This evaluation sought to answer the question, How well prepared is the Bank Group to help clients harness the opportunities and mitigate the risks posed by DTT? The answer to that question is, Given the accelerating pace and complexity of technological change, the Bank Group is not yet sufficiently well prepared, despite some areas of strength.
The Bank Group’s traditional areas of strength are what have enabled its DTT support. The Bank Group has a commanding reputation for supporting global public goods, a support that now also extends to DTT. Furthermore, the Bank Group’s honest broker role has enabled the Bank Group to provide clients with technical expertise, especially in policy and regulatory matters related to DTT. The Bank Group is perceived as a neutral voice advising on different technological solutions. In addition, the Bank Group’s ability to offer quality ASA has equipped it with actionable recommendations to support clients in putting their digital economies on a robust footing. Finally, the Bank Group’s ability to mobilize trust funds and IDA grants and credits has also enabled its DTT support.
Many areas vital to the Bank Group’s preparedness for DTT are, however, either still in development or developing too slowly to match the accelerating technological change occurring in every field. The Bank Group has given increased attention to the digital economy in country diagnostics and strategies, but the discussion in SCDs has not always carried over into CPFs. Although the CPF cannot be expected to address all the constraints identified in the SCD, it would be important to ensure that the CPF’s prioritization and selectivity are well justified. There has also been insufficient effort in SCDs in linking the support for digital technologies to the broader development agenda, including the twin goals (for example, when identifying key constraints). Furthermore, the newly introduced digital economy diagnostics focus on a narrow agenda with room to consider the broader development agenda and the twin goals.
The Bank Group’s strategic documents emphasize the need to invest early in twenty-first century skills and the World Development Report 2019 notes that, in view of the changing nature of work, lack of education is likely to be one of the strongest mechanisms for transmitting inequalities from one generation to the next (World Bank 2019m). The Bank Group’s top corporate initiatives in education—the Human Capital Project and the Learning Poverty initiative—spotlight necessary skills such as literacy and numeracy. The Bank Group has an opportunity to spotlight twenty-first century skills and move the narrative from a focus on necessary skills to also include twenty-first century sufficient skills such as advanced cognitive skills, digital literacy, and socioemotional skills, in particular a growth mindset or the ability to “learn to learn” and adapt. Both necessary and sufficient skills are critical for ensuring that a workforce is well prepared for the future labor market. There are strong reasons for imparting these skills simultaneously—not sequentially—from early childhood, recognizing the profound positive effect on brain development and lifetime capabilities. Imparting sufficient skills may also serve (i) the nascent demand from developing countries that are aspiring to grow and catch up by becoming knowledge-intensive economies and (ii) reduction of the North-South divide (UNESCO 2015).
The Bank Group’s FY20–22 Human Resources Strategy presents key insights about the staffing issues that confront the Bank Group (World Bank 2019l). Reflecting the latest thinking in organizational psychology, it recognizes the need to build new staff skills and expertise and foster a growth mindset for continuous learning in the face of rapid technological change. The Bank Group has yet to (i) identify the DTT-relevant skills that it needs; (ii) ensure that its information systems and databases contain the necessary information on its current DTT-relevant skills; and (iii) take action to fill any gaps. Bank Group staff noted in interviews that the number of existing staff with DTT-relevant skills is insufficient to meet client demand, especially in areas such as regulatory reform, data privacy, cybersecurity, 5G networks, and AI, and, consequently, staff with these skills are often overstretched. They also reported that mindsets for continuous learning and adaptation in the Bank Group fall short of what is needed.
Despite the cross-cutting nature of DTT, there was a perception among interviewees from across Global Practices that collaboration was insufficient among the different Global Practices, with instances of competition for task team leadership. There was also insufficient collaboration between the World Bank and IFC, even though DTT typically require the public and private sectors to work together.
