Results and Performance of the World Bank Group 2024
Chapter 2 | World Bank
Highlights
World Bank outcome ratings have plateaued during FY 2020–23, along with a shift in the share of projects toward countries classified as fragile and conflict-affected situations. In this period, average ratings remained stable at about 4.3, and the percentage of moderately satisfactory or above ratings showed minimal change, inching up slightly from 83 percent to 84 percent.
Among operations closed since FY20, an increasing proportion of their life span occurred during the COVID-19 pandemic. Yet there are no statistically significant differences in outcome ratings among operations that closed before COVID-19 (no exposure), those that operated for part of their life during the pandemic (partial exposure), and those that were approved and closed within the pandemic (full exposure).
Despite improvements in monitoring and evaluation quality over time, one-third of World Bank operations received ratings of modest or negligible. Certain Global Practices may require particular attention given the introduction of the new Scorecard and indicators.
The portfolio continues to experience challenges with institutional capacity, operational design, project data and monitoring, and financial management that the World Bank can influence. Among operations that addressed each issue, challenges were encountered by 75 percent of operations in institutional capacity, 45 percent in operational design, 46 percent in project data and monitoring, and 76 percent in fiduciary compliance.
Effective risk identification and mitigation and adaptive management emerged as crucial strategies for the World Bank in addressing challenges, especially in countries classified as fragile and conflict-affected situations. Larger risk reductions during implementation are significantly associated with higher outcome ratings, while those that fail to mitigate high risk throughout their life cycle tend to receive lower outcome ratings.
This chapter examines the performance trends of World Bank operations closed between FY13 and FY23, as evaluated by IEG by June 30, 2024 (see box 2.1 for a description of the main performance ratings). It delves into the challenges encountered during project design and implementation, exploring their impact on outcomes. The analysis also identifies key areas within the World Bank’s control that could mitigate these challenges and enhance project performance. We focus on statistically significant changes and substantive patterns evident over four data points in the analysis of the portfolio. Online dashboards can be accessed through appendix B and enable interested readers to undertake their own breakdowns of the data.
Box 2.1. Main Performance Ratings in the World Bank
In assessing the World Bank’s performance (figure B2.1.1), the Independent Evaluation Group validates the Implementation Completion and Results Reports through Implementation Completion and Results Report Reviews. The Implementation Completion and Results Reports are completed by operations based on guidance issued by the World Bank’s Operations Policy and Country Services. The Independent Evaluation Group also conducts evaluations of operations through Project Performance Assessment Reports, which can adjust the ratings of the Implementation Completion and Results Report Reviews.
Ratings
Outcome. The extent to which a project efficiently achieved, or was expected to achieve, its relevant objectives. The outcome rating brings together three underlying dimensions: relevance, efficacy (objectives achievement), and efficiency. The outcome is rated on a six-point scale: highly satisfactory, satisfactory, moderately satisfactory, moderately unsatisfactory, unsatisfactory, and highly unsatisfactory.
Bank performance. The extent to which services provided by the World Bank ensured quality at entry of the project and supported effective implementation through appropriate supervision. Bank performance and its two constituent elements—quality at entry and quality of supervision—are rated on a six-point scale: highly satisfactory, satisfactory, moderately satisfactory, moderately unsatisfactory, unsatisfactory, and highly unsatisfactory.
Monitoring and evaluation quality. The quality of the design and implementation of monitoring and evaluation arrangements of the operation and the extent to which the results are used to improve performance. It is rated on a four-point scale: high, substantial, modest, and negligible. The monitoring and evaluation rating applies only to investment project financing and Program-for-Results operations.
Figure B2.1.1. Performance Ratings in World Bank Investment Projects
Figure B2.1.1. Performance Ratings in World Bank Investment Projects
Sources: Independent Evaluation Group; World Bank 2023e, 2024d.
Note: This is the ratings structure for investment project financing and Program-for-Results; development policy financing has a slightly modified ratings structure (see appendix A).
Source: Independent Evaluation Group.
Trends
World Bank outcome ratings have plateaued recently after a long period of increase (figure 2.1). Between FY13 and FY20, portfolio-level outcome ratings saw significant improvement. The average rating increased from 3.8 in 2013 to 4.3 in 2020, while the percentage rated moderately satisfactory or above rose from 68 percent to over 83 percent. In contrast, the FY20–23 period was characterized by plateauing performance. Average ratings remained stable at about 4.3, and the percentage of moderately satisfactory or above ratings showed only a slight increase, from 83 percent to 84 percent.
Figure 2.1. World Bank Project Rating Trend and Coverage
Figure 2.1. World Bank Project Rating Trend and Coverage
Source: Independent Evaluation Group.
