63686 World Bank Group Cooperation Evidence and Lessons from IEG Evaluations 11 World Bank Group Cooperation Evidence and Lessons from IEG Evaluations Evaluation Brief 11 2010 The World Bank http://www.worldbank.org/ieg Washington, D.C. ©2010 Independent Evaluation Group Communications, Learning, and Strategy The World Bank 1818 H Street, NW Washington, DC 20433 E-mail: ieg@worldbank.org Telephone: 202-458-4487 Fax: 202-522-3125 http://www.worldbank.org/ieg All rights reserved This Evaluation Brief is a product of the staff of the Independent Evaluation Group (IEG) of the World Bank. The findings, in- terpretations, and conclusions expressed here do not necessarily reflect the views of the Executive Directors of the World Bank or the governments they represent. The World Bank does not guarantee the accuracy of the data included in this work. The boundaries, colors, denomina- tions, and other information shown on any map in this work do not imply any judgment on the part of the World Bank or IEG concerning the legal status of any territory or the endorsement or acceptance of such boundaries. Rights and Permissions The material in this publication is copyrighted. Copying and/or transmitting portions or all of this work without permission may be a violation of applicable law. IEG encourages the dissemination of its work and will normally grant permission to re- produce portions of the work promptly. For permission to photocopy or reprint any part of this work, please send a request with complete information to ieg@worldbank.org. ISBN-13: 978-1-60244-137-8 ISBN-10: 1-60244-137-5 Contents v Abbreviations vii Preface ix Acknowledgments xi Summary 1 I. Introduction 2 II. IEG Evaluation Evidence on WBG Cooperation 2 Country Strategies 4 Sectoral and Thematic Evaluations 6 Products and Programs 8 III. Perspectives of CODE, Clients, and Others 8 Views from CODE 9 Clients and Stakeholders 9 IV. Staff Perspectives and Incentives 11 V. Cooperation and Results 13 VI. Conclusions and Suggestions 17 References Abbreviations CAE Country Assistance Evaluation CAS Country Assistance Strategy CIR Country Impact Review CODE Committee on Development Effectiveness FIAS Foreign Investment Advisory Service IBRD International Bank for Reconstruction and Development IDA International Development Association IEG Independent Evaluation Group IFC International Finance Corporation MIC Middle-income country MIGA Multilateral Investment Guarantee Agency PEP-ECA Private Enterprise Partnership for Europe and Central Asia WBG World Bank Group v Preface The turmoil in world financial markets and the tion can translate into improved results for Bank worsening growth prospects underline the Group clients in a variety of circumstances. continuing relevance and contribution of World Second, lack of cooperation can reduce the Bank Group (WBG) activities. They also draw potential benefits to clients from engagement attention to the WBG’s unique ability to work with the WBG, and duplication can add to with an array of clients in the public and private operating costs all around. Third, all efforts to sectors through cooperation across the World increase cooperation are not necessarily Bank, IFC, and MIGA. worthwhile because they do entail costs, which the benefits to cooperation may not always This brief is intended to bring together in one outweigh. place, for the attention of management and the Board, the evaluation evidence assembled by IEG Importantly, the evidence also suggests that the on such cooperation. An assessment was staff incentive framework historically has conducted in 2008 and completed in February featured biases against cooperation. It has 2009. Although not itself an evaluation, this brief rewarded Bank staff for successful Bank/IDA uses evidence from past IEG evaluations to outcomes, IFC staff for successful IFC outcomes, examine WBG cooperation and its impact on and MIGA staff for successful MIGA outcomes— WBG effectiveness—a theme of increasing and no one for successful WBG outcomes. importance in the context of President Zoellick’s One Bank initiative. This information comes at a This incentive framework needs to change and time of growing awareness of the potential contri- can change. Building on ongoing initiatives, bution of WBG cooperation and steps being management can clarify further its position on taken to enhance it. WBG cooperation and ensure that the rewards that staff receive for their work recognize the The evidence considered in this brief points to benefits that accrue to clients because of their three broad conclusions. First, effective coopera- cooperative actions across WBG units. vii Acknowledgments As part of its work, IEG prepared, in consulta- Christian Grossmann (IFC), Arthur Karlin (IFC), tion with the CODE chair, a review of its evalua- Kyle Peters (World Bank), and John Underwood tive lessons on the topic of World Bank Group (World Bank) are gratefully acknowledged. (WBG) cooperation. The findings of the review, which was completed in February 2009, are IEG management and staff gave generously of summarized in this brief, prepared by a team led their time for this exercise. They provided by Shahrokh Fardoust (then Senior Advisor, advice, guidance, and access to background IEGDG) and Joanne Salop, with assistance from papers used in the preparation of the IEG evalua- Ann Flanagan and Andrew Waxman. Helen Chin tions on which this brief is based. Inputs and/or edited the brief for publication. The work was comments from the following individuals are carried out under the guidance of Vinod gratefully acknowledged: Aysegul Akin- Thomas (Director General, Evaluation), as well Karasapan, Amitava Banerjee, Arup Banerji, Alain as IEG Directors, Cheryl Gray, Christine Wallich, Barbu, Victoria Elliott, Cheryl Gray, Catherine and Marvin Taylor-Dormond. Gwinn, Kristin Hallberg, Linda Morra-Imas, Thomas O’Brien, John Redwood, James Sackey, Peer reviewers for the paper were James Bond Mark Sundberg, Ethel Tarazona, Marvin Taylor- (MIGA) and Nigel Twose (IDA-IFC Secretariat). Dormand, Stoyan Tenev, Klaus Tilmes, and Helpful comments from Rafael Dominguez (IFC), Christine Wallich. ix Summary T his brief is intended to bring together in one place, for the at- tention of management and the Board, the evaluation evi- dence on World Bank Group cooperation.* It uses the evidence developed in past IEG evaluations to examine WBG cooperation and the dif- ference it makes to WBG effectiveness, a theme of increasing importance in the context of the One Bank initiative. It looks at two aspects of coopera- tion—coordination in the programming and sequencing of WBG-supported activities and collaboration in supporting the implementation of specific interventions. The evidence considered points to three outcomes, IFC staff for successful IFC outcomes, broad conclusions about the value added and MIGA staff for successful MIGA outcomes— to clients of WBG cooperation. First, effective and no one for successful WBG outcomes. The cooperation can translate into improved results brief advocates the identification and neutraliza- in a variety of circumstances—from the financial tion of the possible biases against cooperation sector to forestry, from sanitation to risk mitiga- that existing organizational structures and tion—especially in those areas where policy- incentives may engender, in order to promote a transaction synergies are strong. Second, lack of more level playing field between cooperative and cooperation can reduce the potential benefits to other activities. It does not advocate blanket clients from engagement with the WBG, and directives to staff to cooperate more, or targets duplication can add to operating costs all for collaboration. around. Third, all efforts at cooperation are not always worthwhile to clients or to the institution. Three specific sources of bias have been They entail costs, which the benefits to coopera- identified in past IEG reports: tion do not always outweigh; as for other inputs, the level of desired cooperation needs to be • Anti-coordination bias. As prudent risk calibrated to the specific circumstances. managers concerned about the success of the activities that they are involved in, Bank, IFC, According to the evidence, the staff and MIGA staff have generally focused on incentive framework has historically preparing and offering their clients activities shortchanged the calculus of when and that can be successful, regardless of the pro- how much cooperation to apply. It has grams of other WBG units, over which they and rewarded Bank staff for successful Bank/IDA their managers have little influence. But this * Editor's note: This brief was written in early 2009 as information for the Board and management. IEG is now issuing the text as an Evaluation Brief to share the lessons on WBG cooperation more broadly with the develop- ment community. The text presented here reflects the state of the institution when the brief was originally written and some descriptions have since been overtaken by events. xi E V A L U AT I O N B R I E F 11 prudence has also deprived