Management of the International Finance Corporation (IFC) thanks the Independent Evaluation Group (IEG) for the report, Early-Stage Evaluation of International Finance Corporation Platforms Approach: Addressing Development Challenges at Scale. The evaluation assesses the extent to which IFC platforms achieve their objectives and the extent to which IFC platforms approach meets Board and client expectations of oversight, reporting, and efficiency gains (based on platforms introduced between FY 2017 and FY22). The evaluation is timely as management views platforms as an important mechanism to deliver on the aspirations of the World Bank Group Evolution, which requires the institution to significantly scale its operations, financing capacity, and development impact. The evaluation provides insights to assist IFC in shaping the future use of platforms to address crises and global challenges and to reach new and small clients and markets. Management thanks IEG for the continued collaboration. 

International Finance Corporation Management Response 

Overall 

Management is pleased with IEG’s positive assessment of the IFC platforms approach. The report validates the role of platforms in enabling IFC to respond to crises at scale, engage efficiently with small and new clients, and extend IFC’s reach in International Development Association and fragile and conflict-affected situation markets and to new sectors. The report also recognizes platforms’ contribution to efficiency gains through lowered average project processing time enabled by streamlined decision-making and standardized documentation. In addition, the report confirms that platform projects, whether in the debt or equity space, do not increase IFC’s portfolio risk. 

Management broadly agrees with IEG’s assessment of how platforms have achieved their objectives but believes that the evaluation does not sufficiently capture important aspects of success. While the evaluation states that the IFC Startup Catalyst platform and the Private Equity Funds Co-Investment platform played a “moderate role” in the achievement of platform objectives, management believes that the approach played an essential role in facilitating the investment in challenging markets and engaging with small clients and new sectors in the case of IFC Startup Catalyst and achieving scale in fund investments through the Private Equity Funds Co-Investment platform. Private Equity Funds Co-Investment has become a core IFC tool as current co-investments represent more than 20 percent of IFC’s annual investments through private equity funds. The platform’s streamlined processing has helped enable these initiatives that would otherwise not be economically viable and transactionally efficient size-wise. 

Management would like to note important aspects and drivers of performance for IFC’s sector-focused platforms. Regarding the Global Health Platform (GHP), management agrees that some of the investments under GHP may have occurred on a stand-alone basis but emphasizes that the performance of the platform is more nuanced. GHP’s focus was to enable a strategic sectoral approach that built the foundation for long-term engagement in the health sector to support resilience beyond the crisis period. This involved robust client engagement, including significant upstream business development support and new partnerships. Through GHP’s focused and dedicated approach, IFC has engaged donors (for example, Japan and Norway) and international partners (for example, CEPI, the World Health Organization, and Gavi, the Vaccine Alliance), which has been instrumental in increasing IFC’s value proposition for clients in this sector. 

In regard to the Côte d’Ivoire Housing Program, management believes that key factors undermining its performance were different from those stated in the evaluation. The report refers to IFC excessively narrowing the platform’s focus to a single country and sector and misjudging the market. Management would like to emphasize that housing is a very locally driven business, and a regional housing platform may have in some ways multiplied rather than mitigated risks, given the vast differences between regulatory and tax regimes country to country or even within a single country. The Côte d’Ivoire Housing Program had a strong upstream component in its design, and the team worked closely with the World Bank to create enabling housing regulations that would incentivize the participating banks to engage more with the housing market. Implementation was also dependent on the development of basic infrastructure (water, electricity, and so on) to service the housing under construction. This was delayed and affected by the onset of the COVID-19 pandemic, which led to competing priorities for public finance. The missing basic infrastructure made the banks hesitant to continue their engagement. Additionally, compliance with environmental and social standards did not contribute to the cancellation of the platform. The platform had a strong advisory component to ensure environmental and social compliance and capacity building along the value chain. 

Recommendations 

Management welcomes the report’s two recommendations, which endorse IFC’s approach to platforms and provide guidance for the future use of platforms. Management appreciates the suggested way forward and notes that IFC is already working toward implementing the recommendations. 

Recommendation 1: Management agrees with the recommendation to extend the pilot approach to new platforms building on lessons learned from platform performance. Management is working on an update on the pilot approach, which calls for a rollout of the approach beyond the pilot stage and proposes several modifications to develop it further. The update will be presented to the Board in the third quarter of FY25. These modifications are based on lessons learned throughout the pilot phase and aim to ensure the efficiency and effectiveness of platforms and the approach over the long term. During the pilot period, IFC has made concerted efforts in channeling lessons from previous platforms into the design of new ones and mainstreaming these lessons across IFC’s business. For example, IFC leveraged the streamlined project processing approach of the Fast-Track COVID-19 Facility into the expedited processing procedure for existing clients, enabling IFC to process repeat transactions more efficiently and shift efforts into developing relationships with new ones. Successive iterations of different platforms also include lessons learned from the previous ones. Both Base of the Pyramid and Fast-Track COVID-19 Facility Working Capital Solutions allowed IFC to scale funded solutions under the recently launched micro, small, and medium enterprise finance platform. Starting at $400 million and getting to over $4 billion under the micro, small, and medium enterprise finance platform is only possible through successively more advanced iterations of platforms that leverage lessons learned to create synergies across similar borrower profiles across multiple countries. 

Recommendation 2: Management agrees that thorough reporting on the implementation and outcomes of the platforms approach is key for accountability. Management would like to note that the scope, quality, and depth of reporting have, over the pilot period, become more robust. While IFC will strive to continue improving its reporting on platforms, this process will be gradual for two main reasons. First, the universe of platform projects is still relatively small with few closed projects, and, as such, caution needs to be exercised when drawing definitive conclusions on matters such as the profitability and development impact of the platforms approach. Nonetheless, IFC will share early results with the Board where feasible. Second, further improvements in technology infrastructure to enable more automated data collection are needed to enable IFC to improve analysis of platform outcomes and leverage this analysis into platform design. In this context, IFC agrees with the evaluation’s assertion that there needs to be balance between oversight and reporting to preserve the efficiency gains generated through streamlined processing. IFC is keen to continue the conversation with the Board on how to strike this balance, noting the evolution of the reporting that has already taken place following ongoing discussions with the executive directors and advisors since the initial launch of this pilot phase for platforms. Similarly, it is worth noting that the different platforms have seen an evolution in their own design and reporting on impact and outcome indicators based on lessons from earlier platforms.