Early-Stage Evaluation of International Finance Corporation Platforms Approach Addressing Development Challenges at Scale An Independent Evaluation © 2025 International Bank for Reconstruction and Development / The World Bank 1818 H Street NW Washington, DC 20433 Telephone: 202-473-1000 Internet: www.worldbank.org ATTRIBUTION Please cite the report as: World Bank. 2025. Early-Stage Evaluation of International Finance Corporation Platforms Approach: Addressing Development Challenges at Scale. Independent Evaluation Group. World Bank. COVER PHOTO Adapted from shutterstock/amiak EDITING AND PRODUCTION Amanda O’Brien GRAPHIC DESIGN Rafaela Sarinho This work is a product of the staff of The World Bank with external contributions. The findings, interpretations, and conclusions expressed in this work do not necessarily reflect the views of The World Bank, its Board of Executive Directors, or the governments they represent. 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Early-Stage Evaluation of International Finance Corporation Platforms Approach Addressing Development Challenges at Scale An Independent Evaluation March 5, 2025 Contents Contents Abbreviations v Acknowledgments vi Overview viii Management Response xvi Report to the Board from the Committee on Development Effectiveness xx 1. Background and Context������������������������������������������������������������������������������������������ 1 Definition of Platforms  3 Evolution of International Finance Corporation Platforms 3 International Finance Corporation’s Strategic Priorities 6 International Finance Corporation’s Approach to Platforms 7 Platforms Approach in Other Multilateral Development Banks  8 Scope and Methodology  9 2. Platforms Approach Performance�������������������������������������������������������������������������� 17 Response to Crisis at Scale 19 Engaging with Small Clients and New Clients 22 Engaging with Clients in International Development Association Countries and Fragile and Conflict-Affected Situations 26 Engaging in New Sectors 29 3. Efficiency, Risks, and Reporting���������������������������������������������������������������������������� 33 Efficiency 35 Risk 42 Reporting and Oversight 50 Forward Look: Reflections on Early Experience for Future Use of Platforms 53 Future Role of Platforms Approach in Achieving Efficiencies 54 Future Role of Platforms Approach in Responding to Crises and Global Challenges 55 Future Use of Platforms Approach to Reach IDA Countries and FCS, Small Clients, New Clients, and New Markets 55 ii 4. Summary and Conclusions����������������������������������������������������������������������������������� 58 Summary of Findings on the International Finance Corporation’s Platforms Approach  59 Recommendations for the International Finance Corporation’s Future Use of the Platforms Approach  60 Bibliography��������������������������������������������������������������������������������������������������������������� 63 Boxes Differences Among Platforms, Products, and Programs Box 1.1.  7 Delegation of Authority: The European Bank for Reconstruction and Box 3.1.  Development Versus the International Finance Corporation 37 Achieving Efficiencies Beyond Platforms: European Bank for Box 3.2.  Reconstruction and Development Initiative 42 European Bank for Reconstruction and Development Reporting Box 3.3.  to the Board of Directors on Projects Approved Under Delegation 51 Figures Evolution of Platforms in the International Finance Corporation  Figure 1.1.  5 latforms Approach Evaluation Design  Figure 1.2. P 11 International Finance Corporation COVID-19 Response Channeled Figure 2.1.  Through and Outside of Platforms 21 Base of the Pyramid and International Finance Corporation Startup Figure 2.2.  Catalyst Projects Reaching New Clients, FY17–22  25 Base of the Pyramid Projects Engaging in IDA Countries and FCS, Figure 2.3.  FY17–22  27 Have Platforms Supported the International Finance Corporation’s Figure 2.4.  Entry into New Sectors? 31 Use of Delegated Authority for Platforms Increased During COVID-19 38 Figure 3.1.  Riskiness of Platforms Versus the Rest of the International Figure 3.2.  Finance Corporation  43 Riskiness of Platforms Versus Benchmarks, FY17–22 Figure 3.3.  45 Credit Risk Rating of Equity Projects, Platforms, the Rest of the Figure 3.4.  International Finance Corporation, and Benchmarks, FY17–22 46 iii Tables Responding to Crisis at Scale: Achievements and Role of the Platforms Table 2.1.  Approach for Key Platforms 20 Engaging with Small Clients and New Clients: Achievements and Table 2.2.  Role of the Platforms Approach for Key Platforms 23 Platforms That Enabled the International Finance Corporation Table 2.3.  to Make Smaller Investments 24 Engaging with Clients in IDA Countries and FCS: Achievements Table 2.4.  and Role of the Platforms Approach for Key Platforms 27 Engaging in New Sectors: Achievements and Role of the Platforms Table 2.5.  Approach for Key Platforms 30 Savings in Preparation Time: Platforms Versus Nonplatforms, FY17–22 36 Table 3.1.  Efficiency Features of the Seven Platforms Table 3.2.  40 Front-End Due Diligence Process for Case Study Platforms Table 3.3.  Versus Benchmarks 48 Outcome Indicators and Targets Specified in Platform Board Papers: Table 3.4.  Platform Level Versus Project Level 52 Appendixes Appendix A. Methodology 70 Overview of Platform Detailed Case Studies and Lighter Appendix B.  Desk-Based Case Studies 91  eep Dive Summaries Appendix C. D 109 iv Abbreviations AIMM Anticipated Impact Measurement and Monitoring AOB absence of objection BOP Base of the Pyramid CRR credit risk rating E&S environmental and social EBRD European Bank for Reconstruction and Development FCS fragile and conflict-affected situations FTCF Fast-Track COVID-19 Facility GHP Global Health Platform IDA International Development Association IFC International Finance Corporation ISC IFC Startup Catalyst MSMEs micro, small, and medium enterprises PSW Private Sector Window SLGP Small Loan Guarantee Program All dollar amounts are US dollars unless otherwise indicated.     v Acknowledgments This evaluation was prepared by an Independent Evaluation Group team led by Melvin P. Vaz (senior evaluation officer, Finance, Private Sector, Infrastructure, and Sustainable Development) and Andrew H. W. Stone (lead evaluation officer), under the guidance of Marialisa Motta (former manager), Christopher Nelson (manager), and Carmen Nonay (director), with overall guidance from Sabine Bernabè (Director General, Evaluation). Jozef Vaessen (adviser) also provided critical guidance during the preparation and formulation of findings for this evaluation. The evaluation team and contributors included Ridwan Bolaji Bello and Sanittawan Nikki Tan (evaluation analysts) and Nana Sika Ababio and Stephen C. Miller (consultants), who contributed to multiple inputs, including desk reviews, portfolio analysis, efficiency analysis, benchmarking, statistical analysis, methods appendix, and literature review. Orlando Vaca Rodriquez (consultant) contributed to project coding. Konstantin Panov (senior consultant) authored desk-based studies of four platforms. Rama Seth (senior consultant) authored the International Finance Corporation Startup Catalyst platform case study. Maria Elena Pinglo (senior evaluation officer), advised by Jenny Gold (senior evaluation officer), authored the Global Health Platform case study. Arun Kumar Sharma (senior consultant) authored the Base of the Pyramid platform case study. Stefan Triendl (consultant) authored the deep dive on risk. William C. Haworth (senior consultant) authored the deep dive on oversight and reporting. Andrew Kilpatrick (senior consultant) authored the deep dive on the European Bank for Reconstruction and Development frameworks. Angel Saz-Carranza (professor of strategy and public policy director at the Esade Center for Global Economy and Geopolitics) led and advised on the forward look scenario exercise. Emelda Cudilla (consultant) and Romayne Pereira (program assistant) provided invaluable administrative support. Valuable methodological guidance was received from the Independent Evaluation Group Methods Advisory team led by Estelle Raimondo (methods head) with Santiago Alejandro Tellez Canas (consultant) and Santiago Ramirez Rodriguez (evaluation analyst). vi The peer reviewers were Rashad Kaldany (chief investment officer of Blue like an Orange Sustainable Capital), Alison Harwood (senior fellow, international, the Milken Institute), and Sabine Schlorke (investment professional). The team extends its thanks to the advisers or senior advisers to the executive directors for discussions on the evaluation scope during the Concept Note stage and for focus group discussions as part of the forward look scenario exercise. The team also thanks the many International Finance Corporation staff and managers who contributed their insights to this work. Special thanks go to the Strategy and Operations management team, including Anastasia Gekis (director), Liane Asta Lohde (manager), Ayesha Muzaffar (principal operations officer), Monika Noniewicz and Núria Pérez Tello (associate operations officers), and Yea Jy Lee (strategy analyst). Thanks also go to Mohamed Gouled (vice president, Industries), Tomasz Telma (director, Financial Institutions Group), Farid Fezoua (director, Global Health and Education Services), and German Cufre (manager, Global Infrastructure). These people bear no responsibility for the analysis or conclusions of the Independent Evaluation Group.     vii Overview The International Finance Corporation (IFC), in its December 2022 paper, “IFC’s Approach to Platforms: An Update—Applying Lessons to Enhance Platform Clarity,” defines platforms as thematic interventions at a regional, global, or sectoral level designed to address a specific development challenge (IFC 2022a). Until 2022, there was no generally accepted definition of platforms. IFC’s June 2022 Approach Paper, IFC Platforms: Enabling New Business Development at Scale, defines programs and platforms as a “grouping of projects of a similar nature or development objective under a single envelope, processed in an expedited fashion” (IFC 2022b, 1). The December 2022 paper redefined platforms and distinguished platforms from IFC programs and products explicitly (IFC 2022a). Since then, the paper’s definition of platforms has been widely accepted. Evaluation Purpose and Questions The main purpose of this early-stage evaluation is to assess IFC’s platforms approach as established in IFC’s June 2022 paper to the Board and clarified by IFC to the Board in December 2022. The evaluation answers three ques- tions: » Evaluation question 1: To what extent do the IFC platforms achieve their objectives, specifically (i) responding to crisis at scale, (ii) engaging with small clients and new clients, (iii) engaging with clients in International Development Association (IDA) countries and fragile and conflict-affected situations (FCS), and (iv) engaging in new sectors? » Evaluation question 2: To what extent does IFC’s platforms approach meet Board and client expectations on oversight, reporting, and efficiency gains while balancing risks and benefits to enhance trust over time? » Evaluation question 3: What guidance does the early experience of platforms provide IFC in shaping the future use of platforms? viii The evaluation covers seven platforms that IFC introduced between FY 2017 and FY22. On the basis of the request from the Board, projects approved in FY23 under the seven platforms were also included in the scope of the evaluation. The Independent Evaluation Group conducted an in-depth assessment of three platforms through case studies and a broader assessment of the other four platforms. To answer the evaluation questions, we triangulated findings from different methods: case studies, portfolio review and analysis, interviews with key stakeholders and staff, benchmarking case study platforms, a synthesis of lessons from the European Bank for Reconstruction and Development with a comparable instrument, and a forward look exercise based on focus groups. We assessed the seven platforms against the four objectives as specified in evaluation question 1. Given the early-stage nature of this evaluation, we examined available evidence on the platforms as an approach rather than focusing on the development outcomes of individual IFC platforms. Because the Independent Evaluation Group had evaluated only one platform project at the time of this evaluation, we could not assess outcomes or compare them with what IFC achieved outside of platforms. In addition, the fact that the base of experience in this evaluation is both limited and diverse among the seven in-scope platforms limits the generalizability of findings in some cases. There is no fully articulated and shared perspective on how IFC platforms are intended to work. On the basis of official documents and interviews, Independent Evaluation Group World Bank Group    ix we reconstructed a program logic that hypothesizes how IFC platforms are expected to work and achieve the four objectives elaborated in evaluation question 1. Within this program logic, efficiencies realized by the platforms through streamlined and standardized internal processes, expedited project processing, and pooling of risks combined with blended finance would allow IFC to respond to a crisis at scale and respond to specific development challenges at greater scale, including by engaging with small and new clients, with clients in IDA countries and FCS, and with clients in new sectors. Systematic reporting and monitoring by IFC and periodic self-evaluations and independent evaluations would enhance trust between the Board and IFC management and facilitate oversight and learning. As IFC applies expedited processing and engages with higher-risk clients and markets, platforms would manage risk by employing due diligence processes and the support of blended finance to pool and mitigate risk in more challenging markets. We used the program logic to analyze and explain the evidence collected in this evaluation. Overall, the IFC platforms achieved the objectives they set out to achieve, with some exceptions. However, the importance of the platforms approach in enabling the achievement of these objectives varied across platforms. Findings Platforms provided a key vehicle for IFC to increase the scale of its crisis response during the height of the pandemic, yet the responses of some of the platforms took time to materialize. The generalization of this finding is limited to the three platforms—the Fast-Track COVID-19 Facility, the Global Health Platform (GHP), and Base of the Pyramid (BOP)—that were approved Early-Stage Evaluation of International Finance Corporation Platforms Approach  Overview during the pandemic to address urgent needs. Seventy-five percent of IFC’s COVID-19 pandemic response was channeled through those three platforms. Using expedited processes, the Fast-Track COVID-19 Facility and BOP chan- neled substantial working capital to firms and financial intermediaries at a time when liquidity ran short. Yet, in terms of the pandemic response, there was a period of time that elapsed after IFC’s initial COVID-19 response and before the launch of the BOP platform or the approval of GHP’s first invest- ment. Despite urgent need, GHP’s first investment was approved one year after the pandemic in March 2021 because of the complexity of its projects, which required longer preparation time. Moreover, the BOP platform, which focused on providing financing to financial intermediaries serving micro, small, and medium enterprises (MSMEs), was launched 11 months after the COVID-19 outbreak in February 2021. IFC took time to assess the emerging needs of MSME financial intermediaries. IFC used specific platforms to extend its reach to a higher percentage of small clients (as reflected by small transactions) and new clients. For the purposes of this evaluation, “small clients” refers to clients with small IFC commitment amounts that IFC would not otherwise invest without a specific platform intended to serve such clients. We used this proxy because client size is not always recorded. Project documents often do not report the x size of IFC clients (for example, company asset size, sales, number of em- ployees, and so on). “New clients” refers specifically to partner institutions in which IFC has not made an earlier investment since July 2000. The three platforms that aimed to reach small clients—BOP, IFC Startup Catalyst (ISC), and Private Equity Co-Investment—succeeded in doing so by making smaller investments. Platform features that facilitated small transactions included efficiency from project processing and pooling of risk using blended finance. These allowed platforms to finance transactions that IFC would not have financed through stand-alone projects. Among these three platforms, BOP stood out for having a much higher proportion of new clients than its benchmark. In addition, BOP was able to engage with new and risky clients by taking advantage of pooling of risk using IDA Private Sector Window blended finance support. Platforms enabled IFC to engage with clients in IDA countries and FCS, except for the Côte d’Ivoire Housing Program, because it did not meet its objectives. By design, four platforms were expected to engage substantial- ly in IDA countries and FCS: the Small Loan Guarantee Program, BOP, the Fast-Track COVID-19 Facility, and the Côte d’Ivoire Housing Program. Both the Small Loan Guarantee Program and the BOP platforms have IDA Private Sector Window blended finance support integrated into their design, which enables them to pool risk and mitigate it efficiently with blended finance, thus allowing them to engage substantially with riskier IDA and FCS clients. IFC’s engagement with IDA and FCS clients was facilitated by a portfolio fo- cus (for example, BOP’s focus on financial intermediaries targeting MSMEs), Independent Evaluation Group World Bank Group    xi efficiency gains (for example, delegation of authority—the transfer of proj- ect approval authority from the Board to IFC management—for existing clients and streamlined internal processes such as short-form Board papers for approvals for new clients under BOP), and risk mitigation (for example, pooling of risk through blended finance support in both BOP and the Small Loan Guarantee Program). The Côte d’Ivoire Housing Program was dropped. Contributing factors include that the platform misjudged the market, focus- ing narrowly on one country, one sector, and two participating banks. Of the two banks selected to support affordable housing in Côte d’Ivoire, one withdrew (citing negative price movements in the market), and the other failed to restore compliance with IFC’s environmental and social standards. In addition, IFC informed the Independent Evaluation Group that the Ivorian government did not deliver on the development of basic infrastruc- ture (water, electricity, and so on) to service the housing under construction, after an unsuccessful World Bank engagement, making banks hesitant to continue their engagement. Platforms aiming to reach new sectors did so to some extent; however, the platform approach was not essential to GHP investments. ISC, GHP, and BOP each realized their aim to reach new sectors that IFC did not otherwise reach but to a limited extent. Platforms were able to focus resources and industry knowledge in specific areas. In addition, processing efficiencies (for example, delegation of authority and deal acceptance criteria in ISC) freed up time to serve clients in new sectors. GHP focused attention and resources on reaching new sectors, but interviews suggest that its invest- ments would likely have occurred without the platform approach. Early-Stage Evaluation of International Finance Corporation Platforms Approach  Overview Platforms have demonstrated efficiency in reducing average processing time for projects, with some variation by platform. Key factors in reducing processing time included delegation of authority and standardization and streamlining of processes. Delegation of authority was the most important source of efficiency gains observed in accelerating the crisis response. Use of delegated authority surged during the COVID-19 pandemic, and the resulting time savings were especially evident in the BOP platform. ISC also achieved time savings from delegation of authority, but overall project preparation time was longer because IFC had to provide time-consuming hand-holding to first-time fund managers who were unfamiliar with legal and technical requirements. In addition, the fund managers faced fundraising delays to achieve a minimum viable fund size. The Independent Evaluation Group’s case studies indicate that standardizing and streamlining IFC internal processes (for both preparation and approval) under platforms also contributed significantly to time savings. However, IFC’s analysis of and reporting on efficiency have been limited to processing time, whereas a full consideration of efficiency would require collecting and analyzing additional data on cost and profitability. Based on expected loss, an ex ante risk indicator, there is no indication that platform projects covered by this evaluation will increase IFC’s portfolio risk. xii However, this varies by platform. Expected loss is the amount that IFC is expected to lose from a client’s potential default on a loan. To some extent, the lower risk in platforms can be explained by the presence of IDA Private Sector Window blended finance support, which compensates for a small portion of the loss amounts to IFC, thereby reducing risks to IFC’s balance sheet. For example, the BOP platform’s integrated ability to pool risk and use blended finance efficiently enabled it to take on more risky clients. However, BOP was riskier than its benchmark because of the beneficiaries it targeted (for example, MSMEs). Equity risk for platform and nonplatform projects is similar, but ISC is riskier than its benchmark because of its targeted clients. Platforms reporting has evolved over time but has not met the expectations of the World Bank Group Board of Executive Directors. Contrary to the Board’s expectations at the time of the creation of individual platforms, there is little or no reporting in the Board Operations System and IFC’s operations portal on additionality, development impact, environmental and social and integrity risk ratings, credit and equity risk ratings, and risk-adjusted return on capital. Regular reports from IFC management to the Board show commitment volumes with links to project data, platform usage, and share of IFC’s own account across IDA countries and FCS, climate, and gender. However, there is little reporting on what the Board expected. In addition, platforms have not consistently established indicators and measurable targets at the platform level in their Board papers as a basis for Independent Evaluation Group World Bank Group    xiii reporting and oversight. The forward look exercise found that the Board and IFC agree on using platforms to confront future crises and some development challenges, but their views on delegation and reporting differed. Focus groups involving 20 executive director advisers and IFC senior management yielded the following reflections of views from the participants: » The Board and IFC management agree that platforms can produce efficien- cy gains through streamlining and standardization of internal processes. However, on delegated authority, IFC management viewed it favorably, but the Board regarded it as neither inherent to nor necessary for platforms to operate efficiently. The Board saw potential for expanding delegation within clearly defined parameters and with timely reporting of information needed for oversight. » Both the Board and IFC management see platforms’ value in addressing crises by allowing a faster response to clients in urgent need of financing. Both point to the need for dual capacities in future platforms to address short-term needs in crisis and long-term needs in addressing global develop- ment challenges and building resilience. » The Board and IFC management agree that platforms can provide efficient and targeted approaches to reaching clients in IDA countries and FCS, small clients, new clients, and new markets where the average firm and project size is small and therefore does not meet the investment threshold of normal IFC operations. Recommendations Early-Stage Evaluation of International Finance Corporation Platforms Approach  Overview IFC should extend the approach embodied in its pilot to new platforms that both build on the benefits revealed in the pilot period and enrich and generate new learning on platform performance. Experience to date suggests that platforms can be designed to facilitate small transactions, respond rapidly to crisis, manage risks associated with new clients more efficiently (through pooling of risk and mitigation of risk using blended finance), engage with clients in IDA countries and FCS, and focus on spe- cific global challenges (for example, in health and digital technologies, using lessons from the GHP and ISC platform). In addition, platform design may combine short- and longer-term financial instruments to be prepared for future crises and to address longer-term development needs. A caveat in extending IFC’s pilot approach to platforms is that individual platform outcomes are not yet known, and the base of experience in this evaluation is both limited and diverse among the seven in-scope platforms. Given the likely scale-up of platform use to address global challenge priorities, incor- porating and supporting learning is vital. To facilitate oversight of and learning from platforms, IFC and the Board should reach and implement an agreement on the level, content, format, and frequency of reporting on platforms and individual projects within xiv them, rooted in clear results frameworks. The agreement should balance the information the Board uses for oversight—for example, information on development impact, additionality, risk ratings (credit, environmental and social, and integrity due diligence), efficiency, and risk-adjusted return on capital—with what IFC can provide feasibly. Despite progress, a gap remains between information that the Board has stated it wants in discussions on individual platforms and the information IFC reports routinely. IFC systems could be updated to fill this gap at agreed periods. Furthermore, Board oversight and IFC’s monitoring and evaluation of platforms should be based on results frameworks (consistent with each platform’s program logic) with specific indicators and quantifiable targets agreed to with the Board when individual platforms are approved or extended. Independent Evaluation Group World Bank Group    xv Management Response Management of the International Finance Corporation (IFC) thanks the Independent Evaluation Group (IEG) for the report, Early-Stage Evaluation of International Finance Corporation Platforms Approach: Addressing Development Challenges at Scale. The evaluation assesses the extent to which IFC platforms achieve their objectives and the extent to which IFC platforms approach meets Board and client expectations of oversight, reporting, and efficiency gains (based on platforms introduced between FY 2017 and FY22). The evaluation is timely as management views platforms as an important mechanism to deliver on the aspirations of the World Bank Group Evolution, which requires the institution to significantly scale its operations, financing capacity, and development impact. The evaluation provides insights to assist IFC in shaping the future use of platforms to address crises and global challenges and to reach new and small clients and markets. Management thanks IEG for the continued collaboration. International Finance Corporation Management Response Overall Management is pleased with IEG’s positive assessment of the IFC platforms approach. The report validates the role of platforms in enabling IFC to respond to crises at scale, engage efficiently with small and new clients, and extend IFC’s reach in International Development Association and fragile and conflict-affected situation markets and to new sectors. The report also recognizes platforms’ contribution to efficiency gains through lowered average project processing time enabled by streamlined decision-making and standardized documentation. In addition, the report confirms that platform projects, whether in the debt or equity space, do not increase IFC’s portfolio risk. Management broadly agrees with IEG’s assessment of how platforms have achieved their objectives but believes that the evaluation does not xvi sufficiently capture important aspects of success. While the evaluation states that the IFC Startup Catalyst platform and the Private Equity Funds Co-Investment platform played a “moderate role” in the achievement of platform objectives, management believes that the approach played an essential role in facilitating the investment in challenging markets and engaging with small clients and new sectors in the case of IFC Startup Catalyst and achieving scale in fund investments through the Private Equity Funds Co-Investment platform. Private Equity Funds Co-Investment has become a core IFC tool as current co-investments represent more than 20 percent of IFC’s annual investments through private equity funds. The platform’s streamlined processing has helped enable these initiatives that would otherwise not be economically viable and transactionally efficient size-wise. Management would like to note important aspects and drivers of perfor- mance for IFC’s sector-focused platforms. Regarding the Global Health Platform (GHP), management agrees that some of the investments under GHP may have occurred on a stand-alone basis but emphasizes that the performance of the platform is more nuanced. GHP’s focus was to enable a strategic sectoral approach that built the foundation for long-term engage- ment in the health sector to support resilience beyond the crisis period. This involved robust client engagement, including significant upstream busi- ness development support and new partnerships. Through GHP’s focused Independent Evaluation Group World Bank Group    xvii and dedicated approach, IFC has engaged donors (for example, Japan and Norway) and international partners (for example, CEPI, the World Health Organization, and Gavi, the Vaccine Alliance), which has been instrumental in increasing IFC’s value proposition for clients in this sector. In regard to the Côte d’Ivoire Housing Program, management believes that key factors undermining its performance were different from those stated in the evaluation. The report refers to IFC excessively narrowing the platform’s focus to a single country and sector and misjudging the market. Management would like to emphasize that housing is a very locally driven business, and a regional housing platform may have in some ways multiplied rather than mitigated risks, given the vast differences between regulatory and tax re- gimes country to country or even within a single country. The Côte d’Ivoire Housing Program had a strong upstream component in its design, and the team worked closely with the World Bank to create enabling housing regula- tions that would incentivize the participating banks to engage more with the housing market. Implementation was also dependent on the development of basic infrastructure (water, electricity, and so on) to service the hous- ing under construction. This was delayed and affected by the onset of the COVID-19 pandemic, which led to competing priorities for public finance. The missing basic infrastructure made the banks hesitant to continue their engagement. Additionally, compliance with environmental and social stan- dards did not contribute to the cancellation of the platform. The platform had a strong advisory component to ensure environmental and social com- pliance and capacity building along the value chain. Early-Stage Evaluation of International Finance Corporation Platforms Approach  Management Response Recommendations Management welcomes the report’s two recommendations, which endorse IFC’s approach to platforms and provide guidance for the future use of plat- forms. Management appreciates the suggested way forward and notes that IFC is already working toward implementing the recommendations. Recommendation 