clients of the ben- But, clearly, in order to succeed, these and other efits of well-coordinated and sequenced WBG efforts to improve cooperation will need to programs, drawing on the Bank’s comparative address the incentive framework that staff face advantage on the country policy dialogue and on program design, cross-support, and overlap- IFC’s and MIGA’s comparative advantage on pri- ping mandates. The rewards and recognition vate investment, as highlighted in IEG evalua- staff receive for their work must reflect the tions of WBG work on the environment and benefits that accrue to WBG clients because of extractive industries. their cooperative actions in support of other • Anti-collaboration bias. Staff have per- units. ceived collaborative work on WBG activities as an unfunded mandate, carrying neither re- To this end, management can do more, sources nor rewards. As careful time and cost starting with a further clarification of its managers, staff have generally neither worked position on WBG cooperation. Such a clarifi- on activities managed by other WBG units nor cation might also consider—and launch WBG designed activities requiring other units’ in- staff work on—possible options for the puts, which they do not expect to be forth- following: coming, given the incentives that all staff face. • Pro-competition bias. Overlapping man- • Countering existing anti-coordination biases in dates on guarantees, investment climate as- Bank (both IBRD and IDA), IFC, and MIGA sessments, and credit lines engendered work programming processes by increasing competition and duplication rather than co- the WBG’s voice in country assistance and operation, reducing rather than enhancing partnership strategies; WBG effectiveness. As goal-directed producers, • Strengthening the staff cross-support market staff aimed to offer their clients the products (especially between the Bank and IFC) to ease they managed, rather than steering clients to collaboration during implementation; competing products of other WBG units. But • Further clarifying mandates for guarantees, in- in the end, as highlighted in the evaluation of vestment climate assessments, and credit lines, guarantees, the result has sometimes been and rationalizing due-diligence criteria gov- confusion among clients, who have faced ad- erning loans, credits, and guarantees; and ditional transaction costs, and heightened WBG • Systematic measuring and monitoring of WBG reputational risks. cooperation and its results, as a vehicle for tracking progress. The brief finds evidence showing that the above biases have sometimes been trumped by senior Finally, IEG needs to do its part. While it is management engagement, client insistence, and/or easy to conclude from the examples-based staff friendships crossing WBG lines; however, such approach used in this brief that there is not interventions have not added up to a coherent enough cooperation, it is impossible to say how strategy or systematic operational approach. much cooperation should exist. Making such a determination would require data from system- To improve cooperation, management has atic analyses of actual and missed cooperation taken a number of important steps, includ- opportunities, including the consideration of ing the creation of joint IFC/World Bank counterfactual scenarios. To this end, the departments, the integration of MIGA, requisite analysis should be pursued in the FIAS, and IFC Advisory Services, the MIGA- context of IEG’s country, sectoral, and thematic IFC collaboration on guarantees, and the evaluations—including joint evaluations across establishment of the IDA/IFC Secretariat. the Bank, IFC, and MIGA. A free-standing evalua- These initiatives have not been evaluated by IEG tion of cooperation would be needed if these and are therefore beyond the scope of this brief. issues are to be probed more deeply. xii World Bank Group Cooperation: Evidence and Lessons from IEG Evaluations Editor’s note: This brief was written in early 2009 as information for the Board and management. IEG is now issuing the text as an Evaluation Brief to share the lessons on WBG cooperation more broadly with the development community. The text presented here reflects the state of the institution when the brief was originally written and some descriptions have since been overtaken by events. I. Introduction W orld Bank Group President Robert Zoellick has launched the One World Bank initiative, designed to draw on the full range of WBG products, services, intellectual capital, and synergies in pursuing its mission. As possible input into the implemen- tation of this initiative, this brief considers examples, insights, and lessons from IEG evaluations, focusing on WBG cooperation and its contributions and scope for improvements. The brief itself is not an evaluation but uses evidence from past IEG evaluations to examine such cooperation and value added for WBG effectiveness—a theme of increasing importance. The IEG reports considered for the brief Russian Federation); and promoting and financ- provide examples of effective cooperation ing housing reform (in Mexico). Examples of between the Bank and IFC—and occasion- missed opportunities cited in IEG reports include ally MIGA—as well as of examples of disjointed Bank and IFC activities in the Brazilian missed opportunities and wasteful duplica- Amazon,1 infrastructure in Nigeria, and private tion stemming from failure to cooperate. sector development in Turkey—for each of these examples, the evaluations alluded to lost client The cited examples of effective cooperation cover value from what could have been achieved with a range of countries and sectors, illustrating the greater communications and cooperation, albeit variety of ways in which WBG cooperation can add without specifics. Past examples of duplication value for the client. These examples include (rather than cooperation) include Bank and IFC catalyzing private investment in wireless work on corporate governance in Azerbaijan,2 and communications (in Morocco), supporting the the power sector in Bangladesh. Such instances development of subnational finance (in the have raised WBG costs and confused clients. 1. Management notes that it indicated disagreement with the original IEG findings on the Amazon as set out in Evaluation of Environmental Sustainability (IEG 2008a). The Management Response to that document emphasized the current strong cooperation program between the Bank and IFC in the Amazon. 2. Management notes that the assessment of duplication on corporate governance is not complete or accurate. IFC has had a corporate governance program in Azerbaijan since 2005. As IBRD developed a project with some corporate governance components, IFC communicated with IBRD, which substantially amended the program and took out duplicate activities. Over the past few years, IFC has collaborated with IBRD on a number of related activities in the country. 1 E V A L U AT I O N B R I E F 11 These and other examples cited in the brief evaluations relevant material with respect to are meant to illustrate the variety of WBG cooperation. circumstances in which cooperation can pay off for clients, or in which there have Cooperation is broadly defined in IEG been missed opportunities for cooperation evaluations, distinguishing between (i) coordi- or duplication. They are included to underpin nation—efforts to integrate the strategies of the a possible discussion of the kinds of circum- institutions to accomplish common objectives stances in which cooperation may flourish or such as through division of labor, but which does flounder within the Bank Group, rather than a not necessarily involve interaction on specific discussion of the need (or not) for remedial interventions and (ii) collaboration—interac- action in particular country cases. Indeed, the tion between the institutions on specific examples covered by previous evaluations have interventions (IEG 2007c). already provided occasions for conversations between IEG and management, which in some Country Strategies cases ended up with “agreements to disagree� and in other cases with corrective action by The Country Assistance Strategy (CAS)— management (not yet evaluated by IEG). Owing and variations on it—lies at the core of to the circumstances (and despite the fact that it World Bank work programming processes is not a free-standing evaluation) the brief and management’s dialogue with the Board contains management notes, either reprising on country issues.3 IFC and MIGA do not have points made in connection with the original such formal country-level processes, but partici- evaluations or highlighting corrective actions pate with the Bank in the joint-CAS process, taken to date, albeit without commentary by IEG. designed to promote coherence in the Bank Group’s operations at the country level. In The remainder of the brief is organized as principle, the preparation of the joint CAS follows: Section 2 summarizes the relevant provides an opportunity for the Bank, IFC, and findings from IEG reports; section 3 looks at the MIGA to explore