Highlights

The performance ratings of World Bank projects in fragile and conflict-affected situations (FCS) improved between FY15–19 and FY20–25, with three-quarters of evaluated projects achieving moderately satisfactory or above ratings for development outcomes—below those in non-FCS. Moreover, objectives in FCS were more output focused, such as expanding access to services, rather than outcome focused.

The performance ratings of the International Finance Corporation’s investment services operations in FCS have declined significantly, with only 17 percent rated mostly satisfactory or better on development outcomes in calendar years 2021–23, while only eight of the Multilateral Investment Guarantee Agency’s projects in FCS have been evaluated.

A synthesis of a sample of country-level evaluations indicates mixed results of Country Partnership Frameworks in FCS and in strategic engagement areas targeting institutions, service delivery, and economic opportunities and jobs.

Country-level analyses identify several emerging findings and lessons for engaging in FCS: (i) a lack of adaptation of operations to fragility, conflict, and violence contexts; (ii) successes in using phased, adaptive approaches that gradually scale up support; (iii) calibration of lending volumes with absorptive capacity; (iv) high risks to sustainability in institution building and service delivery; and (v) weak accountability and learning due to a lack of results frameworks and indicators relevant to fragility, conflict, and violence settings.

This chapter presents findings about the early results from the implementation of the FCV strategy in two areas: (i) changes in project performance in FCS and (ii) lessons from country-level outcomes. This evaluation synthesizes project- and country-level findings from the Bank Group’s engagement in FCS, responding to the question regarding the extent to which changes introduced by the FCV strategy have had early effects on Bank Group operational engagements. More findings of the outcomes of Bank Group operational engagements in FCS will be presented in a second phase in FY27.

Project-Level Performance

World Bank

There have been modest improvements in the achievement of project development outcomes amid an increase of evaluated World Bank projects in FCS. The overall World Bank lending portfolio has shifted markedly toward FCS, with the share of projects increasing from 17 percent in FY15 to 25 percent in FY24. Three-quarters of projects evaluated during this period were rated moderately satisfactory or above for the achievement of their intended development outcomes: 74 percent of the projects (n = 342) in FY20–24 were rated moderately satisfactory or above, compared with 70 percent (n = 300) in FY15–19. These ratings were achieved through objectives that were focusing on outputs, such as expanding access to essential health care or social protection services, rather than on outcomes. The World Bank’s performance in FCS projects—a measure of the quality of its own work—has improved (figure 8.1) and is almost at par with that in non-FCS countries. Since FY20, development outcome ratings have diverged from Bank performance ratings in FCS, with Bank performance being rated higher, suggesting that internal improvements may not fully translate into outcomes in these complex environments (World Bank 2025d), or that risks and external factors may be too high to overcome.

Projects focused on expanding access to services have performed strongly. World Bank FCS operations focusing on expanding access to services received significantly higher average outcome ratings, with 83 percent of evaluated human development projects rated moderately satisfactory or above (World Bank 2025d).

Figure 8.1. World Bank Lending Projects in FCS Rated Moderately Satisfactory or Above, FY15–25

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Figure 8.1. World Bank Lending Projects in FCS Rated Moderately Satisfactory or Above, FY15–25

Source: Independent Evaluation Group.

Note: FCS = fragile and conflict-affected situations; MS+ = moderately satisfactory or above.

FCS projects continue to underperform non-FCS projects, with 74 percent versus 82 percent rated moderately satisfactory in FY20–25, primarily due to higher risks of achieving development outcomes in FCS. The performance gap widened from 5 percentage points in FY15–19 to 8 percentage points in FY20–25. IEG identified several areas in which operational effectiveness in FCS could be improved: tailored operational design, effective risk management, adaptive management, mitigation of institutional capacity, and enhanced results measurement frameworks.

