Highlights

This evaluation’s main purpose is to assess the platforms approach of the International Finance Corporation (IFC), as established in IFC’s June 2022 paper to the Board on using platforms to enable new business development at scale and clarified further by IFC to the Board in December 2022.

IFC defines platforms as thematic interventions at a regional, global, or sectoral level designed to address a specific development challenge.

The history of the IFC platforms approach dates to the early 2000s, when IFC developed programs to deliver short-term trade finance to its clients. Several early programs no longer meet IFC’s December 2022 definition of platforms.

IFC started developing platforms with thematic initiatives focused on solving particular development challenges, parallel to developing short-term finance programs. Responding to crises also motivated greater use of platforms by IFC.

The relevance of platforms was brought to the forefront by two major developments within IFC: adoption of the IFC 3.0 strategy and the IFC capital increase.

The European Bank for Reconstruction and Development is the most advanced among multilateral development banks in its use of platform-like structures and thus is the most comparable to IFC.

The evaluation focuses on three key features of platforms: streamlined project approval, monitoring and reporting, and self-evaluations and independent evaluations.

The evaluation uses the following key methods: structured interviews; desk-based document reviews; portfolio analysis; comparisons with IFC stand-alone projects (benchmarking); platform-based case studies; cross-cutting analyses of governance and reporting, risk, and efficiency; and a forward-looking scenario exercise with focus groups.

Definition of Platforms

The International Finance Corporation (IFC) defines platforms as thematic interventions at a regional, global, or sectoral level designed to address a specific development challenge. Projects under each platform have clearly defined eligibility criteria and may use a range of IFC products (for example, loans, equity, and advisory services) to meet these thematic challenges. Platforms may benefit from delegation of authority—the transfer of project approval authority from the Board to management—in full or in part or may have no delegation of authority from the World Bank Group Board of Executive Directors (IFC 2022b). The Bank Group Board grants delegation of authority to IFC management to allow it to approve projects without a formal Board meeting decision (for example, without preparing a Board paper). This contrasts with a regular procedure of convening a formal Board meeting to decide on IFC’s proposed investment or a streamlined absence of objection (AOB) procedure, in which IFC management is authorized to proceed with the proposed project on a closing date specified in the Board paper unless an executive director requests a full Board discussion.

Evolution of International Finance Corporation Platforms

The history of IFC’s platforms approach dates to the early 2000s, when IFC developed new programs to deliver new types of financing to its clients, predominantly short-term trade finance. IFC launched the Global Trade Finance Program in 2004 and other similar programs, such as the Global Trade Liquidity Program in 2009 and the Global Trade Supplier Finance Program and the Global Warehouse Finance Program in 2010, to deliver mainly short-term trade financing to its clients (figure 1.1). Given their market-driven nature, smaller transaction size, and large number of transactions, these short-term products required delegating authority to IFC management to approve transactions to meet the quick settlement time frames that complied with market demands. Otherwise, the large number of transactions under these short-term products, if processed under the regular procedure or AOB, were likely to overburden the Bank Group Board. However, with the change in the definition of platforms in December 2022, these programs are no longer considered IFC platforms (IFC 2022a).

Parallel to developing short-term finance programs, IFC started developing platforms focused on thematic initiatives addressing specific development challenges. Approved in 2008, the SME Ventures program invests equity into small and medium enterprise–focused private equity funds in International Development Association (IDA), fragile and conflict-affected situations (FCS), and frontier countries, whereas the InfraVentures platform aims to increase the pipeline of bankable public-private partnership projects in client countries. Several other platforms were launched later: IFC Startup Catalyst (ISC; approved by the Board in 2017) aimed at supporting early-stage companies across emerging markets; the Private Equity Funds Co-Investment Program (2017), providing a mechanism to leverage investments by private equity funds with IFC co-investments; the Small Loan Guarantee Program (SLGP; 2018), promoting Risk-Sharing Facilities to provide lending to small and medium enterprises in countries eligible for IDA financing; and the Côte d’Ivoire Housing Program (2019), targeting affordable housing.

Figure 1.1. Evolution of Platforms in the International Finance Corporation

Image

Share Tweet Facebook WhatsApp Linkedin Email

Figure 1.1. Evolution of Platforms in the International Finance Corporation

Image

Source: IFC 2022b.

