r0/cis WORLD BANK OPERATIONS EVALUATION DEPARTMENT WINTER 2002 NUMBER 218 IDA's Partnership for 24575 Poverty Reduction he increasing complexity of development challenges over the past decade has been addressed by heightened efforts of gov- ernments, voluntary organizations, and external assistance agencies to learn from experience and improve the effectiveness of development assistance. The International Development Association (IDA) has been at the leading edge of this effort, steadily "raising the bar" in what is expected of both IDA and its borrowers, according to a recent evaluation by the Bank's Operations Evaluation Depart- ment (OED). This study examines the last seven years of IDA's work, assessing its relevance (did it do the right things?) and its efficacy and efficiency (did it do things right?). IDA is a unique instrument of develop- countries in transition and with the special ment cooperation, focused on assisting the needs of countries emerging from conflict. world's poorest countries. Established in 1960 as a separately funded but integral Complexity Increases component of the World Bank Group, IDA's main goals and basic features have IDA represented a bold innovation and an not changed. But its agenda has expanded unprecedented commitment by the inter- and become increasingly complex, particu- national community to improve global larly since the publication of the World welfare. It has made substantial and dis- Development Report 1990: Poverty, tinctive contributions to growth and which advocated a strategy of poverty poverty reduction in low-income countries reduction through economic policy through a combination of concessional reforms and productive investments. The finance, analytical work, and aid coordi- goal was to improve incomes among the nation services for some 40 years. poor through labor-intensive growth and During the seven years covered by this to expand their access to social services review, IDA committed just over $42 bil- and social safety nets. lion to some 77 low-income borrowers to The IDA10-12 replenishment undertak- support country efforts to achieve sustain- ings (see box 1) adopted the framework of able economic growth and poverty reduc- the 1990 strategy, with a call to sharpen tion through improved economic policies IDA's poverty focus. The agenda was and investments; expanded access to basic expanded to acknowledge the centrality of education, health, and other social serv- governance, as well as to include gender and ices; and strengthened public sector man- the environment as part of a broad-based agement and governance. IDA also framework for poverty reduction. IDA was assisted with the challenges faced by the also urged to increase effectiveness through 2 World Bank Operations Evaluation Department ievelopment, and protection of vulnerable groups have Box 1: IDA1D-12 Replenishment Undertakings ecome common GAS objectives, and CASs are increas- In broad terms, the three IDA replenishment agreements- ngly based on comprehensive poverty diagnosis and con- reports that set forth IDA's goals for each three-year funding ultations with stakeholders. IDA has also made a major cycle-endorse poverty reduction as IDA's overarching objec- ontribution to poverty analysis and data. Poverty assess- tive and instruct IDA to: * Sharpen the poverty focus of its support for country devel- opment. )orrowers, and public expenditure reviews for almost half. * Direct its assistance, in support of that objective, to expand- IDA's commitment to increase social sector lending has ing access to basic social services, fostering broad-based een highly satisfactory. Such lending is up from 20 percent growth, promoting good governance, and integrating gender )f total IDA investment lending in the late 1980s to a sus- and environmental considerations into development efforts. ained level of 40 percent since 1995. This has made IDA * Increase its development effectiveness through more selec- fhe largest financier in human development and a major tive, more participatory, and better-coordinated country ;ource of analysis and advice, particularly in Africa. assistance programs. rhe Challenge of Broad-Based Growth 0UA has helped many borrowers move into position to direct greater country ownership, performance-based allocation of greater effort toward poverty reduction goals. In countries assistance, and improved development partnerships. committed to reform, IDA's support has contributed to increased economic stability, fewer distortions, and IDA's Performance improved infrastructure development. But acceleration of IDA's replenishment undertakings have been highly rele- broad-based, job-creating growth remains a major challenge. vant and timely, but they also have been extraordinarily A lag in private sector development (PSD) has been a demanding for both IDA and its borrowers. Overall, OED major contributing factor to weak broad-based growth. As found IDA's implementation of the replenishment under- efforts to stabilize macroeconomic conditions took hold in takings-more than 150, in all-to be satisfactory, with the 1990s, IDA increased PSD activities, supporting important qualifications. Development outcomes of IDA improved business environments, private provision of infra- programs-influenced by exogenous factors and by both structure, and microfinance. But IDA CASs still tend to borrower and partner performance, as well as IDA's lack well-articulated PSD strategies, and while many IDA actions-were judged to be partially satisfactory, with efforts have had successful project outcomes, Country notable improvement over the period. Assistance Evaluations give relatively low ratings to the IDA has repositioned and enhanced the relevance of its effectiveness of IDA's PSD work. A sharper focus on the country assistance programs, strengthened its field pres- investment climate and support for small and medium-size ence, and diversified its lending instruments, while improv- enterprises and rural finance are needed. ing its portfolio performance (see figure, box 2). It has recently intensified aid coordination efforts in the context Broadening the Development Agenda of the Comprehensive