International Finance Corporation

Investment services operations in FCS have seen a significant decline in performance because of heightened risks and FCS-specific challenges (figure 8.2). IFC investment ratings, in contrast with the objectives-based evaluation system used for World Bank operations, reflect IFC’s achievement of financial, economic, environmental and social, and private sector development benchmarks. Development outcome ratings for IFC investment projects in IDA-eligible FCS experienced a significant decline, from 62 percent rated mostly successful or better in calendar years 2015–17 to 17 percent in calendar years 2021–23. While the share of FCS projects in IFC’s active investment portfolio remained stable at about 11 percent, the number of evaluated FCS projects has been growing slowly, accounting for 8.5 percent of the total. IFC investment projects faced implementation challenges and heightened risks, including heightened business and economic risks, civil unrest and asset quality issues, and lower client quality.

Figure 8.2. Development Outcome Ratings of International Finance Corporation Investment Projects, Three-Year Rolling Average, 2015–23

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Figure 8.2. Development Outcome Ratings of International Finance Corporation Investment Projects, Three-Year Rolling Average, 2015–23

Source: Independent Evaluation Group.

Note: FCS = fragile and conflict-affected situations; MS+ = mostly successful or better.

Areas of improvement for IFC’s implementation include project appraisal, client capacity building, and outcome measurement. As the Results and Performance of the World Bank Group 2024 notes, improving appraisal quality would include elements such as market assessments, client quality assessments, and robust assumptions or financial models, as these factors are strongly associated with better development outcomes for IFC’s portfolio. In FCS, where high-quality clients are scarce, IFC can influence client quality by providing capacity-building support, often through advisory services (World Bank 2025d). IFC can also improve the measurement of outcomes, particularly market-level outcomes.

Multilateral Investment Guarantee Agency

MIGA’s few evaluated projects in FCS performed strongly (figure 8.3). MIGA’s guarantee portfolio is relatively small, and few projects are in FCS. Only eight FCS projects were evaluated during FY18–23. Of those, 75 percent had development outcomes of mostly successful or better. A key concern is that MIGA guarantee projects achieve foreign investment–level outcomes (such as creating positive demonstration effects or developing markets) less often than they achieve project-level outcomes (66 percent versus 81 percent in FY21–23). MIGA is significantly delayed in submitting self-evaluations for its guarantee projects, with 19 projects (45 percent of planned self-evaluations) pending for the FY21–23 period, which constrains an accurate assessment of overall development outcome ratings and learning (World Bank 2025d).

Figure 8.3. Development Outcomes of Evaluated Multilateral Investment Guarantee Agency Guarantees, Six-Year Rolling Average, FY15–23

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Figure 8.3. Development Outcomes of Evaluated Multilateral Investment Guarantee Agency Guarantees, Six-Year Rolling Average, FY15–23

Source: Independent Evaluation Group.

Note: FCS = fragile and conflict-affected situations; S+ = successful or better.

Lessons from Country-Level Outcomes

Development outcomes for country programs in FCS are significantly below those in non-FCS. Fifty-five percent of 75 validated CPFs in FCS covering strategies starting FY04–17 and ending FY07–22 were rated moderately satisfactory or above, compared with 76 percent for those in non-FCS, a 21-point difference in performance. However, the Bank Group’s performance and the quality of its work in these country programs have maintained similar levels across FCS, IDA, and blend countries (see figure 5.1 in World Bank 2025d).

Based on a sample of recent country evaluations for FCS, this evaluation synthesized examples of country-level outcomes in three areas that are key for engagement in FCS: (i) institution building, (ii) improved services delivery, and (iii) enhanced economic opportunities. As each country affected by FCV has distinct characteristics, including underlying fragility contexts, it is challenging to generalize findings from cross-country comparisons. As such, the findings should be considered as illustrations of results. This evaluation analyzed recent IEG Country Program Evaluations for six countries, as well as Completion and Learning Review Validations (CLRVs),1 and undertook country deep dives to illustrate country-level outcomes. The outcomes are presented in three areas the literature identifies as highly relevant to engaging in FCS: institutions, service delivery, and economic opportunities.