Note: The RAP data have an inherent selection bias in their coverage. Not all projects closed during recent fiscal years, especially FY23, have been evaluated by the Independent Evaluation Group yet. More ICRs of recently closed projects could arrive later. Projects with ICRs and ICRRs completed relatively quickly after closure tend to have higher ratings than those with delayed evaluations. This pattern was analyzed in depth in RAP 2023. N = 2,982 operations included in RAP 2024 analysis (N = 2,191 for FY13–20 and N = 1,039 for FY20–23). The dashboard for further review of rating breakdowns is available (see also appendix B for more details).ICR = Implementation Completion and Results Report; ICRR = Implementation Completion and Results Report Review; MS+ = moderately satisfactory or above; RAP = Results and Performance of the World Bank Group.
In the period between FY13 and FY20, the increase in the average outcome rating was driven by improvements across a wide range of subgroups within the portfolio. This upward trend is substantive in a wide spectrum of the subgroups, such as Regions, Practice Groups, those exposed to fragile and conflict-affected situations (FCS), agreement types (for example, the International Bank for Reconstruction and Development and IDA), and net commitment sizes. Nearly all subgroups experienced increases in their outcome ratings, with most of these upward shifts being statistically significant.
The recent plateau in portfolio performance occurred amid a notable shift in portfolio composition toward FCS. Between FY20 and FY23, there was no clear trend of increasing or decreasing in ratings across subgroups, and no statistically significant shift was observed for any subgroup. For example, operations with FCS exposure (meaning the country of operation was classified as FCS for at least one year during the operation’s lifetime)1 had their average outcome ratings and those rated moderately satisfactory or above fluctuate, generally at a level below non–FCS-exposed operations, and there are no statistically significant differences in average outcome ratings for FCS operations between FY20 and FY23 or between consecutive years. However, there are substantial changes in the portfolio composition, with shifts in the portfolio share among different subgroups (figure 2.2). For example, the share of operations in FCS contexts, historically with lower outcome ratings, has risen. The proportion of closed operations with full or partial exposure to FCS contexts increased from 31 percent in FY20 to 37 percent in FY23. Conversely, the share of operations in subgroups with historically high outcome ratings declined. For example, the portfolio for Europe and Central Asia decreased from 17 percent to 11 percent. Moreover, the increasing importance of FCS is demonstrated by the shrinking gap in average project volume between FCS and non-FCS operations since FY21 (figure 2.3).
The World Bank’s entire lending portfolio has been shifting toward lower-rated contexts (figure 2.4). The lending portfolio is a measure of the total number of all operations active at any stage of a fiscal year. The analysis found that the proportion of projects operating in FCS contexts increased from 16 percent in FY13 to 25 percent in FY24. A similar pattern emerged at the regional level with a rising share of projects in Africa, where outcome ratings tend to be below average. Simultaneously, there is a shrinking share of projects in East Asia and Pacific, where outcome ratings have traditionally outperformed other Regions. For example, the portfolio is decreasing in countries with high outcome ratings, such as China and Viet Nam. Overall, shifts in portfolio composition for the current lending portfolio mean that there are fewer operations in high-performing countries and more in contexts where average outcome ratings can be lower. The change in distribution toward risky contexts is likely to continue to flow into the closed portfolio that is rated by IEG.
Figure 2.2. Portfolio Composition Shift from FY20 to FY23
Figure 2.2. Portfolio Composition Shift from FY20 to FY23
Source: Independent Evaluation Group.
Note: Not exposed = the country in which operation was active was never classified as FCS on the annually updated list. Exposed = the country of operation was classified as FCS for at least one year during the operation’s lifetime. FCS exposure provides a more accurate estimations of its effect on ratings compared with the country’s FCS status in operation’s closing fiscal year. A country’s FCS status can change over time. For example, a country might be classified as FCS due to an emergency but removed from the list the following year as conditions improve. Using only end-year status would miss the impact of FCS status in other years. FCS = fragile and conflict-affected situations.
Figure 2.3. Gap in Average Project Volume Between Operations in Fragile and Conflict-Affected Situations and in Non–Fragile and Conflict-Affected Situations
Figure 2.3. Gap in Average Project Volume Between Operations in Fragile and Conflict-Affected Situations and in Non–Fragile and Conflict-Affected Situations
Source: Independent Evaluation Group.
Note: The chart shows the gap in average volume between FCS and non-FCS operations. An upward trend indicates that non-FCS operations have a higher volume. A downward trend shows that the average size of FCS operations is increasing. FCS = fragile and conflict-affected situations.
