The purpose of this chapter is to provide concluding remarks and propose ways forward. This RAP’s analysis for each World Bank Group institution—the World Bank, IFC, and MIGA—consisted of different data, cohort sampling, terminologies, and methods of analysis. As such, the conclusions and future directions are presented separately for each institution.

World Bank

Conclusions

World Bank projects maintained or improved their performance ratings between FY21 and FY22 despite the challenges posed by COVID-19. This is the first RAP to include a substantial number of projects affected by the pandemic in its cohort; however, as most of these projects were already at an advanced stage of implementation when the pandemic began, the amount of their project life that was exposed to the pandemic was limited. Moreover, the presence of a sample selection bias, with more successful projects being overrepresented in this cohort, is a limitation that calls for a cautious interpretation of findings on the pandemic’s impacts on projects. Because project cohorts in the next few years may exhibit a more accurate reflection of the extensive repercussions of the COVID-19 pandemic, it is likely that project performance rating trends will change downward in the future when more projects with prolonged exposure to COVID-19 are integrated into the rating trends.

World Bank projects were able to adapt to various implementation challenges, including COVID-19–related disruptions and other obstacles. The fact that overall project performance did not suffer is a testament to the resilience and adaptability of project teams. The low technical and organizational capacity of implementing agencies emerged as a key implementation challenge, especially in projects that failed to adequately identify and mitigate institutional capacity risks. In addition, COVID-19 disrupted project implementation in various ways and led to increased project restructuring and adaptive management, which helped World Bank projects achieve desired results despite the many challenges. However, this RAP did not analyze in-depth the types of changes in results framework during restructurings—a potential area of analysis for future RAPs.

The World Bank’s improved M&E quality documented project achievements and challenges, enabling adaptive management. Increased M&E quality, as reflected in M&E quality ratings, served as an effective early warning tool that enabled project adaptation and provided sufficient evidence of project achievements. Project indicators were well aligned with project objectives, and these adequate indicators contributed to improved efficacy ratings. Nevertheless, M&E challenges persist in measuring the achievement of enhanced capacity of institutions’ objectives, which relied on intermediate outcome indicators to demonstrate the extent to which the project enhanced the capacity of institutions to perform their functions.

Future Directions

Strengthen project capacity to identify and mitigate risks during project preparation, especially the risk of low implementing agency capacity. Risk management by World Bank project teams and the technical capacity of implementing agencies were key factors in successful project implementation. Indeed, the weak capacity of implementing agencies emerged as the predominant underlying risk in projects that failed to adequately identify and mitigate risks. This underscores the need for World Bank project teams to conduct comprehensive risk assessments and develop robust mitigation strategies that prioritize capacity risks, especially in countries where local capacity limitations are common. This future direction aligns with the RAP 2022 proposal to strengthen country programs’ ability to assess implementation capacity risks.

Continue improving M&E as both an adaptation and accountability tool. The World Bank took a proactive approach to adapt and restructure projects as needed during the COVID-19 crisis by closely monitoring projects’ progress and identifying emerging challenges. M&E frameworks also provided sufficient evidence on project achievements. Thus, there is a valuable opportunity to scale up project monitoring, adaptation, and restructuring into postpandemic contexts and, more generally, beyond crisis scenarios. This will help maximize the resilience and performance of World Bank projects. Furthermore, there are still areas in which the World Bank can continue to improve the M&E frameworks for greater accountability. In particular, the World Bank could enhance its ability to measure institutional capacity outcomes in line with the World Bank’s outcome orientation agenda. This future direction is consistent with RAP 2021, which shows that not all projects with institutional strengthening objectives have adequate indicators to measure them.

International Finance Corporation

Conclusions

IFC investment and advisory project performance ratings declined only slightly despite their exposure to COVID-19 and the more challenging operating environment. IFC’s investment project development outcome success ratings decreased from 53 percent in CY19–21 to 50 percent in CY20–22. The development effectiveness success ratings of IFC advisory projects have been improving since FY15–17 but declined from 60 percent in FY19–21 to 54 percent in FY20–22. IFC’s XPSR and Project Completion Report self-ratings also declined. Most IFC investment projects took place during some part of the COVID-19 pandemic, with, on average, 24 percent of their project lives occurring during COVID-19. The pandemic-related disruptions created a challenging operating environment for IFC investment projects. Although IFC restructures loan agreements and reschedules loan repayments, it has no formal procedures to modify investment projects’ development objectives in response to a crisis.