Note: IFC = International Finance Corporation; SME = small and medium enterprise.

Exogenous shocks, such as the global financial crisis, natural disasters, and global health emergencies, also motivated IFC’s increased use of platforms. This dimension first emerged during the 2008–09 global financial crisis when IFC used the Global Trade Finance Program successfully to provide emergency financing to clients. IFC’s Fast-Track COVID-19 Facility (FTCF), launched in 2020,1 was created to provide emergency support to private sector companies to cope with the COVID-19 pandemic’s impact. IFC’s COVID-19 response was enhanced by launching the Global Health Platform (GHP) later in 2020 to increase the supply of health-care products and services in developing countries and the Base of the Pyramid (BOP) platform in 2021 to provide financing to financial service providers serving micro, small, and medium enterprises (MSMEs).2

International Finance Corporation’s Strategic Priorities

The relevance of platforms was brought to the forefront by two major developments within IFC: adoption of the IFC 3.0 strategy and the IFC capital increase. The IFC 3.0 strategy, approved by the Bank Group Board in December 2016, focused on developing new markets or systemic changes to existing markets to achieve sustainable development impact. It sought to promote private participation in development financing to contribute to the Sustainable Development Goals. The historic $5.5 billion capital increase package approved by the Bank Group Development Committee in April 2018 set ambitious strategic targets for IFC. More specifically, IFC committed to ramping up its operations on several fronts, including doubling its annual overall commitments and increasing its share of own-account long-term finance commitments in IDA countries and countries classified as FCS to 40 percent by 2030. These two initiatives required IFC to triple the number of investment projects from approximately 300 per year to an estimated 900 per year. Given that these targets will have to be achieved without a commensurate increase in budget resources, the obvious focus is on efficiency gains and improved productivity. IFC introduced platform approaches to pilot and scale up its interventions in critical development areas, consistent with IFC 3.0 and capital increase objectives.

International Finance Corporation’s Approach to Platforms

Considering this context, soon after approval of its capital increase, IFC management began engaging with the Bank Group Board, linking the concept of systematically using platforms to contribute to capital increase commitments. Yet no generally accepted definition of platforms existed until 2022. In June 2022, the Board approved a paper presented by IFC management on using IFC platforms to enable new business development at scale (box 1.1; IFC 2022b). The main purpose of that paper was to systematize IFC’s approach to platforms because IFC already had several platforms in place. The Board approved the paper on a pilot basis with the understanding that IFC would commit to engaging with the Board regarding each platform, developing robust and regular reporting to the Board on its platforms and their underlying projects, and facilitating periodic Group Internal Audit and Independent Evaluation Group evaluations of platforms. Then, in December 2022, IFC issued an update distinguishing platforms from programs and products.

Platforms Approach in Other Multilateral Development Banks

Among the multilateral development banks, the European Bank for Reconstruction and Development (EBRD) is the most advanced institution in the use of platform-like structures, which it calls “investment frameworks.” EBRD first introduced the concept of multiproduct facilities in the mid-1990s and with it a degree of approval delegated to management. These facilities soon evolved into the broader idea of investment frameworks. Multiproduct facilities aimed to bring together under one roof the standardization of projects and procedures relating to the same client, while frameworks did the same for projects of a similar nature, each within a financial envelope approved by the EBRD’s Board. They were primarily a response to the fact that the project preparation burden faced by clients and the EBRD management, staff, and Board was intensive and resulted in long project gestation periods. Projects of up to €25 million under frameworks are currently eligible for delegated approval, except for those regarded as “novel or contentious.”3 In IFC Platforms: Enabling New Business Development at Scale, IFC established a different indicative threshold from EBRD for platform projects under delegated authority—up to $25 million of IFC own-account finance for new clients and up to $50 million for existing clients (IFC 2022b).

Scope and Methodology

This evaluation focuses on assessing the platforms approach as established in the June 2022 IFC paper and further clarified to the Board in December 2022. It does not evaluate the relevance and effectiveness of each individual IFC platform separately and does not include platforms that may have been called platforms at some point but do not conform to the 2022 criteria.