1: Management agrees with the recommendation to extend the pilot approach to new platforms building on lessons learned from platform performance. Management is working on an update on the pilot approach, which calls for a rollout of the approach beyond the pilot stage and proposes several modifications to develop it further. The update will be presented to the Board in the third quarter of FY25. These modifications are based on lessons learned throughout the pilot phase and aim to ensure the efficiency and effectiveness of platforms and the approach over the long term. During the pilot period, IFC has made concerted efforts in channeling lessons from previous platforms into the design of new ones and mainstreaming these lessons across IFC’s business. For example, IFC leveraged the streamlined project processing approach of the Fast-Track COVID-19 Facility into the expedited processing procedure for existing clients, enabling IFC to process repeat transactions more efficiently and shift efforts into developing relationships with new ones. Successive iterations of different platforms also include lessons learned from the previous ones. Both Base of the Pyramid and Fast-Track COVID-19 Facility Working Capital xviii Solutions allowed IFC to scale funded solutions under the recently launched micro, small, and medium enterprise finance platform. Starting at $400 million and getting to over $4 billion under the micro, small, and medium enterprise finance platform is only possible through successively more advanced iterations of platforms that leverage lessons learned to create synergies across similar borrower profiles across multiple countries. Recommendation 2: Management agrees that thorough reporting on the implementation and outcomes of the platforms approach is key for accountability. Management would like to note that the scope, quality, and depth of reporting have, over the pilot period, become more robust. While IFC will strive to continue improving its reporting on platforms, this process will be gradual for two main reasons. First, the universe of platform projects is still relatively small with few closed projects, and, as such, caution needs to be exercised when drawing definitive conclusions on matters such as the profitability and development impact of the platforms approach. Nonetheless, IFC will share early results with the Board where feasible. Second, further improvements in technology infrastructure to enable more automated data collection are needed to enable IFC to improve analysis of platform outcomes and leverage this analysis into platform design. In this context, IFC agrees with the evaluation’s assertion that there needs to be balance between oversight and reporting to preserve the efficiency gains generated through streamlined processing. IFC is keen to continue the conversation with the Board on how to strike this balance, noting the Independent Evaluation Group World Bank Group    xix evolution of the reporting that has already taken place following ongoing discussions with the executive directors and advisors since the initial launch of this pilot phase for platforms. Similarly, it is worth noting that the different platforms have seen an evolution in their own design and reporting on impact and outcome indicators based on lessons from earlier platforms. Report to the Board from the Committee on Development Effectiveness The Committee on Development Effectiveness met to discuss the Independent Evaluation Group (IEG) report entitled Early-Stage Evaluation of International Finance Corporation Platforms Approach: Addressing Development Challenges at Scale and the draft management response. The committee welcomed the early-stage evaluation of the International Finance Corporation (IFC) Platforms Approach, which was requested by the Board of Executive Directors in 2022. Members acknowledged that the evaluation did not focus on the relevance or effectiveness of individual IFC platforms or whether these have been achieving their intended outcomes, but rather aimed to assess whether the pilot approach has met Board and client expectations and to identify lessons learned that could be integrated into future processes. IEG reminded the committee that the report had recently been finalized in the context of the Global Challenge Programs, and IEG presented its preliminary findings to the committee and management on an exceptional basis in July 2024. The committee appreciated that the study covered not only the seven platforms introduced between FY17 and FY22 but, based on the Board’s request for IEG to expand the scope of the evaluation, included also projects approved in FY23 under these platforms. Members noted their agreement with the early-stage findings that platforms generally achieved their objectives of scaling up the COVID-19 crisis response, reaching smaller and new clients, engaging in new sectors, and expanding IFC’s reach in International Development Association and countries classified as fragile and conflict-affected situtations. They appreciated learning that (i) operational efficiency, (ii) risk pooling and mitigation of risk using blended finance, and (iii) focus on specific development challenges were features that contributed to their success. xx The committee expressed its support for IEG recommendations, which suggested that IFC extend the approach embodied in its pilot to new platforms and for IFC and the Board to reach and implement an agreement on the level, content, format, and frequency of reporting to facilitate oversight of and learning from platforms. Members emphasized the importance of improving reporting and establishing a robust results framework for IFC platforms. Some suggested that a joint working group be set up to address these topics and ensure that the reporting and results frameworks for platforms meet the needs of the Board. IFC management was generally open to continuing the engagement with the Board in this respect. The committee welcomed IFC management’s agreement with IEG recommendations and was pleased to learn that IFC has begun implementing the recommendations and intends to update its Pilot Approach taking into consideration key lessons learned. Members asked IEG to consider a full-fledged evaluation that examines development results when project completion data is available, including on individual platform projects, to get a better understanding of lessons learned and the outcomes and development impacts achieved through the use of IFC Platform Approach. IEG explained that such an evaluation would need to be considered from an evaluability perspective and the topic discussed as part of the fiscal years 2027–29 work program consultations, which are envisioned to start in September 2025. IEG indicated that such an evaluation could be carried out no earlier than fiscal year 2028 were it included in the work program, Independent Evaluation Group World Bank Group    xxi and suggested another option is to cover the work of individual platforms in relevant sectoral and thematic evaluations. 1 | Background and Context Highlights This evaluation’s main purpose is to assess the platforms approach of the International Finance Corporation (IFC), as established in IFC’s June 2022 paper to the Board on using platforms to enable new business development at scale and clarified further by IFC to the Board in December 2022. IFC defines platforms as thematic interventions at a regional, global, or sectoral level designed to address a specific development challenge. The history of the IFC platforms approach dates to the early 2000s, when IFC developed programs to deliver short-term trade finance to its clients. Several early programs no longer meet IFC’s December 2022 definition of platforms. IFC started developing platforms with thematic initiatives focused on solving particular development challenges, parallel to developing short-term finance programs. Responding to crises also motivated greater use of platforms by IFC. The relevance of platforms was brought to the forefront by two major developments within IFC: adoption of the IFC 3.0 strategy and the IFC capital increase. The European Bank for Reconstruction and Development is the most advanced among multilateral development banks in its use of platform-like structures and thus is the most comparable to IFC. 1  The evaluation focuses on three key features of platforms: streamlined project approval, monitoring and reporting, and self-evaluations and independent evaluations. The evaluation uses the following key methods: structured interviews; desk-based document reviews; portfolio analysis; comparisons with IFC stand-alone projects (benchmarking); platform-based case studies; cross-cutting analyses of governance and reporting, risk, and efficiency; and a forward-looking scenario exercise with focus groups. 2   Definition of Platforms The International Finance Corporation (IFC) defines platforms as thematic interventions at a regional, global, or sectoral level designed to address a specific development challenge. Projects under each platform have clearly defined eligibility criteria and may use a range of IFC products (for example, loans, equity, and advisory services) to meet these thematic challenges. Platforms may benefit from delegation of authority—the transfer of project approval authority from the Board to management—in full or in part or may have no delegation of authority from the World Bank Group Board of Executive Directors (IFC 2022b). The Bank Group Board grants delegation of authority to IFC management to allow it to approve projects without a formal Board meeting decision (for example, without preparing a Board paper). This contrasts with a regular procedure of convening a formal Board meeting to decide on IFC’s proposed investment or a streamlined absence of objection (AOB) procedure, in which IFC management is authorized to proceed with the proposed project on a closing date specified in the Board paper unless an executive director requests a full Board discussion. Evolution of International Finance Corporation Platforms The history of IFC’s platforms approach dates to the early 2000s, when IFC developed new programs to deliver new types of financing to its clients, predominantly short-term trade finance. IFC launched the Global Independent Evaluation Group World Bank Group    3 Trade Finance Program in 2004 and other similar programs, such as the Global Trade Liquidity Program in 2009 and the Global Trade Supplier Finance Program and the Global Warehouse Finance Program in 2010, to deliver mainly short-term trade financing to its clients (figure 1.1). Given their market-driven nature, smaller transaction size, and large number of transactions, these short-term products required delegating authority to IFC management to approve transactions to meet the quick settlement time frames that complied with market demands. Otherwise, the large number of transactions under these short-term products, if processed under the regular procedure or AOB, were likely to overburden the Bank Group Board. However, with the change in the definition of platforms in December 2022, these programs are no longer considered IFC platforms (IFC 2022a). Parallel to developing short-term finance programs, IFC started developing platforms focused on thematic initiatives addressing specific development challenges. Approved in 2008, the SME Ventures program invests equity into small and medium enterprise–focused private equity funds in International Development Association (IDA), fragile and conflict-affected situations (FCS), and frontier countries, whereas the InfraVentures platform aims to in- crease the pipeline of bankable public-private partnership projects in client countries. Several other platforms were launched later: IFC Startup Catalyst (ISC; approved by the Board in 2017) aimed at supporting early-stage com- panies across emerging markets; the Private Equity Funds Co-Investment Program (2017), providing a mechanism to leverage investments by private equity funds with IFC co-investments; the Small Loan Guarantee Program Early-Stage Evaluation of International Finance Corporation Platforms Approach  Chapter 1 (SLGP; 2018), promoting Risk-Sharing Facilities to provide lending to small and medium enterprises in countries eligible for IDA financing; and the Côte d’Ivoire Housing Program (2019), targeting affordable housing. 4 Figure 1.1. Evolution of Platforms in the International Finance Corporation Global Warehouse Global Health Finance Program Platform Global Global Trade Global Trade Finance Trade Supplier Finance Small Loan Program I, II, III, IV, and V Liquidity Program Program Guarantee Program IFC Fast-Track COVID-19 Facility 20o4 2008 2009 2010 2017 2018 2019 2020 2021 SME Ventures Program IFC Startup Catalyst InfraVentures Private Equity Funds Co-Investment Program Côte d’Ivoire Housing Base of the Pyramid Platform Program Source: IFC 2022b. Note: IFC = International Finance Corporation; SME = small and medium enterprise. Independent Evaluation Group World Bank Group    5 Exogenous shocks, such as the global financial crisis, natural disasters, and global health emergencies, also motivated IFC’s increased use of platforms. This dimension first emerged during the 2008–09 global financial crisis when IFC used the Global Trade Finance Program successfully to provide emergency financing to clients. IFC’s Fast-Track COVID-19 Facility (FTCF), launched in 2020,1 was created to provide emergency support to private sector companies to cope with the COVID-19 pandemic’s impact. IFC’s COVID-19 response was enhanced by launching the Global Health Platform (GHP) later in 2020 to increase the supply of health-care products and ser- vices in developing countries and the Base of the Pyramid (BOP) platform in 2021 to provide financing to financial service providers serving micro, small, and medium enterprises (MSMEs).2 International Finance Corporation’s Strategic Priorities Early-Stage Evaluation of International Finance Corporation Platforms Approach  Chapter 1 The relevance of platforms was brought to the forefront by two major developments within IFC: adoption of the IFC 3.0 strategy and the IFC capital increase. The IFC 3.0 strategy, approved by the Bank Group Board in December 2016, focused on developing new markets or systemic changes to existing markets to achieve sustainable development impact. It sought to promote private participation in development financing to contribute to the Sustainable Development Goals. The historic $5.5 billion capital increase package approved by the Bank Group Development Committee in April 2018 set ambitious strategic targets for IFC. More specifically, IFC committed to ramping up its operations on several fronts, including doubling its annual overall commitments and increasing its share of own-account long-term finance commitments in IDA countries and countries classified as FCS to 40 percent by 2030. These two initiatives required IFC to triple the number of investment projects from approximately 300 per year to an estimated 900 per year. Given that these targets will have to be achieved without a commensurate increase in budget resources, the obvious focus is on efficiency gains and improved productivity. IFC introduced platform approaches to pilot and scale up its interventions in critical development areas, consistent with IFC 3.0 and capital increase objectives. 6 International Finance Corporation’s Approach to Platforms Considering this context, soon after approval of its capital increase, IFC management began engaging with the Bank Group Board, linking the concept of systematically using platforms to contribute to capital increase commitments. Yet no generally accepted definition of platforms existed until 2022. In June 2022, the Board approved a paper presented by IFC management on using IFC platforms to enable new business development at scale (box 1.1; IFC 2022b). The main purpose of that paper was to systematize IFC’s approach to platforms because IFC already had several platforms in place. The Board approved the paper on a pilot basis with the understanding that IFC would commit to engaging with the Board regarding each platform, developing robust and regular reporting to the Board on its platforms and their underlying projects, and facilitating periodic Group Internal Audit and Independent Evaluation Group evaluations of platforms. Then, in December 2022, IFC issued an update distinguishing platforms from programs and products.  ifferences Among Platforms, Products, and Programs Box 1.1. D No generally accepted definition of platforms existed until 2022. The International Finance Corporation’s June 2022 Approach Paper, IFC Platforms: Enabling New Independent Evaluation Group World Bank Group    7 Business Development at Scale, defines programs and platforms as “grouping of projects of a similar nature or development objective under a single envelope, processed in an expedited fashion” (IFC 2022b, 1). The December 2022 paper, “IFC’s Approach to Platforms: An Update—Applying Lessons to Enhance Platform Clarity,” explicitly distinguished platforms from programs and products. Since then, the paper’s definition of platforms has been widely accepted. » Platforms are defined as “thematic interventions—either at a regional, global, and/or sectoral level—designed to address a specific development challenge” (IFC 2022a, 1). Projects under each platform have clearly defined eligibility criteria and may leverage a range of International Finance Corporation products to enable impact against these thematic interventions. Platforms may (continued)  ifferences Among Platforms, Products, and Programs (cont). Box 1.1. D benefit from delegation of authority in full or in part or may have no delegation of authority from the Board. » Products are market-based financial instruments, such as senior loans, subordinated loans, quasi-equity (loan), equity, quasi-equity (equity), bonds, and guarantees (Risk-Sharing Facilities, partial risk guarantees, and other types of guarantees in the form of unfunded risk participation). Products are purpose-agnostic, used to address varying development needs, and can deliver the intended financing in the most effective and efficient manner. » Programs are “a Board authorized product for up to a specified amount (limit).” A number of programs, such as the Global Trade Finance Program, the Global Trade Liquidity Program, the Global Supply Chain Finance Program, the Global Early-Stage Evaluation of International Finance Corporation Platforms Approach  Chapter 1 Trade Supplier Finance Program, and the Global Warehouse Finance Program, have delegation of authority because of the short turnaround needs of the underlying transactions as required by the market and their standardized nature. For example, the Global Trade Finance Program supplies short-term trade finance under delegated authority and has a limit of US$5.5 billion. Sources: IFC 2022a, 2022b. Platforms Approach in Other Multilateral Development Banks Among the multilateral development banks, the European Bank for Reconstruction and Development (EBRD) is the most advanced institution in the use of platform-like structures, which it calls “investment frameworks.” EBRD first introduced the concept of multiproduct facilities in the mid-1990s and with it a degree of approval delegated to management. These facilities soon evolved into the broader idea of investment frameworks. Multiproduct facilities aimed to bring together under one roof the standardization of projects and procedures relating to the same client, while frameworks did the same for projects of a similar nature, each within a financial envelope approved by the EBRD’s Board. They were primarily a 8 response to the fact that the project preparation burden faced by clients and the EBRD management, staff, and Board was intensive and resulted in long project gestation periods. Projects of up to €25 million under frameworks are currently eligible for delegated approval, except for those regarded as “novel or contentious.”3 In IFC Platforms: Enabling New Business Development at Scale, IFC established a different indicative threshold from EBRD for platform projects under delegated authority—up to $25 million of IFC own-account finance for new clients and up to $50 million for existing clients (IFC 2022b). Scope and Methodology This evaluation focuses on assessing the platforms approach as established in the June 2022 IFC paper and further clarified to the Board in December 2022. It does not evaluate the relevance and effectiveness of each individual IFC platform separately and does not include platforms that may have been called platforms at some point but do not conform to the 2022 criteria. The evaluation focuses on three key features of platforms: streamlined project approval using delegated authority and approvals on an AOB basis, monitoring and reporting, and pooling of risk and mitigating risk (primar- ily using IDA Private Sector Window [PSW] blended finance). First, the Board authorized some platforms to use approval authority delegated to IFC management in approving individual projects, often subject to certain Independent Evaluation Group World Bank Group    9 restrictions. In addition, the Board authorized platforms to use a shorter form of a Board paper paired with Board approval by AOB.4 Both approval methods are supposed to reduce the processing time associated with moving a project from design to approval and to first disbursement, and this evalu- ation explores the actual savings and efficiencies achieved. Processing time is sometimes reduced through standardization and streamlining achieved by a more uniform treatment of similar projects. Second, the Board, to exercise its governance functions, requests IFC to report certain information regu- larly either at approval or periodically at the project or platform level. This evaluation explores the nature and quality of such reporting and inquires as to what information the Board would need to exercise its oversight. Third, some platforms have blended finance (primarily IDA PSW) integrated into their design to allow IFC to reach riskier markets and clients. This evaluation will consider the extent to which IDA PSW allows IFC to engage in IDA coun- tries and FCS and with clients in underserved markets. The evaluation seeks to answer three key questions about platforms: 1. To what extent do the IFC platforms achieve their objectives, specifically (i) responding to crisis at scale, (ii) engaging with small and new clients, (iii) engaging with clients in IDA countries and FCS, and (iv) engaging in new sectors? 2. To what extent does IFC’s platforms approach meet Board and client expectations on oversight, reporting, and efficiency gains while balancing risks and benefits to enhance trust over time? 3. What guidance does the early experience of platforms provide IFC in shap- ing future use of the approach? Early-Stage Evaluation of International Finance Corporation Platforms Approach  Chapter 1 To answer these questions, we used five core methods (figure 1.2). These include (i) in-depth case studies for three platforms and lighter desk studies for the four others enhanced by portfolio analysis; (ii) extensive interviews with IFC staff, the IFC Board, IFC clients, and investors; (iii) benchmarking comparison of IFC platforms with similar nonplatform projects; (iv) a deri- vation and comparison of lessons from EBRD’s experience with frameworks; and (v) a forward look using focus groups to elicit key stakeholder views on the lessons of experience for the future of the platforms approach. As figure 1.2 notes, a subset of methods was used to answer evaluation questions 1 and 3, whereas all methods informed the answer to evaluation question 2. 10 Figure 1.2. Platforms Approach Evaluation Design Methods Evaluation question 1: 1. Desk-based review 2. Conducted 114 interviews 1,2,3 Do the platforms meet and portfolio analysis with IFC staff, IFC Board of platform projects’ members, IFC clients, their objectives? background documents and investors 1,2 (such as appraisal documents Scope: for all platforms with ,3 ,4 √ Responding to crisis at scale and monthly operations reports) more focus on case studies Scope: for all platforms √ Engaging with small clients Evaluation question 2: and new clients Do the platforms meet the 3. Comparison of IFC 4. Lessons from EBRD Board’s and clients’ expectations? platform projects framework experience based √ Engaging in new sectors with IFC individual projects on review of IFC and EBRD based on review of platforms documents and interviews √ Engaging with clients in and individual project documents with EBRD staff* IDA and FCS Scope: for the case study Scope: for the case study platforms platforms 5 Key findings 5 Evaluation question 3: 5. Focus groups on the forward look (Forward look): What guidance • Advisers to the executive directors 5 does early experience provide • IFC industry directors to shape future use of the • IFC Strategy and Operations management platforms approach? Source: Independent Evaluation Group. Note: EBRD = European Bank for Reconstruction and Development; FCS = fragile and conflict-affected situations; IDA = International Development Association; IFC = International Finance Corporation. * EBRD lessons were primarily used to answer evaluation question 2. Independent Evaluation Group World Bank Group    11 The evaluation covers seven platforms that IFC approved between FY 2017 and FY22 (the evaluation period): ISC (FY17), Private Equity Co-Investment (FY17), SLGP (FY18), the Côte d’Ivoire Housing Program (FY19), FTCF (FY20), GHP (FY21), and the BOP platform (FY21). On the basis of a request from the Board, we also included in the evaluation’s scope projects approved in FY23 under the seven platforms. We assessed the platforms approach more deeply through the lens of the three IFC platforms (case studies) that the Board approved during FY17–22: GHP, BOP, and ISC. We conducted the three case studies to reflect diverse platform experiences and identified the case studies based on three criteria: » Timing of platforms approval: Selecting platforms over the six-year period allowed us to assess both crisis and noncrisis response platforms. » Intensity of coverage of priority themes: The platform selection criteria in- Early-Stage Evaluation of International Finance Corporation Platforms Approach  Chapter 1 cluded platforms targeting MSMEs, early-stage companies focusing on digital technologies, and companies contributing to health-care products or services in response to the COVID-19 pandemic. » Ease of grouping subprojects within a theme for alignment with the defini- tion of platforms in the IFC paper discussed at the Board in June 2022 (IFC 2022b) and IFC’s follow-up clarification to the Board in December 2022 (IFC 2022a). The selection criteria included platforms with subprojects ad- dressing a similar development objective (for example, tackling health-care supply gaps in developing countries). Each case study sought to answer evaluation questions 1 and 2 through a combination of desk-based reviews and portfolio analysis, comparing them with IFC stand-alone projects (benchmarking), along with extensive interviews. We collected and analyzed documents at the institutional, platform, and project levels, including through a portfolio review for all the seven platforms in scope. We conducted interviews with IFC platforms owners, IFC investment officers who led platform projects, the IFC reporting team, IFC risk officers, IFC corporate portfolio staff, IFC clients, investors, and executive director advisers. These interviews were semistructured, starting with an established template of questions but with the freedom to explore particular aspects in depth. Case studies also drew from deep dives 12 on risk and on oversight and reporting. For four other platforms—Private Equity Co-Investment, SLGP, the Côte d’Ivoire Housing Program, and FTCF—we prepared lighter desk studies based on fewer interviews and less in-depth analysis. These lighter studies limited the assessment to desk- based reviews of background documents (such as individual platform-level Board papers and Board discussions of individual platforms) and interviews with owners of these individual platforms to gather evidence beyond the desk-based reviews. To answer evaluation questions 1 and 2, we also compared IFC case study platforms with IFC stand-alone projects (nonplatform benchmarks). We selected nonplatform benchmarks for the three case study platforms from all IFC stand-alone investment projects approved between FY17 and FY22. We selected nonplatform benchmarks with objectives, beneficiaries, and industries similar to the platform case studies. We then compared all platform projects for each of the case study platforms with all nonplatform (benchmark) projects matched to each case study. We worked to minimize limitations in the comparison. First, identical comparators were not possi- ble because BOP and GHP benchmarks had been implemented before these two platforms were launched, and the ISC platform finances smaller projects than individual (nonplatform) comparators. Second, to address the lim- itations, we applied several checks to confirm the validity of comparisons. Benchmarks were not used as strict counterfactuals but as reasonable points of comparison. The checks examined the validity of comparison with regard to use of IDA and FCS projects, use of blended finance support (primarily Independent Evaluation Group World Bank Group    13 IDA PSW), regional distribution, country income, investment size, and client type (new or existing client; see appendix A). In addition, a deep dive compared EBRD’s long-term practice and experience with investment frameworks with IFC’s experience with platforms. Among the multilateral development banks, EBRD investment frameworks are the most similar to IFC’s platforms in structure and characteristics. EBRD’s Financial Intermediaries Framework, launched in 2015, is similar to IFC’s BOP. The Financial Intermediaries Framework lends to financial interme- diaries that onlend to MSMEs. Both BOP and the Financial Intermediaries Framework have a delegated authority option. EBRD’s Early-Stage Innovation Facility, launched in 2014, and the Venture Capital Investment Program, launched in 2011, are similar to IFC’s ISC. The Early-Stage Innovation Facility invests in early-stage venture capital funds. The Venture Capital Investment Program provides small direct equity investments in companies needing venture capital. ISC, the Venture Capital Investment Program, and the Early-Stage Innovation Facility all have delegated authority as a standard feature. EBRD does not invest significantly in health care, and thus no frame- work was compatible with GHP. We used a scenario-based forward look exercise to conduct focus group dis- cussions with IFC management, the IFC Corporate Strategy and Operations team, and executive director advisers to reflect on the future implications of experience with the platforms approach. Using an expert facilitator, participants were asked how, in alternate scenarios, platforms could contrib- ute to the IFC 3.0 strategy and to the capital increase targets with regard to delegation of authority, global crises, and scale-up to reach new clients and Early-Stage Evaluation of International Finance Corporation Platforms Approach  Chapter 1 new markets. The forward look had three focus groups: 20 advisers or senior advisers to the executive directors, 3 IFC industry directors for the three case study platforms, and 6 members of management and staff from IFC’s Corporate Strategy and Operations team. Limitations. We examined early evidence on platforms as an approach rather than focusing on the effectiveness of individual IFC platforms and their development outcomes because this is an early-stage evaluation. We could not measure development outcomes or compare them with what IFC achieved outside of platforms. The direct and intermediate outcomes hypothesized in the program logic (see appendix A on methods used in this evaluation) and tested in this evaluation are limited to process outcomes (for example, efficiency gains, anticipated risk, and client and project charac- teristics). In addition, the fact that the base of experience in this evaluation is both limited and diverse among the seven in-scope platforms in some cases limits the generalizability of findings. Although several platforms have objectives of reaching small clients, this evaluation could capture only investment (transaction) size. Client size in terms of assets, sales, or employ- ees is not available universally. Limitations to the benchmarking exercise are explained in this chapter and in appendix A. The Independent Evaluation Group’s methodology on new sectors compares the sectors IFC invested in 14 using platform projects with the sectors IFC invested in without platform projects to identify sectors that IFC has only ever invested in via platforms (that is, new sectors). Already implicit in this analysis is a comparison of the sectoral distribution of platform versus nonplatform projects, obviating the need for further benchmarking. Indeed, this approach cannot be used to generate a “new sector” estimate for nonplatform benchmarks. Independent Evaluation Group World Bank Group    15 1 On March 13, 2020, the president of the United States declared a national emergency because of the COVID-19 outbreak. On April 10, 2023, the president signed a resolution ter- minating the national health emergency, and on May 11, 2023, the public health emergency expired.  