Building Institutions During Times of Fragility, Conflict, or Crisis

Strong, inclusive, legitimate, and effective institutions are important for addressing and mitigating fragility. By addressing weaknesses in governance, economic policies, social cohesion, and conflict resolution, institutions can play a transformative role in building more resilient and stable states (World Bank 2011).

FCS programs faced stark challenges in state and institution building. Those challenges included weak institutions and governments, constrained human and institutional capacity, political instability and conflict, and severe governance and political economy issues.

The focus and depth of individual country programs for institutions varied significantly. Programs ranged from comprehensive programmatic state and institution building to those building administrative capacity and systems (including for public financial management and domestic resource mobilization) to legal and regulatory reform to more narrow, targeted interventions in extractive sectors and macroeconomic policy. In some cases, there was little focus on state building and institution building.

While some countries saw notable achievements, results varied among areas of engagement. In the Federal Republic of Somalia, the Bank Group helped build public financial management systems and contributed to improved capacity, systems, and transparency. In Mozambique, it contributed to improved public financial management, but support for budgeting did not enhance budget credibility. The Federal Republic of Somalia also saw gains in establishing an intergovernmental fiscal system, but progress was constrained by unresolved political and constitutional issues between federal and state entities. Efforts to enhance domestic revenue mobilization were not sufficient to raise revenues to support core state functions and services. Similarly, support to debt management, state-owned enterprise reform, decentralization policy, and extractives were met with limited success. Institutional reforms in Ethiopia focused on macroeconomic issues and were often ineffective in a less conducive reform environment. In Papua New Guinea, targets associated with more limited engagement on institution building were not met. In Chad, support to public financial management was hindered by high government turnover and slow procurement processes within the government. In Madagascar, the Bank Group underestimated the strength of vested interests and rent-seeking in its institutional reform programs.

Gradual, adaptive approaches to institution building can yield significant achievements in state and institution building. Thus, in the Federal Republic of Somalia, the Bank Group has helped build government institutions from scratch since 2013, focusing on fiscal systems, revenue mobilization, and public administration, which helped transform the Somali state. Necessitated by the reliance on limited resources from trust funds, the World Bank followed a deliberate, iterative approach by piloting and scaling programs slowly with robust monitoring, which proved highly effective. It was also appropriate for the extremely limited absorptive capacity of the Federal Republic of Somalia.

Country ownership and alignment matter. While institutional reforms in the Federal Republic of Somalia were well aligned with government and partner priorities, the misalignment of priorities and a delayed or insufficiently integrated FCV focus can constrain institutional reforms. In Ethiopia, the Bank Group’s institutional support centered on macroeconomic reforms rather than broader state building and achieved limited success due to policy disagreements. In Madagascar, insufficient Bank Group engagement with government stakeholders led to weak ownership on multiple institutional development programs.

Progress toward state building is tenuous, and sustainability is often uncertain. Institution building is a long-term, tenuous process with a high risk of reversals—that is, it is seldom a linear progression. In Madagascar, public financial management support helped improve budget transparency and reduce subsidies, but the gains did not last once the support ended. Budget support in Chad helped avoid an immediate fiscal crisis but did not achieve sustained reform. As the capacity of institutions and their ability to deliver core state functions and services remains limited, the social contract between state and citizens is typically weak.

Improving Service Delivery

Effective service delivery to citizens is crucial for addressing state fragility. Providing accessible and reliable public services such as health care, education, and infrastructure not only meets the immediate needs of the population but also builds trust in governmental institutions. When citizens perceive their government as responsive and capable of delivering essential services, social cohesion gets stronger, and conflict is less likely to arise.

Bank Group engagement in service delivery involved sectoral engagements, social protection, and participatory and community-based approaches. Many efforts focused on safety nets and transfers, while others prioritized sector engagements. Given the staggering needs in FCS for significant services for state building and strengthening the social contract, some country programs chose to engage across many sectors simultaneously, while others sought to make progress in a smaller number of sectors to build momentum.