how they can support and perspective of the Committee on Development complement each other in supporting client Effectiveness (CODE) and others; section 4 looks development. In practice, the joint CAS has at the staff perspective and incentives; section 5 provided a vehicle for bringing together in one looks at cooperation and results; and section 6 place the programs of the Bank, IFC, and sets out the brief ’s conclusions and suggestions MIGA—and more detail on IFC and MIGA for further consideration. programs is included in joint CASs than in those that are not joint. As a process, it has provided a II. IEG Evaluation Evidence on WBG platform for communications on work programs Cooperation between Bank, IFC, and MIGA strategy teams. But as a catalyst for integrated Bank Group The evaluation evidence considered in strategies and results, the joint CAS has been less this section includes IEG reports on successful. The result is that even joint CASs country programs, sectoral/thematic rarely set out integrated Bank Group strategies. programs, and individual products issued between 2000 and 2008. Also considered Several IEG reports have explored possible were the annual reports of IEG-World Bank, reasons—both within the Bank and within IEG-IFC, and IEG-MIGA as well as a number of IFC—for the limited success of joint CASs in IEG-World Bank Country Assistance Evaluations producing integrated strategies. In discussing (CAEs) and IEG-IFC Country Impact Reviews why “coordination between the Bank and IFC has (CIRs). The following sections distill from those been uneven,� the IEG report Improving Invest- 3. Variations include CAS Progress Reports, Country Partnership Strategies, and Interim Strategies. 2 W O R L D B A N K G R O U P C O O P E R AT I O N ment Climates concluded, “Although current • China: Development Results in Middle-Income practice is to prepare joint Bank/IFC CASs, discus- Countries argued that exceptions typically re- sions with staff indicate a perception within IFC flected close government involvement and client that its participation has little impact on the insistence on collaboration in the formulation and Bank’s lending and nonlending services� (IEG oversight of Bank Group strategies, rather than in- 2006c). From a different perspective, the Nigeria terventions by management. For example, in CIR emphasized “shortcomings of IFC’s country China, “strategic cooperation between IFC and the strategy-making process� (IEG 2009a). Looking Bank worked well . . . because the government beyond the specifics of the Nigeria program, it is closely involved in the formulation and oversight argued that “IFC’s country strategies . . . are joint of Bank Group strategy, . . . [including] frequent strategies with the World Bank; they are largely dialogue between Bank, IFC, and government of- driven by the World Bank, are poorly integrated ficials, [which] . . . helped to establish a clear frame- with IFC’s main strategy/budget process, and as a work and direction for the Bank Group.� The result there is little ownership of the country resulting coherence is reflected in the China CAS strategy by IFC’s management and staff,� who are (or Country Partnership Strategy), in which the more focused on regional, sectoral, and product Bank, IFC, and MIGA support the five pillars of the strategies.4 Looking at joint CAS problems from strategy in complementary ways, each drawing both the Bank and the IFC perspective, IEG’s 2007 on diagnostic contributions from Bank, IFC, and Independent Evaluation of IFC’s Development MIGA staff while reflecting its unique comparative Results: Results, Lessons, & Implications from 10 advantage (World Bank 2006). Years of Private Sector Development Evaluation • Philippines: The MICs evaluation also cited concluded: “CASs have seldom provided a good WBG work in the Philippines as a case where framework for cooperation, and new incentives cooperation in the CAS process was effective. and mechanisms to complement the CAS would Building on a tradition of Bank and IFC teams be desirable� (IEG 2007a). working together in Manila, it produced pos- itive results in housing finance, urban transport, The IEG evaluation Development Results in and water and sanitation. It did not, however, Middle-Income Countries (MICs) examined preclude occasional coordination problems, the evidence on WBG cooperation at the as for example in rural finance and, as dis- country level in considerable depth. It found cussed later in this brief, in the preparation of that “few CASs included a discussion of the an investment climate assessment. [actual] strategy that the listed interventions • Uruguay: At the other end of the cooperation would seek to influence, or what other factors spectrum, the MICs report cited the Uruguay may influence the outcome� (IEG 2007c). It also CAS—not a joint CAS—which simply listed found that a number of cooperation-intensive IFC plans, quite separately from the Bank’s, activities in CASs were never actually with no obvious attempt to reconcile the two. implemented, which it interpreted as further evidence of the lack of a fully thought-out joint Beyond the instances mentioned, IEG evalua- strategy in the first place.5 tions have not systematically analyzed WBG 4. Management notes that these points on CASs, in both cases, were addressed in the Management Response to these reports. Management discussed recent efforts to strengthen the country strategy perspective in Nigeria and indicated that new approaches to joint CASs are being piloted in conjunction with the IFC-IDA secretariat. 5. Management notes that its footnotes to Development Results in Middle-Income Countries: An Evaluation of the World Bank’s Support (IEG 2007c) and discussions with IEG at the time indicated disagreement with both the methodology employed by IEG and the interpretations of the findings on WBG cooperation. In summary, management suggested that counting expectations of future cooperation in CASs against levels of actual cooper- ation neglected the many areas of cooperation that took place that had not been planned. 3 E V A L U AT I O N B R I E F 11 cooperation at the country level. There is no have so far limited the scope for IFC-World joint country evaluation document corresponding Bank coordination.� to the joint CAS.6 For most countries with joint • Ukraine: The Ukraine CAE, which covered the CASs, IEG-World Bank and IEG-IFC carry out fiscal 1999–2006 period, said that Bank-IFC col- parallel reviews—CAEs and CIRs, respectively. laboration on private sector development was These documents cross-reference each other, and “less than ideal�—albeit without further com- typically include a self-contained box summarizing ment, amplification, or discussion of coopera- key findings of the companion document but they tion or coordination (IEG 2008e, p. xi). The say little about WBG cooperation—either actual or Ukraine CIR indicated that “both the 2000 and missed opportunities. As noted in Development 2003 CASs stress[ed] the importance of coop- Results in Middle-Income Countries, “even when eration between IFC and IBRD, yet recent re- planned cooperation is clearly set out in a CAS, a views found that the overall extent of actual results and monitoring chain is not normally cooperation both at the strategic and working included. Standard evaluation processes such as level ha[d] been short of potential.� It pointed Bank Country Assistance Strategy Completion to problems with the impact of the Private En- Reports and Implementation Completion Reports terprise Partnership for Europe and Central Asia (ICRs), and IEG’s CAEs do not discuss the (PEP-ECA) because of “a lack of coordination and outcomes of cooperation.� This said, where CAEs tactical alignment between IFC and World Bank and CIRs do mention WBG cooperation, it is teams . . . resulting in inappropriate applica- typically to report that there has not been much of tion of IFC data by World Bank staff for Program such activity—with occasional references to Adjustment Loan I conditionalities� (IEG 2008d). possible reasons for, or problems caused by, poor • Pakistan: The Pakistan CAE and an internal coordination. For example: IEG-IFC document were issued and discussed by CODE (IEG 2006e). However, the CAE • Turkey: The 2006 CAE for Turkey stated that hardly mentioned IFC, and the internal docu- there was little interaction between Bank and ment hardly mentioned the Bank. Exceptions IFC staff, with “coordination of programs more comprised brief references in each to the ac- by accident than by design� and the prepara- tivities of the other in the power sector— tion of joint CAS documents not leading to where the Bank and MIGA had extended better coordination (IEG 2006h). It noted that guarantees and IFC loans and equity. There “IFC has maintained good relations with the was no discussion in either document of co- business community in Turkey, but this does operation or coordination—either in terms of not feed into World Bank programs. Perhaps actual performance or missed opportunities. not coincidentally, Bank programs have been relatively light in their focus on constraints to Cooperation issues have mostly received private sector development, except insofar as the silent treatment in other IEG country these constraints affected the overall macro- reports, providing little explicit evidence stability and the financial sector.