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Keeping the private sector alive during the coronavirus (COVID-19): 4 lessons from past crises

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How can the World Bank Group help keep the formal private sector alive during the current coronavirus (COVID-19) crisis?  Beyond its impact on public health, efforts to limit the spread of COVID-19 are taking a toll, damaging businesses and livelihoods across the world. Trade and transport are disrupted, many businesses are idle, and workers and households have lost jobs and income.  By Show MoreHow can the World Bank Group help keep the formal private sector alive during the current coronavirus (COVID-19) crisis?  Beyond its impact on public health, efforts to limit the spread of COVID-19 are taking a toll, damaging businesses and livelihoods across the world. Trade and transport are disrupted, many businesses are idle, and workers and households have lost jobs and income.  By providing timely and effective support and financing, development agencies can help the formal private sector survive. Here’s what the World Bank Group’s experience in earlier crises tells us.  As international financial institutions look to help the private sector cope with the economic shocks of the coronavirus pandemic, past global crises offer valuable lessons on what works.   At the Independent Evaluation Group (IEG), we have mined our evaluations of World Bank Group responses to a range of global crises, alongside assessments of programs to support the private sector, and identified four overarching lessons to guide efforts to help businesses survive the impacts of the coronavirus . In summary, the lessons suggest a need to find ways to act fast to support the private sector, to ensure that assistance reaches those enterprises in distress, to build on prior knowledge of business conditions and constraints, and to understand that restoration of growth and employment requires a sustained response.  1) Businesses need help quickly, so international financial institutions must act fast Governments are often the fastest way to get support to the private sector. The World Bank’s Development Policy Loans (DPL) provide general budget financing to governments to allow spending to address the crisis and fill crisis-induced revenue gaps.  Budget support allows governments to channel resources to banks and businesses to fund payrolls, provide guarantees, credit or loan forbearance to help firms survive although they cannot produce or sell. World Bank Investment Lending can get to enterprises faster when adding finance to existing loans and when designing new simple or repeater loans. The International Finance Corporation (IFC) of the World Bank Group, which is already engaged with private banks and businesses, can respond more rapidly to keep the private sector alive when it focuses on programs and instruments that already have a solid track record and have shown the capacity for rapid mobilization during a crisis. Following the 2008 global financial crisis, the IFC launched several new initiatives to support businesses but their set-up time and the lags in implementation limited their short-term impact.  On the other hand, IFC’s Global Trade Finance Program , an existing facility, was able to increase its support for trade finance and reach out to new banks.  New instruments may be more appropriate for the medium term.  Click to enlarge and download the infographic 2) Make sure projects reach the businesses that need the help Rapid project preparation is critical during a crisis, but it is vital that projects are designed with effective systems for targeting the hardest hit firms and monitoring to ensure the help has actually reached them. The primary aim of most crisis-related World Bank Group financial intermediary loans (FILs), was to increase bank credit for private sector groups most affected by the crisis, such as small and medium enterprises, exporters needing trade finance, rural businesses, and cooperatives.  FILS have been widely used during crisis -- including after the 2008 crisis. Subsequent evaluations found that few FILs were able to disburse rapidly, targeting was an ongoing problem for many of them and the monitoring of the impact of the crisis financing component was weak and often not reported.  Reaching micro, small and medium enterprises poses additional challenges due to their limited size and bargaining power. Besides loans, matching grants can be helpful and business development services appear to help improve firm performance and create jobs.  Yet a better understanding of how they work and how they can be used to respond to crisis is needed. Partial credit guarantees that cover a share of the default risk of loans can also help, but their effectiveness depends on the strength of a country’s legal and regulatory frameworks.   3)  Understanding the business environment is key to helping businesses Drawing from an existing stock of knowledge or carrying out new analytic and advisory work can ensure that interventions are aimed at the most important problems faced by the private sector, and that resources are directed to their best use. During the 2008 global financial crisis, earlier analytical work provided a platform for the World Bank’s response (and sometimes that of other donors as well). In situations of fragility and conflict, Risk and Resilience Assessments (RRAs) can complement private sector diagnostics and help guide interventions that both support businesses and address the drivers of instability.  In countries where pre-crisis engagement was low, knowledge gaps left the Bank unprepared to help map out actionable, forward-looking programs and the quality of lending suffered. 4) When the crisis is over, the private sector still needs support Even when responding to a crisis, there is a need for longer term planning. This should be focused on an enduring restoration of growth and employment, and sustained responses. A strategic roadmap for crisis engagement, that sequences interventions from short term to longer term can be beneficial. Such a roadmap for crisis engagement should be based on ongoing, systemic analysis of stress factors, a framework for coordination within the World Bank Group and with other international financial institutions, and a review of instruments for effective crisis support, meaningful growth and medium-term development. For more details, please see the learning note that elaborates on each of the lessons. Please visit the IEG Lessons Library for a range of resources relevant to the COVID-19 response   Image credit: Shutterstock/ ffikretow

