Output-Based Aid in Fragile and Conflict Situations

Throughout the world, poverty is increasingly concentrated in countries and regions affected by fragility and conflict, which intensify already acute challenges to development. Fragility and conflict can range from persistent domestic or cross-border violence to vulnerability in the face of natural disasters or extreme weather events related to climate change, such as flooding or droughts. Where development has taken place, conflict and environmental disaster can strip years off these gains, and recovery is hampered by political instability, low government capacity, and the destruction of assets and infrastructure. The provision of basic services can support stabilization and lessen the impact of fragility and conflict on people’s lives. Output-based aid (OBA), which ties subsidy payments to the achievement of agreed upon outputs, improves access to basic services for the poor. This note discusses the challenges of service delivery in fragile and conflict-affected situations (FCS), and considers how OBA approaches can be most effectively utilized in FCS.