Figure 2.4. Share of All Lending Projects in Operation (percent)
Figure 2.4. Share of All Lending Projects in Operation (percent)
Source: Independent Evaluation Group.
Note: This chart includes all lending projects active at any stage of a fiscal year, including those that will not be rated by the Independent Evaluation Group, as they do not produce Implementation Completion and Results Reports, such as those projects below $5 million. As such, the chart provides an indication of the total efforts being undertaken by the World Bank in different contexts. Africa = Africa West and Africa East combined; FCS = fragile and conflict-affected situations.
Among operations closed since FY20, an increasing proportion of their life span occurred during the COVID-19 period (defined as March 1, 2020, through May 1, 2023). All operations closed since FY20 have spent part of their lifetime during COVID-19. Operations closed in FY23 spent an average of 49 percent of their life span during the COVID-19 period, the highest so far. While most operations have been partially affected by COVID-19, only a small share had their entire life span (full exposure) within the pandemic time frame (figure 2.5). The rising COVID-19 exposure aligns with the growing share of investment project financing (IPF) operations that have cited epidemics as a challenge in their Implementation Completion and Results Reports (ICRs), from 2 percent in FY20 to 86 percent in FY23. (A detailed discussion of the challenges identified in ICRs can be found in the Challenges section in this chapter.)
Figure 2.5. Average COVID-19 Exposure Among Projects Closed During FY20–23
Figure 2.5. Average COVID-19 Exposure Among Projects Closed During FY20–23
Source: Independent Evaluation Group.
Note: Full exposure refers to a project approved and closed entirely within the COVID-19 period; partial exposure refers to a project operated partially during the period; no exposure refers to a project closed before the period. N = 248 for FY20, N = 267 for FY21, N = 277 for FY22, and N = 247 for FY23.
Outcome ratings of operations with different extents of their lifetime spent in COVID-19 are similar, despite expectations to the contrary. No statistically significant correlation exists between COVID-19 exposure and project outcome ratings. As shown in figure 2.6, operations with varying degrees of lifetime exposure to COVID-19 demonstrate similar average outcome ratings. Although the result contradicts expectations of a decrease in ratings for operations exposed to COVID-19, recent IEG evaluations and RAP 2023 provide some explanation for the stability of ratings. Unlike previous IEG studies on the global financial crisis, which found that operations already underway when the crisis hit had weaker ratings, recent IEG evaluations of the Bank Group’s COVID-19 response reveal that the World Bank applied lessons from the past, leading to significant adjustments in operations and the application of new digital technologies. Furthermore, RAP 2023 showed extensive restructuring whereby operations adapted by repurposing components, revising indicators, reallocating financing, and extending durations. Extensive restructuring was evident in approximately 60 percent of World Bank country programs as part of the COVID-19 response, which substantially realigned their portfolios to address the evolving needs arising from the pandemic (World Bank 2022h). These adjustments include significant modifications to existing projects, enhanced analytic work in relevant sectors, and the introduction of new support initiatives.
Bank performance ratings have had a consistent upward trend since FY13. The rating reached 90 percent of operations rated moderately satisfactory or above, and an average rating of 4.35 in FY23 (figure 2.7, panel a), which has increased incrementally in each year since FY16. Unlike outcome ratings, the World Bank has greater control over the quality of entry and supervision that underpin the Bank performance rating. The increase in average ratings and a lower percentage of operations being rated moderately unsatisfactory and below suggest that there have been ongoing steady improvements in issues related to operations’ designs and support to implementation.
In FCS contexts, a gap has emerged between outcome and Bank performance ratings (figure 2.7, panel b). For much of the past decade, outcome ratings and Bank performance ratings in FCS have tracked each other closely.2 However, since FY20, a notable divergence has appeared between these two ratings. This disparity increased in FY23, with average outcome ratings at 4.0 and Bank performance ratings at 4.2, a statistically significant difference. The widening gap suggests that improvements in Bank performance may not fully translate into better outcome ratings, especially in challenging environments.
Figure 2.6. Distribution of Outcome Ratings by COVID-19 Exposure
Figure 2.6. Distribution of Outcome Ratings by COVID-19 Exposure
Source: Independent Evaluation Group.
Note: The average outcome ratings of operations with no exposure, partial exposure, and full exposure are 4.28, 4.27, and 4.27, respectively. No exposure = no part of operation lifetime spent in COVID-19 emergency period; partial exposure = some part of operation lifetime spent in COVID-19 exposure, but less than 100 percent; full exposure = entire lifetime of the operation is within COVID-19 emergency period. The COVID-19 emergency period is FY20–23.