Furthermore, interviewees noted that procurement was a major constraint to the smooth implementation of DTT-related projects. There is only fragmented guidance for complex technology projects, specifically on the risks associated with such projects (such as vendor lock-in, lack of interoperability of systems, potential loss of data ownership and lack of data privacy, limitations in technology-specific legislation and regulation, and mismatch between business processes and the requirements of the particular technology). There is also insufficient guidance on how the flexibility available for complex technology projects in the World Bank’s procurement systems can be applied in different situations. In addition to insufficient guidance, misaligned incentives may contribute to the reluctance to use the available flexibility.
Harnessing DTT for development often demands innovation, which by definition is without precedent and inevitably risky. However, interviewees reported that DTT were treated in the same way as other sectors or themes, despite their fluid and fast-moving nature, and that relevant staff were not encouraged to keep at the cutting edge of technological advances and DTT trends. Furthermore, the levers at the disposal of the Bank Group (such as leadership signaling, questions asked in operational review meetings, and the performance management system) were not yet being effectively used to facilitate informed risk taking and innovation for DTT for development. Interviewees saw the operational review process as constraining innovation and creative solutions, given the general support for continuing on a familiar path rather than for breaking new ground. Interviewees reported that legal, procurement, and external relations departments often asked for precedents and could not always be counted on to support first-time initiatives.
Finally, IEG presents—for the Bank Group’s consideration—directions of travel (including examples under each) that can help the Bank Group move forward in strengthening its preparedness for DTT for development. These include (i) building on the Bank Group’s existing strengths (by, for example, mining DTT-generated development data to create even greater social value, leveraging the honest broker role by advising clients especially on DTT risks, and using explicit corporate metrics to track the implementation of the Mainstreaming approach); (ii) enhancing Bank Group capabilities that are not yet its forte (by, for example, addressing the gender-differential effects of DTT, importantly in ASA); and (iii) developing new strengths (by, for example, fostering a growth mindset among staff to adapt to technological change and applying foresight and anticipation to proactively foresee and address DTT opportunities and challenges).
This evaluation makes three recommendations:
Recommendation 1: Where DTT offer opportunities to make progress on the twin goals more effectively or efficiently, ensure that the Bank Group avails itself of those opportunities and addresses, in particular, the risks posed by DTT. This will entail, for example:
- Systematically identifying in both country diagnostics and digital economy diagnostics the opportunities and risks posed by DTT for achieving the twin goals;
- Consistently asking in operational review meetings (from Concept Note to approval and implementation stages) whether and how the use of DTT in operations can bring (or is bringing) effectiveness and efficiency gains in addressing the twin goals; and
- Strengthening cross-sectoral linkages and synergies between DTT and sectoral issues, including through enhanced collaboration across Global Practices and between the World Bank and IFC, particularly where different units support technological solutions with the same client.
Where appropriate, a complement to country and digital economy diagnostics could be a review of ongoing and pipeline projects for DTT opportunities, such as the one undertaken recently in Vietnam.
Recommendation 2: Build a Bank Group workforce with the skills required to harness DTT opportunities and mitigate DTT risks by identifying DTT-relevant skills, determining gaps in these skills, and filling these gaps. This will entail:
- New recruitment of staff or consultants to fill specific skills gaps, retraining of existing staff, outsourcing, secondments, external partnerships, or a combination of these;
- Ensuring a more efficient use of the skills of available specialized staff and a better bridging of technology expertise with that of sector specialists and task team leaders; and
- Supporting a growth mindset for continuous learning as noted in the Bank Group’s FY20–22 Human Resources Strategy.
Recommendation 3 (World Bank only): Improve the effectiveness and efficiency of World Bank procurement for complex technology projects. This will entail, for example:
- Strengthening procurement guidance for staff and borrowers, for early-stage project scoping, as well as subsequent capacity development, on the identification, prioritization, and mitigation of the risks associated with complex technology projects. The guidance could cover: availing of existing flexibilities for complex technology projects such as two-stage bidding; monitoring the extent to which World Bank staff teams adopt these flexibilities; and institutionalizing arrangements for technology project management.
- Ensuring that teams benefit from effective and efficient innovation while protecting the World Bank and the borrower from procurement-related reputational risks.
- Preparing a roster of the world’s leading experts on the procurement of complex technology projects and encouraging market consultations on technical requirements in the preparation of bidding documents.