Development Framework and the The Role of Governance. Although good governance is a crit- Poverty Reduction Strategy Paper initiative (see box 3). ical factor that affects all other areas of program emphasis, IDA has done well in helping countries to lay the foun- IDA was initially slow to comply with the DA10 governance dations for economic growth and poverty reduction, but undertakings. Over the past four years it has given increased the record of IDA countries in sustaining growth at high enough levels, over long enough periods, and through Project Outcomes, Institutional Development, and measures that benefit the majority of the poor has been Sustainability Improving mixed. This reflects a host of non-IDA influences including Percentage E] IDA9 (1991-93) regional conflicts, weak domestic capacities, mixed policy 100 IDA10 (1994-96) performance, variable quality of aid, and exogenous shocks. But it also highlights areas where IDA's own per- 80 Fj IDA11+(19972000) formance, while generally satisfactory and improving, 60 could be enhanced still further to contribute more posi- tively to development outcomes. 40 Sharpening the Poverty Focus 20 IDA has progressively strengthened the poverty focus of its 0 analytical work, policy dialogue, and lending. The overar- Institutional Sustainability Outcome ching goal of poverty reduction has been increasingly Development Impact (% likely) (% satisfactory) reflected in IDA Country Assistance Strategies (CASs), par- ticularly since 1997. Broad-based growth, human resource Note:Proecs by exi year. Precis 218 3 Box 2: Examples of IDA Country Assistance Mozambique emerged froi conflic in 1992 and has since made significant and acceleratng advances mi implementing market-based economic policies boasin- aiie-sro ,t $737. illion ,i.. com imentso Povertyari6tof istc h f"l i-* thg-v econtmi pfolies,' gheof he-strongest privatization programs in Afrca Followmg a period of post-confhct assistance, IDA's current portfolio cp 16 projects estimated a $7 ml on is thefoverall goa orte gov ernment and IDA -inth o fry The 2000 CAS, which supports the government's Five-Year Strategy and thiIntiimPv'e'rty Red-1 tion Strategy Paper, focuses on three c6re objectives: (1) increasing economic opportunities, (2) improving governance and empowerment; and,(3) improving human capabilities. Donor assistance plays a vital role in supporting the country's economy and accounts forapprokimately $600 million per year-more than 15 percent of GDP. A Consultative Group (C), for which IDA is chair, is the, main coordinating mechanism for dono r activities. IDA is a partner in sector-wide programs (which involve an agreed sector program and coordinated funding among donors) for health education, transportation, and agriculture. Ghana has received IDA funding forsome 94 operations, accounting for more than $3.5 billon in lendmg The active lendmg port- folio of 23-rojectss one of te largest in-Africa. IDA's current GAS is supportive of Ghana Vision 2020 the national strategy 'for -reducing poverty andiachieving broad-based economic development. The CASuhas two t the government's pyerty reduction,strategy, and thsec6ld- resents IDA's busness srategyEteinaliassistance included some $1. bibion m commit- ments for 200)-01. The government has been strongly involved in aid coordination andGhana is credited wihbehg one of the two CIF pilot countries that have made th& most overall progress in fosterig country-led, long-term development parnrship. The - widely regr ded, noi . in tr-id sta tegy for health invlves 17 donors and s characteried by strong government ownership. ' . -- .........- emphasis to public sector reform in country assistance pro- reinforced by the increased placement of IDA country grams. Lending for such reform has risen, and institutional directors in the field, and IDA has given greater emphasis development issues are increasingly addressed in analytical to harmonizing procedures and processes among multilat- work and lending. But public sector capacity building, public eral development banks, among other steps. The percentage financial accountability, and the rule of law remain major of IDA projects with some stakeholder participation nearly challenges, and greater coordination among external agencies doubled from 1994 to 2000, reaching 83 percent of proi- is needed to consistently cover the broad governance agenda. ects. Overall, the shift to country ownership and partner- Integrating Gender and the Environment. IDA has made ship is clear, but consolidation and institutionalization of limited progress in mainstreaming gender and the environ- this shift call for the move from ad hoc to structured ment, in large part because of uneven country interest and arrangements at the country level and a greater commit- because IDA has not established clear accountability for ment to harmonization at the corporate level by IDA and gender and environmental mainstreaming. Where IDA assis- the other multilateral and bilateral agencies. tance has contributed to strong results-notably in girls' education-there has been significant country ownership, Next Steps effective partnership, and rigorous analytic work underpin- The period under review has been one of considerable ning lending. IDA assistance has been weaker in promoting change-in borrower countries, in IDA, and in the develop- women's participation in the economy and improving bor- rowers' institutional frameworks for gender. Lending for environment projects remains at about the level reached in Box 3: Two Key Initiatives IDA9, but IDA has increased the number of environmental Comprehensl%e Development olis components in projects in key sectors. This assistance has ap i to d i acoe i f e helped to increase public and government interest, reversed country,'ownerhl' of developmfent goals and, action; more land degradation, improved incomes from arid lands, and p m se r and ac tbi strengthened environmental capacity. Still lacking, however, is the full integration of national environmental assessments leadership withidevelop t'partners-workingselectively into CASs and country dialogue and the establishment of according-to.comparative advantage The