Despite improvement in monitoring and evaluation (M&E) quality ratings in FY20, a considerable share of operations is still rated modest or negligible. The average M&E quality rating of IPF and Program-for-Results increased rapidly from 2.1 in FY13 to 2.6 in FY20. Since FY20, the average rating has plateaued between 2.6 and 2.7. The percentage of IPF and Program-for-Results projects with M&E quality rated substantial or above increased from 29 percent in FY13 to 57 percent in FY20 and more incrementally to 64 percent in FY23. Contributing to this are some improving Global Practices. For example, the Water Global Practice’s ratings have improved consistently each year since FY19, rising from 26 percent rated substantial or above to 85 percent rated substantial or above in FY23. Yet more than one-third of operations still have inadequate M&E practices. This gap is concerning, as M&E practices are largely under the World Bank’s influence and are associated with overall outcome ratings. Certain Global Practices may require particular attention given the introduction of the new Scorecard and indicators; for example, during FY20–23, 64 percent of Transport operations and 57 percent of Governance operations had M&E quality ratings of modest or negligible.
Figure 2.7. World Bank Performance Ratings
Figure 2.7. World Bank Performance Ratings
Source: Independent Evaluation Group.
Note: FCS = projects operated in countries classified as fragile and conflict-affected situations during their lifetime; MS+ = moderately satisfactory or above.
Challenges
Challenges are persistent factors often negatively associated with project performances at both the country and project levels. The RAP analysis focuses on areas within the World Bank’s sphere of influence, such as the institutional capacity of stakeholders, project design, data and monitoring, and finance, because these are frequently cited by ICRs and often linked to outcome ratings. Understanding these challenges is essential for the World Bank to make informed adjustments to operation design and implementation, thereby improving project performance. To analyze challenges, RAP 2024 created a comprehensive data set by combining existing data from RAP 2021 and RAP 2023 with new classifications of factors from the Key Factors That Affected Implementation and Outcome section of ICRs. This data set covers all IPF projects closed during FY18–23 as of December 2023. The 12 factors analyzed in the RAP related to three clusters—context, institutional capacity of stakeholders, and project—with sentiment tagged to each factor (box 2.2).
Box 2.2. Delivery Challenges in Operations Taxonomy
Results and Performance of the World Bank Group 2024 builds on previous Results and Performance of the World Bank Group reports by continuing to use an adapted version of the DeCODE (Delivery Challenges in Operations for Development Effectiveness) taxonomy (table B2.2.1). Developed by the World Bank’s Global Delivery Initiative in 2016, DeCODE identifies typical delivery challenges that could affect operational performance from design to closure. The taxonomy’s validity is ensured through an iterative process involving literature reviews, text analytics, and practitioner consultations. In Results and Performance of the World Bank Group 2024, the analysis is structured around three main clusters: context, institutional capacity of stakeholders, and project. These clusters are further divided into 12 categories, some of which include subcategories. The World Bank has limited influence on context, indirect influence on institutional capacity of stakeholders, and direct influence on project-related factors. Detailed definitions of these clusters, factors, and subfactors can be found in appendix A.
Table B2.2.1. Delivery Challenges
|
Context |
Institutional Capacity of Stakeholders |
Project |
|
|
|
Sources: Independent Evaluation Group; World Bank 2023e.
Note: The original DeCODE taxonomy has 15 categories. Three were dropped (social and cultural, environmental and geography, and basic infrastructure) because too few examples of these were identified in developing the training data for the machine learning model. The cluster name institutional capacity of stakeholders is adapted from the original term stakeholder. It is also recognized that stakeholder is a term that may imply hierarchal narratives, which is not the intention in this box (Reed and Rudman 2023).
IEG found that challenges within the World Bank’s sphere of influence could lead to lower project outcome ratings. The analysis revealed that all six factors within the institutional capacity and project clusters were addressed by nearly 60 percent or more projects (figure 2.8), and challenges in all the factors correlate with lower outcome ratings. Notably, these factors all fall within the World Bank’s sphere of influence to varying degrees. This finding underscores the significant impact that operational difficulties can have on project success and highlights areas where the World Bank can intervene to improve outcomes.
Figure 2.8. Challenges in Institutional Capacity of Stakeholders and Project Factors
Figure 2.8. Challenges in Institutional Capacity of Stakeholders and Project Factors
Source: Independent Evaluation Group.
Note: The dashboard that supports further review of factors linked to performance is available (see also appendix B for more details).