2 These financial service providers include microfinance institutions, nonbank financial insti- tutions, and banks focused on micro, small, and medium enterprises.  3 “Novel or contentious” was not defined and was left to EBRD management’s discretion. It was meant to ensure that the Board was able to opine on projects that ventured into new areas—whether to be informed, congratulate staff, or object to the novelty—and on those that fell into disputed issues. Among the latter, at some point, were projects in Türkiye, projects with links to offshore jurisdictions, those with headquarters or domiciled outside countries of operations, and others. Management took a cautious approach with investment committee secretariats and other units, flagging potential issues and escalating them to senior manage- Early-Stage Evaluation of International Finance Corporation Platforms Approach  Chapter 1 ment for decision where appropriate.  4 AOB period for platform projects (5 days) is shorter than for nonplatform projects (10 days).  16 2 | Platforms Approach Performance Highlights The International Finance Corporation (IFC) platforms achieved the objectives they set out to achieve but with some exceptions. However, the importance of the platforms approach in terms of enabling the achievement of these objectives varied across platforms. Platforms allowed IFC to increase the scale of its crisis response during the height of the pandemic, yet, in terms of the pandemic response, there was a period of time that elapsed after IFC’s initial COVID-19 response and before the launch of the Base of the Pyramid platform or the approval of the Global Health Platform’s first investment. Three platforms that were expected to engage substantially (though not always exclusively) with small clients each succeeded in making smaller investments. Projects under the IFC Startup Catalyst platform were early-stage, preseed, or seed funds and were too small to be approved without this platform. The BOP and IFC Startup Catalyst platforms both reached new clients. BOP stood out for having a much higher proportion of new clients than their benchmarks. In addition, BOP was able to engage with new and risky clients by taking advantage of pooling of risk using International Development Association Private Sector Window blended finance support. 17  A large majority of the Small Loan Guarantee Program and BOP projects and a substantial minority of the Fast-Track COVID-19 Facility projects were in International Development Association countries and countries classified as fragile and conflict-affected situations by design. The Côte d’Ivoire Housing Program was dropped because it misjudged the market, focusing narrowly on one country, one sector, and two participating banks. Platforms aiming to reach new sectors did so to some extent. IFC Startup Catalyst projects targeted the digital technology sector; BOP targeted financial service providers for micro, small, and medium enterprises in challenging markets; and the Global Health Platform financed medical equipment and diagnostic services. However, the platforms approach was not essential to Global Health Platform investments. 18   Overall, the IFC platforms achieved the objectives they set out to achieve, with some exceptions; however, the importance of the platforms approach in terms of enabling the achievement of these objectives varied across platforms. This chapter addresses evaluation question 1: To what extent do the IFC platforms achieve their objectives? We identified the following four objectives based on our review of the seven in-scope platforms’ Board papers: (i) responding to crisis at scale, (ii) engaging with small clients and new clients, (iii) engaging with clients in IDA countries and FCS, and (iv) engaging in new sectors. We discuss each of the four objectives in detail in this chapter. We assessed platform objectives based on triangulation of evidence from the following: » Platform case studies, which involved desk-based reviews and interviews with investment officers, investors, and IFC clients » Lighter desk reviews of four individual platforms outside of the three case studies » Portfolio analysis » Benchmarking the case study platforms against IFC stand-alone projects with similar characteristics, where applicable For each objective, we also used these sources to assess the extent to which platforms achieved the objective and whether the platforms approach (that Independent Evaluation Group World Bank Group    19 is, which platform features) was key to this achievement. As an early-stage evaluation, we examined early evidence on platforms as an approach rather than focusing on the development outcomes of individual IFC platforms. Because the Independent Evaluation Group had evaluated only one platform project at the time of this evaluation, we could not assess outcomes or com- pare them with what IFC achieved outside of platforms. Response to Crisis at Scale Platforms focused on pandemic response allowed IFC to increase the scale of its crisis response during the height of the pandemic (table 2.1). Three platforms were approved during the pandemic to address urgent needs: FTCF, GHP, and BOP. “Crisis” in this section refers specifically to the COVID-19 pandemic. Evidence from the case studies shows that 75 percent of IFC’s COVID-19 response ($7.7 billion) was channeled mainly through these platforms from late FY20 through FY22 (figure 2.1). Both the Board and IFC management confirmed in focus groups that platforms added val- ue during the pandemic by allowing a faster and focused response. Using expedited processes, FTCF and BOP channeled substantial working capital to firms and financial intermediaries when liquidity ran short. For example, BOP financed a $50 million loan to a South Asian nonbank financial insti- tution focused on women borrowers in 2022, enabling the institution to expand its lending during a time of increased delinquencies and provision- ing requirements.  esponding to Crisis at Scale: Achievements and Role of the Table 2.1. R Platforms Approach for Key Platforms Platform Early-Stage Evaluation of International Finance Corporation Platforms Approach  Chapter 2 Fast-Track Global Health Base of the Question COVID-19 Facility Platform Pyramid Addressed the Addressed the Addressed the objective; delayed Was the objective objective; fully objective; delayed and not fully achieved? disbursed and but mostly committed; failed to timely committed mobilize at scale Was the platforms Platform efficiencies Projects likely to Platform efficiencies approach key to enabled rapid have occurred enabled it to meet achievement of the response at scale without it urgent client need objective? Sources: Independent Evaluation Group case studies, desk reviews, and portfolio analysis. Note: The table covers three platforms aimed at the pandemic response. Dark green, white text = strongly; medium green, black text = moderately; pink, black text = weakly. 20 nternational Finance Corporation COVID-19 Response Figure 2.1. I Channeled Through and Outside of Platforms 4.5 4.0 IFC own account (US$, billions) 3.5 1 3.0 2.5 2.0 0.3 0.6 3 1.5 0.6 1.0 1.9 1.5 1.3 0.5 0 2020 2021 2022 2023 Commitment fiscal year IFC COVID-19 response outside of platforms IFC COVID-19 response through platforms (GHP, FTCF, and BOP) Source: Independent Evaluation Group, using data from International Finance Corporation quarterly reports and platform evaluation portfolio. Note: IFC’s COVID-19 response outside of platforms was computed as IFC’s total COVID-19 response minus IFC’s COVID-19 response through the GHP, FTCF, and BOP platforms. Data on IFC’s total COVID-19 response are from IFC quarterly reports, and data on IFC COVID-19 response through platforms are from the platform evaluation portfolio. Data exclude the Global Trade Finance Program. BOP = Base of the Pyramid; FTCF = Fast-Track COVID-19 Facility; GHP = Global Health Platform; IFC = International Finance Corporation. Independent Evaluation Group World Bank Group    21 Seventy percent of IFC’s own-account financing to COVID-19 response was channeled through the FTCF. The quick activation and rapid disbursement of FTCF were based on speedy approval using delegated authority and improved internal processes without sacrificing its due diligence and decision-making standards. For example, an early look process replaced the traditional Concept Note process, which achieved time savings by preparing a short-form Concept Note (called early look) and eliminating minutes from Concept Note meetings. In addition, careful risk management using existing clients, short tenors, and de-risking with IDA PSW blended finance contributed to the quick activation and rapid disbursement. However, in terms of the pandemic response, there was a period of time that elapsed after IFC’s initial COVID-19 response and before the launch of the BOP platform or the approval of GHP’s first investment. GHP focused resources on medical manufacturing. Despite urgent needs, GHP’s first investment was approved one year after the pandemic in March 2021. In addition, interviews with the investment officers show that projects would likely have occurred without GHP. Nonetheless, GHP’s focus was highly relevant to the pandemic.1 For example, GHP financed a pharmaceutical company in Africa to expand production of vaccines for the region and other emerging markets. By 2021, it reportedly created capacity to produce more than 400 million vaccines per year. Although BOP focused on providing fi- nancing to financial intermediaries serving BOP (for example, MSMEs), it was launched 11 months after the COVID-19 outbreak in February 2021. The delay occurred because IFC took time to assess the pandemic’s impact on financial intermediaries serving MSMEs so it could tailor its response. Engaging with Small Clients and New Clients Early-Stage Evaluation of International Finance Corporation Platforms Approach  Chapter 2 IFC used specific platforms to extend its reach to a higher percentage of small clients (as reflected by small transactions) and new clients (table 2.2). For the purposes of this evaluation, “small clients” refers to clients with small IFC commitment amounts that IFC would not otherwise invest without specific platform intended to serve such clients. We used this proxy because client size is not always recorded. Project documents often do not capture or report the size of IFC clients (for example, company asset size, sales, num- ber of employees, and so on). “New clients” refers specifically to clients in which IFC has not made an earlier investment since July 2000. Regarding the benchmarking analysis in this chapter (comparing the three case study platforms with IFC stand-alone projects), identical comparators were not possible because BOP and GHP benchmarks were implemented before these two platforms were launched. Moreover, the ISC platform finances smaller projects than individual (nonplatform) comparators because IFC would not otherwise invest in these projects without the ISC platform. 22  ngaging with Small Clients and New Clients: Achievements Table 2.2. E and Role of the Platforms Approach for Key Platforms Platform Base of the IFC Startup Private Equity Question Pyramid Catalyst Co-Investment Reached new Reached much Reached 100% of clients but not higher percentage new clients and fully committed; Was the objective of new clients and much smaller targeted SMEs achieved? smaller transactions transactions than with investments than benchmark benchmark averaging US$4 million Platform efficiencies were critical to Was the platforms Platform efficiencies Platform efficiencies financing small approach key to the and pooled risk facilitated small transactions, but achievement of the helped reach riskier investments in most benchmark objective? new clients SME clients projects also reached new clients Sources: Independent Evaluation Group case studies, desk reviews, and portfolio analysis. Note: Table covers three platforms with highest percentage of small or new clients. Dark green, white text = strongly; light green, black text = moderately. IFC = International Finance Corporation; SMEs = small and medium enterprises. Platforms that aimed to reach small clients enabled IFC to make smaller investments than benchmarking projects. The BOP, ISC, and Private Equity Independent Evaluation Group World Bank Group    23 Co-Investment platforms that aimed to reach small clients succeeded in doing so by making smaller investments (table 2.3). For ISC and BOP, the average commitment amounts per project were much lower than their benchmarks: for ISC, the average commitment amount per project was $3 million versus its benchmark of $14 million, and for BOP, the average commitment amount per project was $12 million versus its benchmark of $29 million. Private Equity Co-Investment financing, which was not benchmarked, averaged only $4 million per project. Platform features such as project processing efficiency and pooling of risk using blended finance (discussed in chapter 3) allowed platforms to finance transactions that IFC would not have financed through stand-alone projects.  latforms That Enabled the International Finance Corporation Table 2.3. P to Make Smaller Investments (average commitment; US$, millions) Client Platform Benchmark IFC Startup Catalyst 3 14 Base of the Pyramid 12 29 Private Equity 4 n.a. Co-Investment Source: Independent Evaluation Group portfolio analysis and benchmarking exercise. Note: IFC = International Finance Corporation; n.a. = not applicable. Evidence from the case study shows that projects under ISC were early-stage, preseed, or seed funds and were too small to be approved under IFC’s non- Early-Stage Evaluation of International Finance Corporation Platforms Approach  Chapter 2 platform approach. Investment officers interviewed for the ISC case study uniformly stated that transactions would not have proceeded without the platform. For example, ISC made a $3 million equity investment in a venture capital fund supporting seed-stage investments in East Asia—a small invest- ment IFC would not have made outside of the ISC platform. IFC also used ISC to make a $3 million equity investment in an accelerator and seed fund sup- porting start-ups in Latin America, supporting a first-time fund manager and setting a positive precedent for other emerging fund managers in the region. BOP, ISC, and Private Equity Co-Investment were all expected to engage substantially (although not always exclusively) with new clients, and all succeeded in doing so. Both BOP and ISC reached more new clients than their benchmarks, but the ISC benchmark (stand-alone projects) also reached a high percentage of new clients.2 Each of the three platforms targeting new clients exceeded IFC’s target of 40–60 percent for new clients as stated in the IFC Approach Paper, which was discussed at the Board in June 2022 (IFC 2022b; figure 2.2). However, BOP stood out for having a much higher proportion of new clients than its benchmark. BOP engaged with new and risky clients by taking advantage of pooling of risk using IDA PSW blended finance support.3 For example, in a Central Asian IDA country, BOP financed two new microfinance institutions, each for $2.5 million. 24 The local currency loans were supported by blended finance earmarked for financing women-led micro enterprises and for affordable housing for low-income individuals.  ase of the Pyramid and International Finance Corporation Figure 2.2. B Startup Catalyst Projects Reaching New Clients, FY17–22 100% (20) 100 90% (18) 90 80 Share of projects (%) 70 60 52% (13) 50 40 30 24% (21) 20 10 0 Base of the Base of the IFC Startup IFC Startup Pyramid Pyramid Catalyst Catalyst (n = 25) benchmark (n = 20) benchmark (n = 88) (n = 20) Platform Sources: IFC Business Intelligence reports; Independent Evaluation Group calculated data on new clients. Note: Dashed lines indicate IFC’s target for new clients at 40–60 percent as stated in IFC (2022b). IFC = International Finance Corporation. ISC provided some nonfinancial additionalities, such as hand-holding to Independent Evaluation Group World Bank Group    25 first-time fund managers who were unfamiliar with legal and technical requirements, to help them work with IFC and develop as fund managers. Legal negotiations were the major reason for delays with many first-time fund managers within ISC, who did not have experience dealing with development finance institutions and were unfamiliar with the legal requirements. The ISC case study found that IFC staff provided technical assistance to such fund managers. Efficiency gains from its business model enabled Private Equity Co-Investment to provide additional financing to new clients (companies within IFC financed private equity funds in this platform). In Private Equity Co-Investment, IFC relies on the fund managers of the platform’s private equity funds to conduct due diligence and investment decisions of the companies in which IFC is co-investing. In addition, IFC’s co-investments within this platform have lower or no fund management fees or carried interest (the percentage of a private equity fund’s investment profits that a fund manager receives as compensation). Engaging with Clients in International Development Association Countries and Fragile and Conflict-Affected Situations Platforms provided a vehicle for IFC to engage with clients in IDA countries and FCS, except for the Côte d’Ivoire Housing Program, because it did not meet its objectives (table 2.4).4 By design, four platforms were expected to engage substantially in IDA and FCS: SLGP, BOP, FTCF, and the Côte d’Ivoire Housing Program. A large majority of SLGP projects (95 percent) and BOP projects (72 percent) were in IDA countries and FCS. In addition, a substantially higher percentage of BOP projects were in IDA Early-Stage Evaluation of International Finance Corporation Platforms Approach  Chapter 2 countries and FCS compared with its benchmark projects (figure 2.3). Both the SLGP and BOP platforms have blended finance support integrated in their design, which enables them to pool risk and engage with riskier IDA and FCS clients. Portfolio focus (such as BOP’s focus on financial intermediaries targeting MSMEs), efficiency gains (for example, delegation of authority for existing clients and streamlined internal processes, such as short-form Board papers for AOB approvals for new clients under BOP), and risk mitigation (for example, pooling of risk through blended finance support in BOP and SLGP) facilitated engagement with IDA and FCS clients. 26  ngaging with Clients in IDA Countries and FCS: Achievements Table 2.4. E and Role of the Platforms Approach for Key Platforms Platform Côte Fast-Track Small Loan d’Ivoire COVID-19 Base of the Guarantee Housing Question Facility Pyramid Program Program Was the objective 31% in IDA 72% in IDA 92% in IDA Terminated achieved? and FCS and FCS and FCS Focus, platform Focus, platform Focus, platform Was the platforms efficiencies, efficiencies, efficiencies, approach key to and pooled and pooled and pooled No basis to the achievement risk enabled risk enabled risk enabled determine of the objective? greater reach greater reach greater reach to IDA and FCS to IDA and FCS to IDA and FCS Sources: Independent Evaluation Group case studies, desk reviews, and portfolio analysis. Note: This table covers four platforms with explicit IDA and FCS aims and highest IDA and FCS engage- ment. Dark green, white text = strongly; light green, black text = moderately; medium red, white text = not at all. FCS = fragile and conflict-affected situations; IDA = International Development Association.  ase of the Pyramid Projects Engaging in IDA Countries and Figure 2.3. B FCS, FY17–22 Independent Evaluation Group World Bank Group    27 80 72% (18) 70 60 Share of projects (%) 53% (47) 50 40 30 20 10 0 Base of the Base of the Pyramid Pyramid (n = 25) benchmark (n = 88) Platform Source: Independent Evaluation Group analysis of data from IFC Business Intelligence reports. Note: FCS = fragile and conflict-affected situations; IDA = International Development Association; IFC = International Finance Corporation. The case study found that the availability of the pooled risk paired with IDA PSW blended finance helped IFC make investments or provide financing in local currencies in countries where clients’ credit risks would otherwise have been regarded as unacceptably high. The IDA PSW blended finance support is embedded in the structure of some platforms (such as BOP and SLGP). The mechanism consists of a pooled first-loss facility, which reduces the risk of loss to IFC if borrowers covered under this credit protection default (applies to both BOP and SLGP platforms), and access to the IDA PSW local currency facility to address situations in which clients needed local currency, but IFC could not access local currency at viable rates (applies to the BOP platform). This support was important to enabling IFC to extend some platforms (such as BOP and SLGP) to IDA PSW-eligible countries, where the needs of the MSME or small and medium enterprise segment were the greatest. By reducing the effective riskiness of some IDA PSW clients Early-Stage Evaluation of International Finance Corporation Platforms Approach  Chapter 2 to IFC’s portfolio through its first-loss protection, IDA PSW allowed IFC to reduce interest rate spreads for such clients. For example, BOP financing of $5 million supported a microfinance institution’s lending to MSMEs and individuals in the Middle East, especially women. The small institution is in a conflict-affected region, and its customer base is vulnerable. A substantial minority of FTCF projects were in IDA countries and FCS. Its Financial Institutions Response Envelope, intended to reach clients in IDA countries and FCS, did so in most of its projects. Based on the evidence from a broader review of FTCF, 43 percent of the platform’s committed volume was deployed in IDA countries and FCS as of February 2022. During the pandemic, most of the engagement in IDA countries and FCS was from the Global Trade Finance Program (57 percent) and Working Capital Solutions (56 percent) components of the Financial Institutions Response Envelope. By contrast, FTCF’s Real Sector Crisis Envelope had limited engagement in IDA countries and FCS (23 percent). However, the Côte d’Ivoire Housing Program did not meet its objectives. The program was a $100 million platform for supporting affordable housing in Côte d’Ivoire and the only platform to focus on a single development challenge in a single country. The platform was designed as financial intermediaries financing and was supported by IDA PSW blended finance. 28 The platform’s first phase consisted of senior loans of up to $45 million equivalent in local currency to two banks in Côte d’Ivoire. Because IFC followed the standard procedures in project preparation, no obvious efficiency gains were expected from the first phase. A proposed second phase envisioned using a delegated authority. However, the program was dropped before providing any financing because it misjudged the market, focusing narrowly on one country, one sector, and two participating banks.5 One of the participating banks withdrew, citing negative price movements in the market, and the second bank failed to restore compliance with IFC’s environmental and social (E&S) standards. The Ivorian banking sector’s appetite for developing mortgage financing was somewhat overestimated under this platform. According to IFC, the Ivorian government did not deliver on the development of basic infrastructure (water, electricity, and so on) to service the housing under construction, after an unsuccessful World Bank engagement. This delayed delivery was further affected by the onset of the COVID-19 pandemic. The missing basic infrastructure made the banks hesitant to continue their engagement. Engaging in New Sectors Platforms aiming to reach new sectors did so to some extent, but the plat- forms approach was not essential to GHP investments.6 ISC, GHP, and BOP each realized their aim to reach new sectors that IFC had not otherwise reached, although to a limited extent (table 2.5 and figure 2.4). Platforms Independent Evaluation Group World Bank Group    29 focused resources and industry knowledge in specific areas.  ngaging in New Sectors: Achievements and Role of the Table 2.5. E Platforms Approach for Key Platforms Platform Global Côte Health IFC Startup Base of the d’Ivoire Housing Question Platform Catalyst Pyramid Program Was the 32% new 50% new 42% new objective country country country Terminated achieved? sectors sectors sectors Focus and platform Focus and Was the Projects efficiencies efficiencies platforms likely to have enabled in reaching No basis to approach key to occurred hand-holding MSME finance determine the achievement without for new fund providers to Early-Stage Evaluation of International Finance Corporation Platforms Approach  Chapter 2 of the objective? platform managers serve MSMEs in emerging and women markets Sources: Independent Evaluation Group case studies, desk reviews, and portfolio analysis. Note: “Platform” covers four platforms targeting new sectors or those with the highest percentage of new country sectors in the portfolio. Dark green, white text = strongly; light green, black text = moderately; pink, black text = weakly; medium red, white text = not at all. IFC = International Finance Corporation; MSMEs = micro, small, and medium enterprises. In addition, processing efficiencies (for example, delegation of authority and deal acceptance criteria in ISC) freed up time to serve clients in new sectors. The ISC enabled IFC to target early venture capital financing to start-ups focusing on digital technology, including investments too small to be processed under IFC’s nonplatform approach. BOP targeted financial service providers, enabling IFC to reach MSMEs in challenging markets. GHP provided financing in the medical equipment and diagnostic service sectors in some countries where IFC had not invested previously in these sectors. For example, IFC loaned $3 million to a distributor of medical equipment with local presence in an East African country, providing scarce foreign currency to be repaid in local currency. Although GHP focused attention and resources in reaching new sectors, interviews suggest that these projects would likely have proceeded as IFC stand-alone projects. 30  ave Platforms Supported the International Finance Figure 2.4. H Corporation’s Entry into New Sectors? 42% 50 45 40 35 19 32% Projects (no.) 30 50% 25 20 7 15 10 26 10 15 5 10 0 ISC GHP BOP Platform New sector Existing sector Sources: IFC Business Intelligence reports; Independent Evaluation Group calculated data on new sec- tors. Note: The numbers in percentages at the top of the bars represent the share of all projects that were committed in a new sector. BOP = Base of the Pyramid; GHP = Global Health Platform; IFC = International Finance Corporation; ISC = IFC Startup Catalyst. Independent Evaluation Group World Bank Group    31 1 A part of IFC’s claimed value for GHP is a greater ability to engage sectorally, including through upstream interventions (which were outside of the scope of the current evaluation). 2 The one evaluated IFC Startup Catalyst global project failed to reach platform goals on emerging markets because the supported fund invested more than intended in developed markets.  3 IDA PSW support to the BOP platform was provided through (i) pooled first-loss guarantee through the PSW Blended Finance Facility and (ii) local currency financing through the PSW Local Currency Facility.  4 IDA countries in this section use the World Bank’s definition, which is based on the country’s relative poverty defined as gross national income per capita below an established threshold. Countries classified as FCS in this section are from the group of countries included in the Bank Group Harmonized List of FCS, which the Bank Group releases annually and which aims to inform strategic and operational decision-making within the Bank Group.  Early-Stage Evaluation of International Finance Corporation Platforms Approach  Chapter 2 5 IFC counterparts also note that an anticipated regulatory change that would have supported mortgage lending was not enacted.  6 “New sector” is defined as a sector in a country where IFC has not invested in the 10 years before platform launch or after platform launch except through the platform. We assessed this objective based on evidence from an Independent Evaluation Group analysis of portfolio project data conducted to determine which platform projects were in new sectors.  32 3 | Efficiency, Risks, and Reporting Highlights Platforms have shown gains in lowering average project processing time, with some variation by platform. Average processing time is the only aspect of efficiency on which the International Finance Corporation (IFC) reports. Use of delegated authority (transfer of project approval authority from the Board to management) increased during the COVID-19 pandemic and was a major source of observed efficiency gains. Standardizing and streamlining IFC internal processes (for both preparation and approval) under platforms also contributed significantly to time savings. Platform projects incur lower expected losses—an ex ante risk indicator—in their debt finance compared with the rest of IFC, even after factoring out the effect of International Development Association Private Sector Window blended finance. However, this varies by platform. Equity investment risk ratings for platforms and nonplatform projects are similar; the IFC Startup Catalyst platform is an important exception. Platform projects are subject to almost the same up-front due diligence as IFC benchmark projects, with some streamlining. Platform reporting has evolved over time but has not met the Board of Executive Directors’ expectations. IFC has begun to report average Anticipated Impact Measurement and Monitoring scores by platform but does not report on platform-specific credit risk, 33  environmental and social risk and integrity risk ratings, or risk-adjusted return on capital. A forward look exercise was conducted to guide IFC’s future use of platforms. Focus groups obtained original inputs from IFC management and the Board, reflecting on three aspects of future use: (i) extending efficiency gains through delegation and streamlining internal processes, (ii) responding to future crises and global challenges, and (iii) scaling up to reach more International Development Association clients, clients in countries classified as fragile and conflict-affected situations, small clients, new clients, and new markets. The Board and IFC management agree that the platforms approach can be expanded to build on efficiency gains, but their views on the use of delegated authority differ. The Board saw potential for expanding delegation within clearly defined parameters and with timely reporting of information needed for oversight. The Board and IFC management both see platforms’ value in addressing future crises by allowing a faster response to clients in urgent need of working capital. Both point to the need for dual capacities in future platforms to address short-term needs in crisis and long-term needs in addressing global development challenges and building resilience. The Board and IFC management agree that platforms can provide efficient and targeted approaches to reaching clients in countries eligible for International Development Association financing, countries classified as fragile and conflict-affected situations, small clients, new clients, and new markets where the average firm and project size is small and therefore does not meet the investment threshold of normal IFC operations. 