2. At the project level, IFC needs to: - Re-examine the stakeholder framework to address distributional and poverty issues in project design. - Make explicit the causal pathways, transmission channels, and underlying assumptions about how projects can contribute to growth and patterns of growth that provide opportunities for the poor.
Incorporating distributional issues into projects has been challenging for IFC. Despite the increase in poverty focus at the broader strategic level, 43 percent of projects had an expected ERR greater than the benchmark and included at least one type of mechanism that addressed distributional issues at design or implementation. (Evaluation Summary) Few projects incorporated a clear mechanism for targeting the poor. In the cases where projects did target the poor, geographic targetingsuch as focusing project activities in frontier and rural areas or urban slumswas the most frequently used mechanism. (Evaluation Summary) Projects that engaged the poor performed better on development outcomes and investment outcomes, although the differences were not statistically significant. (Chapter 4, para 4.4) Evidence from Case Studies: Understanding the livelihoods of the stakeholders is key to meeting their needs (Chapter 4, Box 10) The fact that projects did not have evidence of identifiable effects on the poor does not necessarily mean that they did not contribute to poverty reduction. Projects that achieve adequate economic rates of return contribute to growth and most likely to poverty. However, these projects do not articulate the causal links between growth and poverty reduction or explicitly state the underlying assumptions associated with such relationships. (Chapter 4, para 4.10) IEG's review of 71 randomly selected closed advisory services projects showed that 13 percent had identified benefits to the poor and 37 percent delivered benefits to society but did not specifically identify the poor (Table 15). Nearly half of the cases did not have evidence of identifiable benefits for society or the poor, so it was difficult to make a judgment on whether these benefits actually reached the poor or the extent of these benefits. (Chapter 4, para 4.16) Improving the investment climate can have significant im-pacts in IFC client countries. IFC's effectiveness in enhancing these impacts critically depends on […] (iii) demonstrating the poverty implications of outputs by clearly specifying the causal links and assumptions through which growth is translated into poverty impacts. Periodically testing these assumptions in country situations would provide valuable insights into the impacts of these interventions. (Chapter 2, para 2.39)
Original Response: IFC will consider revising project document guidelines, including both AS and IS project approval documentation to sharpen and standardize relevant sections. Project documentation will be revised to incorporate discussions on direct and indirect anticipated poverty outcomes, underlying assumptions and rationales at inception.
Standardize AS & IS approval documents, revise stakeholder framework and project document guidelines, conduct literature review to clarify association between IFC interventions and poverty results, and provide staff with training, to address more explicitly the anticipated direct and indirect poverty outcomes.
Indicator: Poverty discussions in project approval documents
Baseline: Existing documents
Target: Revised approval documents implemented
Timeline: June 2015
Since last year IFC's emphasis has shifted from project to country/strategy level work for ex-ante and ex-post assessment for twin goals. The main initiative towards this is Lines of Sight. IFC industry departments are developing theory of change that link their interventions to the twin goals. As explained above these are conceptual frameworks. In terms of measuring its impact, IFC is conducting several activities to assess impact on the twin goals, with different levels of success and work in progress. Dynamic model initiative has proven to be very complex and limited. IFC has conducted several evaluations, interestingly project level. IFC Infrastructure team started to use outcome multipliers to measure impact. The most recent development in this area is this establishment of economics and development strategies VPU in IFC. This department aims to initiate the development of a methodology to assess the development impact of projects ex-ante, and advising on the review and update of IFC's results framework, as well as on the structure of development and sequencing of IFC country and sector strategies. This VPU will likely help IFC better articulate how IFC contributes to eradicating poverty and shared prosperity.
