WORLD BANK EFFECTIVENESS
16. In 2004, DFID established the Multilateral Effectiveness
Framework (MEFF) for assessing the way multilateral organisations
work. 23 international organisations were assessed, including
five Multilateral Development Banks, 12 UN organisations, five
humanitarian agencies and the European Commission. DFID was also
assessed. The assessments were conducted by DFID officials in
consultation with the organisations themselves. The MEFF focused
on organisational effectiveness in terms of the systems that organisations
needed to have in place to produce results, rather than on the
results themselves. Under this assessment, the World Bank was
the highest performing multilateral development bank but was out-performed
by the UN Development Programme, the UN Population Fund, the Office
of the UN High Commissioner for Refugees, and the International
Committee of the Red Cross.[19]
17. In 2007, DFID published 14 Multilateral Development
Effectiveness Summaries (MDES). The MDES provide information about
how multilaterals perform across four key dimensions of effectiveness:
managing resources, managing relationships, country/global results
and building for the future.[20]
This information is organised in the form of a "balanced
scorecard", giving a narrative account of how organisations
are performing and their strengths and weaknesses. This time,
DFID did not present a comparative assessment of these organisations.
18. Echoing the Secretary of State's press statement
on 14 December that "the World Bank is the most effective
multilateral development institution", the Minister told
us:[21]
"We do have a system of surveying the effectiveness
of multilateral institutions […] we have published that and
the World Bank ranks the highest, if not amongst the first or
second highest, and that is very important to us."[22]
Given the centrality of the effectiveness assessment
to DFID's decision to allocate an extra £700 million to IDA
15, it is crucial that it is a robust framework. In our evidence
session on 20 November, Bretton Woods Project questioned the metrics
used in the effectiveness assessments:
"Of course, any institution can be very effective
at doing what you do not want it to do. So, I think, very often
when you hear critiques from civil society about the actions of
the World Bank it is not that it is not effective in these fairly
technocratic senses, it is that there is a feeling that the Bank
is not doing what civil society would like it to do."[23]
19. DFID's website says that the MDES's main limitation
is that "while the summaries include a number of indicators
relating to how multilaterals monitor and evaluate their results
on the ground, they are not intended to measure actual development
impact".[24] Measuring
such impacts can be challenging, given that there is little information
available and the impact of individual organisations can be difficult
to disaggregate. We were encouraged to hear during our visit to
Washington about the drive within the World Bank to improve its
performance here—to monitor and analyse results better and
to make public this work. One World Trust told us that DFID should
also be working harder to assess World Bank progress against targets.[25]
Jeff Powell from Bretton Woods Project said in his evidence to
us:
"Last year's annual review of development effectiveness
conducted by the Bank's evaluation unit said that the Bank had
been reasonably effective at getting countries on a growth path,
but that it had not been as effective as it should be at understanding
the distributional impacts of that growth path—so, in other
words, understanding whether or not that growth path was actually
helping the poor."[26]
20. DFID's new Public Service Agreement, published
in October 2007, contains "key actions" on improving
the World Bank's effectiveness.[27]
These key actions look at 'effectiveness' in terms of high-level
strategy and include working to "agree a clear strategy that
sets out how the Bank can most effectively help the international
community deliver the MDGs" and to "press the World
Bank to achieve its own targets to strengthen the number, size,
quality and authority of its country offices, especially in Africa".[28]
21. The Minister said in her evidence to us that,
as well as an organisational effectiveness assessment of the Bank,
DFID had also made an assessment of the Bank's effectiveness "in
terms of what it does":
"We felt and assessed that it achieves for us—it
is the institution that is most effective […] in achieving
what we want it to achieve, which is to be this glue in the system".[29]
DFID did not share this second assessment with us
during the course of this inquiry.
22. An effective World Bank is a vital component
in the international development system and we welcome DFID's
focus on its effectiveness. We note, however, that effectiveness
can be assessed at many levels, including organisational, development
impact and strategic. We therefore caution the Secretary of State
and his team against making bold statements that the World Bank
is the most effective multilateral development institution without
appropriate qualification. It will only be truly effective from
DFID's point of view if it does what DFID wants it to do—if
it is operationally effective as well as organisationally effective.
In our view, DFID should concentrate its efforts on assessing
the Bank's operational effectiveness in terms of development impact,
rather than just its organisational effectiveness, in order to
justify the large increases in its funding to the World Bank.
We were encouraged to learn about the drive within the World Bank
to monitor and analyse results and to make public this work. We
would urge the Bank to make this work a priority.