34   Efficiency A major argument for platforms is that they bring more efficient processing through saving time or staff costs or both. Consistent with discussion with IFC management, the Board expects IFC to process projects more efficiently under platforms through expedited processes during project processing (from Concept Note to first disbursement).1 This implies that it anticipates projects of the same quality as nonplatform projects and with savings in processing time. Clients might not be aware of platforms, but they expect responsive and timely processing of their financing, comparable to sources of alternative finance. Our analysis largely confirms that platforms are associated with quicker processing times and do not sacrifice project quality, but it also raises important questions about how to conceptualize and monitor efficiency. Processing time is shorter on average for platforms versus nonplatforms, but the time savings vary by platform. Key factors in reducing processing time included delegation of authority and standardization and streamlining of processes. On average, BOP projects were processed two months faster than its benchmark projects, while GHP projects were processed an average of three months faster than its benchmark projects (table 3.1). However, ISC projects took longer to process than their benchmarks, despite time savings from delegation of authority, partly because of the nature of the Independent Evaluation Group World Bank Group    35 clients and their required support. ISC clients were mainly first-time fund managers focusing on start-up companies, and therefore ISC provided time-consuming hand-holding to clients, particularly during legal negotiations. In addition, the fund managers faced fundraising delays to achieve a minimum viable fund size. IFC’s approach to delegation of authority on a platform-by-platform basis contrasts with EBRD’s more blanket approach of applying delegation to all noncontroversial platform projects below a certain value (box 3.1).  avings in Preparation Time: Platforms Versus Nonplatforms, Table 3.1. S FY17–22 Platform Average Processing Time (months) Projects (no.) Case study platforms (with benchmark) Base of the Pyramid 12 25 Base of the Pyramid 14 87 benchmark Global Health Platform 15 14 Global Health Platform 18 22 benchmark IFC Startup Catalyst 16 20 IFC Startup Catalyst 8 19 benchmark Early-Stage Evaluation of International Finance Corporation Platforms Approach  Chapter 3 Non–case study platforms (without benchmark) Fast-Track COVID-19 8 73 Facility Private Equity 10 35 Co-Investment Small Loan Guarantee 8 2 Programa Source: Independent Evaluation Group analysis of IFC portfolio data. Note: IFC = International Finance Corporation. a. The Small Loan Guarantee Program projects are guarantees in the case of default. Only two projects were disbursed under this platform. Delegation of authority was the most important source of efficiency gains observed, aiding in crisis response. Use of delegated authority surged in FY20–21 during COVID-19 (figure 3.1). The number of platform projects using delegation of authority fell in FY22 and rose in FY23, led by new plat- forms, including the Africa, and the Middle East, Central Asia, and Pakistan Venture Capital Platform and the Africa Trade Recovery Initiative. 36  elegation of Authority: The European Bank for Reconstruction Box 3.1. D and Development Versus the International Finance Corporation The European Bank for Reconstruction and Development (EBRD) and the International Finance Corporation (IFC) define delegation of authority similarly, but EBRD applies it differently. » Within each investment framework (EBRD’s equivalent of platforms), the EBRD Board delegates authority to management for all noncontroversial projects of up to €25 million, with no distinction between new and existing clients. EBRD does not have absence of objection. EBRD carries out a substantial volume of such small projects—about 60 percent of projects and less than 15 percent of its financing volume. The EBRD deep dive found that EBRD’s Board and operation teams realize time savings of two to three weeks per project through delegation. » In its June 2022 Approach Paper, IFC Platforms: Enabling New Business Development at Scale, IFC established a different indicative threshold from EBRD for platform projects under delegated authority—up to US$25 million of IFC own-account finance for new clients and up to US$50 million for existing clients (IFC 2022b). » Because of small project size, some IFC platforms (IFC Startup Catalyst) are fully delegated. Other IFC platforms (Base of the Pyramid) have delegation of authority for existing clients and absence of objection for new clients. Independent Evaluation Group World Bank Group    37 Sources: Independent Evaluation Group deep dive on the European Bank for Reconstruction and Development, case and desk studies on platforms, and interviews.  se of Delegated Authority for Platforms Increased During Figure 3.1. U COVID-19 Before COVID-19 During COVID-19 After COVID-19 25 19.5 20 Share of commitment (%) 16 15 17.2 15.4 12.3 12.1 10 10.1 5.9 5 5 2.6 0.8 0.3 0.2 0.9 0 2017 2018 2019 2020 2021 2022 2023 Early-Stage Evaluation of International Finance Corporation Platforms Approach  Chapter 3 US$11 US$11 US$9 US$12 US$12 US$12 US$15 billion billion billion billion billion billion billion n = 350 n = 369 n = 281 n = 325 n = 328 n = 317 n = 305 Fiscal year, total own-account commitment, and total project count per year Share of delegated authority projects by project count Share of delegated authority projects by IFC own-account commitment Sources: IFC Business Intelligence reports; Independent Evaluation Group. Note: The figure depicts platform financing. IFC = International Finance Corporation. Among the case studies, time savings from delegation of authority were most evident for the BOP platform. Transaction leaders of BOP projects estimate that delegation of authority saved them 4 to 6 weeks of processing time by not having to prepare and obtain approval of Board papers. Our portfolio analysis found that 17 BOP projects processed under delegation of authority took an average of only 9 months from Concept Note to disbursement. By contrast, 28 BOP projects processed on an AOB basis took an average of 13 months to process compared with 14 months for BOP benchmark projects. Although delegation of authority achieved time savings for ISC, overall project preparation time was longer because of the nature of its clients. Negotiating legal agreements took longer because the first-time fund managers it targeted were unfamiliar with legal and technical requirements. 38 IFC also provided time-consuming hand-holding to these fund managers because of their inexperience. In addition, the fund managers faced fundraising delays to achieve a minimum viable fund size. Our case studies indicate that standardizing and streamlining IFC internal processes (for both preparation and approval) under platforms also contributed significantly to time savings. In focus group discussions and interviews, both Board advisers and IFC management agreed that efficiency gains were achieved through streamlining and standardization, which was made possible by the platforms’ grouping similar projects. Some platforms that introduced a streamlined process included an early look process, which uses a short-form document and accelerated processing, saving time and steps compared with the more detailed Concept Review Memorandum and associated meetings and preparation processes applied to nonplatform IFC projects. Some platforms achieved efficiencies through standardization: mandate letters, Investment Review Memorandums by industry and subsector, deal acceptance criteria for screening investments, and the Anticipated Impact Measurement and Monitoring (AIMM) rating process. For example, both ISC and BOP achieved efficiencies through Investment Review Memorandum forms standardized by industry and subsector. BOP and GHP standardized and streamlined the AIMM rating process. Some platforms also pooled risk across eligible projects using IDA PSW blended finance at the platform level because the blended finance support Independent Evaluation Group World Bank Group    39 was embedded in some platforms’ design (such as BOP and SLGP). Table 3.2 summarizes the efficiency features of the seven in-scope platforms.  fficiency Features of the Seven Platforms Table 3.2. E Procedure Risk Mitigation, Including Delegation Streamlining and Pooling of Risk in Using Platform of Authority Standardization Blended Finance Investments Worked with existing Streamlined operating (existing clients) clients who complied with model and internal under each IFC standards, approval processes, component to short maturities for including early Fast-Track be made under trade-related transactions look, standardized COVID-19 delegated and Working Capital AIMM scores, virtual Facility authority, Solutions loans, and appraisals, and shorter balanced by IDA PSW credit documentation, and comprehensive enhancement; approvals streamlined decisions reporting to the streamlined, applied for lower-risk projects Board IFC’s due diligence Early look process, standard mandate Early-Stage Evaluation of International Finance Corporation Platforms Approach  Chapter 3 letters, standard Streamlined processing form for Investment of IDA PSW; pooled Base of the Review Memorandum, first-loss guarantee under For some projects Pyramid standardized deal IDA with streamlined acceptance criteria concessional calculations and legal agreements, and approval process and coordinated AIMM process Under second extension: IDA PSW funds Transaction co-invested for three leaders all The approval process eligible projects; high confirmed that is the same as for risk–reward profile because time saved from other nonplatform IFC Startup of the focus on start-up not having to venture capital Catalyst companies in markets with prepare and funds, as are the underdeveloped venture approve each environmental and capital ecosystems; Board paper was social requirements subprojects exposed critical to significant local currency risk Financial risks managed through a low-risk Modest efficiency profile of clients (large Global Health gains, the main None manufacturing companies) Platform source of which was and pooling streamlined processes of risk using blended finance and credit rigor (continued) 40 Procedure Risk Mitigation, Including Delegation Streamlining and Pooling of Risk in Using Platform of Authority Standardization Blended Finance With delegation Important efficiency and streamlining, gains attributable Higher riskiness of since start, typical to streamlining first-loss guarantee Small Loan processing time of IFC internal projects balanced by the Guarantee for a project (up to processes, such as pooled first-loss structure Program the commitment use of standardized for IDA PSW Blended of funds) dropped documentation and Finance Facility from 181 days to pricing and centralized about 101 days management Co-investment envelopes with delegated authority approved for Fast, low-cost 16 selected preparation because IFC-invested of reliance on due funds, totaling diligence and Diversified portfolio risks Private Equity commitments of investment decisions because of minimal overlap Co-Investment US$284 million; by private equity funds’ between IFC’s traditional Platform later expanded managers; in addition, portfolio and private equity to allow for up efficiency gains from funds to US$1 billion. co-investments’ lower Delegated management fees, authority allowed carried interest one- to two- month reduction Independent Evaluation Group World Bank Group    41 in co-investment approval time Delegated IDA PSW local currency Côte authority was Program financing eliminated d’Ivoire envisioned for dropped early in currency risks, reducing Housing phase 2, but the implementation, so no general risk level; followed Program program was savings materialized all relevant due diligence dropped policies and procedures Source: Independent Evaluation Group platforms approach evaluation of three case studies and four desk reviews. Note: AIMM = Anticipated Impact Measurement and Monitoring; IDA = International Development Association; IFC = International Finance Corporation; PSW = Private Sector Window. Current IFC reporting on efficiency has been limited to processing time, whereas a full consideration of efficiency must consider additional factors. IFC lacks a robust methodology for tracking sources of efficiency improve- ments or for collecting data related to efficiency by region, department, or platform. Savings in preparation time from mandate to first disbursement may not be the right measure of efficiency gains for several reasons. First, factors outside of the control of IFC or their clients (for example, govern- ment approvals, restrictive regulations, legal issues, and local economy problems) can influence preparation time. Second, efficiency needs to con- sider outputs relative to inputs, not simply time. Instead, efficiency analysis should include the cost-to-income effects of platforms on IFC’s financial statements. Such analysis should include cost reductions from process ef- ficiency improvements and effects of changes in projects size and duration and how they interact with direct and indirect costs and affect IFC’s profit- ability.2 By comparison, EBRD made major investments in streamlining and standardization for efficiency in project processing both within and outside Early-Stage Evaluation of International Finance Corporation Platforms Approach  Chapter 3 of its investment frameworks (box 3.2).  chieving Efficiencies Beyond Platforms: European Bank for Box 3.2. A Reconstruction and Development Initiatives The European Bank for Reconstruction and Development’s experience suggests that savings from streamlining and standardization of procedures and documents could be extended beyond platforms with appropriate investments. The European Bank for Reconstruction and Development invested in Project Monarch to simplify its project processing and Project Christopher to automate elements of project processing. The International Finance Corporation has not yet engaged in a similar, systematic, insti- tution-wide initiative, suggesting that savings could be realized through investments in information and technology systems to automate project preparation further and reengineer procedures and processes. Source: Independent Evaluation Group deep dive on the European Bank for Reconstruction and Development. Risk Platform projects incur lower overall expected losses—an ex ante risk 42 indicator—in their debt finance compared with the rest of IFC, even when factoring out the effect of the IDA PSW blended finance. Expected loss is the amount that IFC is expected to lose from a client’s potential default on a loan.3 Platform projects approved in FY17–22 have an expected loss of about 0.51 percent of their total exposure at default ($29 million) compared with 1.25 percent for the rest of the IFC portfolio ($412 million; figure 3.2).4 In addition, the median expected loss is $121,000 for platform projects compared with $154,000 for the rest of IFC. To a limited extent, the presence of IDA PSW blended finance support can explain this lower expected loss; it compensates a small portion of potential losses to IFC, thus reducing risks to IFC’s balance sheet. As noted in chapter 2, some platforms are designed to pool risk across eligible projects backed by an envelope of IDA PSW support, which avoids the need for individual project applications to IDA PSW for support, achieving savings in processing time. However, clearly other factors must explain much of the lower expected risk of platforms compared with the rest of the IFC portfolio.  iskiness of Platforms Versus the Rest of the International Figure 3.2. R Finance Corporation 1.4 0.02 �(percent of exposure at default) 1.2 1.0 Expected loss 0.8 Independent Evaluation Group World Bank Group    43 0.6 0.03 1.25 0.4 0.2 0.51 0.0 All seven platforms Rest of IFC Platforms and the rest of the IFC portfolio Expected loss, covered by IDA PSW Expected loss Source: Independent Evaluation Group deep dive on platform risk. Note: IDA = International Development Association; IFC = International Finance Corporation; PSW = Private Sector Window. Platform projects in IDA countries are somewhat more likely than nonplatform projects to use IDA PSW guarantees to mitigate risk. For all platform projects in IDA countries, about 33 percent used IDA PSW support compared with only 23 percent for the rest of the IFC IDA portfolio. BOP used IDA PSW support the most among platforms: 71 percent of its IDA country projects used some form of IDA PSW support. As a result of IDA PSW coverage, the expected loss (projected) for platform projects is about 0.03 percent lower and for the rest of the IFC portfolio about 0.02 percent lower. BOP was riskier than its benchmark because of the beneficiaries it targeted. BOP is a riskier platform with higher expected loss than its benchmark and GHP (figure 3.3). The BOP platform’s integrated ability to pool risk and use blended finance efficiently enabled it to take on riskier clients. To illustrate, BOP made local currency loans to two new clients with weak credit ratings (CR-11) in an East African country with the support of IDA PSW blended Early-Stage Evaluation of International Finance Corporation Platforms Approach  Chapter 3 finance. In a second East African country, BOP provided financing (A and B1 loans) to two new clients with weak credit ratings (CR-11) using IFC’s own-account and parallel loans mobilized through the Managed Co-Lending Portfolio Program (IFC’s syndications platform for institutional investors). These two microfinance institutions were part of a large group that operated multiple microfinance institutions in Africa. IFC’s funding at a critical time was equivalent to about 20 percent of this group’s loan portfolio. In addition, during the COVID-19 pandemic, the microfinance sector in most of Africa experienced increases in nonperforming loans and funding restrictions. The BOP platform reached microfinance institutions both with and without blended finance. 44  iskiness of Platforms Versus Benchmarks, FY17–22 Figure 3.3. R 2.0 0.32 �(percent of exposure at default) 1.8 1.6 1.4 Expected loss 1.2 0.04 1.0 0.8 1.42 0.6 0.93 0.4 0.2 0.32 0.33 0.0 BOP BOP benchmark GHP GHP benchmark Platforms and benchmarks Expected loss, covered by IDA PSW Expected loss Sources: IFC Business Intelligence reports; IFC Investment Risk Platform (credit ratings); Independent Evaluation Group deep dive on platform risk. Note: BOP = Base of the Pyramid; GHP = Global Health Platform; IDA = International Development Association; PSW = Private Sector Window. Equity investment risk for platform and nonplatform projects is similar except for the ISC platform. Overall, the platform approach is characterized by equally risky investments compared with the rest of IFC. Risks to IFC’s balance sheet stemming from equity investments can be captured through project credit risk ratings (CRRs). The equity CRR scale ranges from 1 (best) Independent Evaluation Group World Bank Group    45 to 7 (worst), with 2A being the second-best rating. Platform projects are rated in line with the rest of IFC projects, with a median CRR of 3A for plat- forms and the rest of IFC. The distribution of ratings for both platforms and the rest of IFC is skewed to the better-rated end of the rating scale (figure 3.4, panel a). However, ISC is riskier (median CRR of 3B) than its benchmark (2B) because of its targeted client base of private equity funds financing start-up companies (figure 3.4, panel b). Another platform that makes equity investments—Private Equity Co-Investment—has a median CRR rating of 2B, less risky than ISC.  redit Risk Rating of Equity Projects, Platforms, the Rest of Figure 3.4. C the International Finance Corporation, and Benchmarks, FY17–22 a. Credit risk rating of equity projects 40 35 Share of credit risk rating (%) 30 25 20 15 10 5 Early-Stage Evaluation of International Finance Corporation Platforms Approach  Chapter 3 0 1 2A 2B 3A 3B 4A 4B 5A 5B 6 7 Credit risk rating Platform Rest of IFC b. Credit risk rating of equity projects in IFC Startup Catalyst 30 Share of credit risk rating (%) 25 20 15 10 5 0 1 2A 2B 3A 3B 4A 4B 5A 5B 6 7 Credit risk rating ISC platform ISC benchmark Sources: Independent Evaluation Group deep dive on platform risk, desk review, and portfolio analysis of risk associated with platform projects. 46 Note: IFC = International Finance Corporation; ISC = IFC Startup Catalyst. Country concentration is significant in some platforms, whereas industry concentration is inherent to the focused strategy of platforms. In GHP, two countries account for 60 percent of the total commitments: China (31 percent) and Brazil (29 percent). In addition, five countries in GHP account for 96 percent of the total commitments. Similarly, in the BOP platform, three countries account for 52 percent of the total commitments: Tanzania (26 percent), India (13 percent), and the Democratic Republic of Congo (13 percent). By design, some platforms have a narrow focus targeting projects in one industry group. For example, BOP platform projects are all mapped to the Financial Institutions Group, and ISC projects are all mapped to the Disruptive Technologies and Funds group. However, platforms overall are not currently affecting the IFC portfolio’s country risk concentration or industry or sector concentrations. Because individual platforms by design exhibit both country and industry concentrations, if IFC scales up the platform approach, concentrations should be monitored carefully. Platform projects are subject to almost the same up-front due diligence as IFC benchmark projects, with some streamlining. Our benchmarking analysis shows mostly similar due diligence processes (table 3.3). For the three case studies, the Investment Review Memorandum process is the same for GHP, with minor customization for BOP and ISC. The client supervision report adheres to the same standards for GHP and BOP, whereas ISC reporting has a 12- to 24-month initial delay for incubation. E&S reporting is the same as Independent Evaluation Group World Bank Group    47 for benchmark projects for new clients in BOP and GHP. For existing clients, BOP and GHP platform projects must meet E&S criteria. E&S reporting is the same for ISC and its benchmark. 48 Early-Stage Evaluation of International Finance Corporation Platforms Approach  Chapter 3  ront-End Due Diligence Process for Case Study Platforms Versus Benchmarks Table 3.3. F Base of the IFC Startup Global Health Due Diligence Base of the Pyramid IFC Startup Catalyst Global Health Platform Process Pyramid Benchmark Catalyst Benchmark Platform Benchmark Same as for other Concept review Standard Same venture capital Same Standard Same funds Investment Review Projects follow Memorandum: all codified IFC Follows all now uses template policies and codified Financial like nonplatform procedures. No Institutions Group projects; under Follows all IFC standardization processes but 2022 extension, procedures; because of uses standardized Same but less subprojects Investment Review investments Investment review AIMM ratings, standardized; receive specific Same; adheres to Memorandum heterogeneity; process deal acceptance no pooling for AIMM score; all IFC standards slightly select projects terms, term sheets blended finance offshore centers or more customized expedited through and covenants, tax due diligence, than for platform streamlined legal agreements, E&S risk, and AIMM scores and and IDA PSW integrity due Investment Review processing diligence follow Memorandum standard IFC template procedure (continued) Base of the IFC Startup Global Health Due Diligence Base of the Pyramid IFC Startup Catalyst Global Health Platform Process Pyramid Benchmark Catalyst Benchmark Platform Benchmark Because of funds’ Adheres to the incubator nature, standardized client little information supervision reports first 12–24 and portfolio months; once Similar, but review processes; Same as platform Client Adheres to Adheres to financial results nonplatform equity investments for both loans and supervision all standard all standard are available, projects involve meet all IFC health equity; adheres to report procedures procedures reported to the less incubation industry equity all IFC standards Board at market requirements; values through AIMM reporting the monthly missing from client operations report supervision report For new clients, Same as for Began with E&S For new clients, Standard; E&S all Financial reporting; added E&S process governed by process is the Same; follows E&S reporting Institutions Group gender advisory is the same as IFC’s policies and same as for all IFC procedures projects; intensity support for fund for nonplatform procedures based nonplatform based on E&S risks managers projects on E&S risks projects Source: Independent Evaluation Group case studies and benchmarking analysis. Note: AIMM = Anticipated Impact Measurement and Monitoring; E&S = environmental and social; IDA = International Development Association; IFC = International Finance Corporation; PSW = Private Sector Window. Independent Evaluation Group World Bank Group    49 Reporting and Oversight Platform reporting has evolved over time but has not met the Bank Group Board’s expectations. The Board has made clear that its trust is influenced by accurate and complete reporting at the project and platform levels and assurances that platforms are operating according to agreed targets and guardrails. To fulfill its governance function, the Board’s expectation expressed in its discussions of platforms was to receive information on additionality, development impact (AIMM), E&S and integrity risk ratings, credit and equity risk ratings, and risk-adjusted return on capital. Our review of actual reporting shows that reporting was not standardized, and much of what the Board wanted was missing. Regular reports from IFC management to the Board (quarterly and monthly) show commitment volumes (IFC’s own account and core mobilization) with links to project data, platform usage Early-Stage Evaluation of International Finance Corporation Platforms Approach  Chapter 3 and share of IFC’s own account across IDA countries and FCS, climate, and gender. IFC recently began to report average AIMM scores for individual platforms in its quarterly reports to the Board. However, there has been little reporting through the Board Operations System or IFC New Operations Portal on the areas expected by the Board. Similarly, EBRD also provides limited information to its Board of Directors on investment framework projects approved under delegated authority (box 3.3). EBRD reports also tend to be limited to use amounts, average impact ratings and the proportion of projects on track to meet their objectives, and geographic distribution. However, whether the EBRD Board expects to receive anything more than this is unclear. 50  uropean Bank for Reconstruction and Development Box 3.3. E Reporting to the Board of Directors on Projects Approved Under Delegation The European Bank for Reconstruction and Development (EBRD) has a more streamlined approach for projects processed through delegated authority than the International Finance Corporation, and its Board of Directors has different expectations. EBRD’s Board does not expect to exercise any ex ante control on delegated projects. It forgoes the option to intervene before management’s approval of a delegated project. Instead, EBRD management circulates a Delegated Approval Reporting Sheet (a one-page summary of the project) within three days of management’s approval. To ensure maximum process speed and efficiency, Board members cannot raise questions, abstentions, or objections on individual delegated projects except to clarify material in the Delegated Approval Reporting Sheet. However, under the Articles of Agreement, a country of operations’ right to object to a project on its territory is retained with a deadline of five days after notification of EBRD management approval. Source: Independent Evaluation Group deep dive on the European Bank for Reconstruction and Development. Our review of platform-related Board papers indicates that platforms have not consistently established indicators and measurable targets at the plat- form level in their Board papers as a basis for reporting and oversight. Instead, our review showed gaps in establishing clear and quantifiable Independent Evaluation Group World Bank Group    51 indicators at the platform and project levels (table 3.4). However, the ISC platform expansion paper and Côte d’Ivoire Housing Program papers demonstrate better practices by providing both platform level and project level outcome indicators with explicit, quantified targets. Case studies indicate that the Board has not commented based on informa- tion in routine platform reports. Interviews indicate that IFC transaction leaders have not received comments from the Board on monthly opera- tions reports or on Board papers of projects submitted on an AOB basis. For example, IFC transaction leaders for BOP delegated projects did not receive Board comments on any of the monthly operations reports. The lack of comments could indicate either that IFC is exercising its delegated authority consistently with Board expectations or that the Board is not us- ing this information in its oversight.  