Several factors besides COVID-19 negatively affected IFC’s investment project performance, including economic issues, business risks, and market competition. Economic factors reduced demand for IFC client products and services and lowered the project companies’ operational and financial performance compared with the projections at the Board approval stage. Financial sector projects dealing with high business risks moved away from lending to riskier segments to preserve capital. In the real sector, adverse business factors related to cyclicality, a downturn in the markets, or untested and flawed business models affected investment project performance. Higher-than-expected competition led to investment projects missing operational targets and contributed to reduced operating margins and profitability. The private sector reacted quickly to the changing economic landscape and showed remarkable resilience and adaptability. Similarly, strong sponsor ability and technical expertise emerged as two of the most important factors to positively affect investment project performance.

IFC work quality and additionality ratings, which are associated with project development outcome ratings, declined in CY20–22. Overall, IFC work quality success ratings for investment projects declined from 60 percent in CY19–21 to 55 percent in CY20–22, while IFC additionality success ratings declined from 59 percent to 54 percent over the same period. IFC additionality success ratings in challenging markets such as Africa, IDA and blend, and FCS countries were lower than the IFC average. IFC particularly had difficulties in delivering nonfinancial additionality in these challenging markets.

IFC investment project objectives were highly outcome oriented, although outcome achievement rates were low. Overall, 100 percent of the 170 IFC investment projects reviewed in the RAP’s deep-dive analysis pursued project-level outcomes, whereas 74 percent pursued market-level outcomes. IFC investment projects fully achieved 45 percent of their total intended outcomes and partially achieved 22 percent. IFC investment projects achieved market-level outcomes at about the same rate as they achieved project-level outcomes. This contradicts the hypothesis in the RAP 2023 Concept Note that market-level outcomes are much harder to achieve than project-level outcomes. This RAP shows that IFC investment projects that achieved more of their intended outcomes achieved higher development outcome ratings.

Some outcomes could not be verified because of a lack of appropriate result measurement indicators and evidence, depressing outcome achievement rates. Most of these investment projects in the RAP 2023 cohort were not subject to an AIMM assessment at their approval and continued to be monitored in the Development Outcome Tracking System. In many cases, IFC or IEG used other available information sources to validate project outcome claims. However, 8 percent of intended outcomes could not be verified because of a lack of evidence, potentially depressing IFC’s investment project outcome achievement rates.

Future Directions

Improve the delivery of IFC additionality in difficult markets to enhance investment project outcomes. Difficult markets include those in FCS, Africa, and IDA and blend countries, in particular. We found that IFC additionality success ratings were particularly low in a large share of investment projects in these markets. The IFC 3.0 strategy aims to ramp up its investment program in these challenging markets. Higher realized IFC additionality in these challenging markets will make it more likely for IFC investment projects to achieve their objectives. IFC can add value to projects in these markets in several ways. For example, IFC delivers tailored financing but can also increase its provision of industry expertise and capacity- building advisory services, improve corporate governance, and enhance the environmental and social standards and practices of clients. Improving the delivery of IFC additionality would require IFC to adopt a proactive approach to ensure that additionality promises made at approval, particularly nonfinancial additionalities, are fulfilled and properly monitored during the investment project’s life.

Further strengthen the selection of indicators and the measurement and tracking of intended development outcomes of investment projects. These measures would facilitate the monitoring of project development outcome progress and better reflect actual achievement. RAP 2021 highlighted the challenges in measuring development outcomes, particularly at the market level, and this RAP showed that these challenges continue to be an issue. We found that monitoring data were not available for many intended development outcomes of IFC investment projects in the RAP 2023 cohort. As such, IFC has an opportunity to improve its design and implementation of monitoring indicators to ensure that they can measure and track the achievement of intended project outcomes of investment projects. This would require IFC to provide clear definitions and sources for chosen indicators and ensure that clients have the capacity to measure them. That said, the investment projects in the RAP 2023 cohort predate the rollout of IFC’s AIMM framework, which requires IFC to track all project claims until the AIMM target year, which could improve some of these monitoring issues. IFC confirmed that it has increased the use of standardized indicators, improved regular monitoring, and engaged in an ongoing effort to establish a new data platform for data tracking and reporting for investment projects approved under the AIMM system. Appropriate implementation of these measures could result in improvements in the measurement and tracking of intended outcomes, although IEG has not yet been able to systematically validate these claims as very few IFC investment projects approved under the AIMM framework have been evaluated so far.

