon verification of at least six months of sustained implications for families. A major obstacle for service provision. poor households is the high fee to connect to the piped network. In 2005, the government of Morocco set the extension of adequate services RESULTS ACHIEVED to peri-urban settlements as a national priority, The project provided 10,504 low-income households and encouraged operators and local governments with piped water supply, and 9,036 households with (municipalities and communes) to develop pro- improved sanitation services (see table 1). poor water and sanitation programs. OBA Lessons Table 1.  Beneficiaries reached per service and city Learned Series is a THE PROJECT AND ITS PARTNERS City Water beneficiaries Sanitation beneficiaries forum for discussing In 2006, the government, two private water Casablanca 5,593 5,593 and disseminating operators (Société des Eaux et de l’Electricité du Tangiers 2,909 2,909 project insights at Nord, SEEN (also known as AMENDIS-TANGER), the conclusion of and Lyonnaise des Eaux de Casablanca, LYDEC), Meknes 2,002 534 projects in supporting and one public utility (Régie Autonome de Total 10,504 9,036 the delivery of basic Distribution d’Eau et d’Electricité de Meknès, services to the poor. RADEM), approached the World Bank to mobilize Before the project, households used unimproved GPOBA is a partnership a US$7 million grant from the Global Partnership sources of water (unsafe shallow wells or water established in 2003 on Output-Based Aid (GPOBA) to pilot an vendors) and sanitation (mostly latrines or toilets by the UK (DFID) and innovative output-based aid (OBA) scheme to and cesspits). By enabling access to 24/7 water the World Bank. Its expand services in poor peri-urban areas. The supply and standard sewerage services, the project other donors are the objective was to bridge the financial gap between had a significant impact on their daily lives and International Finance households’ ability to pay for connections and the immediate environment. In a beneficiary survey, Corporation (IFC), the cost of service (the “output”). This OBA project, households reported high satisfaction with the Netherlands (DGIS), the first in the Middle East and North Africa region, new services, which translated into collection ratios Australia (AusAID), was implemented from 2007 to 2011, leveraging higher than average, for both connection fees and and Sweden (Sida). investments of more than US$30 million. The ongoing tariffs. The project also sparked economic For more information outputs that triggered the disbursement of the opportunities that transformed the beneficiary visit www.gpoba.org subsidies were individual connections to water and settlements into bustling neighborhoods, and a or email us at sewerage services (in Meknes, it was the connection stronger sense of community among beneficiaries. (continued on page 3) gpoba@worldbank.org. to either one or the other service). Consistent with Supporting the delivery of basic services in developing countries Lessons Learned 1 Commitment at the highest level, engagement by service providers, and a shared understanding of OBA created the right enabling environment for the project. The connections in poor settlements. Together with the central and local authorities, the operators established strong coordination mechanisms among all project stakeholders. On the one hand, priority set by the government of Morocco to extend services they engaged in discussions with municipalities and communes to low-income peri-urban settlements sent a strong signal. to identify solutions to the sensitive and complex issue of land The project built on previous “social connections” programs, tenure–otherwise preventing beneficiaries from joining the which allowed low-income households to pay their access program—and to approve the lists of eligible beneficiaries. fee in installments over time, through the water bill. In turn, Issues related to slum upgrading and land acquisition for works the three autonomous, professional, and accountable service were particularly significant in Casablanca including halting providers demonstrated strong capacity in implementing progress for over a year and preventing the extension of innovative OBA programs in their respective service areas, services to 5,000 households. In some cases, these consultations and leveraged their own funds to pre-finance the outputs. were lengthy, but in the end all parties managed to find In addition, all stakeholders had a common understanding of solutions to land informality matters. On the other hand, unlike the OBA principles. Notably, the service providers remained traditional connection programs where each household is actively involved during both project preparation and responsible for obtaining the required documentation and implementation, and coordinated with relevant counterparts authorizations for eligibility, the project’s operators offered and other stakeholders. This allowed service providers to be full assistance to households throughout the administrative constantly responsive to issues encountered, and propose process. Some operators even helped group requests for appropriate actions. connection, presented these to local authorities, and obtained the legal authorizations on behalf of the group. These proactive, 2 Successful adoption of the OBA approach by a public provider. This innovative project tested the hypothesis that performance risks can be borne by both the private and public concerted efforts allowed the project to reach its objectives, increasing coverage in an efficient and more responsive manner than in the past. sectors. By selecting RADEM as one of the grant recipients, GPOBA’s funds were transferred for the first time to a public utility provider. This revealed that a public utility, under a well-designed scheme, could adopt the OBA methodology, 6 Scaling up OBA needs more than a successful pilot: it requires strong political support and institutional capacity. The success of the project revealed that the OBA bear the operational and financial risk, and successfully deliver approach could be strategically relevant for Morocco, as until services to poor, unserved segments of the population. then, the country did not have subsidy mechanisms targeted at poor households living in informal settlements to access 3 Innovative awareness-raising, reach out, and support beneficiaries had a catalytic role in rolling out the OBA subsidy program. The three operators developed basic services. This prompted the government to develop a nation-wide OBA program, with support from GPOBA and the World Bank, to extend similar services to low-income comprehensive communication programs to build awareness residents still without access in other informal peri-urban among beneficiaries. For instance, in Tangiers, AMENDIS- areas, consistent with its larger National Initiative for Human TANGER sent dedicated teams in fully equipped vans to Development. The first discussions on the scale-up took place marketplaces in the targeted neighborhoods to record the during a review of the project at mid-course, when early lessons demand for connections from new customers. The teams on design and implementation arrangements emerged. This also processed bill payments in real time to accommodate shows the importance of engaging strategic policy dialog with customers who were unable to reach to the operator’s local counterparts on potential scale-up as soon as progress and branch. In Casablanca, a “social accompaniment team” (put results start to materialize on the ground. The government’s in place by LYDEC) provided information and administrative larger program will test its readiness to allocate sufficient support to households to help obtain a connection. resources to achieve results at scale. It will also encourage local 4 Greater specificity in the targeting of beneficiaries governments to establish clear urban policies and institutional improved the subsidy efficiency. The project was initially capacity to manage urban expansion, while enhancing reforms designed using a geographical targeting method to reach poor for financing the water and sewerage sector. households. During implementation, the operators encountered households with varying characteristics and socioeconomic status within their respective targeted areas. Accordingly, they decided to complement the geographical targeting with Works Cited additional criteria, mainly based on housing characteristics (such as size, construction material and number of stories) in order to Chauvot de Beauchêne, Xavier. “Output-Based Aid in Moroc- better direct the OBA subsidies to low-income households. co (Part 1): Expanding Water Supply Service in Rural Areas.” GPOBA . June 2009. http://www.gpoba.org/node/305. 5 The focus on social engineering, moving from a “network- centric” to a “customer-focused” approach, was critical to success, as was the active engagement with local World Bank. Implementation Completion Report of the “Moroc- co-Improved Access to Water and Sanitation Services Proj- ect (English).” World Bank Documents. June 29, 2012. http:// authorities. The OBA approach encouraged the operators to documents.worldbank.org/curated/en/2012/06/16522990/ fundamentally rethink the way they initiate, design, and deliver morocco-improved-access-water-sanitation-services-project. The case studies are chosen and presented by the authors in agreement with the GPOBA program management team and are not to be attributed to GPOBA’s donors, the World Bank Group, or any other affiliated organization, nor do any of the conclusions represent official policy of the aforementioned organizations.