After a decades-long improvement in political stability, Chad saw a surprising reversal in 2021, with six coups, forcing a reassessment of how the World Bank works with Chad. World Bank Operational Policy (OP) 7.30 on Dealing with De Facto Governments is triggered when a “de facto government” comes into power by means outside of a country's constitution, such as a coup d'état, revolution, suspension of the constitution, or when no government is in place. When OP 7.30 is triggered, the World Bank suspends disbursements on projects under implementation. This lasts until the World Bank determines that a proper legal framework is in place and that all parties have carried out their obligations as agreed with the Bank. 

Lessons from the World Bank’s engagement in Chad

IEG recently evaluated World Bank Group engagement in Chad between 2010 and 2020. Over that period, the Bank Group thrice suspended disbursements and new lending to the country. The first suspension occurred in January 2006 when disagreements arose over the use of oil revenues as agreed under the World Bank-support Chad-Cameroon pipeline project (approved in June 2000). The suspension was prolonged by rebel attacks on the capital in 2008, resulting in the temporary closure of the Bank office. In January 2009, the office in N’Djamena reopened, and lending resumed following repayment of the balance on the pipeline project and associated credits of US$66 million to the World Bank in 2008. In May 2010, new lending resumed following an Interim Strategy Note (ISN) covering the 2010-2012 period.  

IEG’s Country Program Evaluation found that the renewed lending in 2010 and the success of initial operations in Chad were hampered by the absence of strategic and high-quality analytics to inform the design of projects, target capacity development efforts, and identify the most critical needs and preconditions for development impact (including adjusting to the evolving political landscape ). Indeed, the World Bank’s interim strategy itself was largely informed by analytics produced by development partners, mainly the African Development Bank and European Union. This was necessary given the lack of continuity and institutional memory at the World Bank as many staff moved on to other assignments when operations were suspended.  

While analytical and technical work picked up when lending resumed, this delay meant that findings and recommendations were not available during the critical stage of figuring out how best to reengage with Chad. Had a more strategic approach been taken to analytical and diagnostic work, which could have continued despite the suspension of  disbursements and new lending, the Bank could have had a better prioritized road map when relations normalized. While the Bank’s use of analytical work from development partners to inform the interim strategy showed commendable collaboration, it was not a full substitute for Bank-led work in areas for which the Bank had a comparative advantage.  

The Bank slowly ramped up analytical work in the second half of the evaluation period. When timely analytical work was available, it informed priority setting, policy dialogue, and the design of more successful interventions. This was especially true for the World Bank’s social protection portfolio approved in 2016.

At the same time, when it comes to analytical work, more is not always better. In a situation of limited resources, as was the case for Chad, what is needed is a strategic approach to analytical work with coordination around the setting of priorities to align them with the absorptive capacity of the country authorities and to ensure adequate quality control.

Shades of World Bank engagement

When a country is under OP 7.30, the World Bank will generally not approve new operations. However, exceptions can be made as the Bank carefully weighs a range of considerations. For example, while Sudan is currently under OP 7.30 following the military coup in October 2021, the Bank has responded to the urgent needs of the population by working through “third parties” to deliver much-needed support without being seen to legitimize the current de facto government.

The suspension of disbursements under OP 7.30 can last from several months as in Chad (April 2021 to July 2021) to years as in Madagascar (2009 – 2014). In recent years, OP 7.30 has been triggered for countries such as the Central African Republic (CAR), Chad, Niger, Mali, Madagascar, Myanmar, Guinea-Bissau, Sudan, Yemen, and most recently, Burkina Faso. Similarly, long pauses in Bank engagement occur when countries are in arrears on repayments to the Bank, as was the case for Somalia and Sudan and remains the case for Zimbabwe.

Countries under the World Bank’s OP 7:30 in the past decade:

Countries under the World Bank’s OP 7:30 in the past decade:
Note: Red diamond represents countries in arrears.

Exiting from OP 7.30 status is often referred to as “re-engagement” in World Bank parlance, but this is a misnomer. It is rare for the Bank to entirely disengage from countries under OP 7.30 or even those in arrears. Analytical and diagnostic work usually continues and can play a critical role in identifying priorities and bottlenecks in the reform process when relations are normalized. While OP 7.30 or arrears do restrict the resources that the World Bank can mobilize in support of longer-term development and reform, external sources of funds such as trust funds can provide important flexibility for the Bank to remain “engaged.”   

The resumption of lending often comes with first-mover status, as was the case in Niger and Madagascar, where exiting from OP 7.30 status convinced other development partners to reengage shortly thereafter. Similarly, in the CAR, the resumption of World Bank lending helped restore government credibility and mobilize other resources for the beleaguered country. 

IEG’s recent evaluation of World Bank Engagement in Situations of Conflict showed that World Bank emergency operations in the CAR, Guinea-Bissau, Mali, Niger, and Yemen were often highly effective at maintaining critical service delivery, although the necessary haste in which they were prepared, often without the benefit of solid analyses, did increase risks of unintended consequences (e.g., exacerbating conflict drivers). In contrast, in Madagascar, the coup which triggered OP 7.30 led the World Bank to ramp up its analytical work and better understand the causes of political instability. This helped inform strategic and operational considerations ahead of eventual normalization of relations and resumption of direct financing.  

These cases reflect something that was a key finding of the Chad Country Program Evaluation: the quality and focus of analytical work produced before financing is resumed, makes World Bank support for countries emerging from a status where financing is not possible, more effective. And with the timing of that resumption by its very nature uncertain, investing in ongoing monitoring and well targeted diagnostics has a potentially high return.

 


Photo credit: dk_photos, Getty Images

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