The International Finance Corporation (IFC), in its December 2022 paper, “IFC’s Approach to Platforms: An Update—Applying Lessons to Enhance Platform Clarity,” defines platforms as thematic interventions at a regional, global, or sectoral level designed to address a specific development challenge (IFC 2022a). Until 2022, there was no generally accepted definition of platforms. IFC’s June 2022 Approach Paper, IFC Platforms: Enabling New Business Development at Scale, defines programs and platforms as a “grouping of projects of a similar nature or development objective under a single envelope, processed in an expedited fashion” (IFC 2022b, 1). The December 2022 paper redefined platforms and distinguished platforms from IFC programs and products explicitly (IFC 2022a). Since then, the paper’s definition of platforms has been widely accepted.

Evaluation Purpose and Questions

The main purpose of this early-stage evaluation is to assess IFC’s platforms approach as established in IFC’s June 2022 paper to the Board and clarified by IFC to the Board in December 2022. The evaluation answers three questions:

• Evaluation question 1: To what extent do the IFC platforms achieve their objectives, specifically (i) responding to crisis at scale, (ii) engaging with small clients and new clients, (iii) engaging with clients in International Development Association (IDA) countries and fragile and conflict-affected situations (FCS), and (iv) engaging in new sectors?
• Evaluation question 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?
• Evaluation question 3: What guidance does the early experience of platforms provide IFC in shaping the future use of platforms?

The evaluation covers seven platforms that IFC introduced between FY 2017 and FY22. On the basis of the request from the Board, projects approved in FY23 under the seven platforms were also included in the scope of the evaluation. The Independent Evaluation Group conducted an in-depth assessment of three platforms through case studies and a broader assessment of the other four platforms. To answer the evaluation questions, we triangulated findings from different methods: case studies, portfolio review and analysis, interviews with key stakeholders and staff, benchmarking case study platforms, a synthesis of lessons from the European Bank for Reconstruction and Development with a comparable instrument, and a forward look exercise based on focus groups.

We assessed the seven platforms against the four objectives as specified in evaluation question 1. Given the early-stage nature of this evaluation, we examined available evidence on the platforms as an approach rather than focusing on the development outcomes of individual IFC platforms. Because the Independent Evaluation Group had evaluated only one platform project at the time of this evaluation, we could not assess outcomes or compare them with what IFC achieved outside of platforms. In addition, the fact that the base of experience in this evaluation is both limited and diverse among the seven in-scope platforms limits the generalizability of findings in some cases.

There is no fully articulated and shared perspective on how IFC platforms are intended to work. On the basis of official documents and interviews, we reconstructed a program logic that hypothesizes how IFC platforms are expected to work and achieve the four objectives elaborated in evaluation question 1. Within this program logic, efficiencies realized by the platforms through streamlined and standardized internal processes, expedited project processing, and pooling of risks combined with blended finance would allow IFC to respond to a crisis at scale and respond to specific development challenges at greater scale, including by engaging with small and new clients, with clients in IDA countries and FCS, and with clients in new sectors. Systematic reporting and monitoring by IFC and periodic self-evaluations and independent evaluations would enhance trust between the Board and IFC management and facilitate oversight and learning. As IFC applies expedited processing and engages with higher-risk clients and markets, platforms would manage risk by employing due diligence processes and the support of blended finance to pool and mitigate risk in more challenging markets.

We used the program logic to analyze and explain the evidence collected in this evaluation. Overall, the IFC platforms achieved the objectives they set out to achieve, with some exceptions. However, the importance of the platforms approach in enabling the achievement of these objectives varied across platforms.

Findings

Platforms provided a key vehicle for IFC to increase the scale of its crisis response during the height of the pandemic, yet the responses of some of the platforms took time to materialize. The generalization of this finding is limited to the three platforms—the Fast-Track COVID-19 Facility, the Global Health Platform (GHP), and Base of the Pyramid (BOP)—that were approved during the pandemic to address urgent needs. Seventy-five percent of IFC’s COVID-19 pandemic response was channeled through those three platforms. Using expedited processes, the Fast-Track COVID-19 Facility and BOP channeled substantial working capital to firms and financial intermediaries at a time when liquidity ran short. Yet, in terms of the pandemic response, there was a period of time that elapsed after IFC’s initial COVID-19 response and before the launch of the BOP platform or the approval of GHP’s first investment. Despite urgent need, GHP’s first investment was approved one year after the pandemic in March 2021 because of the complexity of its projects, which required longer preparation time. Moreover, the BOP platform, which focused on providing financing to financial intermediaries serving micro, small, and medium enterprises (MSMEs), was launched 11 months after the COVID-19 outbreak in February 2021. IFC took time to assess the emerging needs of MSME financial intermediaries.

