WASH 2011 conference: Minh Chau Nguyen

2. East Meets West Overview USA based nonprofit organization (NGO) USD 17 million annual revenues 110+ employees in Asia 4 Star Charity Navigator Rating Broad fundraising base World Bank, Ford, Aus Aid 2 5/16/2011

3. East Meets West 3 5/16/2011 East Meets West's core program work is in the areas of education, medical and health care, clean water and sanitation, and infrastructure. Our programs reflect our commitment to removing the barriers that prevent people from enjoying life's fullest opportunities. Our primary mission is to serve the poor and the disadvantaged in Asia.

4. Programs 4 5/16/2011 Clean Water and Sanitation Healthcare Education

5. Guiding Principles 5 5/16/2011 Long term View: We maintain an active presence after the project is complete Scalable: Reach more people as funding increases Community: Involve locals at every stage Strong partnerships: Work with local and global partners Creative: Innovative solutions to difficult problems Measurable impact: High returns for the donors, partner and beneficiaries

6. Defining Output-Based Aid (OBA) A method for improving the delivery of basic services – (e.g. water supply, electricity or health) – when the users are not able to pay the full cost of access to service and where performance-based subsidies to complement or replace user fees are justified. Connection fee =connection cost Subsidy targeting poor households(GPOBA Grant during pilot) Cost Affordable beneficiary contribution Affordability level of poor households Poor household cannot afford to connect Poor household can afford access (tariff not an issue)

7. OBA Core Concepts Explicit and predetermined subsidies for defined outputs: Helps ensure transparency -- who provides subsidies for what. Payment on output delivery: Shifts performance and financial risk to provider, hence making him more accountable. Innovation and efficiency: Predetermined subsidy paid on outputs instead of contracts for inputs provides incentives for innovation and efficiency; competition or benchmarking proven to lead to value-for-money. Mobilizing the private sector: Opportunity to leverage private funding and management expertise. Monitoring: Tracking of results embedded in the design Sustainability: Subsidies that minimize distortions in consumption.

8. OBA Models In Vietnam 8 5/16/2011 EMW applies 3 models EMW is service provider Private entrepreneurs are service providers Consumer rebates in sanitation

9. Model 1 EMW is service provider taking performance and financial risk by pre-financing the capital cost and get reimbursed upon independent verification of household connections. GPOBA disburses 80% of the agreed amount for household connections, and 20% for 6 months of satisfactory delivery of services 9 5/16/2011

10. Model 1 Targeted poor communities WB / GPOBA Authorities GPOBA Grant Provincial authorities (PPC/CERWASS/DONRE) Grant Agreement Subsidy Payment for each output DPC MOU CPC Pre-finances Selects, manages & supervises Selects/ Monitors Management Solution Independent Verification Agent Water manager Private operator Contractors or IVA Output Verification Operates Build Service provision to users demanding connection Output Delivered = 1. Working Connections installed, 2. 6 months of Satisfactory Service

11. Model 2 Private enterprises are service providers, pre-finance capital cost, and get partial reimbursements upon verification of household connections EMW acts as a fiduciary agent of donors’ resources, but also takes performance and partial financial risks. In this way, EMW mobilizes private sources, passes on part of financial risks and helps upgrade skills of private sector 11 5/16/2011

12. Model 2 WB / GPOBA Authorities GPOBA Grant Provincial authorities (PPC/CERWASS/DONRE) Grant Agreement Subsidy Payment for each output DPC MOU CPC Selects, supports & supervises Subsidy payment Independent Verification Agent Private operator Selects, manages & supervises Pre-finances IVA Output Verification Operates Contractors Build Service provision to users demanding connection Output Delivered = 1. Working Connections installed, 2. 6 months of Satisfactory Service Existing customers and Targeted poor communities

13. Model 3 Adapt to household sanitations Eligible households pre-finance installation of sanitation latrines EMW provides consumer rebates upon verification of household status and construction of latrines and hand washing devices The amount is small so the support is structured as financial incentives not as subsidy Households receive hygienic behavioral changes education along with rebates 5/16/2011 13

14. Results since 2008 20,000 household connections completed and verified under Model 1 20,800 connections under Model 2 10,000 household sanitation facilities under Model 3 Mobilize about USD 1 million from private sources Beneficiaries’ contribution both in-kind and in cash 5/16/2011 14

15. Lessons Learnt Pre-financing is challenging so it is not for everyone Definition of outputs need to incorporate technical and services quality Difficult to reach poorest of the poor Disbursement mechanism from donors need to be more efficient Independent verification is key to success Cash on delivery approach can be applied to any sector 5/16/2011 15

16. For more information East Meets West 1611 Telegraph Avenue Suite 1620 Oakland, CA 94612, USA 510-763-7045 www.eastmeetswest.org info@eastmeetswest.org Regional Office - Asia No. 1 Lane 40 Linh Lang Street Ba Dinh District Hanoi, Vietnam +84-4-3834-7790 Ms. Minh Chau Nguyen Vietnam Country Director Mobile: 84-9090-87921 minhchau@eastmeetswest.org 5/16/2011 16