utcome Indicators and Targets Specified in Platform Board Table 3.4. O Papers: Platform Level Versus Project Level Output or Outcome Quantified Output Indicators or Outcome Targets Platform Platform level Project level Platform level Project level Base of the X Pyramid Global Health X Platform IFC Startup X X X X Catalyst Early-Stage Evaluation of International Finance Corporation Platforms Approach  Chapter 3 Côte d’Ivoire Housing X X X X Program Private Equity X X Co-Investment Fast-Track COVID-19 Facility Small Loan Guarantee X X X Program Source: Independent Evaluation Group desk-based review of the seven IFC platforms covered under this evaluation. Note: IFC = International Finance Corporation. IFC staff do not find the current reporting requirements for projects processed through delegated authority cumbersome, but feedback from IFC clients on reporting was mixed. In general, interviews with IFC staff and managers found existing reporting reasonable but had some trepidations about any additional reporting (see chapter 4). Regarding clients, BOP clients did not find the reporting requirements cumbersome, and many appreciated IFC’s technical assistance with their internal management systems and reporting capabilities. Similarly, GHP clients appreciated IFC’s thorough 52 due diligence process but noted a lack of efficiency gains for existing clients because projects were either approved by regular process or AOB but not through delegated authority. By contrast, for ISC, less sophisticated first- time fund managers indicated that the frequency of reporting was difficult for them and their start-up companies to accommodate. Forward Look: Reflections on Early Experience for Future Use of Platforms To guide IFC’s future use of platforms, we conducted a scenario-based forward look exercise to obtain original inputs from IFC senior management and the Board in focus groups. Participants reflected on three aspects of future use: (i) extending efficiency gains through delegation and streamlining of internal processes, (ii) responding to future crises and global challenges, and (iii) scaling up to reach more IDA and FCS clients, small clients, new clients, and new markets. Forward-looking discussions on the future use of platforms started from a few stylized findings as presented in chapters 2 and 3. These included the following: » Findings showing efficiency gains both from delegation of authority and streamlining and standardization of processes within individual platforms » Findings on EBRD’s experience, which suggested potential to extend delega- Independent Evaluation Group World Bank Group    53 tion of authority to small, noncontroversial transactions for existing and new clients » Findings on the substantial financing (75 percent of IFC’s total response) channeled through platforms in response to the COVID-19 pandemic » Findings on the Board’s expansion of delegated authority through platforms as a COVID-19 response to an urgent crisis, with the expectation of timely reporting of platform data on additionality, development impact, risks, and efficiency (Although IFC’s platform reporting has evolved, it has not yet met the Board’s expectations.) » Findings on the ability of platforms targeting smaller and riskier transactions to engage with hard-to-reach clients, including transactions in IDA countries and FCS and transactions with small clients, new clients, and start-ups (By pooling IDA PSW first-loss guarantee, BOP engaged with new clients otherwise considered too risky.) We organized three focus groups to solicit views from advisers to the execu- tive directors on IFC’s Board, from IFC’s Corporate Strategy leadership team, and from IFC industry directors for industries addressed by the three case study platforms (appendix A). Discussion focused on the future role of the platforms approach in contributing to IFC’s efficiency gains through delega- tion of authority and standardization and streamlining of internal processes; its response to crises and global challenges; and scaling up to reach more IDA and FCS clients, small and new clients, and new markets. Future Role of Platforms Approach in Achieving Efficiencies Early-Stage Evaluation of International Finance Corporation Platforms Approach  Chapter 3 The Board and IFC management agree that platforms can be used to achieve efficiency gains, but their views on delegation of authority differ. Both agree that streamlining and standardization in platforms should be used to reduce delays and costs. However, IFC management regards delegation of authority favorably as a key element of platform efficiency, whereas the Board regards it as neither inherent to nor necessary for platforms to operate efficiently. Both observe that although some platforms did not have delegation of au- thority (for example, GHP), efficiencies were achieved through streamlined processing and standardized templates for several functions—including early look process, Investment Review Memorandum, and Board papers. This was made possible by platforms’ grouping of similar projects. IFC manage- ment sees efficiency gains arising from delegation of authority as crucial for approving projects in difficult contexts (including small states) that involve smaller transactions and quick turnaround, especially to respond to crisis and when mobilizing capital from other financiers. In addition, the Board views delegation as requiring more intense report- ing. The IFC Corporate Strategy team points to the ongoing and anticipated improvements in reporting being implemented, including a real-time dash- board.5 IFC operational management cautions that too much reporting can undermine platform efficiency gains. The Board sees a role for expanding 54 delegation within clearly defined parameters (for example, target clients with good E&S standards and well-defined country, sector, and regional thresholds) and with timely reporting of information needed for oversight. Future Role of Platforms Approach in Responding to Crises and Global Challenges Both the Board and IFC management point to the need for dual capacities in future platforms to address short-term needs in crises and long-term needs in addressing global challenges and building resilience. Both see platforms as adding value to IFC by allowing a faster response to its clients in urgent need of financing. IFC management believes that future platforms can be designed to support both short-term response to crisis and longer-term resilience. For example, the BOP platform was created during the pandemic to provide liquidity support to financial intermediaries onlending to MSMEs. After the pandemic, it continued to support them, extending the tenor of its projects from three years to five years to provide them with longer-term support. In the Board’s view, the design of future platforms should consider different performance standards for due diligence, credit risk, and E&S standards, depending on the nature of the crisis. Doing so can help IFC apply appropri- ate performance standards adapted to the different nature of each crisis (for example, financial crisis, pandemic, food crisis, and so on). Independent Evaluation Group World Bank Group    55 Future Use of Platforms Approach to Reach IDA Countries and FCS, Small Clients, New Clients, and New Markets Both the Board and IFC management agree that platforms can provide efficient and targeted approaches to reaching clients in IDA countries and FCS, small clients, new clients, and new markets where the average firm and project size is small and thus does not meet the investment threshold of a normal IFC operation. IFC management sees platforms as helping IFC to do more small projects and engage further in IDA countries and FCS through improved process efficiencies that lower processing costs. The Board wants IFC to do more in difficult markets and in small states in the future while upholding its standards. The Board would consider expanding delegated authority under conditions that strengthen trust, alignment with strategic goals, and appropriate risk assessment. However, the Board wants clear, well-enforced performance standards on due diligence, credit risk, and E&S for clients in IDA countries and FCS, and it sees a need for a clear risk assessment framework for new IFC clients. Early-Stage Evaluation of International Finance Corporation Platforms Approach  Chapter 3 56 1 For the efficiency analysis, average preparation time from Concept Note to first disburse- ment for platform projects was compared with stand-alone benchmark projects to analyze efficiency gains.  2 According to IFC, it monitors its cost of doing business, expressed as monetary resources spent per project, both in and outside of platforms.  3 Expected loss is defined as the risk of a missed payment (probability of default) times the loss percentage in such an event (loss given default) multiplied by the amount outstanding at default (exposure at default) for projects involving loan-type instruments only.  4 Significant at 99 percent level of confidence.  5 At the time of the forward look exercise conducted by the Independent Evaluation Group, the real-time dashboard was implemented. IFC’s data (including platforms) went live in the Executive Directors’ Data & Analytics Dashboard in early December 2023. Independent Evaluation Group World Bank Group    57 4| Summary and Conclusions  Highlights The findings of the evaluation and the forward look led to two Independent Evaluation Group recommendations: one on building on the benefits of platforms revealed in the pilot period and a second on platform reporting rooted in clear results frameworks. 58   Summary of Findings on the International Finance Corporation’s Platforms Approach IFC platforms have achieved several of the objectives they set out to achieve (response to crisis at scale, engaging with small clients and new clients, engaging with clients in IDA countries and FCS, and engaging in new sectors). However, given the early-stage nature of this evaluation, it is not possible to assess their achievement of outcomes. Their achievements are largely explained by three features of platforms under IFC’s approach: » Operational efficiency, including expedited approval, and streamlining and standardization of internal processes » Pooling of risk and mitigation of risk using blended finance » Focusing on specific development challenges However, the importance of the platforms approach in enabling the achievement of these objectives varies across platforms, and there is no shared articulated program logic on IFC’s platforms approach. Expectations regarding IFC platforms sometimes differ among the Board, IFC management, and clients. Based on expected loss (an ex ante risk indicator), there is no indication that platform projects covered by this evaluation will increase IFC’s overall Independent Evaluation Group World Bank Group    59 portfolio risk. Comparisons of overall projected expected loss for loans and CRRs for equity investments suggest that the platform portfolio as a whole does not increase IFC portfolio risk.1 IFC applies similar due diligence to platforms as it does to its stand-alone projects. However, specific platforms (BOP and ISC) serve riskier clients. Despite significant evolution, challenges remain in aligning reporting with Board expectations. A gap remains in content, format, and frequency be- tween information the Board has stated that it wants and the information that IFC reports routinely. This gap applies to reporting on additionality, risk ratings, and risk-adjusted return on capital. Furthermore, platforms established measurable indicators and targets inconsistently as a basis for reporting and oversight. Recommendations for the International Finance Corporation’s Future Use of the Platforms Approach The evaluation makes two recommendations on the future use of platforms and on platform reporting and monitoring: » IFC should extend the approach embodied in its pilot to new platforms that both build on the benefits revealed in the pilot period and enrich and generate new learning on platform performance. Experience to date suggests that platforms can be designed to facilitate small transactions, respond rapidly to crisis, manage risks associated with new clients more efficiently (through pooling of risk and mitigation of risk using blended finance), engage with clients in IDA countries and FCS, and focus on specific global challenges (for example, in health and digital technologies, using Early-Stage Evaluation of International Finance Corporation Platforms Approach  Chapter 4 lessons from the GHP and ISC platform). In addition, platform design may combine short- and longer-term financial instruments to be prepared for future crises and to address longer-term development needs. A caveat in extending the pilot approach is that individual platform outcomes are not yet known, and the base of experience in this evaluation is both limited and diverse among the seven in-scope platforms. Given the likely scale-up of platform use to address global challenge priorities, incorporating and supporting learning is vital. » To facilitate oversight of and learning from platforms, IFC and the Board should reach and implement an agreement on the level, content, format, and frequency of reporting on platforms and individual projects within them, rooted in clear results frameworks. The agreement should balance the information that the Board uses for oversight—for example, information on development impact, additionality, risk ratings (credit, E&S, and integrity due diligence), efficiency, and risk-adjusted return on capital—with what IFC can provide feasibly. Despite progress, a gap remains between the information the Board has stated that it wants in discussions on individual platforms and the information IFC reports routinely. IFC systems could be updated to fill this gap at agreed periods. Furthermore, Board oversight and IFC’s monitoring and evaluation of platforms should be based on results 60 frameworks (consistent with each platform’s program logic) with specific indicators and quantifiable targets agreed to with the Board when individual platforms are approved or extended. Independent Evaluation Group World Bank Group    61 1 Riskiness is measured based on the expected loss (projected), which is defined as the risk of a missed payment (probability of default) times the loss percentage in such an event (loss given default) multiplied by the amount outstanding at default (exposure at default) for projects involving loan-type instruments only. For equity finance, riskiness is measured by the distri- bution of CRRs for equity projects.  Early-Stage Evaluation of International Finance Corporation Platforms Approach  Chapter 4 62 Bibliography Cohen, Jacob. 1988. Statistical Power Analysis for the Behavioral Sciences. 2nd ed. Lawrence Erlbaum Associates. EBRD (European Bank for Reconstruction and Development). 2019. Special Study: Delegated Authority. EBRD. IEA (International Energy Agency). 2022. Oil Market Report. IEA. https://www.iea. org/reports/oil-market-report-june-2022. 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H. 1995. “Scenario Planning: A Tool for Strategic Thinking.” MIT Sloan Management Review 36 (2), Winter 1995. https://sloanreview.mit.edu/ article/scenario-planning-a-tool-for-strategic-thinking. Triveno, Luis, and Olivia Nielsen. 2021. “Can New Technology Solve the Global Housing Crisis?” Sustainable Cities (blog), June 16. https://blogs.worldbank.org/ sustainablecities/can-new-technology-solve-global-housing-crisis. UNCTAD (United Nations Conference on Trade and Development). 2014. World Investment Report 2014: Investing in the SDGs: An Action Plan. United Nations. https://unctad.org/system/files/official-document/wir2014_en.pdf. World Bank. 2018. “World Bank Group Shareholders Endorse Transformative Capital Package.” Press Release 2018/149/ECR, April 21. https://www.worldbank.org/ en/news/press-release/2018/04/21/world-bank-group-shareholders-endorse- transformative-capital-package. World Bank. 2022a. Global Economic Prospects, June 2022. World Bank. https://thedocs.worldbank.org/en/ doc/18ad707266f7740bced755498ae0307a-0350012022/original/Global- Economic-Prospects-June-2022.pdf. World Bank. 2022b. “Stagflation Risk Rises amid Sharp Slowdown in Growth.” Press Release 2022/068/EFI, June 7. https://www.worldbank.org/en/news/ press-release/2022/06/07/stagflation-risk-rises-amid-sharp-slowdown-in- growth-energy-markets. Early-Stage Evaluation of International Finance Corporation Platforms Approach  Bibliography World Bank. 2023a. International Finance Corporation Additionality in Middle- Income Countries. Independent Evaluation Group. World Bank. https://ieg. worldbankgroup.org/sites/default/files/Data/Evaluation/files/ifc-additionality- middle-income-countries.pdf. World Bank. 2023b. The World Bank Group’s Early Support to Addressing the COVID-19 Economic Response: April 2020–June 2021—An Early-Stage Evaluation. Independent Evaluation Group. 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The Independent Evaluation Group (IEG) reconstructed the program logic on the basis of desk review (for example, Board papers) and interviews. The evaluation’s program logic explains how the platforms approach could allow IFC to achieve its strategic objectives while meeting the Board’s and clients’ expectations, discussed in the Approach Paper for this evaluation, International Finance Corporation Platforms Approach: Addressing Development Challenges at Scale (World Bank 2023b). This evolved during the evaluation to a focus on specific objectives pursued by the evaluation’s seven focal platforms. The evaluation program logic (figure A.1) shows the connections among development objects, key features of IFC’s platforms approach, and its direct and intermediate outcomes (objectives). Both development challenges and development outcomes are outside of the scope of the evaluation because we cannot yet measure the impact of the platforms approach, which IFC launched relatively recently and on a pilot basis. 70  valuation Program Logic Figure A.1. E Building blocks platforms Features platforms Direct outcomes Intermediate outcomes Intention to respond to Use of expedited approval crisis at scale and streamlined processes for reduction in processing time and more rapid disbursement Higher level of Intention to expand client operational efficiency base to new clients, small clients, IDA and FCS Use of pooled risk countries, and new sectors and blended finance to manage risk to serve Engagement with higher-risk Response to crisis at scale higher-risk clients clients and projects while Intention to focus on specific maintaining adequate development challenges risk profile Focus on single development challenge Higher level of engagement with • Small clients • New clients Intention to streamline • IDA and FCS countries approval, including Consistent reporting • New sectors delegation of authority conforming to an Higher level of Board trust and absence of objection agreed results framework Intention to meet the Management of credit, Board’s expectations integrity, and E&S risk for oversight, reporting, efficiency gains, and risk Complementary factors (for example, diagnostics, AIMM, upstream, strategies, and cascade) to help IFC shift to platforms approach Source: Independent Evaluation Group. Note: AIMM = Anticipated Impact Measurement and Monitoring; E&S = environmental and social; FCS = fragile and conflict-affected situations; IDA = International Development Association; IFC = International Finance Corporation. Independent Evaluation Group World Bank Group    71 The program logic centers on key objectives that platforms were pursuing as stated in their Board papers. Within this program logic, efficiencies realized by platforms through streamlined and standardized internal processes, expedited project processing, and pooling of risks combined with blended finance would allow IFC to respond to crisis at scale and respond to specific development challenges at greater scale, including by engaging with small and new clients, with clients in countries eligible for International Development Association (IDA) financing and countries classified as fragile and conflict-affected situations (FCS), and with clients in new sectors. Systematic reporting and monitoring by IFC and periodic self-evaluations and independent evaluations would enhance trust between the Board and IFC management and facilitate oversight and learning. As IFC applies expedited processing and engages with higher-risk clients and markets, platforms would manage risk through due diligence processes and by using blended finance Early-Stage Evaluation of International Finance Corporation Platforms Approach  Appendix A support to pool and mitigate risk in more challenging markets. Complementary factors (see figure A.1) facilitate the platforms approach. In its efforts to achieve its 2030 capital increase targets, IFC has already developed several complementary tools or initiatives to create the conditions for success of the platforms approach. These include, for example, Expedited Processing for Existing Clients Operational Procedure, IFC’s upstream approach, and IFC sector deep dives. Some of these parallel initiatives— Country Private Sector Diagnostics, country strategies, the cascade approach, and Anticipated Impact Measurement and Monitoring—are the subjects of parallel IEG work. Appropriate design and implementation of the platforms approach’s key fea- tures were expected to result in important direct corporate outcomes. The platforms approach could contribute to a higher level of corporate efficiency (for example, faster response to clients), engagement with higher-risk clients while maintaining an acceptable level of corporate risk, and adequate monitoring and reporting by IFC management to the Board to permit oversight and build trust. By achieving these direct corporate outcomes, IFC was expected to better achieve the desired intermediate outcomes. These outcomes include response to crisis at scale and a higher level of engagement through small transactions, with new clients, in IDA countries and FCS, and in new sectors. 72 The relationship of platforms approach features to intermediate outcomes is also captured in a series of hypotheses elaborated during the evaluation. Evaluation Scope and Questions The evaluation assesses IFC’s platforms approach for platforms approved by the Board from FY 2017 to FY22 and, in several dimensions, through FY23. The evaluation period is from July 2017 (beginning of FY17) to June 2022 (end of FY22). In response to the request from several executive directors, we also included subprojects approved in FY23 for the seven active platforms included in scope for both efficiency and risk analysis. Table A.1 summarizes the portfolio of projects under each platform. The combined number of approved projects of the Global Health Platform (GHP), Base of the Pyramid (BOP), and IFC Startup Catalyst (ISC) case study platforms for FY17–23 was 87 and the combined investment services commitments, including core mobilization, was $2.85 billion.  valuation Portfolio Table A.1. E Commitments, Platform Approved Including Board Envelope Projects Core Disbursed Approval (US$, (by June Mobilization (US$, Platform FY billions) 30, 2023 (US$, billions) billions)a Independent Evaluation Group World Bank Group    73 IFC Startup FY17 0.1 20 0.05 0.03 Catalystb Global Health FY21 4 22 2.0 1.1 Platformb Base of the FY21 1 45 0.8 0.5 Pyramidb Private Equity FY17 0.3 49 0.3 0.3 Co-Investment Small Loan Guarantee FY18 0.4 25 0.2 0 Program Côte d’Ivoire Housing FY19 0.1 4 0 0 Program (continued) Commitments, Platform Approved Including Board Envelope Projects Core Disbursed Approval (US$, (by June Mobilization (US$, Platform FY billions) 30, 2023 (US$, billions) billions)a IFC’s Fast-Track FY20 8 101 10.6 5.9 COVID-19 Facility Total 13.9 266 14.0 7.8 Source: Independent Evaluation Group case studies and portfolio review. Note: IFC = International Finance Corporation. a. Disbursement data are as of June 30, 2023. All platforms, except Private Equity Co-Investment, used the support of International Development Association Private Sector Window blended finance. Early-Stage Evaluation of International Finance Corporation Platforms Approach  Appendix A b. Case studies. The following in-scope platforms were approved by IFC and the Board between FY17 and FY22 and are in full compliance with IFC’s 2022 papers to the Board defining platforms: » ISC provides seed-stage funding mechanisms through equity and quasi- equity instruments and targets entrepreneurs (including women) and their early-stage companies. » GHP aims to increase the supply of health-care products and services in developing countries using investments through IFC’s own account and mobilization from commercial banks and development finance institutions and targets manufacturers, suppliers, and service providers. » BOP supports certain IFC clients in good standing—microfinance institutions, nonbank financial institutions, and banks with sound fundamentals and that focus on micro, small, and medium enterprises (MSMEs) using investments in MSME-focused financial service providers—and targets MSMEs. » Private Equity Co-Investment uses co-investment envelopes in private equity funds to target growth equity funds, venture capital funds, and sector funds. » The Small Loan Guarantee Program aims to reach small and medium enterprises (SMEs) in IDA Private Sector Window (PSW) countries, including 74 FCS, using Risk-Sharing Facilities; it targets SMEs, very small enterprises, women-led SMEs, early-stage SMEs, SMEs involved in climate activities and agriculture, and high-growth SMEs. » The Fast-Track COVID-19 Facility supports private sector companies in re- sponse to the COVID-19 pandemic using Working Capital Solutions, the Real Sector Envelope, and the Global Trade Liquidity Program and targets existing IFC clients across sectors and countries dealing with the spread of COVID-19. » The Côte d’Ivoire Housing Program aimed to support affordable housing in Côte d’Ivoire using developer and mortgage financing with participating banks; it targeted selected developers and homebuyers. (This platform did not have commitments and was dropped in July 2022.) This evaluation sought to answer three evaluation questions: 1. To what extent do the IFC platforms achieve their objectives, specifically (i) responding to crisis at scale, (ii) engaging with small clients and new clients, (iii) engaging with IDA countries and FCS, and (iv) engaging in new sectors? 2. To what extent does the IFC platforms approach meet the Board’s and clients’ expectations on oversight, reporting, and efficiency gains while balancing risks and benefits to enhance trust over time? 3. What guidance does the early experience of platforms provide IFC in shap- Independent Evaluation Group World Bank Group    75 ing future use of the approach? Evaluation Methods We used qualitative approaches—including case studies, interviews, and a forward look exercise—to answer the three evaluation questions (figure A.2). The evidence for evaluation questions 1 and 2 was based on case studies, which were based on the triangulation of evidence from desk- based review, benchmarking, and interviews with internal and external stakeholders. The team conducted in-depth case studies of platforms developed in the prior six fiscal years (FY17–22). This section describes the methods for case study selection and analysis (desk-based review, internal and external interviews, and benchmarking). 76 Early-Stage Evaluation of International Finance Corporation Platforms Approach  Appendix A Figure A.2. Evaluation Design Methods Evaluation question 1: 1. Desk-based review 2. Conducted 114 interviews 1,2,3 Do the platforms meet and portfolio analysis with IFC staff, IFC Board of platform projects’ members, IFC clients, their objectives? background documents and investors 1,2 (such as appraisal documents Scope: for all platforms with ,3 ,4 √ Responding to crisis at scale and monthly operations reports) more focus on case studies Scope: for all platforms √ Engaging with small clients Evaluation question 2: and new clients Do the platforms meet the 3. Comparison of IFC 4. Lessons from EBRD Board’s and clients’ expectations? platform projects framework experience based √ Engaging in new sectors with IFC individual projects on review of IFC and EBRD based on review of platforms documents and interviews √ Engaging with clients in and individual project documents with EBRD staff* IDA and FCS Scope: for the case study Scope: for the case study platforms platforms 5 Key findings 5 Evaluation question 3: 5. Focus groups on the forward look (Forward look): What guidance • Advisers to the executive directors 5 does early experience provide • IFC industry directors to shape future use of the • IFC Strategy and Operations management platforms approach? Source: Independent Evaluation Group. Note: EBRD = European Bank for Reconstruction and Development; FCS = fragile and conflict-affected situations; IDA = International Development Association; IFC = International Finance Corporation. * EBRD lessons were primarily used to answer evaluation question 2. Case study selection. We assessed the platforms approach through the lens of three IFC platforms (through in-depth case studies) that were approved by the Board during FY17–22: GHP, BOP, and the ISC Facility. The three plat- forms were identified based on three criteria: » Timing of platform approvals. Platforms selected were approved over the six-year period (FY17–22) to allow the evaluation to assess both crisis and noncrisis response platforms. » Coverage of priority themes. For example, selected platforms targeted MSMEs or early start-up companies, enterprises focusing on digital tech- nologies, and enterprises contributing to health-care products or services in response to the COVID-19 pandemic. » Alignment of subprojects within a theme. This criterion sought alignment with the definition of platforms in the IFC paper discussed by the Board in June 2022 (IFC 2022b) and IFC’s follow-up clarification to the Board in December 2022 (IFC 2022a). The selection included platforms with sub- projects addressing a similar development objective, for example, tackling health-care supply gaps in developing countries. IFC management, through consultations, agreed on the three platforms se- lected for in-depth case studies. Case study approach. Case studies included desk-based review and port- Independent Evaluation Group World Bank Group    77 folio analysis; interviews with IFC staff and management, clients, investors, and project sponsors; benchmarking with nonplatform projects; learning from the European Bank for Reconstruction and Development (EBRD); risk analysis; and efficiency analysis. Lighter desk studies. We prepared lighter desk studies for the four other in- scope platforms. Each included desk-based review and portfolio analysis and interviews with the platform owners. We gathered additional information through other interviews with IFC staff and management over the course of the evaluation. Desk-based review and portfolio analysis. For all seven in-scope platforms, we conducted a desk-based review and portfolio analysis of background documents (for example, project approval documents, monthly operations reports, and quarterly reports) and then conducted a deeper review for the three case study platforms. This review provided evidence to understand the purpose, structure, efficiency, oversight, reporting, and risks of each platform. Case study interviews. We interviewed staff (investment officers, industry specialists, credit and risk officers, environmental and social specialists, blended finance officers, and Anticipated Impact Measurement and Monitoring specialists) who contributed to the design and implementation of projects within the three case study platforms. We conducted 103 interviews that included 54 IFC investment officers, 45 clients or investors (case studies), 3 platform owners, and 1 investor. We also conducted interviews with all clients who consented, which represented 45 out of 53 projects approved in the three case study platforms between FY17 and FY22. An Early-Stage Evaluation of International Finance Corporation Platforms Approach  Appendix A additional project was the subject of interviews for a parallel IEG Project Performance Assessment Report, so we used those interviews as the basis for learning. Interviews for lighter desk studies. On the basis of the initial findings from the three case study platforms, we conducted additional structured interviews with IFC staff leading the four platforms (four interviews with four platform owners: the Fast-Track COVID-19 Facility, the Côte d’Ivoire Housing Program, Private Equity Co-Investment, and the Small Loan Guarantee Program) outside of the three cases to identify common issues and lessons on the platforms approach. This helped us draw inferences about the platforms approach and indicators (such as efficiency gains, oversight, reporting, and risk) to the universe of IFC platforms approved between FY17 and FY22. Interviews with stakeholders that were not platform specific. For deep dives on risk and reporting and monitoring, seven interviews included two risk officers, two corporate portfolio staff, and three reporting team staff. We also conducted interviews with advisers to the executive directors of the IFC Board to understand their views and get input on the oversight, report- ing, and risk management measures. 78 This evaluation uses benchmarking and comparison of case study platforms to provide evidence to help answer the first two evaluation questions. Internal benchmarking of the IFC platform projects against similar nonplatform projects was used to answer evaluation questions 1 and 2, and external comparison was used to help understand the answer to evaluation question 2. Internally, projects for each case study platform were benchmarked against projects approved under the nonplatform IFC approach (stand-alone invest- ment services projects, regardless of their approval process). We selected nonplatform benchmarks with similar objectives, beneficiaries, and indus- tries as platform case studies (table A.2). We compared all platform projects for each of the case study platforms with all nonplatform (benchmark) projects matched to each case study. Selection of the nonplatform projects for benchmarking case study platforms was drawn from all nonplatform IFC investments in the health sector (25 projects) for GHP, all nonplatform IFC investments in financial service providers for BOP (91 projects), and all nonplatform IFC investments in venture capital, private equity, and growth funds for ISC (22 projects). We sought to minimize limitations in the comparisons, recognizing that identical comparators were not possible. For example, BOP and GHP bench- marks were implemented before these two platforms were launched, and the ISC platform finances smaller projects than individual (nonplatform) com- Independent Evaluation Group World Bank Group    79 parators.  