� An internal one way or the other about WBG coopera- document on Turkey, also noting that there tion. Country Assistance Evaluation Retrospec- was little coordination, emphasized the dearth tive: An OED Self-Evaluation does not mention of flagship infrastructure projects. It argued: “In IFC or MIGA activities—or joint CASs (IEG general, IFC-World Bank collaboration at a 2005b). Engaging with Fragile States: An IEG country level can be most visible when pro- Review of World Bank Support to Low-Income moting large, flagship infrastructure projects. Countries Under Stress also makes no mention of In Turkey, the constraints encountered by IFC such activity, with the exception of a one-off in finding viable infrastructure investments reference in an annex to a specific IFC project in 6. This statement was true at the time of the review but has been overtaken by events; IEG now has a joint country evaluation document. 4 W O R L D B A N K G R O U P C O O P E R AT I O N Papua New Guinea (IEG 2006a). Many CAEs have and India. Noting that “where such [Bank-IFC] taken a similar approach—especially those for cooperation has been successful, it has typically most IDA-eligible countries, where joint CASs are followed a two-step process, . . . [in which] less common. For example, in the CAEs for the Bank has created opportunities for private Albania, Honduras, Madagascar, Mali, and sector participation through preparatory in- Senegal, the discussion of the IFC program was frastructure investments and/or dialogue with typically limited to an IEG-IFC-authored box, with government to implement structural reforms no text discussion or mention of cooperation.7 . . . after which IFC has sought joint partners for joint financing and implementation of spe- Sectoral and Thematic Evaluations cific investment projects.� • In terms of possible negative effects from IEG sectoral and thematic evaluations have conflicting WBG approaches and strate- addressed several cooperation issues. One gies, it cited the example of the Brazilian Ama- recurring theme of these evaluations has been zon in which the Bank and IFC differed on the the potential benefits from WBG cooperation, desirability (or not) of the expansion of soybean with successful IFC and MIGA operations production and ranching, in light of the im- depending on adequate country-level legal and plications for private sector development on regulatory frameworks, areas where the Bank the one hand and accelerated deforestation on typically has greater relevance, and successful the other.8 Bank policy-support and institution-building • The report also highlighted differences in operations requiring private investments that the Bank’s and IFC’s and MIGA’s opera- test and validate those regulations, areas where tional policies governing activity-related en- IFC and MIGA have greater relevance. vironmental and social effects—where the Bank takes a safeguards approach, with recourse for Supporting Environmental Sustainability: external complaints provided by an independ- An Evaluation of World Bank Group Experi- ent Inspection Panel, and IFC and MIGA take ence, 1990-2007, treated WBG cooperation a performance-standards approach, with re- as a central theme, noting its importance to course provided by the Office of the Compli- institutional coherence and effectiveness. It ance Advisor/Ombudsman, reporting to the found “recent examples of positive collaboration WBG President. It noted that such differences among the various parts of the WBG from an could increase joint projects’ transactions costs environmental perspective . . . [but] also . . . to clients and posed reputational risks, in that important differences in the past.� It argued: “the one arm of the Bank Group could be support- need remains for greater coordination of strate- ing activities that another arm would reject be- gies, approaches, and interventions at both the cause of potentially negative environmental or corporate and country levels.� The report social side effects. It called for the establishment highlighted the benefits of pursuing complemen- of “mechanisms . . . to promote and monitor tary Bank and IFC/MIGA activities and the costs of coordination across the Bank, IFC, and MIGA, Bank Group failure to achieve internal consensus with respect to environment-related policies, on country development strategies. strategies, and instruments in order to provide a basis for assessing the environmental impact • In terms of positive effects from WBG com- of the alternative approach.� plementarities, Supporting Environmental Sustainability cited the examples of water, Coordination issues—involving questions waste management, and power in Brazil, China, about the consistency between country 7. See CAEs for Albania (IEG 2005a); Honduras (IEG 2006b); Madagascar (IEG 2006d); Mali (IEG 2007d); Senegal (IEG 2006g). Also see the Romania CAE; (IEG 2005d). 8. See endnote 1. 5 E V A L U AT I O N B R I E F 11 strategies and project support—were at the ice improvements in the sector (IEG 2007a). heart of Extractive Industries and Sustain- • Power for Development: A Review of the able Development: An Evaluation of World World Bank Group’s Experience with Pri- Bank Group Experience (IEG 2005c). This vate Participation in the Electricity Sec- report emphasized the importance of position- tor. IEG’s 2003 evaluation of private sector ing Bank Group project support for extractive development in the power sector was carried industries, whether from the Bank, IFC, or MIGA, out by IEG-World Bank, IEG-IFC, and IEG- within an appropriate country framework for MIGA, albeit with little integrated analysis across governance related to revenues from natural the three units (IEG 2003). It found that in resources, the distribution of project benefits countries with joint CASs the Bank’s treatment (both expenditures and job opportunities), and of private sector development was more sys- environmental impacts. Given the Bank’s tematic than in other countries. It also identi- comparative advantage in working with govern- fied country cases (Bangladesh and Sri Lanka) ments on such frameworks, it stressed the where the Bank and IFC competed to fund importance of WBG cooperation for the success power and sent conflicting signals. of IFC and MIGA activities in the sector. It • A Decade of Action in Transport: An Eval- concluded that most IFC extractive-industry uation of World Bank Assistance to the projects generated large government revenues, Transport Sector, 1995–2005. This report but “the distribution of benefits, considered one did not identify duplications or contradictions of the top issues in the sector, was not consis- across Bank Group programs (IEG 2007b) but tently and sufficiently addressed . . . [C]lose it did shed light, albeit indirectly, on WBG cooperation within the World Bank Group—in policy-transaction synergies in the sector. For particular between IFC and the World Bank’s example, it showed that Bank commitments, country departments—[is] necessary to address by value, in ports and inland waterways have this issue effectively.� declined, as Bank focus has increasingly turned to advising on the regulatory framework, pri- IEG evaluations of information technology, vatization, and trade and facilitation services, electric power, and transport have covered while IFC’s commitments, by value, have risen a spectrum of cooperation contexts—from to take advantage of the increased opportuni- complementary policy and investment ties for private sector transactions that the im- support to competition at the product proving policy framework engendered. level. For example: Products and Programs • Information Infrastructure: A World Bank Group Report. The oldest of the reports con- A very different kind of cooperation sidered for this brief—and in many respects the challenge has surfaced in IEG evaluations most out of date because of the intervening of products and programs, including changes in technology and market conditions— guarantees, investment climate analysis the report focused clearly on the interface and advice, and the financing of financial across the Bank, IFC, and MIGA, identifying intermediaries. A recurring theme of these problems but also successes, as in Sri Lanka evaluations has been the implications of overlap- where the Bank assisted with the regulatory ping mandates across the Bank Group for the framework and IFC with the private investors actual division of labor in the provision of client (IEG 2001). A more recent cooperation success services by the Bank, IFC, and MIGA—with WBG story studied in the preparation of Development competition more in evidence than cooperation. Results in Middle-Income Countries concerns Morocco, where Bank policy advice along with World Bank Group Guarantee Instruments, an IFC investment in a mobile telephone op- 1990–2007: An Independent Evaluation erator helped promote competition and serv- Report identified inconsistent pricing, un- 6 W O R L D B A N K G R O U P C O O P E R AT I O N clear boundaries across the risk-mitigation diagnostics, or the implications for follow-up products offered by the Bank Group, and activities by the Bank, IFC, and MIGA.10 It found limited staff awareness of the various the division of labor within the WBG unclear, products on offer as negative factors affect- with both IFC and several parts of the Bank ing the WBG guarantee franchise (IEG 2009b). providing advice to governments and both FIAS It highlighted overlapping mandates for WBG risk- and MIGA assisting investment-promotion activi- mitigation products, in principle, creating ties. This said, the evaluation did not conclude opportunities for cooperation and coordination that duplication of effort was a major problem, but, in practice, engendering competition among “because so much needs to be done on so many WBG staff and confusing clients. It argued the [investment climate] topics.