IFC used specific platforms to extend its reach to a higher percentage of small clients (as reflected by small transactions) and new clients. For the purposes of this evaluation, “small clients” refers to clients with small IFC commitment amounts that IFC would not otherwise invest without a specific platform intended to serve such clients. We used this proxy because client size is not always recorded. Project documents often do not report the size of IFC clients (for example, company asset size, sales, number of employees, and so on). “New clients” refers specifically to partner institutions in which IFC has not made an earlier investment since July 2000. The three platforms that aimed to reach small clients—BOP, IFC Startup Catalyst (ISC), and Private Equity Co-Investment—succeeded in doing so by making smaller investments. Platform features that facilitated small transactions included efficiency from project processing and pooling of risk using blended finance. These allowed platforms to finance transactions that IFC would not have financed through stand-alone projects. Among these three platforms, BOP stood out for having a much higher proportion of new clients than its benchmark. In addition, BOP was able to engage with new and risky clients by taking advantage of pooling of risk using IDA Private Sector Window blended finance support.

Platforms enabled IFC to engage with clients in IDA countries and FCS, except for the Côte d’Ivoire Housing Program, because it did not meet its objectives. By design, four platforms were expected to engage substantially in IDA countries and FCS: the Small Loan Guarantee Program, BOP, the Fast-Track COVID-19 Facility, and the Côte d’Ivoire Housing Program. Both the Small Loan Guarantee Program and the BOP platforms have IDA Private Sector Window blended finance support integrated into their design, which enables them to pool risk and mitigate it efficiently with blended finance, thus allowing them to engage substantially with riskier IDA and FCS clients. IFC’s engagement with IDA and FCS clients was facilitated by a portfolio focus (for example, BOP’s focus on financial intermediaries targeting MSMEs), efficiency gains (for example, delegation of authority—the transfer of project approval authority from the Board to IFC management—for existing clients and streamlined internal processes such as short-form Board papers for approvals for new clients under BOP), and risk mitigation (for example, pooling of risk through blended finance support in both BOP and the Small Loan Guarantee Program). The Côte d’Ivoire Housing Program was dropped. Contributing factors include that the platform misjudged the market, focusing narrowly on one country, one sector, and two participating banks. Of the two banks selected to support affordable housing in Côte d’Ivoire, one withdrew (citing negative price movements in the market), and the other failed to restore compliance with IFC’s environmental and social standards. In addition, IFC informed the Independent Evaluation Group that the Ivorian government did not deliver on the development of basic infrastructure (water, electricity, and so on) to service the housing under construction, after an unsuccessful World Bank engagement, making banks hesitant to continue their engagement.

Platforms aiming to reach new sectors did so to some extent; however, the platform approach was not essential to GHP investments. ISC, GHP, and BOP each realized their aim to reach new sectors that IFC did not otherwise reach but to a limited extent. Platforms were able to focus resources and industry knowledge in specific areas. In addition, processing efficiencies (for example, delegation of authority and deal acceptance criteria in ISC) freed up time to serve clients in new sectors. GHP focused attention and resources on reaching new sectors, but interviews suggest that its investments would likely have occurred without the platform approach.

Platforms have demonstrated efficiency in reducing average processing time for projects, with some variation by platform. Key factors in reducing processing time included delegation of authority and standardization and streamlining of processes. Delegation of authority was the most important source of efficiency gains observed in accelerating the crisis response. Use of delegated authority surged during the COVID-19 pandemic, and the resulting time savings were especially evident in the BOP platform. ISC also achieved time savings from delegation of authority, but overall project preparation time was longer because IFC had to provide time-consuming hand-holding to first-time fund managers who were unfamiliar with legal and technical requirements. In addition, the fund managers faced fundraising delays to achieve a minimum viable fund size. The Independent Evaluation Group’s case studies indicate that standardizing and streamlining IFC internal processes (for both preparation and approval) under platforms also contributed significantly to time savings. However, IFC’s analysis of and reporting on efficiency have been limited to processing time, whereas a full consideration of efficiency would require collecting and analyzing additional data on cost and profitability.

