1. At the strategic level, IFC needs to: - Adopt a more strategic approach to addressing poverty, including sharpening the definition and shared understanding of poverty and poverty impact within the IFC context, and providing guidance to staff on how to operationalize it within the development effectiveness framework at the strategy and project level. In particular, in MICs adopt more nuanced concepts of poverty when defining frontier regions, taking into consideration the incidence of poverty, spatial distribution of the poor, and non-income dimensions. - Establish a consultative framework to support institutional efforts on articulation, measurement, and reporting of poverty impacts within the IFC context, including the participation of Poverty Reduction and Economic Management (PREM), Development Economics (DEC), and the Finance and Private Sector Development (FPD) networks of the World Bank Group and partner organizations to better address poverty and distributional issues, beyond company level impacts.
At the strategic level, IFC's priorities on frontier areas and sectors such as infrastructure, agribusiness, health and education, and financial markets, are largely consistent with a poverty focus in that they reflect geographic, sectoral, and equity aspects that, as evidence suggests, are correlated with enhanced opportunities for the poor. But strategic sectors are defined in such broad terms that although they are consistent with a pro-poor orientation, they need to be designed and implemented in ways that enhance opportunities and impact on poor people. (Evaluation Summary) Frontier regions in MICs are defined on the basis of per capita income differential between country and regional averages. This criterion tends to focus IFC on the regions with the highest poverty rates. However, poverty maps show that the largest concentrations of poor people are not in the locations with the highest poverty rates. (Evaluation Summary) Although there is growing recognition that IFC's support for private sector development can benefit the poor, there is less clarity about what poverty means within the IFC context, which segments of the poor are likely to benefit, and how they benefit from interventions. (Chapter I, para 1.24) To know what helps reduce poverty, what works and what does not, what changes over time, poverty has to be defined and measured. IFC, as a member of the World Bank Group, does benefits from different methods of defining and measuring poverty. However, to be able to meet the needs of the poor, it needs to know: Who are the poor? Where they are located? How can they be reached them with appropriate interventions? IFC need to think carefully about these questions and produce answers based on its own experience and evidence. (Chapter I, para 1.24) Enhancing IFC's poverty focus implies the need to be more strategic, including paying greater attention to sector-wide approaches that effectively combine development goals, IFC's investment and AS instruments, and country strategic priorities. Maximizing development impact from a limited capital base also mean greater effort at seeking complementary relationships with partners, including within the World Bank Group. (Chapter 3, para 3.27)
Original Response: We welcome this recommendation which is consistent with the findings of IFC's internal review of its MIC strategy. The report indicates that IFC contributes to poverty reduction on two dimensions (i) indirectly through broad- based growth; and (ii) directly through inclusive growth. In developing its strategy, IFC is cognizant of the fact that not all projects could focus on both dimensions. The upcoming FY12-14 Road Map Paper indicates that at the portfolio level, IFC aims to achieve a balance of projects that can maximize IFC's contribution to poverty reduction. Where possible, IFC will undertake projects that address both dimensions, e.g., infrastructure projects that provide access to the poor. On indirect poverty reduction, IFC will make more explicit the anticipated indirect poverty effects at project approval, and continuously update its learning. On direct poverty reduction, IFC will continue to invest in learning about best practice in projects that aim to address the needs of the poor and underserved e.g. inclusive business projects, and seek to systematically apply that learning in new business design. IFC will consider revising the existing stakeholder framework to help staff clearly articulate upfront the poverty outcomes of IFC's projects. Staff will be trained via existing training programs such as Development Impact Workshops. Following the FY2011 review of IFC's engagement in MICs, IFC is considering broadening its definition of "frontier" to encompass inclusiveness and target the poor regardless of geographical area. We agree with the intent of this recommendation which we believe can be achieved with existing collaboration structures, rather than establishing any additional formal consultation framework. The WB and IFC collaborate at the institutional strategy level such as in the development and implementation of the WBG's Post Crisis Directions (PCD) strategic pillars. At the country level, IFC's more focused engagement in joint Country Assistance Strategies (CASs) allow closer WB-IFC collaboration in strategy formulation and results measurement. On overall results measurement, IFC's Development Impact Department has a strong relationship with the OPCS Results Secretariat.