Focused, community-driven efforts can significantly enhance service delivery in FCS. In the Federal Republic of Somalia, the Bank Group focused on water and rural resilience, urban resilience, and a landmark social protection program. It engaged in a smaller number of services sectors and improved access to water, urban resilience, and social safety nets, benefiting millions through targeted sector prioritization and community feedback. It achieved most of its service delivery objectives, including building capacity and systems for service delivery among government agencies. The flagship social protection program Baxnaano reached 1.6 million people with cash transfers, addressed food insecurity, and helped the Federal Republic of Somalia cope with multiple shocks, such as floods and locusts. In Madagascar, a broad push for decentralization was anchored in a community-driven approach, which helped empower communities to make decisions about services and hold newly empowered local government accountable for their performance. Similarly, in Papua New Guinea, community-driven development in Bougainville empowered women’s groups to help develop and manage community-prioritized infrastructure and services, demonstrating effective local engagement. However, while the Bank Group initially prioritized a few sectors in Papua New Guinea and later diversified its investments across sectors, in FCS contexts, the Bank Group should not spread itself too thin. In Chad, for example, community-driven development was hindered by weak government capacity and limited experience with the model.

Conflicts highlight the need for resilient service delivery modalities and M&E systems that can adapt and inform responses to instability. The safety net program in Ethiopia was designed for climate challenges but was used to address victims of conflict as well, though often not successfully, given access restrictions. Nonetheless, the program reached 8 million people in food-insecure districts. The Tigray conflict partly shut down this program. Lending in conflict-affected areas resumed only in 2022, and with some difficulty, as the government was unwilling to permit the use of TPI and third-party monitors in conflict-affected areas. In Madagascar, an unconstitutional transfer of power severely constrained operations, but the Bank Group adapted by directing assistance to the municipal level and relying on nonstate actors for years until elections were held.

Service delivery programs create permanent contingencies on limited government budgets, and decisions to expand service delivery need to be deliberate and selective. Achievements in service delivery are notable but face sustainability challenges that are exacerbated by weak government capacity and reliance on external funding. In the Federal Republic of Somalia, water and resilience programs achieved high country ownership, while Papua New Guinea eventually improved road maintenance components. However, the sustainability of safety net programs is uncertain: the Federal Republic of Somalia’s safety net funding (equivalent to 14 percent of the government budget) strains limited budget resources, given low domestic resource mobilization. Ethiopia’s social protection program, reliant on external funding, struggles to graduate beneficiaries.

Enhancing Economic Opportunities

Economic opportunities, economic inclusion, and jobs play a critical role in mitigating state fragility. Economic opportunities, particularly job creation, are vital for inclusive growth and violence prevention in fragile contexts. The World Development Report 2011 stresses jobs as a means to engage youth and ex-combatants, promoting social stability through private sector development and equitable economic policies (World Bank 2011). Pathways for Peace: Inclusive Approaches to Preventing Violent Conflict builds on this, emphasizing economic inclusion to address grievances and reduce conflict risks, especially in unequal societies (World Bank and United Nations 2018). Both reports advocate for targeted interventions to ensure that economic benefits reach diverse groups, which will support sustainable peace and development.

The Bank Group country programs focus on enhancing economic opportunities and inclusion through various approaches. In the reviewed country programs, the World Bank’s approaches to supporting economic opportunities and inclusion encompassed governance and institutional strengthening, private sector development (including a business-enabling environment; access to finance; and sector-specific support such as manufacturing, telecommunications, and agribusiness), and development of the agricultural sector—a key sector in FCS for both employment and food security.