Meet the Evaluator: Lauren Kelly

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Meet the Evaluator: Lauren Kelly
The Independent Evaluation Group’s Lauren Kelly speaks on the role of the evaluator during the ongoing pandemic – and infodemic. The Independent Evaluation Group’s Lauren Kelly speaks on the role of the evaluator during the ongoing pandemic – and infodemic.

Building the First-Ever Partnership Focused on Addressing Global Gaps in Evaluation Capacity

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Building the First-Ever Partnership Focused on Addressing Global Gaps in Evaluation Capacity
With the ten-year countdown to the Sustainable Development Goals (SDGs) now underway, and countries across the globe struggling to cope with the COVID-19 pandemic, the capacity to gather data to inform decisions, and to monitor and evaluate the impact of policies, is now an urgent priority. A broad coalition of governments and national and international organizations have agreed to establish the Show MoreWith the ten-year countdown to the Sustainable Development Goals (SDGs) now underway, and countries across the globe struggling to cope with the COVID-19 pandemic, the capacity to gather data to inform decisions, and to monitor and evaluate the impact of policies, is now an urgent priority. A broad coalition of governments and national and international organizations have agreed to establish the first-ever global partnership focused on addressing the worldwide gaps in monitoring and evaluation capacity. In June 2020, a range of donor countries and organizations met for the first time in a Co-Creation Workshop to discuss concrete steps towards establishing an inclusive partnership to meet the global demand from developing countries for stronger monitoring and evaluation systems and capacity. The aim of the partnership is to increase coordination for greater impact among the various national and international initiatives aimed at building evaluation capacity, and to pool resources and draw on local and global expertise and knowledge to scale up these efforts. The workshop was a three-day virtual brainstorming discussion focused on building consensus around a joint vision of the global partnership. Ahead of the workshop, a series of consultations were held with representatives from countries committed to strengthening their M&E systems and capacities, to understand the challenges they face, and how best to support their programs. {"preview_thumbnail":"/sites/default/files/Data/styles/video_embed_wysiwyg_preview/public/video_thumbnails/ftcYucMsIlE.jpg?itok=y3Fn6dDT","video_url":"https://youtu.be/ftcYucMsIlE","settings":{"responsive":0,"width":"854","height":"480","autoplay":0},"settings_summary":["Embedded Video (854x480)."]} Effective monitoring and evaluation systems are an essential ingredient for advancing the sustainable development goals as they foster accountability and evidence-based policy making. This innovative partnership will take us a step closer in addressing the worldwide demand from countries for stronger M&E systems and capacities for more inclusive and sustainable development results. Oscar A. Garcia, Director, Independent Evaluation Office, UNDP The current demand for evaluation capacity development far outstrips the resources and reach of any single institution, and the impact of the many programs launched to meet this need is diluted by a lack of coordination. Earlier this year, IEG and the UNDP’s Independent Evaluation Office (IEO) signed an agreement on closer collaboration on meeting this need. Recently, IEG also signed an agreement  with Canada’s École nationale d'administration publique (ENAP) in order to coordinate actions and pool expertise and resources towards meeting the need for stronger M&E systems and capacity in key, under-served regions of the world. The lack of robust monitoring and evaluation systems leaves many countries at a disadvantage and has become an ever more urgent development challenge in the face of the fast-moving coronavirus pandemic. Only by working together will we be able to address the global gaps in evaluation capacity, and ensure no communities or countries are left behind. Alison Evans, World Bank Vice President and IEG Director-General Along with developing a joint vision, the participants in the Co-Creation Workshop also discussed the key lines of business and activities in providing countries support on strengthening their monitoring and evaluation systems and capacities. They also discussed other important aspects of the partnership, such as its operational principles, budgetary and administrative arrangements, and its governance structure. The workshop concluded with an agreement amongst the participants on key steps and actions they will be taking in collaboration with the co-hosts of the workshop - the World Bank’s Independent Evaluation Group (IEG) and the Independent Evaluation Office (IEO) of United Nations Development Programme (UNDP)  - and other partners towards launching the partnership later this year.  Watch and hear from Wilson Braganca, the Director General of the Ministry of Planning and Finances from Sao Tome to learn more about the global demand for evaluation capacity development from countries. Read more about the current challenges in global M&E capacity and the need for joint action. Sign up to receive updates about the growing global partnership to close the gap in monitoring and evaluation capacity worldwide.

