| There is an overlap in the provision of political risk mitigation (PRM) products within the WBG. Flexibility of policies and innovation in guarantee and nonguarantee products have expanded the scope for competition. In addition, several nonguarantee IFC products offer PRM to the market. The PRM products of the three WBG institutions serve the same broad group of clients, and there is evidence that these overlaps have caused confusion among clients and internal competition of the kind that often imposes additional transaction costs on clients and adds reputational risks for the Bank. At the same time, each institution’s products carry distinct attributes that help define market niches. Relationships of both substitutability and complementarily exist among the WBG PRM instruments, which implies both opportunities for cooperation and the need for coordination. Mechanisms to enhance coordination across the WBG have had varying degrees of effectiveness. More systematic consultations between MIGA and Bank country and sector departments have helped ensure that MIGA-supported projects are consistent with the Bank Group’s strategy in a country. But the principles that govern the relationship between MIGA and IFC products have been unclear. In some cases, informal information sharing about business opportunities has been effective in leading to actual guarantee projects. There is limited coordination within the WBG in developing new products and at the business development stage. Lack of staff incentives, inadequate skills, and poor familiarity with the products of the other institutions has prevented better exploitation of downstream synergies in marketing WBG products. Significant potential exists for more systematic links between Bank-IFC advisory services and the use of WBG risk mitigation instruments, particularly in infrastructure, keeping in mind the need to manage potential conflict of interest issues. In sum, opportunities exist for improvement, and maintaining the status quo should not be an option.
Also see:Â
 Â Should the WBG be in the guarantees business?
 Have WBG guarantees been used to potential?  |
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