The evaluation focuses on three key features of platforms: streamlined project approval using delegated authority and approvals on an AOB basis, monitoring and reporting, and pooling of risk and mitigating risk (primarily using IDA Private Sector Window [PSW] blended finance). First, the Board authorized some platforms to use approval authority delegated to IFC management in approving individual projects, often subject to certain restrictions. In addition, the Board authorized platforms to use a shorter form of a Board paper paired with Board approval by AOB.4 Both approval methods are supposed to reduce the processing time associated with moving a project from design to approval and to first disbursement, and this evaluation explores the actual savings and efficiencies achieved. Processing time is sometimes reduced through standardization and streamlining achieved by a more uniform treatment of similar projects. Second, the Board, to exercise its governance functions, requests IFC to report certain information regularly either at approval or periodically at the project or platform level. This evaluation explores the nature and quality of such reporting and inquires as to what information the Board would need to exercise its oversight. Third, some platforms have blended finance (primarily IDA PSW) integrated into their design to allow IFC to reach riskier markets and clients. This evaluation will consider the extent to which IDA PSW allows IFC to engage in IDA countries and FCS and with clients in underserved markets.

The evaluation seeks to answer three key questions about platforms:

1. To what extent do the IFC platforms achieve their objectives, specifically (i) responding to crisis at scale, (ii) engaging with small and new clients, (iii) engaging with clients in IDA countries and FCS, and (iv) engaging in new sectors?
2. To what extent does IFC’s platforms approach meet Board and client expectations on oversight, reporting, and efficiency gains while balancing risks and benefits to enhance trust over time?
3. What guidance does the early experience of platforms provide IFC in shaping future use of the approach?

To answer these questions, we used five core methods (figure 1.2). These include (i) in-depth case studies for three platforms and lighter desk studies for the four others enhanced by portfolio analysis; (ii) extensive interviews with IFC staff, the IFC Board, IFC clients, and investors; (iii) benchmarking comparison of IFC platforms with similar nonplatform projects; (iv) a derivation and comparison of lessons from EBRD’s experience with frameworks; and (v) a forward look using focus groups to elicit key stakeholder views on the lessons of experience for the future of the platforms approach. As figure 1.2 notes, a subset of methods was used to answer evaluation questions 1 and 3, whereas all methods informed the answer to evaluation question 2.

Figure 1.2. Platforms Approach Evaluation Design

Image

Share Tweet Facebook WhatsApp Linkedin Email

Figure 1.2. Platforms Approach Evaluation Design

Image

Source: Independent Evaluation Group.

Note: EBRD = European Bank for Reconstruction and Development; FCS = fragile and conflict-affected situations; IDA = International Development Association; IFC = International Finance Corporation.

* EBRD lessons were primarily used to answer evaluation question 2.

The evaluation covers seven platforms that IFC approved between FY 2017 and FY22 (the evaluation period): ISC (FY17), Private Equity Co-Investment (FY17), SLGP (FY18), the Côte d’Ivoire Housing Program (FY19), FTCF (FY20), GHP (FY21), and the BOP platform (FY21). On the basis of a request from the Board, we also included in the evaluation’s scope projects approved in FY23 under the seven platforms.

We assessed the platforms approach more deeply through the lens of the three IFC platforms (case studies) that the Board approved during FY17–22: GHP, BOP, and ISC. We conducted the three case studies to reflect diverse platform experiences and identified the case studies based on three criteria:

• Timing of platforms approval: Selecting platforms over the six-year period allowed us to assess both crisis and noncrisis response platforms.
• Intensity of coverage of priority themes: The platform selection criteria included platforms targeting MSMEs, early-stage companies focusing on digital technologies, and companies contributing to health-care products or services in response to the COVID-19 pandemic.
• Ease of grouping subprojects within a theme for alignment with the definition of platforms in the IFC paper discussed at the Board in June 2022 (IFC 2022b) and IFC’s follow-up clarification to the Board in December 2022 (IFC 2022a). The selection criteria included platforms with subprojects addressing a similar development objective (for example, tackling health-care supply gaps in developing countries).

Each case study sought to answer evaluation questions 1 and 2 through a combination of desk-based reviews and portfolio analysis, comparing them with IFC stand-alone projects (benchmarking), along with extensive interviews. We collected and analyzed documents at the institutional, platform, and project levels, including through a portfolio review for all the seven platforms in scope. We conducted interviews with IFC platforms owners, IFC investment officers who led platform projects, the IFC reporting team, IFC risk officers, IFC corporate portfolio staff, IFC clients, investors, and executive director advisers. These interviews were semistructured, starting with an established template of questions but with the freedom to explore particular aspects in depth. Case studies also drew from deep dives on risk and on oversight and reporting. For four other platforms—Private Equity Co-Investment, SLGP, the Côte d’Ivoire Housing Program, and FTCF—we prepared lighter desk studies based on fewer interviews and less in-depth analysis. These lighter studies limited the assessment to desk-based reviews of background documents (such as individual platform-level Board papers and Board discussions of individual platforms) and interviews with owners of these individual platforms to gather evidence beyond the desk-based reviews.

