We defined transformational engagements as individual or series of interventions that support deep, systemic, and sustainable change with the potential for large-scale impact in an area of a major development challenge.
Transformational engagements and projects have the potential to completely change the fortunes of countries, which is why they are a critical pillar of the World Bank Group's strategy. However, it is inherently difficult to design for transformation, or even to measure it in hindsight. To this end, a new IEG report looked at a number of interventions of the World Bank Group to identify factors that explained their transformational effects.
Our first challenge was to define what qualifies as a transformational engagement. When we started our review, it was clear that transformational meant many different things to different people. To apply the concept to Bank Group operations, we defined transformational engagements as individual or series of interventions that support deep, systemic, and sustainable change with the potential for large-scale impact in an area of a major development challenge. This definition was broad enough to allow us to look at programs, (series of) projects or interventions in different sectors, covering different modes of engagement - including lending and knowledge products.
Over the years, IEG found that the World Bank Group has had several successful transformational engagements, for example, in Kenya, where a World Bank supported project provided six million consumers with access to reliable electricity; in Argentina, where the government expanded health coverage for more than 1.3 million people; and in the Caribbean, where 16 countries developed a novel risk-pooling facility to better protect themselves against catastrophic risks of earthquakes and hurricanes.
IEG's review of the World Bank Group's portfolio concluded that there is no single prescription for catalyzing transformational change. But, there are things that can increase the likelihood of transformational impact. We highlight some below.
These mechanisms were present either individually or in combination in all the interventions that showed positive transformational results:
- Identifying and addressing binding constraints, and doing so in a sequenced way has shown great promise. More successful transformers tackled the most binding constraints first and then moved on to address other constraints. In Kenya, for example, implementing sector policy reforms was the binding constraint that unlocked the electricity sector and created opportunities for enhancing access.
- Adopting approaches that address multiple constraints in interrelated parts including through cross-sectoral linkages.
- Scaling up and replicating effective approaches and innovations and of novel financing instruments. When designed properly, innovative approaches were scaled up successfully to help extend services to the underserved. The Bank Group's role was in playing the catalyst rather than coming up with the innovations themselves. They were effective by innovating to reduce cost, using new delivery platforms to increase the reach or utilization of services, and addressing information asymmetries and incentives for beneficiaries; or catalyze changes in systems, markets and behaviors. One such example is results-based finance and output-based aid.
- Behavioral change. Changing behaviors by modifying incentives of beneficiaries, introducing market forces, or increasing the flow of information. Many of the transformational engagements used alternative mechanisms to create incentives, such as empowering beneficiaries or removing affordability constraints. They focused on commercially viable approaches, taking advantage of market mechanisms and private enterprises as vehicles to reach scale and extend services to the poor and underserved.
So what did the Bank Group and its clients do differently in these engagements to make them transformational?
- Rigorous diagnosis and analytical work to underpin the design of interventions with the potential to address the context-specific constraint or opportunity.
- Adapting interventions to local context, capabilities and social norms is critical in successful transformational engagements. Appropriate analytical and diagnostic work can help adapt and tailor program design to local context, and identify the need for complementary capacity building.
- Early and broad engagement with stakeholders to forge agreement on common objectives. Building broad coalitions and political consensus - beyond the immediate client counterparts - around reforms was effective in broadening support and maintaining momentum. Successful transformations often were implemented in partnership with other donors, underlining the importance of the Bank Group's convening role.
- Transforming institutions is at the core of transformational engagements. A focus on building and strengthening local institutions contributed to the sustainability of transformational impacts.
- Comprehensive versus focused program design. The key is to strike the right balance between fostering a strategic understanding of key constraints and then pursue reforms through a set of sequenced and focused interventions. The combination of strategic vision and focused interventions limits complexity of individual projects, but maintains a focus on systemic issues. Ongoing support to clients (rather than one-off projects) facilitated the deep reforms associated with transformations by helping build capacity and address several parts of a system through sequential interventions.
- Robust monitoring and reporting systems ensure proper targeting of beneficiaries and facilitate learning, as well as adjustments to the project or program during implementation.
Interventions to foster transformational change carry a higher risk, but our insights show that these are well compensated with the results that can be achieved. For more details, read our in-depth review.