Comoros CLR Review FY14-19

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This review of the Comoros Completion and Learning Review (CLR) of the World Bank Group (WBG) Country Partnership Strategy (CPS) covers the CPS period, FY14-FY19, and the Performance and Learning Review (PLR) of December 2018. This is the first CPS for Comoros following a series of Interim Strategy Notes (ISNs), the latest of which was prepared in 2010. The WBG programs under the ISNs were Show MoreThis review of the Comoros Completion and Learning Review (CLR) of the World Bank Group (WBG) Country Partnership Strategy (CPS) covers the CPS period, FY14-FY19, and the Performance and Learning Review (PLR) of December 2018. This is the first CPS for Comoros following a series of Interim Strategy Notes (ISNs), the latest of which was prepared in 2010. The WBG programs under the ISNs were limited in scope reflecting the high level of political instability, serious governance issues and related low IDA allocations. The CLR highlighted several lessons about a need to ensure a streamlined project design and flexibility in implementation; value of increased WBG presence on the ground; importance of donor coordination; and a need for greater realism and selectivity in the program. IEG particularly agrees that there is need for greater realism and selectivity in the program, throughout the program, beyond the governance area on which the lesson in the CLR focuses. Being excessively ambitious with respect to institutional targets in a fragile environment increases the risk of program underperformance. IEG adds the following lesson: The decision on a large program expansion at the PLR stage requires a detailed discussion and careful justification in the PLR document because it poses a longer-term implementation risk.

Croatia: Revenue Administration Modernization Project (PPAR)

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The development objective of the Croatia Revenue Administration Modernization Project was to achieve further improvements in tax efficiency, taxpayer services, and tax compliance through capacity building and systems improvement in the Croatia Tax Administration (CTA). For purposes of this review, three sub-objectives are assessed: (i) improvements in efficiency; (ii) improvements in taxpayer Show MoreThe development objective of the Croatia Revenue Administration Modernization Project was to achieve further improvements in tax efficiency, taxpayer services, and tax compliance through capacity building and systems improvement in the Croatia Tax Administration (CTA). For purposes of this review, three sub-objectives are assessed: (i) improvements in efficiency; (ii) improvements in taxpayer services; and (iii) improvements in tax compliance. Ratings for the Revenue Administration Modernization Project are as follows: Outcome was moderately unsatisfactory, Risk to development outcome was negligible, Bank performance was moderately unsatisfactory, and Borrower performance was moderately unsatisfactory. This assessment offers the following lessons: (i) Poor quality at entry and lack of readiness for implementation contributed to significant implementation delays and limited results. (ii) Given that the main driver of the tax administration reforms was Croatia’s bid for membership of the EU, the project could have better secured the government’s commitment to reforms up front. (iii) In projects aiming to improve tax revenue administration, the right balance must be struck between institutional reform and hardware needs (buildings and information and communications technologies). (iv) High TTL turnover could be mitigated by ensuring adequate capacity in the field with the presence of competent local staff.

Jordan: Cultural Heritage, Tourism, and Urban Development Project (PPAR)

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An Evaluation of the World Bank Group’s Support to Municipal Solid Waste Management, 2010–20 (Approach Paper)

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Municipal solid waste (MSW) has emerged as one of the most pressing challenges for urban areas across the world. This evaluation is the Independent Evaluation Group’s (IEG) first major study of the Bank Group’s support for MSWM. It is timely given the rapidly increasing scale of MSW in most MICs and LICs and considering the spectacle of massive open garbage dumps in cities as diverse as Manila, Show MoreMunicipal solid waste (MSW) has emerged as one of the most pressing challenges for urban areas across the world. This evaluation is the Independent Evaluation Group’s (IEG) first major study of the Bank Group’s support for MSWM. It is timely given the rapidly increasing scale of MSW in most MICs and LICs and considering the spectacle of massive open garbage dumps in cities as diverse as Manila, Lagos, and New Delhi. The evaluation will highlight the linkages of MSWM with other sectors and themes such as water supply and sanitation, environment, climate change, health, jobs, and social protection. This can point to how the Bank Group can better support the development of synergistic policy frameworks and regulations for MSWM in client countries. This has implications for developing systematic collaboration between various sectors within the Bank Group and among client government ministries and for leveraging opportunities for climate finance.