Define poverty and poverty impact in IFC context.
Indicator: Applicable poverty and poverty impact definitions for strategies
Baseline: IFC Roadmap 2012-14
Target: Definitions approved by Management
Timeline: March 2012 or at the completion of IFC Roadmap 2013-15
Apply Inclusive Business Models to expand BOP of IFC.
Indicator: # of regional strategies including BOP
Baseline: 2
Target: 4
Timeline: 2013
Standardize AS & IS approval documents, revise stakeholder framework and project document guidelines, conduct literature review to clarify association between IFC interventions and poverty results, and provide staff with training, to address more explicitly the anticipated direct and indirect poverty outcomes.
Indicator: Poverty discussions in project approval documents
Baseline: Existing documents
Target: Revised approval documents implemented
Timeline: June 2015
Review IFC definition of ï¾frontierï¾.
Indicator: Definition of ï¾frontierï¾
Baseline: Current definition
Target: Decision made on the definition of ï¾frontierï¾
Timeline: Roadmap 2013-2015
Collaborate with WB within existing structures in the context of Actions A, , F and H.
Indicator: Involvement of relevant WB staff in discussions
Baseline: Current practices
Target: Inputs of WB staff sought for all relevant issues
Timeline: Continuously starting FY12
A: IFC's the most recent road map indicates that IFC contributes to the Twin Goals, through jobs and broad economic growth. IEG agrees that this is one of several ways IFC contributes to the Twin Goals.
IFC has taken steps to articulate its impact at the design (or ex-ante) recently. For example, Lines of Sight, theory of Change, conceptualizes IFC's project impact for each sub sector. These ToC potentially provide guidance to staff on how to operationalize twin goals within the development effectiveness framework at the strategy and project level. Since December 2015, IFC requires its staff to articulate how projects link to the twin goals in the Board documents. These are ex-ante approaches.
To measure its impact, IFC developed a dynamic system approach, however, recent interviews with IFC staff indicates that the use of this approach is limited. Several evaluations have been conducted to measure development impact but not necessarily twin goals, and at some point IFC piloted poverty score cards to measure its impact on poor but IFC gave up on this approach.
B: As a result of the IFC's Refocus exercise, IFC's progress in Inclusive Business cannot be captured as originally intended. IEG recommends to drop this action.
C: Since last year IFC emphasis has shifted from project to country/strategy level work for ex-ante and ex-post assessment for twin goals. The main initiative for articulating IFC contribution to twin goals is Lines of Sight. IFC industry departments are developing theory of change that link their interventions to the twin goals. As explained above these are conceptual frameworks. In terms of measuring its impact, IFC is conducting several activities to assess impact on the twin goals, with different levels of success and work in progress. Dynamic model initiative has proven to be very complex and limited. IFC has conducted several evaluations, interestingly project level. IFC Infrastructure team started to use outcome multipliers to measure impact. The most recent, promising development in IFC has been the establishment of IFC economics and developprment strategies VPU. This VPU will likely bring the much needed focus and rigor to IFC articulation of its development impact.
D: This is another concept that lost its appeal in IFC in the recent years, the current focus of IFC is on creating markets. With this new approach IFC will try to develop new markets or deepen existing markets. This concept is different than frontier markets. IEG recommends to drop this action.
E: The Systematic Country Diagnostics, the Country Partnership Framework, and the Joint Implementation Plans are main avenues that WB, IFC and MIGA jointly work towards identifying issues, priorities for twin goals prosperity. The action E is complete.
