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Results Based Financing Project

Results Based Financing Project

MESPT is the local Project Implementer of the two RBF facilities. The goal of the RBF is “to overcome market failures constraining private sector delivery of distributed renewable energy systems providing modern energy services to the poor”. RBF funding is intended to reduce or mitigate commercial market failures, however not in the sense of large scale capacity building or policy support, but by providing financial incentives to the private sector to overcome typical, but temporary, market development risks. The financial incentives are therefore a temporary measure aimed at transforming the market and lifting it into an efficient and self-sustaining level through mitigation of market and growth barriers

An RBF avails barrier-removal and market enhancement incentives to beneficiaries after delivery and verification of pre-agreed objectives and results i.e. the number of products (solar or cookstoves) sold to consumers and/or enterprises on credit or flexible payment schemes. The two RBF projects are:

The Results Based Financing (RBF) concept is about developing and testing viable business models, that employs financing as a performance incentive rather than a traditional lump sum loan payment. The key feature is payment upon delivery. Private participants are expected to take the full risk until the moment of delivery of the contracted results. RBF instruments are generally characterized by the following principles:
1. Disbursement of funds is contingent on the delivery of pre-determined results (outcomes or closely related outputs);
2. Results are broadly defined to allow for product & service innovation by allowing flexibility to service providers;
3. Verification acts as the trigger for disbursement;
4. Incentives are non-discriminatory, in that all eligible service providers are able to participate on a competitive basis.

RBF Mechanism/Principles:
1. The participating organization must be willing to provide Solar and Improved Cookstove products.  
2. The RBF Beneficiary must maintain reliable data on all products issued for Solar products / Improved Cookstoves to facilitate verification and monitoring process. We have developed standard template to help in data management and reporting.
3. The participating organization is required to identify key challenges and barriers and that hindering them from commencing in lending in this sector or from scaling up their current performance and possible activities to address them.
4. The incentives are calculated based on the credit value to the financed unit and the county the product would be used. The incentive rates are varied per County as per attached templates.