IDA NEGOTIATIONS
23. The negotiations on the latest replenishment
of IDA began in March 2007. Five high-level negotiating meetings
were convened, at the last of which, in Berlin in December 2007,
an overall deal was agreed. Details of the agreement and the
negotiations will be published in spring 2008 in a World Bank
'Deputies' Report'. Referring to the negotiations, the Minister
told us:
"We made clear our objectives beforehand around
decentralisation, fragile states, the climate change agenda as
some of the top priorities of what we wished to secure from the
Bank, and that was made clear ahead of any decision and indeed
any discussions. We then had a series of discussions over the
period in the negotiations for the replenishment and there will
be the Deputies' Report that will be published that will show
what actually has been agreed by the Bank in response to those."[30]
We await publication of the final Deputies' Report
which is likely to be within days of our own Report. From our
reading of the chairman's summaries of the negotiation meetings,
it appears that the UK has influenced the agenda and IDA priorities
to some degree.[31] The
importance of a coherent strategy for dealing with fragile states
is a clear theme throughout the negotiations and decentralisation
and climate change emerge as priorities towards the end of the
negotiating cycle. The particular needs of Africa appear to have
featured in the negotiations and we hope to see this more clearly
and in greater detail in the final Deputies' Report.
24. There are however concerns about the transparency
of the allocation process and about the DFID analysis which underpins
it. In response to the announcement on the UK contribution to
IDA 15, a statement from Bretton Woods Project said:
"Commitments [in DFID's 2004 Institutional Strategy
Paper] to review and make public DFID assessments of the Bank's
progress against selected indicators have been left unfulfilled.
[DFID's latest report on the UK and the World Bank] says only
that there is a "plan to develop a new strategy in 2008 based
on a review of the current strategy". This means that the
agreement to provide the Bank with over £2 billion in funding
was done without a publicly-disclosed review."[32]
25. We welcome DFID's decision to increase its contribution
to the World Bank's International Development Association but
we believe that it did so with insufficient rigour. In developing
its strategic approach to the funding levels, it is right that
during the negotiations DFID assessed both the Bank's effectiveness
and its responsiveness to DFID's own priorities for the Bank.
We look forward to examining the Deputies' Report for evidence
of DFID's influence on the negotiations. An explanation of the
strategic approach is not, however, the same as an explanation
of the mechanics of the decision itself. The Minister's assertion
that a 49% increase in the commitment was in line with the increase
in DFID's overall budget appears to suggest that the increase
was largely mechanical. Without a transparent account of how the
increase was decided, we have no evidence to challenge that suggestion.
We would have liked to have seen a robust analysis showing that
an additional £700 million allocated to IDA would do more
to meet DFID's objectives than using the same amount of money
for funding another multilateral agency or for bilateral development
work. We recommend that DFID publish, alongside the Deputies'
Report in spring 2008, a full account of how the increase of £700
million was calculated. Given the very large sums involved, we
further recommend that DFID ensure that, as well as conducting
a new assessment of the Bank's organisational effectiveness, a
full review of the World Bank's development impact is conducted
and published before the next IDA replenishment round is launched.
8 In this Report the terms 'the World Bank' and 'the
Bank' refer to the World Bank Group institutions and not just
the IBRD. Back
9
DFID also provides funding to the World Bank Trust Funds. See
chapter 4 for discussion of Trust Funds. Back
10
IDA funds are provided either as a loan (known as a credit) or
a grant. A standard IDA credit is provided with a 40 year maturity,
with a 10 year grace period and a service charge of 0.75%. As
a result the grant element of a standard IDA credit is about 65-70%.
IDA also provides grants to some countries: approximately 20%
of IDA funds in financial year 2006 were provided in the form
of grants. Back
11
"IDA: A fund to improve the lives of the earth's poorest
people", World Bank website (www.worldbank.org) Back
12
IDA 15 will cover the period from July 2008 to June 2011. Back
13
"IDA Replenishments", World Bank website (www.worldbank.org) Back
14
HC Deb, 17 December 2007, cols 96-97WS Back
15
This is also partly due to the strength of the pound's exchange
rate to the US dollar, IDA's working currency. Back
16
DFID, Statistics on International Development 2001/02-2005/06,
2006 Back
17
Q 141; Public expenditure is divided between Departmental Expenditure
Limit (DEL) spending, which is planned and controlled on a three
year basis in Spending Reviews, and Annually Managed Expenditure
(AME), which is expenditure which cannot reasonably be subject
to firm, multi-year limits in the same way as DEL, such as social
security benefits, local authority self-financed expenditure,
debt interest, and payments to EU institutions. Back
18
Qq 141-144 Back
19
www.dfid.gov.uk/pubs/files/meff-results.pdf Back
20
www.dfid.gov.uk/aboutdfid/DFIDwork/multilateral-eff-faq.asp Back
21
"UK to give record level of support to fight global poverty",
DFID Press Release, 14 December 2007 Back
22
Q 143 Back
23
Q 2 Back
24
www.dfid.gov.uk/news/files/assess-multilateral-effectiveness.asp Back
25
Ev 97 Back
26
Q 3 [Mr Powell] Back
27
PSA Delivery Agreement 29, paragraphs 3.14-3.15 (www.hm-treasury.gov.uk) Back
28
Ibid. Back
29
Q 152 [Baroness Vadera] Back
30
Q 144 Back
31
"IDA Replenishments", World Bank website (www.worldbank.org) Back
32
"UK report on its activities at the World Bank: Weak, unaccountable, and late"
Bretton Woods Project Press Release, 14 December 2007 Back
