The Committee on Development Effectiveness met to consider the report entitled World Bank Group Approaches to Mobilize Private Capital for Development and the draft management response.
The committee welcomed the evaluation, commending the Independent Evaluation Group (IEG) for the diagnostic, methodology, comprehensiveness, and quality of the report. Members noted the relevance and timeliness of the topic given the context of discussions on the Forward Look and capital package implementation and the challenges posed by the coronavirus pandemic on external financial flows toward developing countries. Acknowledging members’ concern on management’s disagreement and partial agreement on the recommendations, IEG and management agreed to engage to understand management’s challenges, present the case more clearly, and ensure ownership of the recommendations. Members asked for regular updates to the Board of Executive Directors, with the chair suggesting an update to the Board in 4 to 6 months, subject to the Bank Group’s management readiness. Members acknowledged that the new Management Action Record process would also serve as a platform for the Board to learn the progress made toward implementing the recommendations.
Although encouraged to learn that the Bank Group’s approaches were relevant and mostly effective in meeting the expectations and priorities of client countries and investors, members acknowledged room for improvement. They called for the World Bank to give greater priority to scale up its private capital mobilization (PCM) efforts and the Cascade approach, with the objective of meeting the capital package commitments, and to help client countries advance toward meeting the Sustainable Development Goals. Management noted IEG’s findings that the International Bank for Reconstruction and Development can realistically meet its corporate target of a 25 percent mobilization ratio on average by 2030 and that management is committed to meeting that goal. Noting management’s explanations on how decentralization and training opportunities for Country Management Units could help advance the PCM agenda, members highlighted the need to differentiate by sector and by country, with some encouraging a move toward International Development Association countries and greater attention paid to domestic PCM and local capacity building.
Members agreed with the recommendation on testing pilot instruments and encouraged management to come up with innovative approaches and instruments to extend the reach and impact of development finance. They underscored the importance of Country Private Sector Diagnostics to create a more positive environment for cascading PCM targets and suggested enhancing cooperation among the Bank Group institutions. Acknowledging management’s remarks on the relevance of collaborating with other multilateral development banks to create the right markets, members asked for clarifications on differences in measurement, challenges to improving the collaboration, and whether the presence of bilateral development finance institutions improved project performance. Members looked forward to the future evaluation on the catalyzation approach to capital mobilization, which will complement this evaluation.
Members were pleased to learn about the International Finance Corporation exceeding its core mobilization targets and meeting client expectations. They agreed with IEG’s recommendation that the positive results could be consolidated by improving product alignment with investors’ needs, while maintaining goals, procedures, and environmental and social standards. Members acknowledged management’s explanations that the International Finance Corporations efforts need to be calibrated and delivered within the specific regulatory and operating environment of different asset classes and investor groups and that such efforts and further product development are not a simple process.