1999 Annual Review of Development Effectiveness

1. 1999 Annual Review of Development Effectiveness Toward a Comprehensive Development Strategy

2. The 1999 ARDE. . . Lessons from development experience supporting CDF implementation. Key Findings: • CDF principles are solidly grounded in development experience: beyond central planning and structural adjustment paradigms. • CDF mainstreaming is central to the Bank’s development effectiveness. • The CDF is not a soft option: tensions must be managed. • Promising approaches should be systematically piloted and evaluated.

3. Three Development Paradigms Comprehensive Planning Adjustment Development Framework · · · Pervasive market failures Pervasive government failures Joint public-private-civil service failures · · Government-led development Market-led development · Country-led development through partnership · · · Centrally driven; detailed Short-term adjustment Long-term vision, social blueprints transformation, adaptive learning process · · · Investment-led development Incentive-led development Investment, incentives, and institutions considered jointly · · Resource allocation by Investments and institutions administrative fiat follow it · · · Planners and engineers Economists and financial Multidisciplinary approach dominant experts dominant · · · Donors fill resource gap Donors determine resource Country drives aid coordination envelope based on comparative advantage · · · Donors place foreign experts Donors impose policies Donors provide advisory assistance to empower stakeholders with options · · · Marginal role for monitoring Donor-driven monitoring of Participatory monitoring and and evaluation policy implementation evaluation to enhance learning and adaptation

4. Comprehensive, balanced, and long-term approach needed for sustained, poverty-reducing growth. Ownership key to improved outcomes, sustainability, and institutional development impact of operations. Country-led partnership key to ownership for clients and strategic selectivity for donors. Focus on results key to learning, accountability, and improved performance. OED Evidence Confirms that... CDF Principles Holistic Long-term Results Partnership Ownership

5. Challenges at the Project and Sector Levels • Performance gains made, but plateauing suggests need for change. • Project complexity has outstripped borrower capacity. • CDF is likely to increase complexity further. • CDF principles are easiest to practice in “hard” sectors; most difficult in “soft” sectors. 80 70 60 50 40 30 20 10 0 FY90 FY91 FY92 FY93 FY94 FY95 FY96 FY97 FY98 FY99* Complexity (% substantial) Borrower Implementation Outcome (% satisfactory)

6. The Poverty Challenge Demands Sustained and Broad-based Growth • Growth in per capita incomes—a necessary condition for poverty reduction—is not being achieved by most developing countries. • Low-income countries experienced annual decline in per capita income of 1.4% (exclude India and China, 1985-95). • Excluding China, there are 100 million more poor people in developing countries than a decade ago. • Rising inequality within most developing countries (ARDE 98). • Finding broad-based growth strategies remains a challenge (Poverty Study, PA Review).

7. A Long Way to Practicing CDF Principles • Application of CDF principles in country assistance strategies was modest or poor in about two-thirds of recently evaluated cases. (+) (–) Balance in policy dialogue and sector work Balance in lending operations Building capacity for governance Holistic Inter-sector coordination Long-term view of client potential and constraints Client commitment to reforms Ownership Country-driven strategy formulation/implementation Encouraging stakeholder participation Capacity building for country-driven aid coordination Partnership Encouraging strategic selectivity Harmonization of donor procedures Tracking sustainable growth Tracking poverty Results Focus Development of local capacity for M&E Outcomes, impact, and monitorable indicators 0 50 100 Percent of CASs rated modest-poor

8. Challenges of CDF Implementation • Short term versus long term. • Comprehensiveness versus selectivity. • Broad-based ownership versus speed. • Ownership versus conditionality. • Country-led partnership versus country capacity and commitment. • Country focus versus increasing globalization. • Focus on results versus poor M&E record.

9. Promising ApproachesWe don’t have all the answers, but we can suggest that the Bank: • Adopt a learning process approach. • Sequence interventions within a long-term strategy. • Produce comprehensive analysis with selective strategic actions. • Move systematically toward programmatic approaches. • Use adaptable and reciprocal conditionality for mutual commitment. (HIAL) • Take the time to broaden and deepen ownership. • Invest in partnerships and comparative advantage. • Build capacity to manage for results. • Others?

10. Implications for the Bank • Improve capacity building efforts. • Replace “one-size-fits-all” with “customization” mindset. • Develop tools and knowledge services that empower partners and support local processes. • Change from having “all the answers” to a listening, learning, and “connector” Bank. • Develop new tools, skills, incentives, and attitudes. • Practice strategic selectivity and partnership, and redeploy resources. • Promote a new development architecture to mainstream the CDF.

11. Additional slides

12. APPI average 9 8 By disbursements 7 By projects 6 5 FY90 91 92 93 94 95 96 97 98 99 Aggregate Project Performance Index

13. By Exit FY (percent satisfactory) By Approval FY (percent satisfactory) 90 90 By disbursements 80 80 By disbursements 70 70 By projects By projects 60 60 50 50 FY90 91 92 93 94 95 96 97 98 99 FY82 84 86 88 90 92 Satisfactory Project Outcomes

14. Exit FY90–93 Exit FY94–97 Exit FY98–99 Sustainability (percent likely) Percent Outcome (percent satisfactory) Percent 90 90 80 80 70 70 60 60 50 50 40 40 30 30 20 20 10 10 0 0 ECA LCR MNA SAR AFR EAP ECA LCR MNA SAR AFR EAP Region Region Institutional Development Impact Percent (percent substantial) 90 80 70 60 50 40 30 20 10 0 ECA LCR SAR AFR EAP MNA Region Outcome, Sustainability, and ID Impact, by Region and Exit fiscal Year Group

15. By Disbursements (percent satisfactory) By Projects (percent satisfactory) Public sector management Public sector management Transportation Transportation Urban development Urban development Social sector Social sector Education Education Finance Finance Oil & gas Oil & gas Multisector Multisector Population, health & nutrition Population, health & nutrition Agriculture Agriculture Electric power & other energy Electric power & other energy Water supply & sanitation Water supply & sanitation Industry Industry Percent 0 20 40 60 80 100 Percent 0 20 40 60 80 100 Exit FY90–93 Exit FY94–97 Exit FY98–99 Satisfactory Operations by Sector and Exit Fiscal Year Group

16. By Projects Percent 70 60 Modest 50 40 Substantial 30 20 Negligible 10 0 FY90 91 92 93 94 95 96 97 98 99 ID Impact By Disbursements Percent 70 60 Modest 50 40 Substantial 30 20 Negligible 10 0 FY90 91 92 93 94 95 96 97 98 99

17. Sustainability by Projects Percent 70 60 Likely 50 40 Uncertain 30 20 Unlikely 10 0 FY90 91 92 93 94 95 96 97 98 99 Sustainability By Disbursements Percent 70 60 Likely 50 40 Uncertain 30 20 10 Unlikely 0 FY90 91 92 93 94 95 96 97 98 99

18. By Projects (percent satisfactory) By Disbursements (percent satisfactory) Percent Percent 100 100 80 80 60 60 40 40 20 20 0 0 Preparation Preparation Implementation Compliance Implementation Compliance Exit FY90–93 Exit FY94–97 Exit FY98–99 Borrower Performance

19. By Projects (percent satisfactory) By Disbursements (percent satisfactory) Percent Percent 100 100 80 80 60 60 40 40 20 20 0 0 Identification Identification Appraisal Supervision Appraisal Supervision Exit FY90–93 Exit FY94–97 Exit FY98–99 Bank Performance