The Committee on Development Effectiveness met to consider the Independent Evaluation Group report International Finance Corporation Additionality in Middle-Income Countries and the management response.

The committee welcomed the evaluation findings and recommendations, which emphasize that 96 percent of International Finance Corporation (IFC) projects realized some level of additionality, including both financial and nonfinancial additionality. Members noted IFC’s leadership among other development finance institutions in identifying and articulating additionality at the time of project approval and underscored the timeliness and relevance of the subject in the context of the World Bank Group evolution roadmap discussion. They appreciated management’s agreement with the Independent Evaluation Group’s recommendations and urged them to ensure that the findings and recommendations, including the need to incorporate IFC’s additionality approach to country strategies, are integrated into the roadmap discussions on the operational model and toward a more effective use of the Cascade approach.

Members acknowledged the evaluation’s finding that IFC is comparatively less successful in realizing nonfinancial than financial additionality and underscored the importance of remedying this imbalance, which could undermine IFC’s value proposition in middle-income countries. Members called on IFC to ensure that adequate measures are identified to better articulate and realize nonfinancial additionality, including the delivery of advisory services to support realization of nonfinancial additionality and by optimizing footprint and providing incentives to the project teams, for a more enhanced engagement.

Acknowledging that additionality is core to IFC’s operations, members echoed IEG’s findings that internal IFC systems to assess additionality are incomplete and as such encouraged IFC management to follow up on its commitment to update IFC’s monitoring and reporting system for additionality. They called on IFC management to provide regular reporting on achievement of additionality at the sector, region, and portfolio level as part of development impact reporting while also improving the database. In addition, they urged IFC to take adequate steps toward improving client commitment, which is key to the successful realization of nonfinancial additionality. Members also stressed the importance of scaling up the One World Bank Group approach through IFC’s enhanced collaboration with the World Bank and the Multilateral Investment Guarantee Agency, as this offers an opportunity for IFC to create more markets, serve all clients, and enhance additionality and impact.