Policy and macroeconomic reforms to address economy-wide issues lay groundwork but often fall short of creating broad economic opportunities if there are not deliberate downstream interventions. In Ethiopia, the Bank Group’s support focused on macroeconomic reform, competitiveness, and trade logistics, which were constrained by an unfavorable reform environment due to the state’s dominance and widening macroeconomic imbalances. Support to industrial parks to buttress the private sector, absent a conducive reform environment and with an overvalued exchange rate, underperformed Ethiopia’s jobs and economic opportunity goals (housing 90,000 jobs) and were insufficient to slow Ethiopia’s declining export performance. In the Federal Republic of Somalia, the World Bank focused mainly on macroeconomic stability and reforms to core economic institutions as part of the state-building agenda, with few tangible results on private sector–led growth and economic opportunities. Macroeconomic advice supported a reform-friendly environment, but tangible economic opportunities and job creation remained limited without further downstream investments in job creation, value chains, and support to firms that might have a direct impact on beneficiaries in a country where high unemployment among youths may be a potent driver of fragility. This finding highlighted a gap where foundational reforms are not always matched by direct support for livelihoods. Approaches to reform business regulatory and enabling environments were often hampered by weak governance, corruption, and elite capture, which proved that there were more significant private sector development constraints in FCS than there were business regulatory issues. World Bank support focused more on adopting new laws and regulations and less on the effective application of these laws and regulations. Macro and investment climate reforms are necessary, but not sufficient, to stimulate jobs-rich private-led growth (World Bank 2014).

Sector-specific interventions, efforts to diversify economies, and support for small and medium enterprises show modest results, often hindered by structural constraints. Interventions targeting specific sectors—such as manufacturing, telecommunications, and agribusiness—had varying degrees of success depending on the country context and the enabling environment. Agriculture is the backbone of many FCS and a significant source of employment opportunities. In Ethiopia, Bank Group support to agriculture included irrigation and sustainable land management. Irrigation projects covered 95,000 hectares of farmland, which did not sufficiently address the scale of the challenges in a country with 11 million irrigable hectares. In that case, the state-centric development model hindered progress. Still, Bank Group support contributed to increased crop yields and cereal productivity (by 3.7 percent annually). In Papua New Guinea, the Bank Group promoted efforts to diversify the economy beyond extractives, mainly by providing access to finance for small and medium enterprises and growing nonextractive sectors like agriculture. While cash crop outputs were impressive, the impacts on farmers’ livelihoods were unclear due to inadequate monitoring. In Ethiopia, support for small and medium enterprises exceeded targets but was constrained by state dominance in banking, illustrating the difficulty of fostering diversification amid structural challenges. In Mozambique, the discovery of large gas reserves led the government to focus on attracting foreign investors rather than on broader near-term private sector development.

Inclusive approaches linking fragility or social issues to economic growth are less frequent and require careful design to address complex FCV drivers. Few economic programs sought to address FCV issues directly. In Chad, constraints on economic growth were exacerbated by conflict, yet only a small fraction of programs were designed to address conflict, particularly between farmers and pastoralists and over land tenure more broadly. In one promising example, in Papua New Guinea, the “smart economics” strategy integrated FCV by targeting gender-based violence and gender inequality to boost women’s labor participation, achieving increased agency in some communities and jobs in road construction. However, challenges such as childcare and domestic violence persisted, showing the complexity of integrating FCV and economic goals and the need for programs to anticipate and mitigate negative FCV-related consequences.

IFC and MIGA had a marginal role in supporting downstream economic opportunities in evaluated country programs. They supported key infrastructure developments and financial investments, such as telecommunications in Ethiopia; trade and supply chain financing in Ethiopia; and support for micro, small, and medium enterprises in Papua New Guinea. In Ethiopia, state dominance, financial repression, and macroeconomic imbalances (for example, an overvalued exchange rate and crowding out by state-owned enterprises) limited the scale and impact of IFC investments, particularly in financial services and agribusiness. IFC and MIGA were challenged to develop active investment and guarantee programs elsewhere across evaluated FCS country programs, due in part to the lack of bankable projects and clients meeting their requirements and policies and high nonfinancial risks. Chad saw limited IFC investments and no exposure from MIGA. In many contexts, such as in the Federal Republic of Somalia, nonfinancial risks and integrity issues precluded a more active role despite a vibrant local private sector. This may point to a more general issue about how IFC and MIGA operations are more geared toward countries with better and more stable investment climates and clients rather than those in conflict or with deep-seated fragility and governance issues.