To answer evaluation questions 1 and 2, we also compared IFC case study platforms with IFC stand-alone projects (nonplatform benchmarks). We selected nonplatform benchmarks for the three case study platforms from all IFC stand-alone investment projects approved between FY17 and FY22. We selected nonplatform benchmarks with objectives, beneficiaries, and industries similar to the platform case studies. We then compared all platform projects for each of the case study platforms with all nonplatform (benchmark) projects matched to each case study. We worked to minimize limitations in the comparison. First, identical comparators were not possible because BOP and GHP benchmarks had been implemented before these two platforms were launched, and the ISC platform finances smaller projects than individual (nonplatform) comparators. Second, to address the limitations, we applied several checks to confirm the validity of comparisons. Benchmarks were not used as strict counterfactuals but as reasonable points of comparison. The checks examined the validity of comparison with regard to use of IDA and FCS projects, use of blended finance support (primarily IDA PSW), regional distribution, country income, investment size, and client type (new or existing client; see appendix A).

In addition, a deep dive compared EBRD’s long-term practice and experience with investment frameworks with IFC’s experience with platforms. Among the multilateral development banks, EBRD investment frameworks are the most similar to IFC’s platforms in structure and characteristics. EBRD’s Financial Intermediaries Framework, launched in 2015, is similar to IFC’s BOP. The Financial Intermediaries Framework lends to financial intermediaries that onlend to MSMEs. Both BOP and the Financial Intermediaries Framework have a delegated authority option. EBRD’s Early-Stage Innovation Facility, launched in 2014, and the Venture Capital Investment Program, launched in 2011, are similar to IFC’s ISC. The Early-Stage Innovation Facility invests in early-stage venture capital funds. The Venture Capital Investment Program provides small direct equity investments in companies needing venture capital. ISC, the Venture Capital Investment Program, and the Early-Stage Innovation Facility all have delegated authority as a standard feature. EBRD does not invest significantly in health care, and thus no framework was compatible with GHP.

We used a scenario-based forward look exercise to conduct focus group discussions with IFC management, the IFC Corporate Strategy and Operations team, and executive director advisers to reflect on the future implications of experience with the platforms approach. Using an expert facilitator, participants were asked how, in alternate scenarios, platforms could contribute to the IFC 3.0 strategy and to the capital increase targets with regard to delegation of authority, global crises, and scale-up to reach new clients and new markets. The forward look had three focus groups: 20 advisers or senior advisers to the executive directors, 3 IFC industry directors for the three case study platforms, and 6 members of management and staff from IFC’s Corporate Strategy and Operations team.

Limitations. We examined early evidence on platforms as an approach rather than focusing on the effectiveness of individual IFC platforms and their development outcomes because this is an early-stage evaluation. We could not measure development outcomes or compare them with what IFC achieved outside of platforms. The direct and intermediate outcomes hypothesized in the program logic (see appendix A on methods used in this evaluation) and tested in this evaluation are limited to process outcomes (for example, efficiency gains, anticipated risk, and client and project characteristics). In addition, the fact that the base of experience in this evaluation is both limited and diverse among the seven in-scope platforms in some cases limits the generalizability of findings. Although several platforms have objectives of reaching small clients, this evaluation could capture only investment (transaction) size. Client size in terms of assets, sales, or employees is not available universally. Limitations to the benchmarking exercise are explained in this chapter and in appendix A. The Independent Evaluation Group’s methodology on new sectors compares the sectors IFC invested in using platform projects with the sectors IFC invested in without platform projects to identify sectors that IFC has only ever invested in via platforms (that is, new sectors). Already implicit in this analysis is a comparison of the sectoral distribution of platform versus nonplatform projects, obviating the need for further benchmarking. Indeed, this approach cannot be used to generate a “new sector” estimate for nonplatform benchmarks.