Bank s current criteria for mainstreaming environmental concerns and the CDF thecerf the insti- clearly linking them to poverty reduction. ions strategicorientation. Building More Effective Partnerships. Few of IDA's Strategy Papers (PRSPs) have become objectives can be satisfactorily achieved without more effective partnerships based on enhanced aid coordination the y and increased participation by governments, civil society, " e Po Cutr h a k -ecl ah-sm for improving. the policy perfor manc o h ooet'on and the private sector in IDA program design, implementa- s, oun tion, and monitoring. Progress in this area was moderate oectives Built,onthe fourCD ari - b during IDA10-11, but the CDF and PRSP initiatives intro- country.ownedrunded,nari duced after the IDA12 negotiations have given significant ..should serve as eframeworr t ssisnce. impetus to aid reform. In-country coordination has been co 4 World Bank Operations Evaluation Department consistency among the PRSP, the CAS, and the Box 4: Response of the Board and IDA Deputies allocation system. The Board of Executive Directors welcomed OED's IDA Focus on governance and capacity building. Every area review, noting that it was both timely and important. The of this review highlights the centrality of governance and directors were in general agreement with the OED finidings, public sector capacity building, with a view to and viewed them as a useful input to the IDA13 replenish- en ment. The directors congratulated Management for its per- incpriing blic go erves and more formance as documented by OED, noting that it was particularly noteworthy because of the breadth and complex- transparent and accountable to their publics. ity of these undertakings. Looking ahead, the directors wel- Commit to effective development partnerships. IDA comed the broad agreement between management and OED should work at the country and global levels to move to on priorities, especially the focus on:implemeitation, consoli- a new development architecture, including a shift from dation, alignment of resources to strategic priorities, and the ad hoc to structured arrangements of aid harmonization related costing of IDA mandates. They stressed the impor- and coordination. tance of building on the CDF/PRSP process,.particularly with Clarify policies and strengthen accountabilities. IDA regard to ownership, participation,.partnership, and, harmo- nization of operational policies and procedures. The IDA Deputies noted that the,OED review provided an excellent overview and analysis of IDA's performance and a strong platform for IDA13. They agreed with the conclusion Better align resources with program priorities. Improved that IDA's performance had improved markedly over the"' deployment of resources relative to IDA commitments is period and welcomed management's positive response. They essential for applying the lessons of the past seven years. broadly endorsed OED's recommendations as important for IDA would also benefit from adjusting the replenish- strengthening IDA's development effectiveness, particularly ment process by developing a longer-term vision, focused by focusing on implementation, aligning resources to strate- on results; engaging developing countries in setting priori- gic priorities, and consolidating IDAmandates; and they ties and monitoring IDA performance; and defining com- looked forward to a time-bound action plan for implementa- mitments in terms of monitorable and achievable tion. They encouraged IDA to adopt a longer-term approach. objectives, with realistic costing, focused on agreed indica- focused on outcomes, including monitoring and evaluation o results and means of reporting on them., ment system. The IDA10-12 policy framework has encour- aged IDA to move in directions relevant to the needs of its Director-General, Operations Evaluation: Robert Picciotto borrowers and it remains broadly relevant for the future. Director, Operations Evaluation Department: Gregory Ingram But IDA and its partners are still in the process of putting Task Manager: Catherine Gwin core elements of the framework into practice, reinforced by new initiatives adopted during IDA12. What is needed now This Pricis is based on IDA's Partnership for Poverty Reduction: new An Independent Evaluation of FiscaltYears 1994-2000, is to deepen and broaden the gains from the existing policy Catherine Gwi, Lead Evaluation Officer, Corporate Evaluation and framework by focusing on implementation, adequately Methods Group, OED. aligning resources to strategic priorities, and consolidating the IDA mandates. 0 Prcis For this, IDA will need to further adjust its role at both Internal Documents Unit and from regional information service the country and global levels. In its primary role of support- centers, and to.thepublic from the World Bank InfoShop. Priis are ing country-based development efforts, IDA should concen- elin@wordb orcing 1-20/4584497 trate more on its areas of comparative advantage-which, for the most part, lie at the strategic level in supporting econ- Precis omy-wide, sector-wide, and government-wide reforms-and Manager, Partnerships and knowledge: Osvaldo Feinstein on capacity building. IDA should also play a more proactive role at the global level to foster the harmonization and coor- EdCarine Eleth Dsmnato c SeresEitor: dination of external assistance needed for greater progress DSAMER: OED Precis are produced by the World Bank Operations toward the overarching goal of poverty reduction. There are Evaluation Department, Partnerships and Knowledge Group (OEDPK), several steps that IDA could take to build on the improve- Outreach and Dissemination Unit.'The views in this paper are those of ments of the past seven years: the Operations Evaluation staff and editors and should not be attributed * Increase country, program, and corporate selectivity. tothe World Bank, its affiliated organizations, or its Executive Directors. This calls for further improvements in IDA's Prics aussi di onibleen franpis performance-based allocation system and ensuring frcis en espahol tambien disponible @ http://www.worldbank.othtml/oed Pr6ois 218 IDA's Partnership for Poverty Reduction ISSN 1564-6297