ase Study Platforms and Benchmark Characteristics Table A.2. C Characteristics and Selection Criteria Platform Benchmark Base of the Pyramid Project approval fiscal year, number of projects FY21–22, N = 25 FY17–22, N = 88 Responding to COVID-19 crisis by Support access to maintaining access finance for MSMEs Objective to finance for through financial MSMEs through intermediaries intermediaries Responding to crisis, reaching new and Relevance to evaluation subquestions small clients, and engaging clients in (for evaluation question 1) IDA countries and FCS Industry group Financial Institutions Group x x Early-Stage Evaluation of International Finance Corporation Platforms Approach  Appendix A Commercial banking: general, microfinance, and SME finance; microfinance IFC sectors and small business; finance x x companies; noncommercial banking; other nonbank financial institutions Financial service providers focusing Beneficiaries on MSMEs Global Health Platform Project approval fiscal year, number of projects FY21–22, N = 19 FY17–22, N = 24 Increase supply Support of health-care health-care Objective products and product and services service providers Responding to crisis and engaging in Relevance to evaluation subquestions new sectors for phase 1; engaging in (for evaluation question 1) new sectors for phase 2 » Financial Institutions x Group » Manufacturing, Industry group Agribusiness, and x x Services » Disruptive Technology x x and Funds 80 (continued) Characteristics and Selection Criteria Platform Benchmark » Chemicals, finance, and insurance; industrial and consumer products; x IFC sectors textiles, apparel and leather; wholesale and retail trade » Health care x x Businesses addressing medical Beneficiaries supply gap IFC Startup Catalyst Facility Project approval fiscal year, number of projects FY17–22, N = 20 FY17–22, N = 20 Support Support early-stage early-stage Objective start-ups in digital start-ups and technologies beyond Relevance to evaluation subquestions Reaching new and small clients (for evaluation question 1) and new sectors » Disruptive Technology Industry group x x and Funds » Collective investment x x vehicles IFC sectors » Other nonprivate equity x x funds » Venture capital fund x x Independent Evaluation Group World Bank Group    81 Beneficiaries Early-stage or seed-stage start-ups Source: Independent Evaluation Group. Note: FCS = fragile and conflict-affected situations; IDA = International Development Association; IFC = International Finance Corporation; MSMEs = micro, small, and medium enterprises; SMEs = small and medium enterprises. To address the limitations, we applied several checks to confirm the validity of comparisons. These checks examined the validity of comparisons regard- ing the use of IDA and FCS projects, IDA PSW support, regional distribution, country income, investment size, and client type. The checks revealed the following significant differences: » Fourteen IDA PSW supported BOP platform projects (56 percent) versus 12 projects in the selected benchmark projects (14 percent). » Non-IDA PSW benchmarking projects were mostly in East Asia and the Pacific, Latin America and the Caribbean, and South Asia. Only one platform non-IDA PSW project was in East Asia and the Pacific, one in Latin America and the Caribbean, and one in South Asia. » Fifteen percent of ISC platform projects are in IDA countries, whereas 5 percent of selected ISC benchmark projects are in IDA countries. » Forty-eight percent of BOP platform projects are in Africa, but selected BOP benchmark projects have the most projects in East Asia and the Pacific (25 percent). There is no BOP platform project in Europe, but there are 13 projects in this region in the selected benchmark group. Early-Stage Evaluation of International Finance Corporation Platforms Approach  Appendix A » ISC had a project in the Central Asia and Türkiye region, whereas the bench- mark had none. » BOP had a higher proportion of projects in low-income countries than its benchmark. » GHP had a higher proportion of projects in upper-middle-income countries than its benchmark. We mitigated validity risks by reviewing platform documents and project documents for each platform and benchmark project. Furthermore, bench- marks are not portrayed as strict counterfactuals and instead are used to provide reasonable points of comparison. For the internal benchmarking, analysis of oversight and reporting was qualitative and involved review of platform-level Board discussions to understand the Board’s expectation from platforms regarding reporting of individual platforms. This analysis was followed by desk-based review of IFC’s weekly, monthly, and quarterly reporting of platforms to the Board; meetings with advisers to the executive directors; and meetings with IFC staff and management involved in reporting of platforms to the Board. This reporting was then compared with oversight and reporting processes and content for stand-alone (nonplatform) investment projects. Reporting 82 evolved over the evaluation lifespan, so we tried to capture updates. Analysis of efficiency gains and risks involved quantitative analysis. For the efficiency analysis, average preparation time from Concept Note to first disbursement for platform projects was compared with stand-alone benchmark projects to analyze efficiency gains. Comparisons of credit risk ratings for platforms in relation to stand-alone benchmark projects were used to analyze risks. In these latter two contexts, we applied the following statistical tests: 1. For comparison of the average preparation time from Concept Note to first disbursement between platform projects and IFC stand-alone benchmark projects, we used Cohen’s d to measure the effect size for the differences in mean between the two populations (Cohen 1988). Cohen’s d is defined as follows: 2. Cohen’s d = (Group A Mean – Group B Mean) / (pooled standard deviation of groups A and B) 3. The rule of thumb criteria established by Cohen for effect sizes are cat- egorized as small (d = 0.2), medium (d = 0.5), and large (d = 0.8). A large Cohen’s d indicates that the mean difference is large compared with the variability. a. For example, in comparing the difference for the BOP platform between projects processed under delegated authority (transfer of project approv- al authority from the Board to management) and those processed under Independent Evaluation Group World Bank Group    83 absence of objection, the Cohen’s d value was 0.8, corresponding to a large effect size, indicating that delegation was associated with a large effect size in terms of reduced time for processing. b. In comparing the difference in processing time between projects pro- cessed under the ISC platform and projects in the benchmark group, the Cohen’s d value was 1.3, a very large effect size, which indicated that the difference in processing time between ISC projects and benchmark proj- ects was very large. 2. For comparison of proportions between two populations, we used Cohen’s h (Cohen 1988) to characterize the difference between two proportions or probabilities. Cohen’s h is defined as the difference between the arcsine transformations of two proportions. The arcsine transformation is defined as the mathematical operation of taking the inverse sine (arcsin) of the square root of a proportion. 4. It was used to describe the difference between two proportions as small, medium, or large. The rule of thumb criteria established by Cohen are as follows: h = 0.2 is a small difference, h = 0.5 is a medium difference, and h = 0.8 is a large difference. a. For example, in comparing the proportion of BOP projects engaging new clients to the BOP benchmark projects, and in comparing ISC projects engaging new clients to the ISC benchmark projects, the Cohen’s h value for both comparisons of proportions was 0.6, corresponding to a medi- um-size effect. Early-Stage Evaluation of International Finance Corporation Platforms Approach  Appendix A b. In comparing the share of BOP projects engaging clients in IDA countries and FCS to the share of projects in the benchmark, the Cohen’s h value for effect size was 0.4, corresponding to a small effect size. 3. Our deep dive on risk used a comparison of risk between platform projects and IFC stand-alone projects. To supplement interviews, we conducted a desk review of the probability of default and client supervision reports and a portfolio analysis of credit risk, environmental and social risk, and integ- rity risk data for platform subprojects. For its quantitative comparison, we started by formulating a null hypothesis that posits no effect or difference between platforms and stand-alone projects with regard to risk in terms of expected loss to IFC.1 First, we tested for normal distribution of the data. If the data were normally distributed, we used parametric tests to test the hypothesis. If the data were not normally distributed, we used nonpara- metric tests. By applying these tests (t test or chi-square), we assessed the likelihood of obtaining the observed results under the assumption of the null hypothesis. If the probability (p value) of observing such results by chance was below our predetermined significance level (0.10, 0.05, or 0.01), the null hypothesis was rejected, suggesting a statistically signifi- cant finding. We also conducted a qualitative comparison of due diligence between platforms and their benchmarks. 84 As evidence on evaluation question 2, a second external comparator was used to derive lessons about the platforms approach from EBRD (which refers to its platforms as frameworks). EBRD serves as a useful point of reference because even though it focuses on upper- and middle-income countries, it is more advanced than other multilateral development banks in designing and implementing the platforms approach. During consultations, IFC agreed with IEG that EBRD’s investment frameworks provided the best comparator to the IFC platforms approach for the purposes of this evaluation and learning for the future. Such benchmarking is relatively rare and new for IEG. Very few recent IEG evaluations have used other multilateral development banks as comparators for IFC. The recently completed evaluation, International Finance Corporation Additionality in Middle-Income Countries (World Bank 2023a), served as a reference in this respect. Such benchmarking allows IFC to understand and learn from the approaches used by another multilateral development bank. With EBRD’s investment frameworks, we could draw some direct qualitative comparisons of two platforms (BOP and ISC) with similar EBRD frameworks.2 EBRD’s Financial Intermediaries Framework, launched in 2015, is similar to IFC’s BOP. Like BOP, the Financial Intermediaries Framework lends to financial intermediaries that onlend to MSMEs. Both BOP and the Financial Intermediaries Framework have a delegated authority option. New clients in BOP are approved on absence of objection. EBRD’s Early-Stage Innovation Independent Evaluation Group World Bank Group    85 Facility, launched in 2014, and the Venture Capital Investment Program, launched in 2011, are similar to ISC. The Early-Stage Innovation Facility invests in early-stage venture capital funds. The Venture Capital Investment Program provides small direct equity investments in companies needing venture capital. ISC, the Venture Capital Investment Program, and the Early- Stage Innovation Facility all have delegated authority as a standard feature. Because EBRD has not invested significantly in health care, EBRD does not have a suitable comparator for GHP. Table A.3 summarizes similarities and differences between selected IFC platforms and EBRD frameworks.  election of the European Bank for Reconstruction and Table A.3. S Development Frameworks for Comparison IFC Platforms EBRD Investment Frameworks Comparable Size or Investment Size IFC EBRD Commitment or Commitment Platform Framework Similarities Amount Amount FIF lends to financial intermediaries that Investment size: Average onlend to micro, US$12 million investment size: small, and medium to US$17 million €9 million to enterprises €10 million BOP FIF Total Both BOP and FIF commitment: Total commitment: have a delegated US$0.8 billion €750 million authority approval (as of FY23) (as of FY18) Early-Stage Evaluation of International Finance Corporation Platforms Approach  Appendix A option VCIP investment size: €2 million to €15 million for VCIP I and II and less than or equal VCIP provides to €25 million small direct equity for VCIP III; total investments in Investment size: commitment: companies needing US$2 million €500 million venture capital to US$5 million (as of FY22) VCIP ISC ESIF invests in Total ESIF investment ESIF early-stage venture commitment: sizes: less capital funds. US$50 million than or equal to ISC, VCIP, and (as of FY23) €10 million for ESIF all have a ESIF I and less delegated authority than or equal to approval option €8 million to €15 million for ESIF II; total commitment: €300 million (as of FY22) Sources: Independent Evaluation Group EBRD deep dive and platform case studies. Note: BOP = Base of the Pyramid; EBRD = European Bank for Reconstruction and Development; ESIF = Early-Stage Innovation Facility; FIF = Financial Intermediaries Framework; IFC = International Finance Corporation; ISC = IFC Startup Catalyst; VCIP = Venture Capital Investment Program. 86 The comparison between IFC platforms and EBRD frameworks was based on desk-based reviews and interviews with EBRD staff. We compared the processes each of the institutions used to process platform projects. For example, in terms of efficiency gains, we found that EBRD made significant investments to upgrade its information technology systems (Project Monarch) and reengineered procedures and automated processes (Project Christopher) wherever possible to accelerate approval of frameworks. We did not make direct quantitative comparisons of process efficiency between the two institutions. In terms of reporting, we found that both EBRD and IFC provide limited information to their Boards on platform projects. Forward Look Exercise This innovative method used tools of scenario analysis to help IFC incorporate evidence and learning from evaluation questions 1 and 2 into its consideration of whether or how to use platforms in likely future states of the world. The first step was to identify key external and internal factors that are likely to vary in important ways that influence the future context for IFC platforms and their utility. External factors focus on uncertainties about the future state of geopolitics, energy and food availability, climate, and other factors that could influence the circumstances under which IFC seeks Board authorization to develop new platforms. Internal conditions within IFC could also be consid- ered, including its own priorities and understanding between the Board and Independent Evaluation Group World Bank Group    87 management. On the basis of the findings and lessons from the three case study platforms and identification of key factors, our second step was to develop a forward look by considering the likely future states of these internal and external conditions. This process involved constructing simple scenarios. After this, our final step was to derive an understanding of the potential role and contribution of platforms to corporate results and to meet the Board’s and clients’ expectations. Three focus group meetings conducted in January 2024 informed this step. The purpose of the focus group meetings was to gather inputs on the way forward, inform consideration of future IFC platforms, and identify ways to evaluate them. Using an expert facilitator, participants were asked how, in alternate scenarios, platforms could contribute to the IFC 3.0 strategy and to the capital increase targets with regard to (i) extending the delegation of authority, (ii) responding to compounding global crises, and (iii) scaling up to reach new clients and new markets. One focus group consisted of advisers to the executive directors of the IFC Board, and a second was composed of managers and staff from IFC’s Corporate Strategy and Operations management team. A third was composed of IFC industry directors for the three case study platforms. The focus groups involved 20 senior advisers and advisers to the executive directors, 3 IFC industry directors, and 6 members of management and staff from IFC’s Corporate Strategy team. As part of the forward look, principles were identified for future self-evaluations and independent evaluations of individual platforms. Limitations As an early-stage evaluation, we examined early evidence on platforms Early-Stage Evaluation of International Finance Corporation Platforms Approach  Appendix A as an approach rather than focusing on the effectiveness of individual IFC platforms and their development outcomes. We could not measure development outcomes or compare them with what IFC achieved outside of platforms. The direct and intermediate outcomes hypothesized in the program logic and tested in this evaluation are limited to process outcomes (for example, efficiency gains and outreach). In addition, the fact that the base of experience in this evaluation is both limited and diverse among the seven in-scope platforms in some cases affects the generalizability of findings. Although several platforms have objectives of reaching small clients, this evaluation could capture only investment (transaction) size. Client size in terms of assets, sales, or employees is not available universally. Limitations to the case study platform benchmarking exercise were addressed through the use of checks and by not using benchmarks as strict counterfactuals but rather as reasonable points of comparison. IEG’s methodology on new sectors compares the sectors IFC invested in using platform projects with the sectors IFC invested in without platform projects to identify sectors that IFC has only ever invested in via platforms (that is, new sectors). Already implicit in this analysis is a comparison of the sectoral distribution of platform versus nonplatform projects, obviating the need for further benchmarking. Indeed, this approach cannot be used to generate a “new sector” estimate for nonplatform benchmarks. 88 References Cohen, Jacob. 1988. Statistical Power Analysis for the Behavioral Sciences. 2nd ed. Lawrence Erlbaum Associates. IFC (International Finance Corporation). 2022a. “IFC’s Approach to Platforms: An Update—Applying Lessons to Enhance Platform Clarity.” Board Update, IFC. IFC (International Finance Corporation). 2022b. IFC Platforms: Enabling New Business Development at Scale. Approach Paper IFC/R2022-0177, IFC. World Bank. 2023a. International Finance Corporation Additionality in Middle-Income Countries. Independent Evaluation Group. World Bank. World Bank. 2023b. International Finance Corporation Platforms Approach: Addressing Development Challenges at Scale. Approach Paper. Independent Evaluation Group. World Bank. Independent Evaluation Group World Bank Group    89 1 Expected loss is defined as the risk of a missed payment (probability of default) times the loss percentage in such an event (loss given default) multiplied by the amount outstanding at default (exposure at default) for projects involving loan-type instruments only.  2 EBRD originally introduced a platformlike mechanism called multiproduct facilities in the mid-1990s that had a degree of delegation of approval authority from EBRD’s Board to its management. Multiproduct facilities grouped projects and their processing relating to a single client, but they later evolved into broader “investment frameworks,” which grouped projects of a similar nature for multiple clients within a financial envelope approved by the EBRD’s Board. Investment frameworks were primarily a response to the long project periods related to EBRD’s project preparation.  Early-Stage Evaluation of International Finance Corporation Platforms Approach  Appendix A 90 Appendix B. Overview of Platform Detailed Case Studies and Lighter Desk-Based Case Studies This appendix provides an overview of the three detailed case studies carried out for selected focal platforms and the four limited desk-based case studies carried out for the other in-scope platforms. The in-depth case studies ben- efit from specific analysis of mobilization and scale-up, efficiency, oversight and reporting, and risk. Detailed Case Studies Base of the Pyramid Case Study Background, Rationale, and Relevance The Board of Executive Directors of the World Bank Group approved the Base of the Pyramid (BOP) platform on February 4, 2021, as an incremental facility to the Fast-Track COVID-19 Facility (FTCF). The Board approved the International Finance Corporation (IFC) FTCF on March 17, 2020, to provide immediate relief to existing clients and to deliver fast and flexible solutions across sectors and countries dealing with the spread of COVID-19. IFC want- ed to address significant unmet financing needs for clients at BOP, including micro and small enterprises and low-income households, and demand for liquidity was strong from financial service providers focused on serving this segment. The program was designed to enable this market segment to receive immediate liquidity support from their lenders and to provide lon- ger-term funds to support their recovery as their countries emerged from the COVID-19 pandemic and resumed progress toward normal economic growth. The BOP platform was presented as a follow-on to the FTCF because IFC wanted to wait long enough to take an informed view of the financial     91 condition of BOP financial service providers before committing substantial new exposures to this client segment. The platforms approach was adopted to ensure efficient and effective scale-up of lending to this segment, which involved processing a number of small transactions, many of which were in challenging markets that were made more challenging by pandemic-created uncertainties. Platform-level International Development Association (IDA) Private Sector Window (PSW) support was sought where applicable, along with delegated authority (transfer of project approval authority from the Board to management) for processing investments with existing clients. Mobilization and Scale-up As of April 30, 2023, and after two extensions, the BOP platform had committed $521.8 million own account, of which $338 million is in countries that received financial support during the 17th Replenishment of IDA (IDA17) and countries classified as fragile and conflict-affected situations (FCS); 53.9 percent of exposure is in Africa. The platform also mobilized Early-Stage Evaluation of International Finance Corporation Platforms Approach  Appendix B $105 million, of which $85 million is in IDA countries and FCS. IFC also reported that more than half of the portfolio reached women entrepreneurs. Approximately one-third of the BOP projects engaged with new clients (compared with one-quarter for nonplatform benchmark projects). As of April 2023, after a little more than two years of operation, 30 projects have been financed—12 under delegated authority to existing clients and 18 under the streamlined Board absence of objection process. The average Anticipated Impact Measurement and Monitoring (AIMM) score of projects was 54. The ability to onboard new clients in IDA countries with PSW support helps IFC expand to reach a number of new business opportunities that would not have been available otherwise. The platform’s process efficiency (see the Efficiency section in this appendix) and the IDA PSW support enable IFC to do deals in markets where it is challenged by local currency access and where clients need local currency. Furthermore, IDA PSW allows IFC to take higher exposures per client. Efficiency A key goal of the BOP platform was to achieve efficiency in processing BOP investments. However, like all IFC platforms reviewed at the time of this evaluation, no efficiency benchmark was established against which 92 improvements in efficiency could be measured beyond time to approval and to disbursement. Efficiency was considered important to reducing operating costs, improving response time to clients, and delivering a higher number of projects with the same level of human resources. The COVID-19 pandemic added urgency. At the same time, it was recognized that efficiency would not be achieved at the cost of the integrity and rigor of the IFC investment process, including due diligence, credit review, environmental and social (E&S) and other pol- icy considerations, and rigorous decision-making based on all the required inputs. No compromise was evident on the governance of the IFC investment process in terms of decision-making processes and information and report- ing to the relevant stakeholders, including IFC management and the Board. Efficiency gains were achieved primarily in projects with existing clients that could be processed under delegated authority. The Independent Evaluation Group’s analysis showed efficiency gains through lower average time for processing projects. A detailed analysis of the time spent on various stages of the IFC investment process showed that the time savings came mainly from the ability to approve projects at the IFC management level without having to go to the Board. Other sources of efficiency included the early look process, standard mandate letters, stan- dard form of Investment Review Memorandum books, a better coordinated AIMM process between the AIMM and investment teams, more efficient Independent Evaluation Group World Bank Group    93 processing of the IDA PSW support using the platforms approach method- ology, and a streamlined processing format. IFC does not have a process for tracking efficiency, and therefore improvements are hard to quantify. Not all improvements are related to the platforms alone because they originate from broader process improvements, but each can contribute to efficiency under the right conditions. Staff engaged in the platform reported that delegated authority saved four to six weeks of processing time for repeat clients and that standardization of internal processes—client acceptance criteria, AIMM processes, and legal agreements—also helped. A system of pooled first loss under IDA streamlined the concessionality calculations and approval process under the IDA PSW. Interviews with existing clients provided clear feedback that IFC had improved over the years in its efficiency and response time, especially compared with other development finance institutions. At the same time, it was recognized that onboarding and processing smaller clients reduced overall efficiency. The processing costs of such small deals with new clients are very high, which makes these projects financially unattractive to IFC because these costs are spread over a very small income stream. Oversight and Reporting The platforms approach did not require any changes in the reporting requirements at the client level, whereas standard IFC reporting requirements depend on the type of transaction and type of client. In general, the clients did not find the reporting requirements particularly onerous, and many appreciated IFC’s technical assistance with their internal management information systems and reporting capabilities because it helped them to get a better picture of their own businesses. IFC did not Early-Stage Evaluation of International Finance Corporation Platforms Approach  Appendix B consider the additional reporting requirement for delegated authority projects under the monthly operations report to be onerous and complied with it, and the Board did not raise any issues. Interestingly, the Board did not comment on any of the monthly operations reports, which implies that IFC is exercising its delegated authority in line with the Board’s expectations. Broader platform-level reporting is addressed in the cross- cutting report on oversight and governance in appendix C. Reporting is currently under revision regarding scope, coverage, and information technology issues. Risk The BOP platform does not have a material impact on IFC’s corporate risk, given the BOP’s relatively small size. IFC also did not seek any relaxation in credit standards in the context of the BOP platform and continued to process deals in accordance with its normal credit standards and risk management policies and processes. Some risk indicators suggest that BOP’s risks are slightly higher than average because of its focus and clientele. Expected loss—a key indicator of risk—at 1.5 percent exposure at default is higher than for other platforms and compared with benchmark nonplatform proj- ects. By design, the portfolio is concentrated in financial markets and thus 94 lacks diversification across industries. However, the sectoral, geographical, market segment, and other risk man- agement aspects of the BOP platform are subsumed under normal IFC corporate balance sheet risk management processes, and no impact was expected or experienced specifically because of the platform. To the extent that IFC received IDA PSW support for projects processed under the platform as a result, the risk to IFC was reduced, compared with the counterfactu- al scenario in which such projects might have been taken onto the books without such support. The risk levels for projects that were processed with- out IDA PSW support were, on initial review, the same as for similar projects processed outside of the platform. Global Health Platform Background and Rationale The Global Health Platform (GHP) was established in response to the urgent need for health-care resources during the COVID-19 pandemic. The pri- vate sector alone required an estimated $60 billion to meet the immediate demands of COVID-19, and additional resources would be needed for recov- ery efforts after the pandemic to engage the private sector in longer-term strengthening efforts. GHP, launched in July 2020, aimed to provide financ- ing to health-care product manufacturers, suppliers of critical raw materials, and health-care service providers so they could expand capacity for products Independent Evaluation Group World Bank Group    95 and services to be delivered to developing countries. GHP fit into a larger global COVID-19 response and efforts to build resilience after COVID-19. The platform’s objectives include supporting the private sector in meeting urgent COVID-19 needs, increasing health-care product manufacturing and delivery capacity, and enhancing the resilience of devel- oping countries’ health systems by diversifying supply chains. GHP engages with select clients that have the potential to increase regional and local manufacturing. GHP was intended to allow IFC to enhance efficiencies over its nonplatform project processes through rapid response to the pandemic. The platform had a total investment envelope of $4 billion, including invest- ments on IFC’s own account of up to $2 billion and additional investments in the form of B1 and B2 loans of up to $2 billion. GHP gave visibility to new and atypical sectors and smoothed the approval process internally without compromising due diligence and internal scrutiny. Clients and partners were not aware that their financing was through GHP but recognized IFC’s value added to help enhance brand image and increase exposure to investors. Most projects under the platform aligned well with the platform’s objectives, focusing on increasing health-care product capacity and enhancing health-care system resilience. In practice, GHP addressed restructuring and recovery efforts to build resilient systems (rather than relief response to COVID-19). However, its theory of change— its account of how its activities linked to challenges and desirable outcomes—needs to be strengthened. Outcome evidence for GHP is limited. Many GHP projects explicitly men- tion that they will benefit from the market because support will enable the client to increase its market reach (within the country or regionally). Yet in Early-Stage Evaluation of International Finance Corporation Platforms Approach  Appendix B practice, little is known about market outcomes because of limited measure- ment to assess results at project closure. Collaboration with the World Bank improved during COVID-19 but remains limited and has been challenging, as was collaboration with other organizations. Efforts are needed to improve coordination between public and private sectors in health care. Mobilization and Scale-up Findings show that GHP commitments were significant but considerably less than the $4 billion targeted. At the time of this evaluation, $1.4 billion in IFC own-account financing had been channeled through the platform. GHP increased IFC’s health sector commitments by 75 percent over a three-year period, but commitments declined sharply in FY 2023. GHP expected to create strong partnerships to scale up and mobilize additional resources. Mobilization has been limited—only one subproject mobilized additional funds successfully, although the amount mobilized ($604 million) was substantial. Although GHP mobilization was below expectations, projects performed better than benchmarks in the ratio of core mobilization (19 percent for GHP versus 10 percent for benchmarks). 