� In terms of specific WBG needs to facilitate client choice in a more examples, IEG-IFC’s 2007 Independent Evalua- coordinated fashion by presenting a single menu tion of IFC’s Development Results: Results, of options, with common marketing arrange- Lessons, & Implications from 10 Years of Private ments that would also transparently set out areas Sector Development Evaluation cited the of overlap and complementarities with other positive experience with WBG cooperation in WBG risk-mitigation products. In the develop- Morocco, where IFC staff contributed to the ment of new products, it found limited coordina- investment climate assessment carried out by tion, with most activity associated with large, Bank staff. On the negative side, the case studies high-profile, joint products. These have tended to prepared for Development Results in Middle- be power-sector investments (for example, in Income Countries found miscommunication Nam Theun or Bujagali) with high transaction and duplication between Bank and IFC teams. costs—and risks—for both the WBG and clients, For example, in the Philippines, the Bank carried with the aforementioned differences in WBG out an investment climate assessment without environmental and social rules complicating involving IFC staff, despite the latter’s active project preparation and implementation. Going presence in the country, and in Azerbaijan, the forward, the evaluation saw significant potential Bank and IFC embarked on separate corporate for more systematic links between Bank/IFC governance projects with similar agendas that advisory services and the use of WBG risk- duplicated each other’s work.11 mitigation instruments, particularly in infra- structure.9 Separate IEG-World Bank and IEG-IFC evaluations have analyzed aspects of Bank Improving Investment Climates: An and IFC credit line activities (IEG 2006i and Evaluation of World Bank Group 2008b). Like CAEs and CIRs, these evaluations said Assistance also identified mandate little about Bank/IFC cooperation/competition or overlaps across the Bank, IFC, and MIGA each other. World Bank Support for Lines of Credit (IEG 2006c). It found weak coordination across noted IFC’s rising share of the WBG credit line the WBG (and within the Bank) and failures to market and the ongoing debate about IFC’s right- reflect in CASs the findings of investment climate of-first-refusal. However, there was no discussion 9. Management notes that in the Management Response it took exception to the sweeping nature of these statements especially as they apply to the WBG as a whole. It further notes that the current IEG report omits discussion of the extensive new program of MIGA-IFC collaboration with respect to cross-selling and new product development that was launched after The World Bank Group Guarantee Instruments 1990–2007: An Independent Evaluation Report (IEG 2009b) was issued. 10.Management notes that while the findings of 2006 were true during the period covered by the evaluation, management has taken action to correct many of these shortcomings and ensure better cooperation across the WBG. The main example is the integration of MIGA technical assistance services into FIAS in early 2007 and the full alignment of FIAS activities into the IFC Advisory Services business line. These substantial changes are not reflected in the current report. 11.See endnote 2. 7 E V A L U AT I O N B R I E F 11 of how cooperation in the sector actually took Views from CODE place, either in terms of the exercise of the right-of- first-refusal or otherwise. Financing Micro, Small, According to the Chairpersons’ Summary of the and Medium Enterprises in Frontier Countries CODE meeting on the MICs report, concern through Financial Intermediaries: An Independ- about the level of cooperation across the Bank ent Evaluation of IFC’s Experience referred to Group—and missed opportunities for increasing World Bank Support for Lines of Credit in passing, it—has been “a recurrent theme in recent discus- recommending that IFC take a more proactive sions� (IEG 2007c, CODE chair’s summary) approach with development partners who have Salient points on relevant CODE discussions substantial engagements with developing country follow, in the same order as discussed in section 2. governments to promote prudential regulatory frameworks for microfinance intermediaries.12 • Country programs: In discussing Develop- Meanwhile, according to the case study analysis for ment Results in Middle-Income Countries and Development Results in Middle-Income Countries the CAE and CIR for Ukraine, CODE speakers �poor coordination and duplication of services� stressed the desirability of enhanced Bank have been problems in the sector. In Jordan, in the Group cooperation (IEG 2008d, CODE chair’s context of overall good cooperation between the summary). However, they were silent on WBG Bank and IFC, in one instance both the Bank and cooperation issues during the discussion of IFC approached the same microfinance intermedi- the Pakistan CAE and internal document and ary and offered competing services, thus sending on the CAEs for Honduras, Romania, Senegal, mixed signals and duplicating work. In the and Yemen.13 During the discussion of the 2007 Ukraine, IFC staff reported being informed of a IEG-IFC annual report, CODE members called Bank credit line to an existing IFC client by the for improvements in the interaction between client rather than by the Bank, with the two credit the Bank and IFC, including in the division of lines carrying different pricing terms and confus- labor and consistency of country approaches ing the client. Development Results in Middle- (IEG 2007a, CODE chair’s summary). Income Countries also cited the Ukraine credit • Environment: CODE speakers underscored line example, while noting the effective coopera- the need to improve collaboration within the tion on the creation of credit bureaus—with WBG to strengthen the effectiveness of its as- the Bank providing assistance on the legisla- sistance at the country, regional, and global tive underpinnings and IFC providing assistance levels. They emphasized that organizational on implementation (IEG 2007c, CODE chair’s structures, staffing and incentives, and internal summary). constraints should be considered in address- ing the lack of an integrated WBG approach III. Perspectives of CODE, Clients, and (IEG 2008a, CODE chair’s summary). Others • Extractive industries: CODE speakers sup- ported the report’s recommendations for a The varying perspectives of Bank Group clients, WBG strategy for sequencing extractive- Board members, and shareholders on these industry interventions, taking governance is- issues have emerged in the context of evaluation sues into account. preparations and discussions. • Transport sector: CODE speakers stressed the 12.There was no specific reference to the World Bank in the recommendation. However, during the report’s CODE discussion, several speakers suggested that it should be more sharply focused on the Bank. See IEG 2008b, p. 60. 13.See CODE Chairperson’s Summary in the Pakistan CAE (IEG 2006e); Honduras CAE (IEG 2006b); Romania CAE (IEG 2005d); Republic of Yemen CAE (IEG 2006f); and the Chairperson’s Summary of the Informal Subcommittee to CODE in the Senegal CAE (IEG 2006g). 