VietNamNet Bridge – The output-based aid approach was an innovative way to mobilise capital from enterprises and individual households to invest in rural water programmes, said Deputy Minister of Agriculture and Rural Development Dao Xuan Hoc.

Photo shows the water treatment system of Dung Quat Water Factory in Binh Tri Comune, Binh Son District in central Quang Ngai Province. The ouput-based aid approach ia said to be working in the mobilisation of capital for rural water programmes. (Photo: VNS)

The output-based aid (OBA) approach, or performance-based aid, is a development aid strategy that ties the disbursement of public funding to the achievement of clearly specified results. It was first used in Viet Nam in November 2007 with projects aimed at enhancing rural water systems in the Central Region and Cuu Long (Mekong) Delta.

According to Nguyen Minh Chau, country director of the East Meets West Foundation which piloted the mechanism, to ensure that quality water systems are implemented, recipients are reimbursed 80 per cent of their initial outlay once the infrastructure is in place and the remaining 20 per cent after six months if it works properly.

Chau said the organisation would only provide funds to enterprises that failed to meet standards after proposing the construction of water plants, distribution pipelines, household connections, water metres and water pressures.

In 10 months, 24 businesses in the Mekong Delta's Tien Giang Province, where the project was piloted, were involved in providing water to 7,304 households, consisting of 29,320 individuals, said vice director of Water Resources Department Tran Dinh Hoang.

The total reimbursment was about VND13.5 billion (US$6.75 million), 80 per cent of which had already been disbursed. The local people contributed VND3.8 billion ($190,000).

Hoang recommended that due to the enterprises' limited financial capacity, it would be better to reimburse them earlier so they could repay their debts and reclaim ownership of their land.

Nguyen Van Kha, director of An Thien Company, said the OBA project had been implemented for nearly six months, the biggest challenge was the timing of reimbursements — it took nine months for the company to receive the full reimbursement.

To date, the OBA project has provided 21,000 households and 10,000 sanitation plants access to clean water.

VietNamNet/Viet Nam News