96 Efficiency Efficiency gains have been observed in project processing time and costs, although these savings were modest. Project preparation costs were on average 5 percent lower than benchmarks, whereas staff and consultant time required was on average 7 percent less. Streamlined processes were the main source of these savings, but internal and external challenges sometimes offset these efficiency gains. Oversight and Reporting Oversight and reporting involved regular monthly reports to the Board, but certain key metrics such as production of health-care products, supply chain contributions, and specific developmental impacts were not reported systematically. Reporting was lacking on production or contribution to the reduction of market gaps of health-related products or health services in local or regional markets. Clients were very satisfied with IFC’s responsiveness and support in mobi- lizing institutions. Clients appreciated IFC’s thorough due diligence process and noted that new and repeat clients received similar treatment. All clients felt that the reporting was thorough but appropriate. Financial Risk GHP has a low risk profile because of its focus on large manufacturing Independent Evaluation Group World Bank Group    97 companies in markets in Brazil, China, India, and the Russian Federation. Financial risks are managed through a low risk profile of clients and credit rigor. Expected loss is only 0.3 percent exposure at default, while expected loss for benchmark projects was 0.7 percent. Subprojects face an expected set of economic and sector risks, such as foreign exchange risk and risks arising from stockpiling, regulatory uncertainty, and competition. GHP has substantial geographic concentration, with the five largest country expo- sures constituting 96 percent of total exposure and the two largest ones accounting for 60 percent (China at 31 percent and Brazil at 29 percent). IFC has generally been able to manage these risks. Despite mitigation mea- sures, one of the biggest subprojects realized some identified regulatory risk when a company did not receive government approval for vaccine distribu- tion. As a result, the project did not disburse and was being restructured. Strong sponsors and a well-diversified overall IFC portfolio were the most common mitigants. Riskier smaller subprojects used blended finance to help de-risk projects to an acceptable level. In summary, GHP has contributed to addressing health-care challenges but could improve in efficiency, collaboration, and reporting. International Finance Corporation Startup Catalyst Program Background and Rationale IFC Startup Catalyst (ISC) was initially approved in 2016 with a fund of Early-Stage Evaluation of International Finance Corporation Platforms Approach  Appendix B $30 million to support entrepreneurs and early-stage companies across emerging markets. It aimed to address known funding and knowledge gaps in the early stages of venture capital ecosystems. The platform rationale was to invest in projects with strategic priorities aligned with the general catalyst program: supporting entrepreneurship in nascent markets, contributing to expanding the venture asset class in these markets, and creating employment. The main funding instruments are equity and quasi-equity instruments. As of December 2022, ISC had invested in 19 accelerators, incubators, seed funds, and other similar vehicles and structures (seed-stage funding mechanisms), which then invested in more than 1,200 start-ups across 24 different countries. (These start-ups have reportedly raised $4.5 billion in follow-on financing, even without direct mobilization.) The platform had two extensions: one in June 2020 for an additional $30 million and the most recent in December 2022, bringing the total to $120 million. Of the newly sanctioned $60 million, $48 million came from IFC’s own account, and the remaining $12 million was approved through the IDA PSW. The types of investments that ISC proposed aimed to reduce the emerging digital divide. In addition, the seed-stage funding mechanisms were aligned with IFC’s objective to expand the venture capital portion of IFC’s existing portfolio strategically. The ISC platform proved effective in reaching new 98 clients that IFC would otherwise have no viable means to engage with financially. Mobilization and Scale-up The amount invested in each fund is so small that these investments alone do not make a substantive difference to IFC’s capital increase financing and mobilization targets. Nevertheless, scaling up may be possible if the funds and firms financed through its activities become a pipeline of successful candidates for future IFC investments. In many projects, IFC played a cat- alytic role in bringing other limited partners. ISC does not generate direct mobilization, although the start-up companies it financed reportedly raised $4.5 billion in follow-on financing. ISC proved an effective vehicle to reach new clients, often in hard-to-reach markets. The ISC platform is a nexus of new markets and new clients. First, its clients are entirely new to IFC. All transaction leaders confirmed that the platform’s projects were too small to be approved under IFC’s nonplatform approach (ranging from $1 million to $5 million). In addition, ISC engages only with new fund managers. The ISC platform has virtually no repeat clients because usually, by the time ISC client funds raise their next fund, they have grown in size and are no longer eligible for ISC funding. The platform has also reached clients in IDA countries and FCS. During its first phase, about 13 percent of the financing was allocated to IDA countries and Independent Evaluation Group World Bank Group    99 FCS and grew to 30 percent in its next phase and 35 percent since 2022. Greater exposure in IDA and FCS countries will rely on increasing the use of blended finance. Efficiency Gains The program was designed to disburse funds among seed-stage funding mechanisms across emerging markets. The platform approach was expected to show substantial efficiency gains in preparation time and cost. Delegated authority has contributed significantly toward achieving efficiency gains by reducing preparation times. Transaction leaders of all 19 projects found the time saved by not having to prepare and have each Board paper approved to be of crucial importance in achieving efficiency gains. Overall time and staff savings from delegation are counterbalanced by greater up-front need to provide hand-holding assistance to new fund managers. Even so, the aver- age savings in ISC were 4 percent in preparation cost and 46 percent in staff and consulting time. As with BOP, onboarding and processing smaller clients reduced overall efficiency. The processing costs of very small deals must be spread over a very small income stream. Oversight and Reporting The approval process is the same as for other nonplatform venture capital funds, as are the E&S requirements. Reporting is a concern because of high investment risks and the need for informed decision-making by the Board. Quarterly reports are structured at both the platform and the subproject levels. The Board has also proposed real-time tracking through a dashboard mechanism that will provide real-time information and contain key data for Early-Stage Evaluation of International Finance Corporation Platforms Approach  Appendix B each project. Project Concept Notes report various indicators, such as AIMM scores, E&S ratings, blended finance use, and climate and gender targets. The ISC platform, like other platforms, is expected to follow a standard- ized reporting format. IFC has promised the Board periodic Independent Evaluation Group and Group Internal Audit assessments for all platforms. Financial Risk The ISC risk profile corresponded to a typical financial intermediary trans- action characterized by credit risks of participating banks with a risk rating of FI-3 (IFC 2012). The high risk–reward profile is because of the project’s focus on start-up companies in markets with underdeveloped or no venture capital ecosystems. The subprojects under the ISC are exposed to a signifi- cant level of local currency risk. The risk exposure is related directly to the macroeconomic conditions of the regions to which the subprojects cater. ISC’s approach to investing in venture capital funds aims to alleviate this risk by helping generate exit opportunities for seed-stage funding mecha- nism portfolio companies while helping to originate pipelines for later-stage investors. IDA PSW funds were co-invested for three projects eligible for IDA PSW funding under the second extension of the ISC. None of the transaction leaders reported using the IDA Local Currency Facility. 100 Lighter Desk-Based Case Studies Fast-Track COVID-19 Facility Background and Rationale The FTCF was a crisis response envelope activated quickly in March 2020. It aimed to address the adverse impacts of the COVID-19 pandemic on the private sector across IFC client countries. Funds were made available to real sector and financial institution clients to maintain the cash flows of viable companies. The design of the FTCF was based on the experience of using Global Trade Finance Program for crisis response in 2008–09 and featured full delegation. The FTCF was partially de-risked by IDA PSW support. Its successful full disbursement may be attributed to its design based on two foundations: (i) speedy approval using delegated authority and improved internal processes (early look, standardized AIMM score, and so on) and (ii) careful risk management through the predominant use of existing clients, short tenors, and de-risking by IDA PSW. Overall, the FTCF has shown its effectiveness as an emergency response tool. The platform mandate expired at the end of FY23. Mobilization and Scale-up Independent Evaluation Group World Bank Group    101 The total amount approved was $8 billion, divided among four compo- nents, with initial availability for two years, later extended to three years. As such, FTCF was responsible for two-thirds of all platform financing in the FY17–22 period. It managed to disburse close to 75 percent of approved amounts within two years, with almost full use by the third year. By the end of February 2022, approximately 43 percent of the committed volume had been deployed in IDA17 and FCS countries. The FTCF’s flexibility resulted in a relatively high level of use rate, particularly within the envelopes of the Financial Institutions Response Envelope. Furthermore, the FTCF was responsible for 84 percent of platforms’ direct mobilization, amounting to about 3.7 billion in the FY17–22 period. Efficiency Gains To deploy the FTCF efficiently, IFC streamlined its operating model and internal approval processes without sacrificing its due diligence and de- cision-making standards. Innovations included virtual appraisals, shorter documentation, and streamlined decision-making for lower-risk projects. As a result, FTCF projects in FY20 and FY21 moved from mandate to disburse- ment in 146 median days compared with 318 days for non-FTCF projects during the same period. Oversight and Reporting Investments under each component were to be made under delegated au- thority from the Board, balanced by comprehensive reporting arrangements. Existing clients were expected to benefit from the FTCF, with well-defined Early-Stage Evaluation of International Finance Corporation Platforms Approach  Appendix B exceptions. The reporting format was elaborate and included weekly month- ly, quarterly, and annual reports. The FTCF experience informed the 2022 platforms discussion and design framework. Financial Risks Overall risks from the FTCF to the IFC corporate portfolio were not sub- stantially higher than from nonplatform operations. Many mitigants were in place, including transacting with existing clients in full compliance with IFC standards, short maturities involved in most of the trade-related trans- actions and Working Capital Solutions loans, and credit enhancements provided by IDA PSW. Private Equity Fund Co-Investment Delegated Authority Envelopes Background and Rationale In 2016, the Board approved the model of a co-investment envelope (later called a platform) that allowed IFC to co-invest directly in a company in which a private equity fund—in which IFC had already invested—decided to make an investment. Co-investment envelopes with delegated authority 102 were approved for 16 selected funds, totaling commitments of $284 million. The platform was expanded recently to allow for up to $1 billion in commit- ments. Mobilization and Scale-up The co-investment model allowed IFC to deploy additional capital in strate- gic companies, industries, or geographies, including IDA countries and FCS. This model is of a second-step nature because it follows the initial phase of engaging with selected fund managers with IFC investment. Its benefit lies in scaling up co-investments that diversify the size of companies in IFC’s portfolio and provide IFC access to companies it would otherwise not be able to reach, particularly small and medium enterprises (SMEs) in fragile economies. Commitments totaled $284 million FY17–22, with no significant mobilization. Efficiency Gains The co-investment model created good opportunities for efficiency gains and scaling up in IDA countries and FCS. Higher speed and lower preparation costs resulted from the fact that IFC relied mostly on due diligence and investment decisions by private equity fund managers. Consequently, the average envelope co-investment approval under delegated authority was processed in four to eight weeks, whereas the Independent Evaluation Group World Bank Group    103 absence of objection process for regular equity co-investments generally required three to four months and sometimes up to six months. Additional efficiency gains resulted from the fact that co-investments have lower or no management fees or carried interest. Additional efficiencies could be realized because of the potential for fast- paced replication of the co-investment model. Co-investments currently reach only about 15 percent of the population of private equity funds in which IFC has invested recently, with the overall proportion of only 4 percent of the commitment value of the private equity funds portfolio. Oversight and Reporting IFC follows all the relevant policies and procedures in processing private eq- uity fund co-investments that it follows for nonplatform projects. Regarding the reporting requirements, the private equity fund co-investment approach was approved before the 2022 IFC paper on platforms approach to the Board. Thus, initial reporting parameters were developed on an ad hoc basis within existing reporting mechanisms. Since 2022, the reporting format has fol- lowed the generalized platform reporting parameters. Financial Risks The concept of private equity fund investment and co-investment envelopes seems to produce a more diversified IFC portfolio than could have otherwise been achieved by means of IFC’s traditional direct investments. Early-Stage Evaluation of International Finance Corporation Platforms Approach  Appendix B IFC’s traditional portfolio and that of private equity funds do not overlap much, and thus the risk at the portfolio level is lower, even though equity investments are inherently riskier than loans. Overall, IFC’s growth equity and venture capital portfolio outperforms the relevant benchmark in financial returns. Small Loan Guarantee Program Background and Rationale The Small Loan Guarantee Program (SLGP) consists of unfunded Risk- Sharing Facilities aimed at supporting lending to SMEs in IDA countries and FCS to contribute to financial inclusion, job creation, and bridging the SME finance gap in vulnerable macroeconomic environments. SLGP was dedicated entirely to IDA countries and FCS, with a focus on the subset of PSW-eligible countries and thus the strong development impact. The intended development impact made SLGP an attractive instrument, while pooling of guarantee coverage also plays an essential role. Consequently, the SLGP represents an important lesson learned on where and how to engage the platforms approach. 104 Mobilization and Scale-up SLGP was originally approved in 2018 with a commitment ceiling of a cumu- lative SME portfolio of $333 million, with an IFC risk amount of $166 million supported by a pooled first loss of $50 million provided by the IDA PSW Blended Finance Facility. The program was later extended to a cumulative SME portfolio of $800 million that included an aggregate IFC commitment of $400 million and $120 million in first-loss guarantee provided by the IDA PSW Blended Finance Facility. IFC’s priority was to invest strategically in IDA countries and FCS, where its financing could deliver the most impact on building the capacity of financial sector players to cater to the underserviced SME segment. Of 16 Risk-Sharing Facilities committed and active as of the end of June 2023, 13 were in IDA PSW countries and 11 in FCS countries. Efficiency Gains Efficiency gains under SLGP were impressive and arose from two ma- jor sources: (i) delegation of authority and (ii) process streamlining and standardization of internal processes. Over the life of SLGP, the typical pro- cessing time for a subproject (up to the commitment of funds) was reduced from 181 days to about 101 days. A large part of this gain was attributable to streamlining IFC internal processes, such as its use of standardized doc- umentation and pricing and centralized management. Pooling of guarantee Independent Evaluation Group World Bank Group    105 coverage was also an important efficiency factor. Oversight and Reporting IFC follows all the relevant institutional policies and procedures in process- ing SLGP subprojects that it follows for nonplatform projects. Regarding the reporting requirements, SLGP was approved before the 2022 paper defining IFC’s platform approach. Thus, initial reporting parameters were developed on an ad hoc basis within existing reporting mechanisms. Since 2022, SLGP’s reporting format follows the generalized platform reporting parameters. Financial Risks SME investments are inherently riskier than standard IFC projects, so it could be argued that this platform adds to IFC’s risk profile. Moreover, the riskiness of first-loss guarantees seems to be even higher. Those factors are counterbalanced by the pooled first-loss structure provided by the IDA PSW Blended Finance Facility. A pooled first-loss counter-guarantee from the IDA PSW facility would reimburse IFC for payouts under any of the Risk-Sharing Facilities included under SLGP up to the maximum first-loss risk amount of $50 million. Côte d’Ivoire Housing Program Background and Rationale Early-Stage Evaluation of International Finance Corporation Platforms Approach  Appendix B The Côte d’Ivoire Housing Program, a facility of up to $100 million for supporting affordable housing in Côte d’Ivoire, was approved on May 16, 2019. The first phase of the program consisted of senior loans of up to approximately $45 million equivalent in local currency to two banks in Côte d’Ivoire. The proposed investment was supported by an allocation from the IDA18 IFC–Multilateral Investment Guarantee Agency PSW. The program fit with IDA18 themes and targeted the largest low-income IDA and FCS country in the West African Economic and Monetary Union region. It intended to leverage the IDA PSW to provide much-needed long-term local currency financing. This program was considered crucial for the development of Côte d’Ivoire’s housing market, which would thus support jobs and economic growth. The structure itself was believed to be quite promising because it combined supply and demand sides and was to be complemented by a strong advisory services component. The program was canceled without disbursements in December 2022 because one of the only two participating banks withdrew, citing negative price movements in the market, while the second bank failed to restore com- pliance with IFC’s E&S standards. Lessons from that experience suggest that IFC had given too much weight to the Ivorian government’s enthusiasm to address its affordable housing challenge and that the design of the platform 106 was extremely narrow (one country, one sector, and just two participating clients). The experience also suggested that the Ivorian banking sector’s appetite for developing mortgage financing was overestimated. A broader program with regional coverage and a higher number of participating banks might have been more sustainable. According to IFC, the Ivorian government did not deliver on the development of basic infrastructure (water, electricity, and so on) to service the housing under construction, after an unsuccessful World Bank engagement. This delayed delivery was further affected by the onset of the COVID-19 pandemic. The missing basic infrastructure made the banks hesitant to continue their engagement. Mobilization and Scale-up The Côte d’Ivoire Housing Program failed to disburse or mobilize funds. Replication of the program was foreseen from the start, with the anticipation of developing similar approaches for other countries in Sub-Saharan Africa and outside. However, replication did not occur. Efficiency Gains The program design was typical for IFC financial intermediary financing. The first phase followed the IFC’s standard project preparation procedures and thus would have had no apparent efficiency gains compared with nonplat- form processing. Delegated authority was considered for the second phase so Independent Evaluation Group World Bank Group    107 that additional subprojects under the program would be exempt from pre- paring a project document and circulating it to the Board. The program was dropped early in its implementation, and no savings or gains materialized. Oversight and Reporting The Côte d’Ivoire Housing Program in its initial phase provided for follow- ing all relevant policies and procedures strictly and thus did not differ from nonplatform projects. All approvals for additional subprojects under the pro- gram were planned to be reported to IFC’s Board in the monthly operations report as part of new business approvals. Financial Risks Overall, the risk profile of the Côte d’Ivoire Housing Program corresponded to a typical financial intermediary transaction, characterized by the credit risks of participating banks. The entire program thus was a one-country- one-sector operation with evident potential to concentrate the IFC portfolio geographically and sectorally. An IDA PSW local currency financing elimi- nated currency risks, thus reducing the general risk level. Reference IFC (International Finance Corporation). 2012. “Interpretation Note on Financial Intermediaries.” IFC. Early-Stage Evaluation of International Finance Corporation Platforms Approach  Appendix B 108 Appendix C. Deep Dive Summaries Oversight and Reporting In June 2022, the International Finance Corporation (IFC) agreed with the Board to pilot a new platforms approach and begin to develop a more standardized approach to executing, reporting, and managing platforms with the Board. The primary driver of this shift in business model was based on the belief that the platforms approach could be deployed with greater efficiency, that is, providing faster service to clients at lower cost to IFC, particularly when delegated authority—the transfer of project approval authority from the Board to management—was extended judiciously, when the Board paper preparation and clearance process was reduced, when deal acceptance criteria were defined clearly, and when reporting was standardized and automated. The Board supported this pilot approach to platforms, but it demanded clear analytics and solid controls to ensure that platforms performed as well as or better than nonplatform approaches. Meeting this demand required rethinking the reporting requirements that would enable the Board to track and evaluate the overall success of the platforms approach against the traditional way that IFC has done business for many years. The COVID-19 crisis created the demand for a natural experiment in faster processing to meet crisis demand through the Fast-Track COVID-19 Facility and other new platforms that were initiated under the COVID-19 response umbrella. However, these platforms varied—some were standardized with delegated authority as a central feature, and some were not standardized and included no delegated authority. Platforms had many different reporting approaches. Much of the reporting was simply included in standard Board reports (table C.1), with a special section on commitment volumes under platforms or fast-track facilities. Some platforms had their own monthly reports. Delegated authority was     109 reported separately and included information not found in standard reports. So far, the proliferation of platforms seems to be increasing IFC’s operational complexity and reporting burden. For projects approved under delegated authority, unlike traditional projects and those approved on an absence of objection (AOB) basis, the Board expects additional reporting. The Board has specifically requested reporting on additionality, development impact, Anticipated Impact Measurement and Monitoring scores, risk, environmental and social (E&S) risk ratings, integrity due diligence ratings, any offshore financial center issues, and International Development Association (IDA) Private Sector Window (PSW) usage on each project. In addition, the Board has requested detailed reporting on how platforms and delegated authority are affecting efficiency. However, IFC’s reporting did not satisfy the Board’s request for information on platform additionality, development impact, risks, or efficiency. Reporting Early-Stage Evaluation of International Finance Corporation Platforms Approach  Appendix C was not standardized, and much of what the Board wanted was missing. Regular reports from IFC management to the Board (quarterly and monthly) show commitment volumes (IFC’s own account and core mobilization) with links to project data, platform usage, and share of IFC’s own account across IDA countries and countries classified as fragile and conflict-affected situations. Although IFC recently began to report average Anticipated Impact Measurement and Monitoring scores for individual platforms in its quarterly Board reports, the methodology used for aggregating the scores at the platform level is unclear. Risk-adjusted return on capital is reported on a portfolio basis, not for platforms. Reporting to the Board still does not include credit risk, E&S risk, and integrity risk ratings. IFC reporting on platform efficiency covers only time for processing, without the evidence base to calculate project costs or profitability. IFC also does not report on indicators (such as cost-to-income ratio) on efficiency at the platform level. Moreover, IFC does not have a robust methodology for collecting data related to efficiency by region, department, or platform or for tracking sources of efficiency improvements. 