Challenges with factors that link to the institutional capacity that affect outcome ratings—human resources and organizational capacity, coordination and engagement, and commitment and leadership—are within the World Bank’s indirect influence.3 In the World Bank, institutional capacity-building efforts aim to improve the effectiveness of country development by changing the formal and informal rules that structure interactions across multiple organizations (World Bank 2005b, 2018b; World Bank Group 2017).4 The RAP analysis found that 75 percent of projects encountered one or more challenges in human resources and organizational capacity, coordination and engagement, and commitment and leadership factors. Human resources and organizational capacity challenges include a lack of qualified personnel or their difficulty in acquiring necessary skills. Coordination and engagement challenges stem from complex administrative structures, ambiguous role definitions, or insufficient communication strategies. Commitment and leadership challenges arise from shifts in leadership, evolving priorities, or a lack of shared vision among stakeholders.
Institutional capacity plays a crucial role in the success of World Bank operations. Various World Bank and external studies have identified institutional capacity as a critical issue for improving development effectiveness (OECD 2008; Otoo et al. 2009; World Bank 2005a, 2005b, 2017a, 2018b, 2018c, 2022b; World Bank Group 2017). There is a nonlinear association between the extent of institutional capacity challenges and the outcome rating. Specifically, the negative effect of challenges on outcome ratings becomes more pronounced when there is more than one challenge, with a more noticeable downward shift in outcome ratings as the number of challenges increases from one to three. Moreover, similar findings on the importance of addressing institutional capacity challenges have been highlighted in previous IEG products—for example, IEG’s evaluation of the World Bank’s early support to addressing COVID-19 health and social response (World Bank 2022h).
Institutional capacity challenges are more prevalent in FCS contexts than in the overall portfolio. The share of projects reporting institutional challenges and the average number of challenges per project are both higher in FCS contexts than in the overall portfolio, underscoring the importance of attending to this subgroup. Overall, among projects that discussed institutional capacity, 78 percent of operations mentioned one or more challenges in FCS, compared with 75 percent overall. Among operations that addressed human resources and organizational capacity, challenges were cited in 75 percent of FCS, compared with 69 percent overall. Similarly, for projects that mentioned commitment and leadership, challenges were more prevalent in FCS contexts (48 percent) than overall (41 percent).
Beyond institutional challenges, operations in Africa and FCS also encounter more country-level contextual obstacles. In Africa, among the projects that discussed political interference and business environment challenges, 71 percent and 75 percent, respectively, reported facing these challenges, compared with 66 percent and 69 percent at the overall level. Out of the FCS projects that discussed political interference and electoral cycles, 74 percent and 80 percent identified these as challenges, compared with 66 percent and 73 percent, respectively, at the overall level. Additionally, in FCS contexts, 85 percent of the projects that addressed the macroeconomic environment reported it as a challenge, compared with 66 percent overall. Along with the ongoing portfolio shift toward Africa and FCS contexts, these findings underscore the need for mitigation efforts that focus on these specific challenges.
The World Bank has opportunities to reinforce performance by improving the design of operations. There are four aspects that define the project design category: appropriate objectives or project design, time allocation or task sequencing, stakeholder selection, and beneficiary targeting. Among projects that discussed challenges in project design, 45 percent reported one or more challenges in these four areas. The most frequently discussed subfactors were appropriate objectives or design and time allocation or task sequencing, which were addressed by 64 percent and 48 percent of projects, respectively. Challenges were identified in 25 percent of the operations addressing objectives or design and in 51 percent of those addressing time allocation or sequencing. The importance of project design has been a subject of concern in various World Bank reports, including those by IEG. Tracing back to the Wapenhans report in 1992, the RAP findings echo concerns that have been raised previously, such as recognizing risks from limitations in country capabilities, giving systematic attention to whether the operation can be implemented, keeping complexity minimal, and considering intended outcomes and risks when designing indicators (World Bank Group 1992).
Operations with the longest preparation times are more likely to encounter significant challenges in institutional capacity and project design. The distribution of IPF preparation times shows a notable proportion taking extended periods. As shown in figure 2.9, for IPF projects closed during FY13–23, the 10 percent with the longest preparation times took more than 1,393 days for preparation (measured from initiation to approval). The analysis reveals a significant correlation between projects with extremely long preparation times and the occurrence of challenges related to institutional capacity and project design. These extended preparation periods not only reflect difficulties encountered during the design stage but also serve as an early warning of potential obstacles in institutional capacity that operations may face during implementation.
Figure 2.9. Density Distribution of Project Preparation Days Between Initiation and Approval
Figure 2.9. Density Distribution of Project Preparation Days Between Initiation and Approval
Source: Independent Evaluation Group.
Note: This graph displays the density distribution of preparation time of 2,213 investment project financing operations closed during FY13–23. The histogram represents the frequency of projects across different preparation time intervals. The density scale normalizes the data, ensuring that the area under the curve sums to one. Overlaid on the histogram is a kernel density estimate curve, which provides a smooth, continuous representation of the probability density function.