Action A(Completed) IFC has defined its contribution to the Twin Goals, through jobs ; economic growth. No indicator has been defined but instead IFC is using different approaches to estimate its impact on jobs ; economic growth: (i)line of sights or theory of changes for several industries ;products; (ii)conducting evaluations that look at these two impacts; (iii)developing a dynamic system approach ; Input/ Output models; (iv)requiring that each Board Paper includes a discussion of the links of the project to the twin goals. Action B(Completed): As indicated last year, as a result of the IFC's Refocus exercise, IFC's progress in Inclusive Business (iBiz) cannot be captured in the way it was originally intended. The iBiz team, the Development Impact department, ; regional strategy staff were put together under the Client Services VPU, with the aim to generate greater cohesion ; synergy. Along the change process, the term ‘inclusive growth' is used interchangeably with ‘inclusive business'. The inclusive business practice has been mainstreamed as part of regular operations in many regions. Requests for greater inputs into strategy are coming from specific sector areas such as agribusiness, health ; education - not necessarily from the regional departments. Action C(Ongoing): IFC has defined its contribution to the Twin Goals, through jobs ;economic growth. Regarding IFC approach to estimating its impact several activities are under implementation. (i)CODE has endorsed our approach to measuring results which points to the overarching framework of country/strategy level links to the twin goals, moving the discussion from transaction level (although results frameworks are required and monitored for each transaction). We believe this is much more effective in looking at IFC's focus on poverty ;shared prosperity than looking at individual projects 1 by 1 in the format of Board reports. (ii)Many of the industries have developed line of sights or theory of change that link their interventions to the twin goals. (iii)We continue to work on developing a dynamic approach/model on how to estimate the impact of private sector involvement on jobs ;economic growth. (iv)We have continued to use evaluations strategically in key sectors ; sub-sectors to assess ;develop clearer articulation of our contribution to dev. impact ;ultimately the twin goals. (v)The Board paper template now includes guidance on how to link the project to the poverty goal. We are in the process of reviewing feedback from the first 6 months of implementation of the new guidelines ;will update the guidelines if necessary. Training for operational staff on how to prepare the Board docs., including additionality ;expected dev. impact is being delivered. Action D(Completed) IFC's strategy paper discusses working on frontier areas as follows (par. 2.11): Developing new markets for private investment. As part of the WBG, IFC acts to help extend the frontier of market solutions to new areas or deepen existing markets. IFC may leverage the WB to improve the enabling environment ;address market failures. Historically, IFC played a key role in opening emerging markets as an investment class, private infrastructure in lower income countries, local currency bond markets, in frontier regions, financial innovation, ;expanding microfinance including in FCS. IFC will prioritize opportunities such as these, to extend market solutions. Action E (Completed)Discussion on the poverty agenda between IFC ; the WB occurs as part of the Systematic Country Diagnostics(SCDs), the Country Partnership Framework(CPF), and the Joint Implementation Plans.(JIP) The SCD assesses the country dev. priorities in the context of the WBG goals. The CPF outlines the WBG strategy in the context of the SCD priorities, the country priorities, and the WBG competitive advantage. In FY16, IFC designed jo
The recent developments at IFC as described at the management update section are not substitute for the actions that have been agreed. IEG acknowledges that progress has been made towards the agreed action plan, however the impetus for action has been fading. The agreed actions or new initiatives in the spirit of IEG recommendations should be at the center of IFC's result measurement efforts.
Action A (Completed)
Action B (Completed):
As a result of the IFC's Refocus exercise, IFC's progress in Inclusive Business cannot be captured in the way it was originally intended. The Inclusive Business team, the Development Impact department, and regional strategy staff are put together under the Client Services VPU, with the aim to generate greater cohesion and synergy. Along the change process, the term ‘inclusive growth' is now used interchangeably with ‘inclusive business'. However, despite the change, the inclusive business practice has been mainstreamed as part of regular operations in many regions. Requests for greater inputs into strategy are coming from specific sector areas such as agribusiness, health and education - not necessarily from the regional departments.
In addition, the Inclusive Business team had delivered on the following new areas: (a) establish IFC's thought leadership in inclusive business through publications, launch, participation as speakers in key events, and requests from other DFIs and donors on inputs for their inclusive business strategies; and (b) widen the influence of the team more broadly by interacting beyond investment departments within IFC as well as with other World Bank Group units to maximize exposure of the inclusive business concept more globally; for example, through the issuance of the first ever Inclusive Business Bond with the total value of more than $200 million as well as the creation of G20 Inclusive Business Framework.