8 W O R L D B A N K G R O U P C O O P E R AT I O N need for an integrated WBG transport sector Clients and Stakeholders strategy capitalizing fully on the synergies and competencies of different units within the Bank, Development Results in Middle-Income IFC, and MIGA (IEG 2007b, CODE chair’s sum- Countries reported that clients have “an mary). Several speakers noted the existence of appetite for the WBG to make better use of possible conflicts of interest for the Bank Group its combined resources,� with some as an advisor to the government and as an cautioning about risks of enhanced collabo- investor. ration. Clients and stakeholders interviewed for • Guarantees: In stressing the importance of the report’s cooperation case studies generally responding to market changes, being client- said one of three things when asked about the oriented, and promoting the full array of WBG coordination of services across the Bank Group.14 guarantee products, CODE speakers noted a First, some said they thought there should be need for a higher level of collaboration, im- more collaboration—especially in infrastructure proved marketing, greater staff awareness of the and the business environment—noting that guarantee instruments, and appropriate staff currently they did not see much connection incentives (IEG 2009b, CODE chair’s summary). between IFC investments and Bank policy advice • Investment climate: CODE speakers called for (and vice versa). Second, some said they saw an increase in the number of joint CASs, and en- better collaboration at the strategic level than couraged the consideration of investment climate during implementation, where they would also issues in those CASs, as opposed to separate in- have preferred greater collaboration. Third, some vestment climate strategies (IEG 2006c, CODE cautioned that greater collaboration would carry chair’s summary). They also emphasized the risks—with private sector clients worrying that it importance of improving coordination across would slow down IFC, and public sector clients the Bank Group, with several speakers noting the worrying that it would inappropriately involve the “burden on clients, especially resulting from Bank in protecting IFC shareholder value, contradictory or even duplicative advice given by especially in times of financial crises (see box 1). different Bank Group teams.� • Bank lending for lines of credit: During IV. Staff Perspectives and Incentives the CODE discussion, there was general sen- timent favoring coordination with IFC through IEG evaluations have identified a mix of a consultative IFC-private sector development factors influencing the degree of WBG mechanism as opposed to the presumption of cooperation that takes place. Taken together, an IFC right-of-first-refusal on offering credit these factors add up to a staff incentive lines (which IEG had recommended and at framework that is biased against cooperation. least one member supported) (IEG 2006i, CODE chair’s summary). Evaluation surveys and interviews carried • IFC support for financial intermediaries out for Development Results in Middle- in frontier countries: CODE members Income Countries explored staff views with stressed the importance of WBG synergies in de- respect to WBG cooperation. On the plus side, veloping prudential microfinance regulations staff respondents pointed to client demand, (IEG 2008b, CODE chair’s summary). Most speak- signals from senior management, and personal ers felt that the report’s recommendations on the relationships with other staff as factors encourag- regulatory framework—which called for greater ing cooperation. They said that factors on the IFC engagement with “development partners� minus side, including “high costs of cooperation— involved in regulatory work—needed to be more delays in implementation, making time when sharply focused on the Bank. already overworked, multiple ‘bosses,’ communi- 14.See country case study reports for Development Results in Middle-Income Countries (IEG 2007c) at http://www.worldbank.org/ieg/mic. 9 E V A L U AT I O N B R I E F 11 Box 1. Client Views on Crisis-Related Cooperation Risks Of all the evaluations reviewed for this brief, only one—Devel- standing has been recently tested because of its perceived de- opment Results in Middle-Income Countries—explored coop- fense of IFC-sponsored projects in privatized utility companies eration in the context of financial crises. Based on the interviews during the 2001 crisis, despite an attempt by the Bank and IFC conducted by the evaluation team in the 15 countries in the co- to separate their positions.a In Thailand, several counterparts in- operation case study review, it focused on perceived conflicts terviewed for the field assessment speculated that the IFC had of interest between the Bank and IFC, as follows: attempted to use the Bank’s increased leverage during the 1997 �Some stakeholders raised the problem of actual or per- crisis to receive preferential treatment for its investments.b That ceived conflicts of interest within the WBG during and after a perception may create reputational issues for WBG work in the financial crisis. Although this evaluation does not in any way sug- country.c Little cooperation has been observed in either of these gest that conflicts have occurred in practice, views among countries since the respective crises, possibly in response to stakeholders need to be acknowledged. In Argentina, the Bank’s client perceptions.� Source: IEG 2007c. a. Management notes that others alleged that the Bank defended public sector behavior affecting private sector rights. b. Management notes that, like all other commercial creditors, IFC sought remedies from the courts in Thailand and not through its links with the World Bank. c. The evaluation has not tried to assess whether either of these cases was an actual conflict of interest, but rather to show that a perception thereof has impinged on WBG effectiveness. cation costs in finding the right person, and similar private sector development. Though their factors,� outweighed the limited benefits. Staff also implications have not yet been evaluated by IEG, were concerned that their time could neither be Extractive Industries and Sustainable Develop- easily allocated to cooperation nor recognized in ment: An Evaluation of World Bank Group performance assessments, and they pointed out a Experience did focus on one, the global product lack of clarity about Bank Group policies on group for oil, gas, and mining. Of particular cooperation, incompatible project timelines, and relevance is the evaluation’s survey results, differences in organizational cultures. excerpted in table 1, which indicate that staff (especially IFC staff, but Bank staff as well) feel Bank and IFC management has taken steps the global product group improved coordination to improve cooperation in particular at the sectoral level. The survey results suggest business lines where the Bank and IFC are an enhanced ability of Bank and IFC sectoral staff both active. One such step has been the to avoid contradiction and duplication and to creation of joint Bank-IFC departments for collaborate effectively, which, in turn, may bode particular sectoral/thematic areas—for example, well for the effectiveness of such joint depart- oil, gas, mining, information and communication ments in addressing impediments to coopera- technology, subnationals, and finance and tion at the sectoral level. Table 1: Staff Views on Improvement from a Global Product Group Formation Question: Did the formation of the global product group . . . at the level of the macro/ for oil, gas, and mining improve coordination . . . . . . at the sectoral level? sectoral interface? IFC staff respondents: 88% said yes, 58% said yes, 46% said by a lot 11% said by a lot World Bank staff respondents: 71% said yes, 58% said yes, 29% said by a lot 8% said by a lot Source: IEG 2005c. 10 W O R L D B A N K G R O U P C O O P E R AT I O N However, the results in the table also cooperation-intensive activities, and to ensure the suggest significantly less enthusiasm about necessary cooperation from the Bank through the impact of the global product group on management guidance and the CAS or a related the sectoral/macro interface, where the process. This was the approach taken by the China challenge facing sectoral staff is less about country team, at the insistence of their Ministry of coordinating with sectoral colleagues than Finance counterparts, as highlighted in Develop- with the Bank’s country directors and ment Results in Middle-Income Countries. But, country management units. For IFC (and lacking pressure from management or a powerful MIGA) staff, this issue is especially challenging, as champion—and in the face of risk aversion and the they will be looking to Bank country directors to kinds of sentiments described earlier—IFC and include in the CAS Bank activities that will MIGA staff may lean toward activities that do not support and complement possible IFC (and require cooperation from Bank staff because IFC MIGA) activities. Indeed, IEG-IFC survey and and MIGA staff will be better able to steer these interview evidence indicates that IFC staff feel activities toward successful outcomes. that Bank programs (and CASs) have failed to include work that would have helped to facilitate V. Cooperation and Results IFC investments, for example, on the governance arrangements for public revenues accruing from Bank Group cooperation is not an end by natural resources and extractive industries. itself. Its potential contribution lies in enhanc- ing Bank Group results. What have IEG evalua- The above has major implications for WBG tions said about how—and how much— work programming processes and the design cooperation has affected results? of WBG programs because cooperation does not affect all activities in the same way. For IEG reports have been careful to say that it some activities where the policy-transactions nexus is difficult to establish definitive evidence is very strong, cooperation is an essential ingredi- about the value added—or results—of Bank ent for development effectiveness, while for others Group cooperation. Development Results in it is less relevant. When designing the menu of Middle-Income Countries, for example, argued operations to present to clients, IFC and MIGA staff that “it is plausible that cooperation contributes will likely lean toward activities that do not require to development effectiveness, but evidence is cooperation for success if they are in doubt as to lacking as to whether it actually has done so.