Based on expected loss, an ex ante risk indicator, there is no indication that platform projects covered by this evaluation will increase IFC’s portfolio risk. However, this varies by platform. Expected loss is the amount that IFC is expected to lose from a client’s potential default on a loan. To some extent, the lower risk in platforms can be explained by the presence of IDA Private Sector Window blended finance support, which compensates for a small portion of the loss amounts to IFC, thereby reducing risks to IFC’s balance sheet. For example, the BOP platform’s integrated ability to pool risk and use blended finance efficiently enabled it to take on more risky clients. However, BOP was riskier than its benchmark because of the beneficiaries it targeted (for example, MSMEs). Equity risk for platform and nonplatform projects is similar, but ISC is riskier than its benchmark because of its targeted clients.

Platforms reporting has evolved over time but has not met the expectations of the World Bank Group Board of Executive Directors. Contrary to the Board’s expectations at the time of the creation of individual platforms, there is little or no reporting in the Board Operations System and IFC’s operations portal on additionality, development impact, environmental and social and integrity risk ratings, credit and equity risk ratings, and risk-adjusted return on capital. Regular reports from IFC management to the Board show commitment volumes with links to project data, platform usage, and share of IFC’s own account across IDA countries and FCS, climate, and gender. However, there is little reporting on what the Board expected. In addition, platforms have not consistently established indicators and measurable targets at the platform level in their Board papers as a basis for reporting and oversight.

The forward look exercise found that the Board and IFC agree on using platforms to confront future crises and some development challenges, but their views on delegation and reporting differed. Focus groups involving 20 executive director advisers and IFC senior management yielded the following reflections of views from the participants:

• The Board and IFC management agree that platforms can produce efficiency gains through streamlining and standardization of internal processes. However, on delegated authority, IFC management viewed it favorably, but the Board regarded it as neither inherent to nor necessary for platforms to operate efficiently. The Board saw potential for expanding delegation within clearly defined parameters and with timely reporting of information needed for oversight.
• Both the Board and IFC management see platforms’ value in addressing crises by allowing a faster response to clients in urgent need of financing. Both point to the need for dual capacities in future platforms to address short-term needs in crisis and long-term needs in addressing global development challenges and building resilience.
• The Board and IFC management agree that platforms can provide efficient and targeted approaches to reaching clients in IDA countries and FCS, small clients, new clients, and new markets where the average firm and project size is small and therefore does not meet the investment threshold of normal IFC operations.

Recommendations

IFC should extend the approach embodied in its pilot to new platforms that both build on the benefits revealed in the pilot period and enrich and generate new learning on platform performance. Experience to date suggests that platforms can be designed to facilitate small transactions, respond rapidly to crisis, manage risks associated with new clients more efficiently (through pooling of risk and mitigation of risk using blended finance), engage with clients in IDA countries and FCS, and focus on specific global challenges (for example, in health and digital technologies, using lessons from the GHP and ISC platform). In addition, platform design may combine short- and longer-term financial instruments to be prepared for future crises and to address longer-term development needs. A caveat in extending IFC’s pilot approach to platforms is that individual platform outcomes are not yet known, and the base of experience in this evaluation is both limited and diverse among the seven in-scope platforms. Given the likely scale-up of platform use to address global challenge priorities, incorporating and supporting learning is vital.

To facilitate oversight of and learning from platforms, IFC and the Board should reach and implement an agreement on the level, content, format, and frequency of reporting on platforms and individual projects within them, rooted in clear results frameworks. The agreement should balance the information the Board uses for oversight—for example, information on development impact, additionality, risk ratings (credit, environmental and social, and integrity due diligence), efficiency, and risk-adjusted return on capital—with what IFC can provide feasibly. Despite progress, a gap remains between information that the Board has stated it wants in discussions on individual platforms and the information IFC reports routinely. IFC systems could be updated to fill this gap at agreed periods. Furthermore, Board oversight and IFC’s monitoring and evaluation of platforms should be based on results frameworks (consistent with each platform’s program logic) with specific indicators and quantifiable targets agreed to with the Board when individual platforms are approved or extended.