Lessons and Implications from 10 Years of Experience
 |  | The Independent Evaluation Group (IEG) of IFC fully discloses for the first time its Independent Evaluation of IFC's Development Results (IEDR).
The findings, which cover the last 10 years, indicate that IFC has effectively pursued its goal of promoting sustainable private sector investment in developing countries while maintaining its own profitability. IFC has performed well in its strategic priorities of investing in infrastructure and financial markets, as well as working in low-income and/or high-risk countries. However, IEG finds that IFC must strengthen its country-level strategic focus to complement its sectoral and regional involvement. |
Main Findings
IEG’s methodology is based on a combination of metrics and carefully informed judgments which represent the very best evaluation practices and standards agreed on by major Multilateral Development Banks with private sector operations. The report is based on evaluations of 627 IFC-supported investment operations that were evaluated between 1996-2006, as they reached operating maturity. IEG also assessed leading indicators for more recent projects, such as inherent project risk intensity and country business climate risk.
The main findings of this review are the following:
- IFC profitability and development impact have tended to go together; IFC has not actively supported projects where there was a trade-off between the two.
- Since 1991, IFC has invested around $50 billion in developing countries, achieving high development ratings in 59 percent of cases (or 65 percent by commitment volume).
- Project performance is closely linked to changes in a country's business climate, to management of risks, and to IFC's work quality.
- While evaluation findings broadly support IFC's strategic directions, they also point to the crucial need for more tailored, country-specific strategies with greater IFC-World Bank cooperation.
Recommendations
In order to address the many challenges that IFC faces, IFC management will need to pursue the following recommendations (See
full report for further details):
- From a client and stakeholder perspective,
- Adopt more tailored country strategies to complement its strong sector and regional approach, including through the development and pursuit of a set of country-specific private sector development indicators.
- In its country strategies, flag opportunities to work on the nexus of rural poverty and sustainable natural resources, on which poor people depend, and to identify and develop high-impact agribusiness and rural microfinance projects with widespread demonstration effects, while simultaneously providing leadership in promoting socially and environmentally sustainable practices.
- From an internal process perspective, enhance cooperation with the World Bank in areas of synergy,
- By considering, with the Bank, new incentives and mechanisms to complement the Country Assistance Strategy (CAS) process.
- By identifying investments at approval that were facilitated by Bank policy or regulatory assistance to a government, and tracking them throughout the project cycle (through IFC's Development Outcome Tracking System or other means) to judge their success.
- From a human capital perspective, monitor the decentralization process closely to ensure that IFC work quality remains robust and is supported by a rigorous training program for new investment staff.
- From a financial and measurement perspective,
- Make continued efforts to improve its risk-management systems and to prepare for the next correction in the international markets, including perhaps the extended use and development of new risk-mitigation products.
- With IEG's support, advance its metrics to understand better (and derive lessons about) the wider sector and country-level impacts of the projects that IFC supports.
To see the full recommendations, please see Chapter 4 of the report.
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