110  tandard Reports Received by the Board on Platforms as of Table C.1. S June 2023 Frequency Reporting Channel Description » After initial investment review, » MOR new item before commitment (via INOP and BOS) » MOR new item in INOP As projects are » + Advanced entry of » MOR new item in BOS approved (ex ante) subprojects in MOR » Provides executive directors » + Article 3 notifications with time to comment by subproject or object before IFC commitment » Includes a compiled list of » MOR weekly fact sheet, FTCF projects with MOR update on COVID-19 Weekly new items submitted the Fast-Track Facility prior week, plus a summary (via BOS and INOP) of the facility use » Summary of delegated » Delegated authority monthly Monthly frameworks use, including report (via INOP) FTCF » + Dedicated section to the FTCF in quarterly report provides comprehensive view » IFC operations report to Quarterly of platform facility’s use the Board (IOR via BOS) » + Also included a summary use of other delegated authority frameworks Independent Evaluation Group World Bank Group    111 » + Dedicated section in quarter 4 report provides comprehensive view of FTCF » IFC operations report to use with annual retrospective Annual the Board (IOR via BOS) » + A comprehensive list of projects under other delegated frameworks is also included » Review of subproject » IEG and GIA assessments Periodic adherence to IFC policy at subproject level and procedure Source: Independent Evaluation Group review of IFC reporting. Note: BOS = Board Operations System; FTCF = Fast-Track COVID-19 Facility; GIA = Group Internal Audit; IEG = Independent Evaluation Group; IFC = International Finance Corporation; INOP = IFC New Operations Portal; IOR = internal operations report; MOR = monthly operations report; + = in addition. The current IFC reporting architecture is not yet up to the task of preparing systematic analysis of platforms that meet the Board requirements, but this can be fixed easily in many cases. Platform reports lack a common format that would enable more regular, standard, and complete reporting by platform. IFC and the Board have an opportunity to assess how various platform approaches have performed against traditional approaches. By tracking and analyzing empirical evidence, more can be learned about the efficiency and financial results of these different models, rooted in agreement on what reporting the Board requires to govern IFC platforms. To delegate authority more effectively, IFC and the Board need to agree on new reporting frameworks that will enable the Board to monitor aggregate results more effectively and see clearly what is happening in the IFC portfolio. This is required for the Board to govern IFC responsibly but should also help IFC improve efficiency and impact in a more material way over time. Early-Stage Evaluation of International Finance Corporation Platforms Approach  Appendix C IFC and the Board need to answer five key questions related to platforms: » Are platforms more efficient? » Are platforms more or less risky than nonplatform approaches? » Are platforms better at applying IDA PSW support? » Do the financial performance and developmental performance of projects differ depending on how they are processed and approved (for example, full Board, streamlined AOB, or delegated authority)? » Can lessons from IFC’s various platform pilots be generalized and applied more broadly to IFC operations to improve efficiency, additionality, and im- pact? European Bank for Reconstruction and Development Investment Frameworks: A Comparison IFC and the European Bank for Reconstruction and Development (EBRD) are similar organizations that both invest in projects that support private sector development in emerging and less developed markets. However, 112 EBRD’s focus is regional versus IFC’s global reach. EBRD’s span of country per capita incomes is wide, like IFC’s, but it operates mainly with middle- income countries, whereas IFC is increasing its efforts in the least developed countries. EBRD’s shareholder base is predominantly European, and European Union countries hold a majority, whereas IFC’s shareholders involve constituencies from around the world. EBRD’s frameworks evolved over time. EBRD first introduced the concept of multiproduct facilities in the mid-1990s—and with it a degree of delegated approval to management. These soon evolved into the broader idea of investment frameworks. Multiproduct facilities aimed to bring together under one roof the standardization of projects and procedures relating to the same client, while frameworks did the same for projects of a similar nature, each within a financial envelope approved by the EBRD’s Board. They were primarily a response to the fact that the project preparation burden faced by clients and the EBRD management, staff, and Board was intensive and resulted in long project gestation periods. It was also recognized that most EBRD projects were small and took up as many resources as larger investments. The incentives to pursue projects in smaller and more difficult countries, where projects were mostly of a small size, were lessened by this fact, and scaling up was made more difficult. Pooling efforts on legal documentation, environmental assessments, and other reviews for a set of such projects was seen as an efficient way of managing these issues by Independent Evaluation Group World Bank Group    113 exploiting economies of scale. Investment frameworks are built on the wider notion of standardization of products rather than those offered by the same client. For a small multilateral development bank such as EBRD, frameworks provided an important lever to scale up its business volume and grow its portfolio. Business volume doubled from the mid-1990s to the early to mid-2000s and again from then to the mid- to late 2010s, by which time it had reached an annual rate of more than €10 billion ($11 billion), a scale not dissimilar to that of IFC. Currently, approximately 60 percent of EBRD’s investment operations (about 240 projects per year) are conducted under frameworks— a substantial volume of small projects that together constitute less than 15 percent of its financing volume. Frameworks allow EBRD to pursue a series of standardized or similar projects in an efficient way without compromising the normal credit, devel- opment impact, or other standards and assessments associated with regular transactions. EBRD management’s arguments in favor of frameworks cov- ered several areas: » Reduced overhead costs—a great advantage for smaller projects » Enhanced efficiency of smaller transactions through delegation » Increased clarity of purpose, better strategic planning, and more coherent approaches to sector challenges, as well as links with country strategies » Increased visibility, awareness, and understanding of EBRD activities, with scope for positive demonstration effects and potential knowledge sharing across countries Early-Stage Evaluation of International Finance Corporation Platforms Approach  Appendix C » Dedicated structures in niche areas, which support specialist skills and knowledge transfer that improve talent acquisition and retention and moti- vate staff » Efficiency in mobilizing donor funds for a set of similar projects or projects that fit themes attractive to donors » Greater leverage for strengthening policy engagements and regulatory, insti- tutional, and legal reforms IFC’s approach to delegation of authority on a platform-by-platform basis contrasts with EBRD’s more blanket approach of applying delegation to all noncontroversial investment framework projects below a certain value. The EBRD definition of delegation of authority is similar to IFC’s but is applied differently. Within each investment framework (EBRD’s equivalent of platforms), the EBRD Board delegates authority to management for all noncontroversial projects of up to €25 million with no distinction between new and existing clients. EBRD does not have approval on an AOB. In its June 2022 Approach Paper, IFC Platforms: Enabling New Business Development at Scale, IFC established a different indicative threshold from EBRD for platform projects under delegated authority—up to $25 million of IFC own-account finance for new clients and up to $50 million for existing 114 clients (IFC 2022). Some IFC platforms—IFC Startup Catalyst (ISC) and the Small Loan Guarantee Program—are fully delegated because of small project size. Other IFC platforms—for example, Base of the Pyramid (BOP)—have delegation of authority for existing clients and AOB for new clients. Delegated approval authority under EBRD’s investment frameworks gen- erates important efficiency gains. Estimates of resource savings from delegation are uncertain, though in EBRD are widely believed to amount to at least two to three weeks of staff time saved per project. » The benefits from delegation are especially significant in the context of fast-moving, time-sensitive, commercially oriented projects, such as private equity deals, co-investments, and bond placements. » Efficiencies from delegation are maximized and governance is improved by minimizing the scope for Board intervention on delegated projects. » The Board needs good summary project information on delegated projects that meets its main concerns and is made available promptly after manage- ment approval. » Restrictions, indicative or otherwise, are not applied to EBRD frameworks. The key considerations are demand for EBRD services and ensuring that del- egated projects do not conflict with agreed policy directions or risk appetite and keep within EBRD’s Board-agreed headroom. Independent Evaluation Group World Bank Group    115 » Mechanisms to identify delegated projects that might be escalated for Board approval should be considered, such as EBRD’s “novel and contentious” cat- egorization. Criteria should be agreed as far as possible in advance, with the ultimate decision to escalate left to management’s judgment. » No distinction between existing and new clients is necessary, given strong due diligence requirements on all projects under EBRD frameworks. » Care should be taken not to water down project due diligence because of del- egation. Informal evidence at EBRD over more than five years of experience suggests that this has not been the case. Direct efficiency savings and productivity improvements from EBRD’s investment frameworks are small in the broader context, in which projects normally take many months to come to fruition. Additional internal pro- cess reengineering can optimize efficiency. Significant initiatives at EBRD have helped streamline processes but cloud the extent to which investment framework structures amplify the gains. EBRD invested in Project Monarch to simplify its project processing and Project Christopher to automate ele- ments of project processing. EBRD frameworks facilitated scaling up volumes by having a ready-made and familiar structure in place with clearly defined parameters, together with a track record of deploying funds for a given purpose, already agreed with the Board. However, as they scale up, they risk becoming unwieldy and opaque and lose their value as direct simple structures. A proliferation of EBRD’s investment frameworks may become difficult to manage, and the Board may voice concerns as the number of delegated projects under differ- ent headings grows. Early-Stage Evaluation of International Finance Corporation Platforms Approach  Appendix C Frameworks’ design should give prominence to their theory of change, espe- cially the impact at the market or sector level, and to well-specified results frameworks. Targets should be matched to the framework objectives. Frameworks have not added significant risk to EBRD’s overall portfolio. Framework financial envelopes have been small in relation to EBRD balance sheets. With due diligence as robust as for nonframework projects, they pose no obvious additional risks. Lessons from European Bank for Reconstruction and Development Frameworks Lessons include the following: » EBRD frameworks add value by providing a coherent and strategic approach to a set of projects targeted on a clear development challenge. They offer some advantages in the use of donor funds and particularly for integrating investments with policy reform work. » EBRD frameworks offer efficiency gains, but their extent is hard to measure. Delegated authority under frameworks generates important efficiency gains, which can increase activity volumes and incentivize the pursuit of smaller 116 deals. Frameworks have facilitated a scale-up of project volume. » Frameworks risk becoming unwieldy and opaque as they increase in size and extend their reach. A proliferation of frameworks may become difficult for the EBRD’s Board to oversee, and the Board may voice concerns as the num- ber of delegated projects grows. » Frameworks’ design should give prominence to their theories of change, es- pecially the impact at the market or sector level, and to well-specified results frameworks. Ex ante impact targets and expected results need to be defined at the framework level. (Unlike IFC platforms, EBRD frameworks do not have the equivalent of the platform approach document, which was discussed at the World Bank Group Board of Executive Directors in June 2022.) » Framework reporting commitments, such as annual reviews, and their con- tents should be agreed with the Board up front and adhered to accordingly. Periodic evaluation is also important. » Framework financial envelopes are small in relation to EBRD’s balance sheets, and with due diligence as robust as for nonframework projects, frame- works per se pose no obvious additional risks. Platform Risk Main Risk Concepts The following key concepts are referred to in the platform risk analysis: » Probability of default. The likelihood that a client will fail to pay its obliga- Independent Evaluation Group World Bank Group    117 tions to IFC is expressed as the probability of default. This key credit quality consideration for loan-type projects is assessed under IFC’s new Investment Risk Platform methodology. » Loss given default. Loss given default is the estimated share of the amount of assets IFC loses when a client defaults and is expressed as a percentage through the facility risk rating. » Expected loss. Expected loss is the sum of the values of all possible losses multiplied by the probability of that loss occurring. » Credit risk ratings (CRRs). Equity projects rely on the CRR framework, which is a different rating system that is older and less empirically based than the new Investment Risk Platform system that IFC now uses for debt instru- ments. The CRR scale ranges from 1 (lowest risk) to 7 (highest risk, equivalent to default). Platform coverage. Platform projects are projects that fall under the fol- lowing platforms approved by the Board during FY 2017–22: BOP, the Global Health Platform (GHP), ISC, the Fast-Track COVID-19 Facility, the Côte d’Ivoire Housing Program, the Small Loan Guarantee Program, and Private Equity Co-Investment. Case study platforms in this analysis refer to the three platforms for which the Independent Evaluation Group conducted de- tailed case studies as part of this evaluation: BOP, GHP, and ISC. Key Findings from Data: Risk Analysis, FY17–22 Platform projects overall have a lower expected risk of defaulting compared Early-Stage Evaluation of International Finance Corporation Platforms Approach  Appendix C with the rest of the IFC portfolio (figure C.1), but this varies by platform. For example, the BOP platform was designed specifically to take more risks with smaller financial institutions that reached BOP in IDA and other more difficult markets with three-year working capital finance, while GHP was designed to provide long-term finance to drive production of COVID-19 vac- cine and personal protective equipment at scale to address supply shortages in emerging markets. Thus, the risk profile of these platforms was different by design, and our findings are consistent with this difference in design. 118  iskiness of Platforms Versus the Rest of the International Figure C.1. R Finance Corporation Portfolio 1.80 1.60 0.02 1.40 0.02 1.20 1.00 0.02 0.80 1.51 1.25 0.03 0.60 0.03 0.03 0.87 0.40 0.51 0.57 0.20 0.42 0.00 Sources: IFC Business Intelligence reports; IFC Investment Risk Platform (credit ratings). Note: FIG = Financial Institutions Group; IDA = International Development Association; IFC = International Finance Corporation; MAS = Manufacturing, Agribusiness, and Services; PSW = Private Sector Window. Independent Evaluation Group World Bank Group    119 Expected losses are smaller for platform projects, even when factoring out the effect of IDA PSW support, but differences among platforms exist. Overall, platforms are characterized by an expected loss of about 0.51 percent of the total exposure at default compared with more than 1.25 percent for the rest of the IFC portfolio. The median size of expected loss is $121,000 for the platform category but is higher for the rest of the IFC portfolio at $145,000. Platforms made greater use of the IDA PSW than nonplatform projects and delivered a larger percentage of projects to IDA countries, especially some specific platforms. IDA PSW support improves the risk profile of covered projects. However, platforms that use the IDA PSW extensively, such as BOP, would see a significant deterioration in their risk profile if IDA PSW support were removed. Looking only at projects with active IDA support, the expected loss increases to 3.17 percent for platform projects (from 0.27 percent) compared with 1.76 percent for the rest of IFC (from 0.13 percent). The platforms approach does not have a different sovereign risk component from the rest of IFC’s portfolio. The median foreign currency sovereign rat- ing for platform projects in IDA countries and countries classified as fragile and conflict-affected situations is CR-10, the same as the rest of IFC. Equally, the median rating for non-IDA and countries classified as fragile and con- flict-affected situations is CR-6 for both platforms and the rest of IFC. Platforms are not currently affecting IFC’s country risk concentration or industry or sector concentrations. However, individual platforms exhibit Early-Stage Evaluation of International Finance Corporation Platforms Approach  Appendix C both country and industry concentrations by design, and therefore, if IFC scales up the platforms approach, concentrations must be monitored carefully. Concentration is significant in country exposure in some platforms. In GHP, the five largest country exposures in committed amounts account for 97 percent of total exposure. Equally, the top five exposures in the BOP platform account for 64 percent of total commitments. Some platforms also have significant industry concentration. For example, BOP projects are targeted exclusively to the Financial Markets industry group, while ISC investments are made only in the Disruptive Technologies and Funds industry group. The platforms approach has a slightly better integrity risk compared with the rest of the IFC portfolio, but individual platforms have very diverse integrity risk profiles. The risk that equity investments pose under the platforms approach is sim- ilar to that posed under the nonplatform approach, but individual platforms are characterized by higher risk. Platform projects are rated in line with the rest of IFC projects, with a median rating of 3A for platforms and the rest of IFC. The case study platform ISC is by design much riskier than the funds benchmarking sample. The median CRR for ISC is 3B, whereas the funds benchmarking sample has a median CRR of 2B. 120 Platforms have a slightly better average environmental and social risk rating (ESRR), but some ESRRs are missing. Case study platforms use intermediary jurisdiction less frequently, but if used, the expected loss is higher; however, differences between individual platforms exist. Less than one-third of case study platform projects use intermediary jurisdiction compared with more than half of benchmarking projects. Expected loss is larger if intermediary jurisdiction is used. For BOP projects with intermediary jurisdiction, expected loss is 1.8 percent of exposure at default, but it is only 0.4 percent of exposure at default if no intermediary jurisdiction is used. Equally, for GHP projects with intermediary jurisdiction, expected loss is 0.3 percent compared with 0.2 percent without it. Investments in new clients versus existing clients are similar between the platforms approach and the nonplatform approach; risk assessment depends on platform type. Risks to IFC’s balance sheet are higher when making investments to new clients under GHP projects. Equally, for BOP projects, expected loss is also smaller when making loan investments to existing clients (that is, expected loss of 1.3 percent compared with 1.9 percent for new clients). Platform approvals through delegation and AOB share risk characteristics (table C.2), while the regular procedure tends to approve less risky projects. Independent Evaluation Group World Bank Group    121  o Clear Pattern of Riskier Projects from Different Approval Table C.2. N Types Regular Procedure AOB Delegated Authority Share of Share of Share of Platform EAD (%) (no.) EAD (%) (no.) EAD (%) (no.) BOP n.a. 0 1.8 14 0.5 7 BOP 0.3 1 1.5 84 n.a. 0 benchmark GHP 0.7 3 0.3 11 n.a. 0 GHP n.a. 0 0.7 15 n.a. 0 benchmark Source: Independent Evaluation Group. Early-Stage Evaluation of International Finance Corporation Platforms Approach  Appendix C Note: AOB = absence of objection; BOP = Base of the Pyramid; EAD = exposure at default; GHP = Global Health Platform; n.a. = not applicable. Supplemental Findings on Risk from FY23 Data This section analyzes projects approved in FY23 compared with projects approved in the FY17–22 period: » IDA PSW use has increased among platforms and the rest of IFC for projects approved in FY23 compared with previous periods. » Risk of default has increased slightly among some platform projects but de- creased in the rest of the IFC portfolio. » Platform projects approved in FY23 are riskier compared with previous peri- ods because expected loss is higher for new projects. Expected loss in terms of exposure at default has increased to 0.73 percent from 0.51 percent in the previous FY17–22 period. At the same time, the rest of IFC portfolio’s expect- ed loss rates improved to 0.57 percent from 1.25 percent. » Risk from sovereigns to platform projects is higher for new FY23 approvals. » Country concentration remains stable in committed amounts, but the num- ber of projects in top five countries among platforms increased slightly. 122 » The ESRR system will be replaced, helping to explain the large number of unassigned ESRRs. » Trends of differences in expected loss between existing and new clients for FY23 approvals were similar to previous periods, with a deterioration in risk for BOP projects to existing clients. » Projects approved in FY23 under delegated authority tend to be lower-risk projects compared with approvals through AOB. General Observations The following are some of the general observations from platform risk anal- ysis: » Data quality and consistency should be improved at the platform level and the rest of IFC. A significant share of all projects is characterized by some missing indicators and data points, which limits the possibility of assessing risks fully for individual projects. » Consistency of country ratings should be improved. Some discretion appears to be used in assigning a foreign currency sovereign rating to each project. Country risk should be the same for all projects located in any given country. One way of improving data quality on sovereign risk could be to use the sovereign ratings of one or all of the three largest credit rating agencies— Independent Evaluation Group World Bank Group    123 Moody’s, S&P Global (formerly Standard & Poor’s), and Fitch Ratings—as a reference. » Why approximately 50 percent of all IFC projects have a similar loss expec- tation is unclear. Astonishingly, about 50 percent of all IFC projects, when aggregated, are characterized by a loss given default of 35 percent (midpoint) because they are rated with a facility rating of G. It is unclear why such a large share of projects has the same loss, given default expectation. Due Diligence Platform projects are subject to almost the same up-front due diligence as IFC benchmark projects, with some streamlining. The Independent Evaluation Group’s benchmarking analysis (table C.3) showed mostly similar due diligence processes. For the three case studies, the Investment Review Memorandum process is the same for GHP, with minor customi- zation for BOP and ISC. The client supervision report adheres to the same standards for GHP and BOP, whereas ISC reporting has a 12- to 24-month initial delay for incubation. E&S reporting is the same as for benchmark projects for new clients in BOP and GHP. For existing clients, BOP and GHP platform projects must meet E&S criteria. E&S reporting is the same for ISC and its benchmark. Early-Stage Evaluation of International Finance Corporation Platforms Approach  Appendix C 124  ront-End Due Diligence Process for Case Study Platforms Versus Benchmarks Table C.3. F Due Base of the IFC Startup Global Health Diligence Base of the Pyramid IFC Startup Catalyst Global Health Platform Process Pyramid Benchmark Catalyst Benchmark Platform Benchmark Concept Same as for other Standard Same Same Standard Same review venture capital funds Projects follow Investment Review all codified IFC Follows all Memorandum: now policies and codified FIG uses template like procedures. No processes but nonplatform projects; Follows all IFC standardization uses standardized under 2022 extension, procedures; because of Same but less Investment AIMM ratings, subprojects receive Investment Review investments standardized; Same; adheres to all review deal acceptance specific AIMM score; Memorandum heterogeneity; no pooling for IFC standards process terms, term sheets offshore centers and slightly selected projects blended finance and covenants, tax due diligence, more customized expedited through legal agreements, E&S risk, and integrity than for platform streamlined and IDA PSW due diligence AIMM scores and processing follow standard IFC Investment Review procedure Memorandum template (continued) Independent Evaluation Group World Bank Group    125 126 Early-Stage Evaluation of International Finance Corporation Platforms Approach  Appendix C Due Base of the IFC Startup Global Health Diligence Base of the Pyramid IFC Startup Catalyst Global Health Platform Process Pyramid Benchmark Catalyst Benchmark Platform Benchmark Adheres to the Because of funds’ standardized client incubator nature, little supervision reports information available and portfolio review in first 12–24 months; Similar, but processes; equity Same as platform Client Adheres to Adheres to once financial results nonplatform investments meet for both loans and supervision all standard all standard available, reported to projects involve all IFC health equity; adheres to report procedures procedures the Board at market less incubation industry equity all IFC standards values through the requirements; monthly operations AIMM reporting report missing from client supervision report For new clients, For new clients, Standard; governed Same as for all FIG Began with E&S E&S process E&S process by IFC’s policies and E&S projects; intensity reporting; added gen- Same; follows is the same as is the same as procedures based reporting based on E&S der advisory support all IFC procedures for nonplatform for nonplatform on risks for fund managers projects projects E&S risks Source: Independent Evaluation Group case studies and benchmarking analysis. Note: AIMM = Anticipated Impact Measurement and Monitoring; E&S = environmental and social; FIG = Financial Institutions Group; IDA = International Development Association; IFC = International Finance Corporation; PSW = Private Sector Window. Platform Efficiency: Reflections Based on Investment Banking Practices Efficiency gains currently are not reported at the platform level, and IFC does not have a robust methodology for collecting data related to efficiency by region, department, or platform or for tracking sources of efficiency improvements. Measuring, tracking, and reporting on efficiency needs to cover the speed of delivery to clients and the cost-to-income effects of platforms on IFC’s financial statements. This analysis needs to include the cost reductions from process efficiency improvements and the effects of changes in project size and duration, how these interact with direct and indirect costs, and how these together affect break-even project economics and overall IFC profitability. The current reporting systems are unable to provide data that support a full analysis of efficiency. The lack of data sharply constrains insight into the sources of efficiency improvements created by platforms. Data are lacking to compare the efficiency gains of procedural changes such as delegating authority, streamlining processes, sharpening deal acceptance criteria, stan- dardizing legal agreements, and outsourcing selected processes within and outside of platforms. Independent Evaluation Group World Bank Group    127 The IFC key performance indicators include three efficiency measures: » Budget coverage ratio (item 23: target for FY23: less than 95 percent). This indicator is defined as administrative budget or loan and debt security interest, and fees, net. The budget coverage ratio is basically IFC’s cost of operations divided by the expected net cash flow from IFC’s loan and bond portfolios. It is a conceptually diluted cost-to-income ratio. The idea is that IFC should be cash flow positive before unrealized gains or losses on its direct and private equity investment portfolio. To be usable, this ratio needs to be decomposed to the regional, departmental, and platform levels, with specific budget coverage ratio targets for each, while exempting income or losses from equity holdings but not the costs associated with those equity holdings and incorporating the costs of IFC’s non–donor-funded advisory services operations. Besides being operationally difficult to allocate such tar- gets credibly to business lines, it also raises significant cost allocation issues because only interest revenue–generating units can take responsibility for the denominator, while all cost centers are responsible for the numerator. » Savings through efficiency gains and economies of scale (item 24: target for FY23: greater than or equal to $60 million). This indicator is defined as “gains” derived from the following: » Total resources redeployment or trade-offs across functions (US dollars, millions) » Cost avoidance from implementation of new policies, procedures, real estate strategies, or financial practices (US dollars, millions) » Productivity and economies of scale gained through process simplifi- Early-Stage Evaluation of International Finance Corporation Platforms Approach  Appendix C cation and optimization initiatives, reskilling, and workforce planning (output per full-time employee) » Mandate to disbursement median days (item 25: target for FY23: 229 days). Mandate to disbursement can be tracked meaningfully at the platform level, but this key performance indicator has some issues. First, it measures elapsed time and not efficiency. It is a rough gauge of IFC’s client service— for example, if it targets meeting client needs in 9–12 months (or in elapsed workdays). Second, both the mandate date and the commitment date can be subject to arbitrary influence. A mandate letter can be delayed or revised, and a commitment date can be moved forward with challenging disbursement conditions, weakening the value of this key performance indicator. Third, many factors can affect the time between mandate and commitment that are not under the control of IFC or its clients, such as government approvals, restrictive regulations, complex legal issues, local economic problems, debt crises, local currency devaluations, and others. Thus, it can be difficult to track this key performance indicator fairly and attribute responsibility justly. The current IFC systems confuse financial efficiency with elapsed time from mandate to commitment. They do not account for changes in duration and project size on risk-adjusted return on capital and financial efficiency. IFC’s time recording system and disciplines are not detailed enough to provide 128 useful data at the project level, and IFC’s cost allocation system does not allocate overhead in a way that encourages appropriate marginal deci- sion-making. Many commercial businesses have addressed these challenges successfully, and solutions are available. Currently, the distinction between sources of efficiencies and whether they are unique to the platform approach is unclear. Typically, efficiency can come from six interrelated sources, and none of these is inherently depen- dent on platforms: » Work elimination: IFC stops engaging in activities that do not add value. » Process streamlining: IFC reduces unnecessary work steps and eliminates redundancy. » Delegation of authority or decentralization: IFC uses less expensive staff- ing or fewer people to carry out key functions, including approvals, or uses resources that are closer to clients and thus more efficient at client delivery, which also relates to having the correct leverage structure in the organization design with a span of control appropriate to the risks being managed. » Automation: IFC uses workflow software and automated reporting often, increasingly using artificial intelligence. » Applying decision rules or automating decisions: IFC uses deal acceptance Independent Evaluation Group World Bank Group    129 criteria or risk-based approval approaches—that is, existing IFC clients need less processing than new IFC clients, standardized products require less processing than tailored products, and so on; some decisions and much re- porting can be fully automated. » Balancing organizational workloads: IFC expands or contracts spans of control and approval hierarchies to improve efficiencies and eliminate bottle- necks, using cheaper labor wherever possible (leverage), using flexible work to shift resources to meet peak demand, adapting employment when there is no demand, cross-training people so they can move with peak workflows on a more flexible basis, and more. Automation and workflow software can make all the other programs work more effectively, help track individual produc- tivity, and help with time and cost allocations and efficiency tracking. Firms that are serious about efficient operations use technology to track everything they do. Using these sources of efficiency successfully requires the ability to mea- sure (and model) how each one affects labor use (about 50 percent of IFC costs) and both fixed costs and capital use. Reaching this level of under- standing and control requires a deep understanding of where individuals spend time and effort today and how processes, reporting, technology, and capital use changes will affect this, and what this will do to efficiency and costs. Measuring scale effects requires understanding how transaction costs change with volume, if at all. IFC’s discussions about platform efficiency are not informed by a careful examination of the impact that project tenors and size have on the break- Early-Stage Evaluation of International Finance Corporation Platforms Approach  Appendix C even point of projects and platforms. IFC has an intensive investment review process that for any given project takes months of elapsed time and many full-time equivalent months of investment review work, requiring efforts from multiple departments: Investment, Equity, Anticipated Impact Measurement and Monitoring, Credit, Insurance, E&S, Integrity Due Diligence, Treasury, Blended Finance, and Legal. Therefore, using the right analytic framework to look at efficiency is vital. Distinguishing between projects and platforms with a favorable cost-to- income ratio and those that reduced elapsed time to approve projects is important. If platform projects are smaller, shorter in duration, or riskier, recognizing their efficiency impact is crucial. Reference IFC (International Finance Corporation). 2022. IFC Platforms: Enabling New Business Development at Scale. Approach Paper IFC/R2022-0177, IFC. 130 The World Bank 1818 H Street NW Washington, DC 20433