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Independent Evaluation of IFC's Development Results 2009

Knowledge for Private Sector Development

In this year's report IEG provides a first global review of advisory services by IFC - knowledge services to private firms and governments in support of private sector development, such as customized training or advice on investment promotion and policy. IFC's advisory portfolio has grown tenfold, to nearly $1 billion, in the last seven years, and IFC now has more advisory than investment staff in the field. The substantial growth of this business line raises important questions related to the appropriate balance of advisory and investment services to ensure maximum development impact.


Main Findings

Methodology
IEG’s project evaluation ratings for investment operations are based on the Expanded Project Supervision Report (XPSR) system. The development outcome rating is a bottom-line assessment of the project's results across four development dimensions: 1) pro-ject business success; 2) econo-mic sustainability; 3) environ-mental and social effects; and 4) private sector development impacts. The evaluation of IFC Advisory Services operations is based on six performance indicators, including 1) strategic relevance; 2) output achievement; 3) outcome achievement; 4) impact achievement; 5) efficiency; and 6) development effectiveness.

The main findings of this review are:
  • Investment Services (IS) results improved overall. Seventy-two percent of IS operations maturing between 2006-08 achieved high development outcome ratings, compared to 63 percent between 2005-07. Performance was especially strong in Europe and Central Asia (ECA) and Latin America and the Caribbean (LAC). But there was no improvement, from a low base of around 50 percent, in East Asia and Pacific (EAP), Middle East and North Africa (MENA), and Sub-Saharan Africa (SSA).
  • The rapid growth of IFC Advisory Services (AS) has changed the nature of IFC's business. The 1,262 AS staff make up nearly half of all IFC’s operational staff, and AS teams now dominate IFC’s presence in the field. Quality trade-offs are possible, given the high reliance on relatively new staff, outsourcing work through some 1,300 short–term consultants, and considerable organizational change. An overall strategy has been lacking.
  • In terms of results, 70 percent of reviewed AS operations achieved high development ratings. Performance has been strongest in Southern Europe and Central Asia (SECA) and weakest in LAC.
  • Key drivers of AS performance have been: client commitment; programmatic approaches; IFC’s additionality including through some, though not all, AS-IS links; and local presence and ownership and M&E quality. Charging for AS has been associated with better performance.

Recommendations

To enhance its development effectiveness and additionality, IFC needs to do the following:

  • Operations during the crisis:


    - Effectively manage the tension between protecting the portfolio and responding to opportunities during crisis

  • IFC role in advisory services:

    - Set out an overall strategy for IFC AS that addresses the need for a clear vision and business framework, and is closely linked with IFC's global corporate strategy;
    - Pursue more programmatic AS interventions;
    - Improve execution of the AS pricing policy through greater client contributions;
    - Strengthen AS performance measurement and internal knowledge management.




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    WHAT IS THE IEDR?
    The Independent Evaluation of IFC's Development Results (IEDR) reports, on an annual basis, on the development performance of IFC's investment and Advisory Services projects across the world, and draws out lessons that help provide the basis for better IFC results in the future.
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