Action C (Ongoing): IFC has defined its contribution to the Twin Goals, through jobs and economic growth. Regarding IFC approach to estimating its impact several activities are under implementation. (i) CODE has endorsed our approach to measuring results which points to the overarching framework of country/strategy level links to the twin goals, moving the discussion from transaction level (although results frameworks are required and monitored for each transaction). We believe this is much more effective in looking at IFC's focus on poverty and shared prosperity than looking at individual projects one by one in the format of Board reports. (ii) Many of the industries have developed line of sights or theory of change that link their interventions to the twin goals. (iii) We continue to work on developing a dynamic approach/model on how to estimate the impact of private sector involvement on jobs and economic growth. (iv) We have continued to use evaluations strategically in key sectors and sub sectors to assess and develop clearer articulation of our contribution to development impact and ultimately the twin goals. (v) The Board paper template now includes guidance on how to link the project to the poverty goal. We are in the process of reviewing feedback from the first 6 months of implementation of the new guidelines and will update the guidelines if necessary. Training for operational staff on how to prepare the Board documents, including additionality and expected development impact is being delivered.
The action suggests that IFC would standardize its documents to include poverty focus. So far this has not been achieved. Furthermore, the direction of IFC diverges from agreed MAR. The management update indicates that (i)IFC prefers to focus on IFC's country/sector level contributions rather than its project level contributions; and (ii) IFC's contribution will be broad level, focusing on economic growth and jobs. This implies that IFC will not specifically articulate IFC's poverty focus and expected poverty impact at project level.
Action C (Ongoing):
IFC has defined its contribution to the Twin Goals, through jobs and economic growth. CODE endorsed RM 2.0 which points to the overarching framework of country/sector level links to the twin goals. We believe this is much more effective in looking at IFC's focus on poverty and shared prosperity than looking at individual projects one by one in the format of board reports. In addition, we are working on a dynamic approach/model (RM 3.0) on how to estimate the impact of private sector involvement on jobs and economic growth. We have continued to use evaluations strategically in key sectors and sub sectors to assess and develop clearer articulation of our contribution to development impact and ultimately the twin goals. Training for operational staff on how to prepare the Board documents, including additionality and expected development impact is being developed. We recommend changing the timeline to June 2016.
There has been some progress,but so far the project document guidelines, including both AS and IS project approval documentation has not been revised to sharpen and standardize relevant sections on poverty.
IEG acknowledges progress on synthesizing the literature review for staff and in drafting, but not yet adopting, guidelines.
Action c: Partly completed as per timeline. 11 literature reviews across Advisory and Investment sectors were done. Findings shared.
Draft guidelines created for assisting staff to think about poverty based on literature reviews and pilot training rolled out.
In order to start addressing the need for greater clarity on poverty inproject documents, a poverty and prosperity framework has been designed and is in the process of being piloted. Based on lessons learnt from the pilot, scale up and roll out will be planned for project documentation.
Relevant engagement of WB staff has been undertaken during discussion on the definition of poverty for IFC as well as in doing the literature reviews.
Integrating distributional issues into project design remains a challenge. It is not clear how the distributional and poverty issues are being integrated intothe stakeholder framework
As per commitment on literature reviews, 11 literature reviews were completed across BLï¾s and IGï¾s in FY12 itself. Initial findings have been shared and discussions ongoing on operationalizing findings. There are proposals for other sector reviews which could be undertaken in FY14. Besides the literature reviews, IFC has proactively initiated several other analyses to better understand the poverty impact, which in turn, can serve the institution to start addressing it in project design in time for the committed timeline of FY15. Among these initiatives are the IFC demonstration effect study which was undertaken to take a deeper dive into the PSD effects of operations in the markets IFC engage in. Next steps include potential refining of the way we think about these effects through more refined monitoring. As mentioned in the update to the evaluation strategy, IFC is also using its more robust evaluation strategy to capture more systematically the poverty impact of operations- which can then be used to inform project design.
Findings from these analyses has also allowed IFC to start looking at our lines of sight to the twin goals on poverty and prosperity, which were announced for the Bank group last year. We intend to continue and further refine this analysis of the contribution, with the objective of providing specific learnings for strategy, operations and how IFC captures the impact through M;E. We are looking at being able to use mixed evaluative methods to broaden our understanding. The work on these goals being done on the Bank side will also be useful input. All of these activities will assist us as we re-examine our current stakeholder framework for poverty issues.
However, work has started on building poverty guidance for the sectors reviewed to be used as lens during project discussion and documentation.