The independent validation of the World Bank Group’s 2018 capital increase package finds that progress has been made both on improving financial sustainability and on delivering global public goods. The report also presents lessons for the Bank Group’s ongoing transition.
The World Bank Group is undergoing an evolution, albeit not for the first time.
In 2018, Bank Group shareholders endorsed a capital increase package (CIP) that boosted the institution’s financial firepower. The CIP also committed the Bank Group to increasing private capital mobilization and expanding financing for priority areas. This would better position the Bank Group to support the 2030 development agenda.
Similarly, the current Evolution Roadmap seeks to answer a call from shareholders to “bolster and scale the response to global challenges and move toward achieving the Twin Goals and the Sustainable Development Goals in all client countries.” The building blocks of the Evolution Roadmap mirror, or are closely related to, the CIP’s priority areas.
The Independent Evaluation Group’s validation of the CIP’s implementation and the quality of management’s reporting on it offer valuable lessons for the World Bank’s evolution process, its implementation, and future reporting on its effectiveness.
A Package to Help the World Bank Group Deliver on Its Ambitions for 2030
What was involved in the package agreed on by Bank Group shareholders in 2018?
The CIP had two parts. First, it delivered a financing package to enhance the financial capacity of the International Bank for Reconstruction and Development (IBRD) and the International Finance Corporation (IFC). This aimed to help them achieve their strategic priorities. Second, it introduced a policy package that committed Bank Group management to implement policies that could deliver on its 2016 Forward Look strategy. This meant identifying priority areas that the CIP should support, including climate change; gender; fragility, conflict, and violence work; “serving all clients,” that is, differentiating support across client country segments; creating markets; and enhancing internal corporate effectiveness.
“Excellent Progress” on Many Fronts and Areas for Improvement
Overall, the validation’s findings about the CIP’s impact were positive.
IBRD and IFC made strong progress in the following CIP priority areas: increasing the Bank Group’s financial sustainability and promoting global public goods. IBRD’s and IFC’s capital bases have been clearly strengthened by the CIP, and the World Bank has since expanded its role in crisis response, as seen in its concerted response to the COVID-19 pandemic.
IBRD and IFC also made excellent progress in implementing many of the other global themes that the CIP committed to, particularly gender and climate change. For example, IBRD’s and IFC’s climate co-benefits exceeded their targets after FY18, then reached record high volumes in FY22.
IBRD made strong progress in implementing commitments to engaging with different client country segments and increasing its financing for small states and countries that have not reached the stage for graduation from International Development Association, the World Bank’s fund for the poorest countries. By contrast, IFC made the least progress in increasing financing for low-income and fragile countries.
IFC’s private capital mobilization ratio has been 94 percent, averaged over the CIP period. This exceeds its target of 80 percent.
The report also identifies areas where the CIP has not been as effective, which offer useful insights for the future.
IBRD made least progress in its aim of mobilizing private resources alongside the CIP. IBRD’s average annual private capital mobilization from FY19 to FY22 was 7.4 percent, well below its target of 25 percent.
Although IBRD has intensified its domestic revenue mobilization since 2018, especially in low-income countries with low revenue–to–GDP ratios, the institution has shown limited internal collaboration and policy coherence on domestic revenue mobilization. For example, the links between IBRD’s diagnostic work and its operational work on tax reforms were weak.
Assessing the Capital Increase Package’s Regular Reporting, Not Just Its Outcomes
Assessing the implementation of the CIP was clearly a key aim of this validation, but the Independent Evaluation Group also assessed how effectively Bank Group management has itself been reporting annually on the CIP’s implementation. This is vital because better reporting can help identify and lead to the implementation of potential improvements to an intervention more quickly.
The validation finds that the Bank Group management’s reporting on the CIP could have been more informative and learning oriented. The CIP monitoring did not enable learning or fine-tuning of strategy implementation, and there were instances of incomplete reporting.
In addition, management’s progress reports on the CIP tended to be specific to issues or activities and included limited evidence of assessing the CIP’s overall outcomes or of taking a step back to recognize the interaction between different CIP policy commitments.
Pointing the Way to More Effective Implementation of Financing
The validation made findings that could—and should—guide future action related to the CIP specifically or to other corporate initiatives.
One striking conclusion is that the CIP contributed positively to action on priority areas where the Bank Group already had clear strategies or action plans, supportive internal organizational arrangements, and well-defined indicators and targets in place.
By contrast, in areas that made the least progress, the Bank Group either lacked a clear vision or measurable indicators, or displayed weak oversight, limited collaboration, and adverse incentives.
The lesson is clear: starting with a strategy, clear accountability, and a plan for measurement and evaluation is the best way to design and report on corporate initiatives. This is also a critical foundation for quicker learning and adaptation.
In the future, the Bank Group should underpin its corporate initiatives by putting in place the following:
These steps will help make corporate interventions like the CIP more targeted and effective, which, in turn, will help the Bank Group fulfill the core objectives of the transition it is undergoing.
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