Rwanda CLR Review FY14-20

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In summary, under the Rwanda CPS for FY14-FY20, the World Bank Group supported the government to address problems in areas and sectors that could help reduce poverty and improve shared prosperity. The CLR’s most relevant lessons are summarized as follows. First, government discipline and leadership enhance the effectiveness of official development assistance and the country’s ability to progress Show MoreIn summary, under the Rwanda CPS for FY14-FY20, the World Bank Group supported the government to address problems in areas and sectors that could help reduce poverty and improve shared prosperity. The CLR’s most relevant lessons are summarized as follows. First, government discipline and leadership enhance the effectiveness of official development assistance and the country’s ability to progress. Second, more qualified people working on financial management, procurement and safeguards is needed to enhance the impact of projects and program. Third, plans for agricultural modernization require considering interactions between the rural and urban labor markets to ensure migrating rural workers have gainful urban employment. Fourth, generating knowledge through ASA can help identify binding constraints and design policy reforms in a timely manner. IEG adds the following lesson: Poor results framework make it difficult to learn from a program’s experience, attribute results to the program and assess its achievements, and build knowledge that can guide future program design and implementation. To assess programs, build knowledge and guide future actions, the WBG needs to ensure CPF Results Frameworks have: (a) a clear and coherent results chain and (b) indicators that can be measured, are useful for assessing the achievement of objectives and are linked to the program’s interventions.. In Rwanda, the CPS results framework has shortcomings that makes it difficult to measure the achievement of some objectives, build knowledge and guide future WBG programs.

Madagascar: Emergency Support to Critical Education, Health, and Nutrition Services Project and Additional Financing (PPAR)

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The World Bank suspended operations in Madagascar in 2009 after a coup d’état and establishment of a de facto government. The unconstitutional regime change caused a prolonged period of political crisis, and together with the 2008 financial crisis, threatened to reverse a decade of sustained gains in social and economic indicators. The dearth of public financing for basic social services and the Show MoreThe World Bank suspended operations in Madagascar in 2009 after a coup d’état and establishment of a de facto government. The unconstitutional regime change caused a prolonged period of political crisis, and together with the 2008 financial crisis, threatened to reverse a decade of sustained gains in social and economic indicators. The dearth of public financing for basic social services and the withdrawal of most donors during the protracted political crisis were especially concerning. The Emergency Support to Critical Education, Health, and Nutrition Services Project was prepared in 2012 after the World Bank’s reengagement in Madagascar and before reentry of other partners. The project’s objective was “to preserve critical education, health, and nutrition service delivery in targeted vulnerable areas.” The project initially focused on five of Madagascar’s poorest and most vulnerable regions, where other donors were not active, and eventually extended nutrition services only to four additional regions (of 22 regions in the country). Ratings for the Emergency Support to Critical Education, Health, and Nutrition Services Project and Additional Financing are as follows: Outcome was highly satisfactory, Bank performance was moderately satisfactory, and Quality of monitoring and evaluation was modest. This assessment offers the following lessons, which focus on the challenges of further strengthening and sustaining a multisectoral approach to nutrition raised in this report: (i) A multisectoral approach, which delivers a range of services that benefit communities, can have a synergistic and impactful effect on the health and nutrition of mothers and children. (ii) The effectiveness and efficiency of Madagascar’s nutrition efforts are contingent on the ONN fully assuming its primary mandate of multisectoral coordination, with the full support and recognition of the public sector, at all levels of government, and in partnership with leaders and stakeholders in the political, administrative, religious, and traditional arenas and in the private sector. (iii) The roles and comparative advantages of the regions and districts in the strategic management and implementation of service delivery, including the support and encouragement of cross-sectoral synergies, will continue to be underexploited as long as the government’s structure is highly centralized. (iv) Successful mobilization of domestic and international resources, planning, programming, and priority setting—including managing the tensions between the goals of expanding nutrition coverage and strengthening existing services—will be difficult to achieve without investments in ONN capacity. Over and above the capacity strengthening needed, improved aid effectiveness and the sustainability of Madagascar’s nutrition efforts also depend on development partners working closely with ONN and the regions and supporting their development plans and priorities, and on an evolution from projects to program support. (v) The World Bank can play a pivotal role in supporting ONN to assume its multisectoral coordination role by advocating to the highest levels of government the importance of prioritizing nutrition as a means of achieving its development objectives and of allocating more budgetary resources to this end, and in supporting the decentralization process to empower regions. (vi) Emergency operations can provide an opportunity for embarking on broader development efforts, as shown by this project, whose interventions transcended recovery efforts. However, the inclusion of such development support without attention to sustainability can undermine gains postproject.