Cross-Cutting Findings

The review of country evaluations and validations produced the following cross-cutting findings.

Adaptation of country programs and operations to FCV dynamics is very limited. A gap between FCV talk and FCV action hinders effective engagement. For example, systemic delays in recognizing FCV dynamics and integrating them into program design and M&E were common, and in many cases treatment of FCV was superficial. The lack of robust FCV indicators inhibits adaptive management and makes it difficult to ascertain if programs truly address the structural drivers of fragility, such as in Papua New Guinea, where strong FCV commitments in strategies saw minimal M&E follow-through. Similarly, in Mozambique, strategies and analytical documents routinely acknowledged growing FCV challenges, but the challenges were seldom reflected in operations. A review of 13 FCS CLRVs indicated that the treatment of FCV issues in most of these countries was superficial. In Chad, all development constraints were also regarded as conflict drivers, yet the connection between programs and efforts to address FCV challenges was usually indirect or nonexistent. The evaluations and validations of more recent CPF periods (from 2016 onward) reveal a quick transition to move beyond fragility issues to more normal development planning, and the rush to normalcy resulted in the World Bank being caught unprepared when the next cycle of political instability or violence erupted. An example of the effects of this lack of preparation can be found in the Democratic Republic of Congo 2022 CLRV compared with the 2017 CLRV.

Adaptive, context-specific strategies using scaling up were successful. Strategies such as slow scaling in nascent institutional environments are essential for success in FCS. For example, the Federal Republic of Somalia’s gradual scaling and use of pilots was partly necessitated by initial financing constraints but proved highly effective for building capacity and trust, which contrasts the delayed integration of an FCV lens in Ethiopia and Mozambique.

Financing volumes in FCS need to be mindful of absorptive capacity to be effective and sensitive to fragility. The limited capacity of governments in FCS requires careful calibration of lending to absorptive capacity and the avoidance of rapid increases in lending that may exacerbate grievances and drivers of fragility. A review of 13 CLRVs found cases where too much financing was committed in countries with little or weak capacity. In the Federal Republic of Somalia, IEG concluded that with the availability of enhanced IDA resources, the World Bank should calibrate the growth of its lending portfolio with the absorptive capacity of the government, such as through an incremental, phased approach of piloting and then scaling up successes while closely monitoring implementation.

Engaging in FCS involves high risks to sustainability. Sustainability challenges often threaten long-term impact, particularly due to limited government capacity, funding, and the risk of reversals where gains are fragile. For example, in Chad, Madagascar, and the Federal Republic of Somalia, institutional gains and service delivery rely on technical assistance and external funds, with progress tenuous and, in some cases, already reversed due to capacity challenges. Ethiopia’s social protection efforts, which are reliant on external funding and disrupted by conflict, also face these risks, underscoring capacity and funding constraints across FCS.

Weak results frameworks and M&E indicators impede accountability and learning. A critical challenge is the persistent inadequacy of results frameworks in CPFs. IEG validations found that 83 percent of country programs over the past 10 years had major inadequacies in their results frameworks. These frameworks often focus on inputs or outputs rather than fragility-specific or -sensitive outcomes and fail to capture the contributions of ASA, IFC, or MIGA, which directly affects the ability to measure progress toward FCV objectives (World Bank 2025d). Most of the reviewed programs did not include FCV indicators guiding the portfolio, meaning that the Bank Group does not know whether its interventions purposefully and effectively address drivers of fragility, a stated objective of the FCV strategy and many FCS programs. Although there were some examples of country programs tracking the demobilization of ex-combatants and gender-based violence, many country programs appeared to measure delivery of services as a proxy for tracking fragility.