Action C (Ongoing):
IFC has defined its contribution to the Twin Goals, through jobs and economic growth. CODE endorsed RM 2.0 which points to the overarching framework of country/sector level links to the twin goals. We believe this is much more effective in looking at IFC's focus on poverty and shared prosperity than looking at individual projects one by one in the format of board reports. In addition, we are working on a dynamic approach/model (RM 3.0) on how to estimate the impact of private sector involvement on jobs and economic growth. We have continued to use evaluations strategically in key sectors and sub sectors to assess and develop clearer articulation of our contribution to development impact and ultimately the twin goals. Training for operational staff on how to prepare the Board documents, including additionality and expected development impact is being developed. We recommend changing the timeline to June 2016.
Action D (Completed)
Action E (Completed)
Last year, we noted that the work on poverty agenda between IFC and the World Bank occurs as part of the Systematic Country Diagnostics and the Country Partnership Framework dialogues as well as the discussions on the Joint Implementation Plans. As evidences of our statements, all CPFs must articulate how the WBG program will contribute to helping the member country progressing towards the achievement of the twin goals (one of which relates to poverty). This is the principle of selectivity embedded in the CPFs. For details on the number of SCDs and CPFs in process of being finalized (with IFC inputs) please refer to the attached slide.
Action A: Completed
Action B: This action has not been fully achieved. The strategies listed above are targeting inclusive growth, the strategies do not articulate clearly how/whether inclusive business models target BOP.
Action C: So far the project document guidelines, including both AS and IS project approval documentation has not been revised to sharpen and standardize relevant sections on poverty.
Action D: Completed
Action E: With the recent organizational structure, IFC has been closely working with the WB. However IEG does not have any evidence of any WBG formal collaboration specifically on poverty aspects.
IEG 's review of the regional strategies reveals no meaningful treatment of BOP.
Action AandD have been completed as reported in MAR 2013.
Action B: Three regional strategies included BOP (CAF, SA and LAC). This metric is under review in the context of IFC Refocus. IFC investment in inclusive business incresased to $1.6 billion from the baseline of $1.0 billion.
Action C: Partly completed as per timeline. 11 literature reviews across Advisory and Investment sectors were done. Findings shared.
In order to start addressingthe need forgreater clarity on poverty inproject documents, a poverty and prosperity framework has been designed and is in the process of being piloted.Based on lessons learnt from the pilot, scale up and roll out will be plannedforproject documentation.
Relevant engagement of WB staff has been undertaken during discussion on the definition of poverty for IFC as well as in doing the literature reviews.
Action E: IFC has been working on the poverty agenda in close collaboration and coordination with the WB. There have been several places for these engagements such as the work on the Systematic Country Diagnostics and the Country Framework dialogues as well as the discussions on the Joint Implementation Plans. All of these have the context of the WBG twin goals front and center stage. Further, there has also been co-operation and inputs between IFC and the global practices on areas of strategy and action plans which focus on areas of sectoral engagement for maximizing development impact.
IFC has made substantial progress on its poverty agenda.
Action A: (Achieved): IFCï¾s agreed approach to poverty has been incorporated into Road Map FY13-15 and in the Road Map of FY14-16.
Action B: (Underway): On Inclusive Business models,CAF and CSA are assessing Inclusive Business opportunities for possible strategic focus.
Action C: (Deliverables for FY12 achieved):As per commitment on literature reviews, 11 Literature reviews were completed across BLï¾s and IGï¾s in FY12 itself. Initial findings have been shared and discussions ongoing on operationalizing findings. There are proposals for other sector reviews which could be undertaken in FY14.As part of ongoingwork on capturing poverty discussions in board papers etc, work has started on building poverty guidance for the sectors reviewed to be used as lens during project discussion and documentation.
Action D: (Achieved):Following Board consultations, existing definition maintained for now.
Action E:From the beginning (inoutlining IFC's approach to poverty), relevant colleagues from PREMhave beenconsulted. During the poverty literature reviews, relevantWB colleagues have been involved and WB publications considered. With thefocus of the twin goals and itsimplications for IFC's poverty focus, this engagement and collaboration with the Bank has grown and continues.
Status: Active