� support from Bank staff on the policy and regula- Underpinning this statement, the report noted tory framework (see box 2). Yet, from the perspec- that “there is no robust pattern of association tive of the country—and the World Bank Group—a between more areas of cooperation in a country better solution might be to orient staff toward and better development outcomes in either Bank Box 2. Staff Incentives for Different Kinds of Activities Consider two alternative WBG activities: “A,� with an outcome • The choice also depends critically on the likelihood of suc- that is sensitive to WBG cooperation, and “B,� with an outcome cess of A versus B. This, in turn, depends on the likelihood that is not. Which activity would a WBG staff member choose that the requisite cooperation from WBG partners will be to develop for his/her client’s consideration? forthcoming as and when needed by A. • Clearly, the answer depends on several variables, including Even if A’s development impact (if successful) is greater than likely client interest in activity A versus B, likely development B’s, task managers may prefer to develop B because it does not impact of A versus B if successful, and likely transactions and require cooperation from WBG partners, over which staff (and their other costs of A versus B. managers) have limited control. 11 E V A L U AT I O N B R I E F 11 or IFC projects among the cooperation cases. the Bank and IFC (and/or MIGA) engage in Similarly, the share of successful Bank and IFC parallel or sequenced activities toward a projects was about the same, regardless of shared goal. Such cases typically combine Bank whether a joint CAS was in place—a basic indica- policy advice with IFC and/or MIGA support for tor of the intent for cooperation across the Bank private investment, as in the housing sector in Group. Moreover, evaluated MIGA guarantee Mexico and Ukraine, in forestry in China, or in projects that were consistent with WBG strategies tourism in Egypt and Jordan. But there are also were equally likely to have high or low develop- cases in which IFC provides advisory services and ment outcomes,� although MIGA projects that the Bank provides the investment support, for were not consistent with existing WBG strategies example, in agricultural leasing in Azerbaijan and generally had lower development outcomes. Kazakhstan (IEG 2007a). These cases of program coordination draw on the WBG’s unique ability Lacking systematic quantitative evidence, to support both the requisite changes in the IEG evaluations have relied on examples to policy and regulatory framework and the illustrate cases in which WBG cooperation pioneering investments to test them and see has paid off—or not. With respect to collabo- them through. In each case, the Bank Group’s ration on ongoing activities, the evidence developmental additionality exceeded the sum suggests that this is largely relevant for advisory of what the individual unit contributions would services led by IFC (IEG 2007a). For example, in have been had they been made in isolation. the Evaluation of IFC’s Private Enterprise Partnership Advisory Services Program in The main problem with these examples, Eastern Europe and Central Asia, IEG generally however, is that they do not happen often found IFC’s efforts to collaborate with the Bank enough. As observed in Development Results in to be “ad hoc [and] varied in their degree of Middle-Income Countries, “cooperation at the success . . .� It identified many successes— country level is modest, and its potential has not especially in projects that sought to improve the been fully exploited.�15 Moreover, two IEG business environment and especially in smaller reports—Extractive Industries and Sustainable countries, such as Belarus, Georgia, Tajikistan, Development: An Evaluation of World Bank and Uzbekistan—but also failures, either where Group Experience and Supporting Environmen- there was no cooperation or where it failed to tal Sustainability: An Evaluation of World Bank produce the desired results. The evaluation Group Experience, 1990–2007—point to the noted “for example, in Armenia and Ukraine, importance of Bank-supported, country-level [where] World Bank and IFC teams agreed to policies for the success of IFC operations. IFC include passage of company laws to support staff were surveyed for the extractive-industries improved corporate governance practices and report and they pointed to Bank staff failures to standards as a condition of a World Bank project do the revenue governance work that would loan� but where the results of the efforts to make IFC extractive-industry operations tenable. collaborate and coordinate were “largely disappointing from the IFC perspective, with The reason that such cases of cooperation actual legislative changes leading to little or no do not happen more frequently is because substantive improvements in [the] legal and of the adverse staff incentives discussed in regulatory framework� (IEG 2008c). section 4, which biases the selection of activities in a cooperation-insensitive Meanwhile, the more iconic cooperation direction. Indeed, in the iconic examples, in examples, as noted in a number of IEG order for country-level cooperation to succeed, reports, are those involving coordination the Bank needs to include the underlying policy at the country or sectoral level, in which dialogue and support in its work program to 15.See endnote 5. 12 W O R L D B A N K G R O U P C O O P E R AT I O N open the way for IFC’s and MIGA’s support for there to be too little cooperation compared to private sector transactions. If it does not, IFC staff the level that would be forthcoming under a will not feel comfortable proceeding with their more neutral staff incentive framework. cooperation-sensitive activities, given the cooper- ation risks involved, over which they have little Looking at the results of cooperation—and control; they will prefer to promote activities that the missed opportunities—three conclu- are less sensitive to such risks, even if the less- sions emerge from the brief ’s review of IEG sensitive activities ultimately have lower rewards. evaluations. First, effective cooperation can Where cooperation is central to project results, translate into improved results for WBG clients in the Bank, in effect, gets a veto over IFC’s activities a variety of circumstances—from the financial under current arrangements. The converse is also sector to forestry, from sanitation to risk mitiga- true: If the Bank thinks there should be comple- tion—especially in those areas where policy- mentary activities by the Bank and IFC— transaction synergies are strong. Second, and especially transactions in frontier areas—IFC can, conversely, the lack of cooperation can reduce in effect, veto the idea by not going ahead with the potential benefits to clients from engagement the cooperation activities on its list. with the Bank Group, and duplication of work can add to operating costs all around. Third, The question for the Bank Group is who cooperation is not always worthwhile to clients brokers the deal when a compromise and the institution. It entails costs, and there are between the Bank and IFC is needed? In the instances in which the benefits of cooperation do case of countries like China, which insist on not outweigh those costs. Regarding other coherence across Bank Group activities, the inputs, the correct level of cooperation needs to answer is clearly the country. What about other be judged on the merits of the case. instances, though? The evidence shows that cooperation happens (i) when Bank and IFC staff While greater insight into the specific areas are friends, which allows them to minimize where cooperation is likely to add value— transactions costs and risks associated with the and by how much—will need to await the delivery of cooperation activities; or (ii) when findings of more detailed evaluations, the pushed by senior management in high-profile evidence from past IEG reports points to activities, such as in the Chad-Cameroon pipeline biases in incentives that have shortchanged project. In the absence of such conditions, the the staff ’s calculations of when and how needed coordination does not happen. And while much cooperation to apply. that might be the correct response in some cases, it is not the correct response in all, but there is no • Anti-coordination bias: The design—both systematic institutional mechanism for sorting out composition and sequencing—of Bank, IFC, which is which. With programming decisions and MIGA programs at the country and sec- made by the Bank, and by IFC, and by MIGA—each toral levels has been biased against the inclusion acting individually—the WBG has no unified voice. of cooperation-intensive activities reflecting (i) the greater costs and implementation risks, as VI. Conclusions and Suggestions perceived by staff and (ii) the lack of a WBG voice in program decision-making and follow-through. There are clearly a number of examples • Anti-collaboration bias: Staff have per- where cooperation across the Bank, IFC, ceived collaborative work on WBG activities as and MIGA has produced results. These an unfunded mandate, lacking the necessary examples suggest a range of ways in which resources and rewards. This bias has both re- cooperation can enhance the WBG’s value duced collaboration on ongoing activities and added. But equally clearly, such cooperation has distorted program development away from fu- not been the WBG’s standard way of doing ture activities that would benefit from business. Adverse staff incentives have caused collaboration. 