Multilateral Investment Guarantee Agency

Conclusions

MIGA guarantee project development outcome ratings remained stable over the last six years but were slightly lower over the last three years, partially due to pandemic-related market challenges. The implementation of half of MIGA guarantee projects in the last three years was affected by COVID-19 to at least some extent. On average, these MIGA guarantee projects were exposed to the pandemic for 27 percent of their project lives. This suggests, and project evaluations confirmed, that FY20–22 projects operated under more challenging conditions during the pandemic. As such, MIGA’s overall development outcome success rates on a six-year rolling basis remained stable in FY17–22 but were lower on a three-year rolling basis in FY20–22, which coincided with the onset of the pandemic and the more challenging operating environment. Like IFC, MIGA has no formal procedures for restructuring development-related objectives or outcome targets during project implementation or crises.

Several factors besides COVID-19 negatively affected MIGA’s project performance. Cost overruns and construction delays along with foreign exchange issues were the most common factors undermining project implementation. Capable sponsors showed resilience and flexibility in helping MIGA guarantee projects adapt to the challenging economic landscape caused by COVID-19. For example, some MIGA hospital projects adjusted their services to assist the government in addressing new medical demands during the pandemic. Favorable legal and regulatory environments also helped projects effectively counter adverse factors.

MIGA’s project objectives were highly outcome oriented, but their achievement was relatively low. As in IFC, approximately one out of five intended outcomes from MIGA projects were foreign investment–level outcomes, with the rest being project-level outcomes. However, MIGA was even more outcome oriented, with 86 percent of projects pursuing foreign investment–level outcomes. That said, foreign investment–level outcomes were more difficult for MIGA to achieve than project-level outcomes, as hypothesized in the RAP 2023 Concept Note and demonstrated in RAP 2021. MIGA guarantee projects fully achieved 31 percent and partially achieved 25 percent of their foreign investment–level outcomes, compared with 55 percent full achievement and 21 percent partial achievement of their project-level outcomes. This had a direct effect on ratings; this RAP shows that MIGA projects that achieved more outcomes had higher development outcome ratings. Further undermining MIGA’s outcome achievement were shortcomings in project M&E, particularly a lack of appropriate indicators to measure intended project outcomes. Subsequently, 69 percent of project outcomes were not tracked by MIGA. MIGA and IEG used supplementary data to separately verify many of these outcomes, but 10 percent of project-level outcomes and 13 percent of foreign investment–level outcomes still could not be verified by MIGA or IEG because of a lack of evidence. This may have affected MIGA’s development outcome ratings.

Future Directions

Enhance project preparation work quality to strengthen the performance of MIGA guarantee projects. We found that MIGA work quality was rated lower than satisfactory in half of guarantee projects. MIGA could undertake more comprehensive project risk assessments, estimate detailed operational and financial projections with clear targets, and account for stricter downside scenarios. These up-front actions would help project teams enhance the awareness or understanding of potential project risks, consider mitigation mechanisms, and set clear project expectations. In PPP projects, MIGA could identify foreseeable macroeconomic developments, such as local currency depreciations that can increase the government’s financial obligations, and assess the risks from these developments, for example, whether the government is willing or able to pay the increased obligations to reduce their sustainability risks. According to MIGA, project risk assessments have recently improved, and the current IMPACT framework incentivizes project teams to mitigate risks to the extent possible. However, IEG has not been able to validate these claims because MIGA’s guarantee projects approved under the IMPACT framework have not yet been subject to evaluation.

Strengthen measurement and tracking of intended development outcomes, particularly at the foreign investment level. These measures would facilitate monitoring of project development outcome progress, would better reflect actual achievement, and would be especially helpful for tracking the achievement of intended foreign investment–level outcomes. MIGA could accomplish this by better defining its project development objectives, selecting relevant indicators to measure outcomes, and establishing appropriate mechanisms to gather results evidence and development impact data. This suggestion is in line with findings of RAP 2021, which noted that many MIGA guarantee projects lacked sufficient evidence to rate project outcomes; however, MIGA’s evidence collection has improved in recent years.