Extremely long preparation periods also correlate negatively with the performance of operations. Operations with preparation times exceeding the 90th percentile tend to underperform compared with those below this threshold, consistent with earlier findings on the association of challenges with ratings. Table 2.1 shows strong negative correlations with outcome, Bank performance, and M&E quality. This negative correlation is particularly pronounced for Bank performance, closely followed by M&E quality. This finding aligns with RAP 2015, which also identified a negative correlation between the months from the Concept Note to project approval and project outcome ratings. Conversely, even though the RAP 2024 analysis does not show a statistical association between shorter preparation time and project outcomes, other evaluation evidence highlights the importance of adequate preparation for successful outcomes (World Bank 2024f).
Table 2.1. Mann–Whitney U Test and Ordinal Logistic Regression on Project Ratings and Long Preparation Time (more than 1,393 days)
|
Rating |
Mann–Whitney U Test |
Ordinal Logistic Regression Models (independent variable: long preparation time) |
|
|
p value |
Coefficient |
p value |
|
|
Outcome |
.000 |
−0.422491 |
.0012 |
|
Bank performance |
.000 |
−0.638323 |
.0000 |
|
M&E quality |
.000 |
−0.604527 |
.0000 |
Source: Independent Evaluation Group.
Note: M&E = monitoring and evaluation.
Challenges in project data and monitoring are more directly within the World Bank’s control, with evidence on challenges highlighting opportunities where improvements can be made. Challenges identified in project data and monitoring span indicators, data availability and baselines, and reporting and supervision. Notably, 46 percent reported at least one of these challenges among operations that discussed issues in project data and monitoring. Furthermore, there is a negative correlation between project outcome ratings and challenges in indicators, and reporting and supervision projects with these specific weaknesses tend to have lower outcome ratings. Indicator challenges included poorly designed or misaligned metrics that failed to capture intended outcomes, a lack of clarity on calculation or measurement methods, and overly ambitious targets that were unrealistic for given timelines or country contexts. Data availability and baseline problems encompassed a lack of initial data, difficulty setting appropriate targets due to missing baselines, and challenges in tracking progress without reliable information. Reporting and supervision difficulties involved data collection and reporting delays, low quality of progress reporting, and obstacles to conducting in-person monitoring visits because of security concerns, travel restrictions, or other external factors.
Financial management challenges are prominent, including those related to procurement, budgeting, financial management and reporting, and financing mechanisms. Overall, 76 percent of operations encountered one or more of these challenges among those mentioned that reported these issues. Procurement was the most frequently cited factor (41 percent of projects, among which 76 percent reported it as a negative factor specifically).
Common challenges in project finance were identifiable across operations. Common procurement challenges included delays due to counterpart fund disbursement, prolonged approval processes, and procurement rules. Budgeting problems involved inadequate or untimely counterpart funding, financing gaps from underestimated costs, and inflexible budget processes. Financial management and reporting challenges encompassed disbursement delays due to various administrative bottlenecks, weak internal controls leading to financial mismanagement, and recurring delays and low quality of financial reports. Financing mechanism challenges included, for example, IPFs’ lack of flexibility and complexities in disbursement-linked indicator modality and multidonor trust funds. There is a significant negative correlation between Bank performance and outcome ratings and challenges in budgeting, financial management and reporting, and financing mechanisms. The finding aligns with the IEG evaluation of the World Bank’s procurement system, which pointed out that even minor improvements in procurement can substantially enhance project outcomes (World Bank 2024f).
Levers
Risk identification and mitigation and adaptive management are two critical levers that can significantly impact project outcomes. The World Bank’s ability to influence project performance is linked to its capacity to activate key “levers”—actions within the organization’s control to address challenges or enhance performance. By effectively employing these levers, the World Bank may proactively identify potential obstacles, develop targeted mitigation strategies, and adapt to changing circumstances throughout a project’s life cycle. The following analysis explores how the World Bank uses these levers to address the challenges identified in this chapter and contribute to more favorable outcome ratings.
Risk identification and mitigation can enable better anticipation and response to challenges. The key challenges discussed earlier in this chapter closely align with risks defined by the World Bank’s SORT. SORT evaluates residual risk by assessing the likelihood and impact of risks materializing, considering mitigation measures (World Bank 2021b). It identifies specific inherent risks to development outcomes and reviews mitigation strategies. The analysis found statistically significant correlations between the six challenges within the World Bank’s sphere of influence and SORT ratings, including overall ratings and ratings of various SORT categories (figure 2.10). Institutional capacity for implementation and sustainability, technical design of project or program, and fiduciary are the three SORT categories that correlate the most with the six challenges.
