Results based financing (RBF) can be a valuable complementary tool for contributing to institutional reform but requires sufficient time for design and implementation. The Sierra Leone Threshold Program agreement stipulated that a Performance-Based Regulation Activity (the Results-based Financing Activity or RBF) would be included under the Regulatory Strengthening Project but suggested that the Activity would “only commence 12-18 months prior to the Completion Date.” In reality, the initial design for the activity was not completed until late 2018. Following the RBF design, there were delays in hiring the independent verification firm; challenges in MCA procurements of equipment to be provided before the activity, particularly for the Electricity Distribution and Supply Authority (EDSA); and shifts in the electricity sector focus which required a redesign of the RBF targets for the Electricity Generation and Transmission Company (EGTC). The RBF was implemented over the course of nearly one year (June 2019-May 2020) with three of the four institutions involved: the Electricity and Water Regulatory Commission (EWRC), Guma Valley Water Company (GVWC), and EDSA). This implementation window would not have been possible without an extension of the threshold program which was initially slated to end February 2020. The fourth institution, EGTC, experienced additional delays in implementation due to the COVID Pandemic and concluded near the end of the threshold in March 2021. Participants in the program and other stakeholders, thought a longer implementation period would contribute to better performance because it takes time to for some institutions to work out how they will address the key performance indicators (KPIs) address the related challenges and build momentum in their performance. A longer implementation period would also have given the institutions more opportunity to put the incentive payments received back into their programming. Given the complexity of the design process, RBF should be planned early on, especially when it involves up front procurements. Future program should consider bringing on design consultants and verification agents early on (perhaps in the program development phase). Careful analysis should also be made to determine the optimal timeline for RBF implementation to maximize the benefits to participating institutions.
Lesson Learned