13 E V A L U AT I O N B R I E F 11 • Anti-cooperation bias: Overlapping man- To this end, management can do more, dates on guarantees, investment climate as- starting with clarification of its position on sessments, and credit lines have engendered WBG cooperation. Such clarification might also competition and duplication rather than co- consider—and launch WBG staff work on— operation, thus reducing rather than enhanc- possible options for the following: ing WBG effectiveness. • Countering anti-coordination biases in Bank, These biases against WBG cooperation— IFC, and MIGA work programming processes and the underlying incentives that drive by giving the WBG perspective a voice in coun- them—have contributed to the perpetua- try strategies—through reforming the joint- tion of “silo cultures� within the Bank, IFC, CAS process and/or other reforms; and MIGA. The evidence suggests that the • Strengthening the cross-support market be- identified anti-cooperation biases can be—and tween the Bank and IFC to ease collaboration in the successful cooperation examples, have during implementation, and building on the been—trumped by instances of senior manage- IFC initiative to reimburse Bank staff work on ment engagement, client insistence, and/or staff IFC-managed advisory services; friendships crossing WBG lines; however, these • Further clarifying mandates for guarantees, in- instances do not add up to a coherent and vestment climate assessments, and credit lines, systematic operational approach. and rationalizing due diligence criteria gov- erning loans, credits, and guarantees; and Management has taken a number of steps • Measuring and monitoring WBG cooperation to improve cooperation, several in response as a basis for tracking progress. to earlier IEG evaluations. These include the creation of joint IFC/World Bank departments, These four suggestions for action are discussed the integration of MIGA’s technical assistance below, noting some of the options and complex- services into FIAS,16 MIGA-IFC collaboration on ities to consider in moving forward. guarantees,17 and the establishment of the IDA/IFC Secretariat, which is piloting initiatives Country strategies and programming. In related to joint projects and joint CASs. Because this area, there are three considerations. First is a these recent initiatives have not been evaluated critical need to ensure a voice for the World Bank by IEG, they lie beyond the scope of this brief. In Group in country programming discussions. order to succeed, however, such efforts clearly This has happened for operations with very large will need to address the incentive framework that reputational risks (Chad-Cameroon pipeline, staff face and, in particular, ensure that the Bujagali, Nam Theun, and so on), but not in rewards and recognition staff receive for their other cases. One possible remedy is for the WBG work reflect the benefits that accrue to WBG President to chair selected CAS review meetings. clients because of their cooperative actions in (One or more members of the President’s senior support of other units. team could be the acting chair when the 16. The integration of MIGA's technical assistance services into FIAS has been evaluated by IEG-MIGA in its annual report, Independent Evaluation of MIGA's Development Effectiveness 2009, which found that the integration has been positive at the corporate and WBG institutional levels, and from a client perspective. The evaluation recommended that MIGA better articulate and define its expectations and preferences with respect to technical assistance activities in the context of its mandate. 17. In July 2009, IFC and MIGA established a contractual arrangement on cross-selling products to enable the complete range of product offerings available to the private sector clients of the WBG. In July 2010, MIGA and the Bank signed a one-year marketing and cooperation agreement to cross-market their corresponding products and services. 14 W O R L D B A N K G R O U P C O O P E R AT I O N President is unavailable.)18 Second, notwith- addressing potential impacts of World Bank standing the joint-CAS process, the CAS remains Group operations are now being followed both primarily a Bank document and process, not fully for environmental and social effects and for owned by IFC and MIGA staff. IFC’s increasing development effectiveness, with the key country focus may make this an opportune time question for rationalization concerning the for IFC to experiment with its own country results of the alternative approaches in the field. strategies. Third, the effectiveness of the joint CAS should be reviewed against this background, Measuring and monitoring. Managing the especially the scope for replacing it with a truly One World Bank initiative will require measures superior exercise that would build on the Bank’s of Bank Group performance that can be CAS and IFC’s own country-level strategies (as monitored to chart progress. For this, some they are developed) and focus explicitly on WBG conceptual work will be needed to identify synergies and results. meaningful and feasible measures. Such work could also contribute to the clarification of what Cross-support and performance assess- is meant by Bank Group cooperation and ments. As noted earlier, staff have indicated as performance. One place to start would be with “inhibitors� to cooperation the fact that their the proposal in the IEG-IFC 2007 annual report time can neither be easily allocated to coopera- calling for the identification of IFC investments at tion nor recognized in performance assessments approval that were facilitated by Bank policy or (IEG 2007c). These are a function of policies set regulatory assistance, tracking them through by management and can therefore be changed CAS completion reports, IFC’s development by management; indeed, IFC has already outcome tracking system, or other means to introduced reimbursement for cross-support on judge their success. A similar approach might advisory services, the most frequent kind of WBG also be useful for tracking Bank operations with collaborative activity. Appropriate steps to identified linkages to IFC and MIGA activities. further open the cross-support market would also send an important signal about the serious- IEG needs to do its part. While it is easy to ness of management’s commitment to enhanc- conclude that there is not enough cooperation, it ing cooperation during implementation, in is far more difficult to say by how much, which is addition to enhancing cooperation during the reason for the tentativeness of some of the strategy formulation. findings of this brief. Making such a determina- tion would require data from systematic analyses Clarification of mandates and rationaliza- of actual and missed cooperation opportunities, tion of due diligence criteria. IEG reports including the consideration of counterfactual have shown that confusion abounds on who scenarios. Such analyses have not been consis- does what within the Bank Group and that differ- tently developed in IEG evaluations to date. ences in due diligence standards add to the cost Going forward, they should be pursued in the of joint projects. Clarifications should include the context of Country Assistance Evaluations, division of labor across the Bank Group—and Country Impact Reviews, and other evaluative across units within the Bank—in areas such as vehicles aimed at developing further insights and guarantees, credit lines, and policy advice on the lessons. A free-standing evaluation of coopera- investment climate, building on recent changes. tion would be needed if this issue is to be For due diligence, differing approaches to explored more deeply. 18. 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