Risk identification and mitigation look to be important for undertaking more successful operations. The RAP analysis revealed statistically significant negative correlations between outcome ratings and end SORT ratings across all categories. Larger risk reductions during operations, measured as the difference between the initial and end SORT rating, are also associated with higher outcome ratings. Operations that fail to mitigate high risk throughout their life cycle are strongly associated with lower outcome ratings. Notably, the most substantial effects of risk reductions were observed in areas where the World Bank has indirect or direct control, particularly in institutional capacity for implementation and the technical design of the operation. Further consideration of actions that support lowering risk ratings would be beneficial, as some shifts may occur as risks do not materialize, whereas others may arise from efforts on the part of the World Bank team and country counterparts.
The analysis of the text of ICRs reinforces the importance of proactively addressing risk. The RAP analyzed the sentiment of the text in the Key Factors That Affected Implementation and Outcome section of 1,118 ICRs. This analysis also uncovered a strong association between positive sentiment of risk identification or mitigation actions and higher outcome ratings. This finding is crucial in Africa and FCS contexts, where risk profiles are higher (figure 2.11) and the share of lending projects has grown.
Source: Independent Evaluation Group.
Note: Spearman correlation is used to calculate correlation coefficients and statistical significance. All correlations are positive. Sample sizes ranged from 652 to 925 projects per pair. Bubble size represents covariance (larger = higher). Bubble color indicates p value.
Source: World Bank operations data.
Note: SORT rating is on four-point scale, with larger number indicating higher risk. Data include 1,613 investment project financing lending projects closed during FY16–23. FCS = fragile and conflict-affected situations; SORT = Systematic Operations Risk-Rating Tool.
The World Bank can effectively identify and mitigate risks in institutional capacity through various strategies. SORT guidance highlights key risk areas in institutional capacity, such as the competence of implementing agencies, implementation arrangements, and M&E systems. The combined manual and artificial intelligence–assisted summarization review of text from 615 ICRs with positive sentiment of risk identification or mitigation actions shows that successful operations often included extensive efforts to influence institutional capacity through, for example, capacity-building initiatives, such as training agency staff on World Bank processes and technical aspects of project management, and establishing well-resourced, dedicated implementing agency units. To manage the complexity of institutional arrangements, successful operations streamlined steering committees by maintaining representation from key stakeholders and oversight functions, along with detailed project operational manuals that clarify roles and responsibilities. For projects involving multiple agencies or levels of government, formal coordination mechanisms, such as regular interagency meetings and shared reporting systems, ensured consistent communication and alignment. Additionally, enhanced engagement and monitoring—through the involvement of technical experts, regular missions, and community participation—are critical for addressing risks related to capacity and resource challenges in institutional capacity.
The technical aspect of project design, largely controlled by operational staff, is another critical area for risk reduction and mitigation. SORT considers the project design stage to be the primary mitigation measure. The aforementioned text analysis found that operations with realistic and measurable objectives engaged interests that could exert more direct control over implementation. These operations conducted extensive political economy analysis and drew lessons from the World Bank’s previous operations and economic and sector work. The design of operations also benefited from engaging key internal and external stakeholders in comprehensive consultation processes involving government entities, local communities, civil society organizations, and international partners. The effective design phase incorporated local stakeholders, which enabled communities to identify needs and plan interventions. Successful approaches also included decentralizing decision-making processes and engaging local institutions to leverage existing structures and knowledge. By grounding designs in practical insights and local needs, operations promoted local ownership and aligned objectives with the on-the-ground realities of their specific locations.
Appropriate design of operations is paramount in FCS contexts, where complex challenges demand tailored, realistic, and adaptable approaches. IDA21 Policy Package: The “Lenses” Paper emphasized the need for tailored solutions that account for limited government capacity and resources in FCS contexts (World Bank 2024e). World Bank Group Strategy for Fragility, Conflict, and Violence 2020–2025 and its Mid-Term Review noted that crisis-related operations could perform well because of their focused, simple, and realistic nature, calling for more realism in objective setting and project design (World Bank 2020e, 2023d). Moreover, IEG evaluations have indicated the importance of World Bank efforts in, for example, the Geo-Enabling Initiative for Monitoring and Supervision in reinforcing elements of performance that are relevant for the design of operations (World Bank 2021d). The analysis of ICR text revealed successful operations that leveraged existing local networks and delivery systems to maintain essential services despite ongoing conflict. Operations emphasizing quick wins—achievable, high-impact activities—helped maintain momentum and demonstrated immediate benefits to affected populations.