Madagascar: Projet d’Appui d’Urgence aux Services Essentiels d’Éducation, de Santé et de Nutrition et à son financement additionnel (PPAR)

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En 2009, la Banque mondiale a suspendu ses opérations à Madagascar suite à un coup d’état et l’installation d’un gouvernement de facto. Le changement de régime inconstitutionnel provoqua une période de crise politique prolongée qui, ajoutée à la crise financière de 2008, a menacé de renverser une décennie de progrès soutenus des indicateurs sociaux et économiques. Particulièrement inquiétant Show MoreEn 2009, la Banque mondiale a suspendu ses opérations à Madagascar suite à un coup d’état et l’installation d’un gouvernement de facto. Le changement de régime inconstitutionnel provoqua une période de crise politique prolongée qui, ajoutée à la crise financière de 2008, a menacé de renverser une décennie de progrès soutenus des indicateurs sociaux et économiques. Particulièrement inquiétant était le problème du manque de financement public destiné aux services sociaux de base et du retrait des partenaires financiers durant cette crise politique prolongée. Le Projet d’Appui d’Urgence aux Services Essentiels d’Éducation, de Santé et de Nutrition fut préparé en 2012, juste après le réengagement de la Banque mondiale et juste avant le retour des autres partenaires. L’objectif du projet était « … de préserver la fourniture des services essentiels d’éducation, de santé et de nutrition dans les zones vulnérables ciblées. » À l’origine, le projet s’est concentré sur cinq des plus pauvres et plus vulnérables régions de Madagascar, là où les autres partenaires financiers n’étaient pas actifs, pour finalement étendre seulement ses services de nutrition à quatre régions supplémentaires (sur un total de 22 régions du pays). Les évaluations du Projet d’Appui d’Urgence aux Services Essentiels d’Éducation, de Santé et de Nutrition et de financement supplémentaire sont les suivantes: les résultats ont été très satisfaisants, la performance de la Banque a été modérément satisfaisante et la qualité du suivi et de l'évaluation était modeste. De cette évaluation se dégagent les leçons suivantes qui visent à mettre l’accent sur les défis posés pour renforcer davantage et assurer la durabilité d'une approche multisectorielle à la nutrition soulevés dans ce rapport : (i) Une approche multisectorielle fournissant une gamme de services qui bénéficient aux communautés peut avoir un effet synergique et des répercussions importantes sur la santé et la nutrition des mères et des enfants. (ii) L’efficacité et l’efficience des efforts de Madagascar en matière de nutrition dépendent des efforts de l'Office National de Nutrition (ONN) à assumer pleinement son mandat principal de coordination multisectorielle, avec le plein soutien et la reconnaissance du secteur public, à tous les niveaux du gouvernement, et en partenariat avec les dirigeants et les parties prenantes dans les domaines politique, administratif, religieux et traditionnel et dans le secteur privé. (iii) Les rôles et avantages comparatifs des régions et des districts dans la gestion stratégique et la mise en œuvre des fournitures de services, notamment l'encouragement et le soutien aux synergies intersectorielles, continueront d'être sous-exploités tant que la structure du gouvernement restera fortement centralisée. (iv) Une mobilisation réussie des ressources nationales et internationales, la planification, programmation et définition des priorités, notamment en ce qui concerne la gestion des tensions entre les objectifs d'élargissement de la couverture nutritionnelle et ceux de renforcement des services existants, seront difficiles à réaliser en l'absence d’investissements pour développer les capacités de l’ONN. Au-delà de la nécessité de renforcer les capacités, améliorer l’efficacité de l'aide et la durabilité des efforts de Madagascar en matière de nutrition va également dépendre de l’engagement des partenaires au développement à travailler en étroite collaboration avec l'ONN et les régions, de leur appui aux plans et priorités de développement de ceux-ci et de l'évolution du soutien des projets vers une approche programme. (v) La Banque mondiale peut jouer un rôle central, notamment en aidant l'ONN à assumer son rôle de coordination multisectorielle ; en faisant valoir auprès des plus hautes instances du gouvernement l'importance de donner priorité à la nutrition comme moyen d'atteindre les objectifs de développement et d'allouer davantage de ressources budgétaires à cette fin ; et en apportant un appui au processus national de décentralisation pour donner aux régions les moyens de se prendre en charge et d’agir. (vi) Les opérations d’urgence peuvent être l’occasion d’explorer et de lancer des efforts de développement plus larges, comme le montre ce projet dont les interventions ont transcendé les efforts de redressement entrepris. Cependant, l'inclusion d'un tel appui au développement sans une attention accordée à sa durabilité peut, après le projet, compromettre les gains réalisés. English version: Madagascar: Emergency Support to Critical Education, Health, and Nutrition Services Project and Additional Financing (PPAR)