The RAP analysis also observed a growing share of projects in FCS with objectives incorporating expanded access to services since FY20, with these projects receiving higher outcome ratings on average (figure 2.12). Improving access to services is important, as it can support the building of trust in institutions (World Bank 2020d). The percentage of operations incorporating access to services in their objectives has grown from 39 percent in FY20 to 51 percent in FY23. In contrast, operations not exposed to FCS more frequently incorporate elements of quality of service in objectives. For both FCS and non-FCS operations, enhancing the capacity of institutions remains the most frequent area of focus. The FCS operations that incorporated expanding access received significantly higher average ratings. The FCS operations whose focus did not include access—but rather incorporated only improving quality of services or institutional capacity—received lower ratings. This finding suggests that consideration needs to be given to framing project objectives that balance the need for expanding access to services while also preserving institutional strengths that are needed for long-term development, which other analyses in this report point to as important.
Mitigating fiduciary risks—encompassing both financial management and procurement—is crucial for improving project outcomes. Correlations between outcome ratings and fiduciary risk at project completion, as well as shifts in fiduciary risk ratings, exist across the portfolio, with particular importance in FCS and African contexts, where fiduciary risks are higher than average. IEG’s evaluation of procurement highlights its critical role in achieving development outcomes, noting it as a major challenge in project performance, especially in fragile, conflict-affected, and low-capacity countries (World Bank 2024f). The analysis of ICR text revealed that successful projects mitigated financial management risks through strengthening institutional capacity, enhancing financial controls, and adopting robust systems. Actions included training financial management staff, establishing dedicated financial management units, implementing regular external and internal audits, and adopting computerized management systems. For procurement, effective risk mitigation strategies focused on capacity building, strengthening oversight, and implementing adaptive approaches. Key actions included extensive training programs, developing detailed procurement manuals, establishing multilayered supervision mechanisms, and adopting flexible procurement strategies. Both financial management and procurement areas emphasized hiring specialized staff, creating independent oversight bodies, and providing hands-on support to address delays and improve execution. Similar issues have been highlighted in the recent IEG evaluation on procurement (World Bank 2024f).
Figure 2.12. Share of Projects with an Objective on Expanding Access to Services
Figure 2.12. Share of Projects with an Objective on Expanding Access to Services
Source: Independent Evaluation Group.
Note: FCS = fragile and conflict-affected situations.
Adaptive management can be undertaken to support risk management and enhance project outcomes. Adaptive management is an iterative approach to decision-making, whereby interventions and portfolios are adjusted based on evidence and evolving context (World Bank 2020d). The World Bank recognizes the importance of adapting to local challenges and allowing operational flexibility (World Bank 2020d, 2022c, 2023e). The RAP analysis coded text discussing adaptive management in the Key Factors That Affected Implementation and Outcome section of ICRs. The analysis found a statistically significant correlation between positive sentiment in the text on adaptive management and higher outcome ratings. Projects can implement adaptive management to mitigate risk or to take advantage of new opportunities (for example, through restructuring). Risk-responsive adjustments may involve changes to scope, timelines, activities, results frameworks, budgets, and procurement. ICRs provide examples such as shifting to virtual training during the COVID-19 pandemic, relying more on local partners in deteriorating security situations, and revising procurement strategies to attract qualified contractors. Adaptive management can also occur outside of risk management. Examples include scaling up projects based on lessons learned or implementing new activities through cost savings and exchange rate gains. Overall, adaptive management demonstrates a project’s ability to improve outcomes by addressing challenges and capitalizing on enhancement opportunities.
- FCS exposure means the country of operation was classified as FCS for at least one year during the operation’s lifetime. It is a more accurate capture of the context of the country in which the operation was implemented. Previous RAPs tagged only FCS as the country status of the operation’s closing fiscal year. FCS exposure represents a change from the previous methodology because operations in countries that experienced FCS conditions during implementation but were non-FCS at closing are now properly captured in the portfolio analysis. The full performance implications of this vary as some projects and Global Practices better design for adaptation to conflict situations (World Bank 2021f). The change in method leads to an additional 187 operations being captured under the FCS analysis. The change to FCS exposure method produces a small increase in average ratings of 0.02 during FY13–23 and 0.06 in FY23.
- It is worth noting that Afghanistan accounts for the largest share of operations among FCS countries during FY13–23 at 9 percent, with this share reaching a peak of 15 percent in FY23.
- Other analyses of World Bank operations have identified similar institutional challenges in ICRs and Implementation Status and Results Reports (for example, World Bank 2022h, 2023a; World Bank Group 2017).
- Institutional capacity-building efforts are a feature of the Bank Group’s evolution process, with papers on the Knowledge Compact and Global Challenge Programs identifying the importance of addressing institutional capacity gaps.