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World Bank Management Response
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| Introduction
Management welcomes this Independent Evaluation Group (IEG) review of World Bank support to multicountry operations, which provides useful insights into a small but growing segment of Bank support. The review rightly points out that some issues are best addressed from a regional perspective, and at the extreme, some problems can only be addressed through regional cooperation. Overall, the review is useful in helping the Bank refine its thinking with regard to its role in supporting regional activities.
Coverage
The evaluation covers World Bank-supported operations that entail three or more countries and involve cooperation or integration among the participating countries. It also covers regional partnerships, using the Bank's breakdown between global and regional partnerships. The review covers 95 activities from fiscal 1995 to 2005, examining in depth 12 operations and 7 partnerships.
Management Views on IEG's Analysis and Conclusions
Although this report provides valuable input into the Bank's work in support of regional initiatives, there are aspects of the review that deserve further discussion.
Bank Support for Regional Activities
While the Bank remains primarily a countryfocused organization-supporting countryowned growth and poverty-reduction goals-it recognizes the importance of support for regional activities. There are some issues- energy and water, for example-that often can be addressed more effectively at the regional level. That said, issues such as institutional capacity and measuring country ownership that are difficult enough at the country level are even more challenging at the subregional or regional level. In spite of these challenges, there is a growing demand for Bank support for regional activities, especially in Africa. The African Union's New Partnership for Africa's Development (NEPAD), launched in July 2001, recognized the need for regional cooperation and integration, notably to overcome the limited size of internal country markets, meet infrastructure needs, and address important environmental issues. To support these NEPAD goals, in July 2004 the Africa Region established its Regional Integration Department (replacing an earlier lower-level Regional unit). More widely, all Regional vice presidential units support regional economic and sector work (ESW) that covers issues of trade and integration, including the identification of priorities for regional cooperation. They also support regional operations and partnerships to different degrees, depending on demand and country circumstances. Recognizing the importance of addressing the increased demand from countries for support for regional activities, IDA13 included a pilot program for regional projects. The program was continued in IDA14 and, as of end-fiscal 2006, the portfolio supported by the pilot comprised 14 projects with total commitments of almost $1 billion (World Bank 2006a). In recognition of the progress to date, IDA recently increased by $50 million the annual amount of resources allocated to the pilot. Overall, given its worldwide experience in dealing with complex operations, the Bank has proven to be well placed to support regional initiatives. However, this is in essence a new portfolio of activities, and experience to date is limited.
Sample Size and the Conclusions and Recommendations
With regard to the findings on the factors that underpin successful Bank support for regional activities, management notes that the sample size is small (less than 100) and, as observed above, much of the Bank's support is very recent. More than three-quarters of the operations and almost three-quarters of the partnerships were started after the midpoint of the IEG review period. The IDA pilot program discussed above was launched only in 2003. As the IEG review noted, regional activities by their nature take longer to prepare, so half the programs under the IDA pilot started in fiscal 2006 and 2007, after the IEG review sample period, and those in the sample were of very recent origin. Management also notes that, given the sample size, some of the findings might have been considerably different with a different selection of the few activities subject to in-depth review. One of the reasons for the small sample size is IEG's definition of regional programs. Although management understands IEG's motivation in choosing a welldefined sample, the Bank often supports through its country programs activities in which countries in a region act in parallel on the basis of a common understanding of an issue. Examples include World Trade Organization (WTO) accession and accounting and auditing standards. Therefore, while management finds the review to be a serious and useful undertaking, it believes that it must take a measured approach toward the analysis and recommendations in the review and continue to learn from the growing set of experiences as it steps up support for regional activities.
Other Management Views
There are issues on which management would have liked to see further analysis. Management concurs generally with IEG's analysis on the rationale for Bank support, but, as the review points out, there is a “free rider” problem with regional operations-countries have an incentive to try to reap the benefits without paying the costs. So far, the international community does not have an answer to this problem. Partly because of this issue, management does not concur with IEG's conclusions on the necessity of up-front calculations of costs and benefits for all countries or on the need for all Country Assistance Strategies (CASs) in all affected countries to highlight regional programs. A better approach in many cases may be to deal with engagement issues as part of implementation. In some cases, a large country may be crucial for the success of a regional program, even though that program is not a priority in its poverty reduction strategy and, therefore, in the Bank's CAS for that country. The review also makes a clear distinction between operations and partnerships; often a combination of the two can be a good tool to support a regional initiative. Lastly, the review might have differentiated more between cases in which activities are regional in scope to overcome small country size and those that address issues that are independent of country size.
Main Findings and Recommendations
The IEG evaluation makes four key recommendations: (a) establish regional program strategies and integrate them into CASs; (b) work to strengthen the international architecture for financing regional development programs; (c) increase the impact of Bank support for regional partnerships; and (d) strengthen corporate incentives and capacities to provide effective regional program support. Management accepts the general thrust of the recommendations but with several caveats. The actions to which management commits are outlined in the Management Action Record included in the Management Comments Summary.
Regional Program Strategies
Management prefers to leave the decision on whether or not to prepare regional (or subregional) strategies to individual Regional vice presidents and their management teams. Regions are very different in terms of the number, size, and geographic features of countries and, therefore, in the relative importance of regional programs in overcoming obstacles to sustainable growth and poverty reduction. It is not clear that mandating all Regions to produce medium-term plans will succeed in channeling resources where they will have the highest return. Regional programs are fundamentally linked with the positions that governments take with regard to economic relations with their neighbors. While the Bank can play a crucial role in identifying the need for regional programs, as noted above, in some cases the implementation of these programs will be more opportunistic than strategic, pending the strengthening of regional institutions. Experience shows that many of the operational series that have worked well did not arise because a medium-term plan had been developed and included in the CASs of all relevant countries. Instead, it was possible to support a few countries that had reached consensus on the likely benefits of a regional approach, launch the operations, and build on early successes to encourage other countries to join. Quality Regional ESW, demonstrating where potential benefits may lie, is still fundamental to fostering these opportunities, but that is not the same thing as formal planning covering several years. Instead of mandating formal strategies from all Regions, management will build on approaches to Regional ESW-for which many Regions have strong selection, production, and dissemination processes-and will share best practice for similar processes for regional programs and partnerships.
International Architecture for Financing Regional Programs
As the review recommends, the Bank will engage with partners on a case-by-case basis to devise financing packages for individual programs. More generally, the Bank will work with donors on harmonizing the processes of support for regional activities as part of its overall alignment and harmonization agenda.
Effective Regional Partnership Support
The recommendation in this area raises important issues. Management agrees that regional partnerships, like global partnerships, require increased attention, notably with regard to priority, selectivity, and monitoring and evaluation, and such work is ongoing. With regard specifically to the Development Grant Facility (DGF) as an instrument for supporting regional partnerships, the current criteria allow flexible support of regional partnerships. Regional vice presidents can propose regional partnership programs for DGF funding, and the DGF can provide both short-term and longerterm funding via its two-window approach. The evaluation of DGF-supported operations has been strengthened; however, management would not necessarily want to drop support for a partnership on the basis of an initial negative evaluation. Evaluation can be the basis for taking corrective action if the partnership objectives remain a high priority. Management notes that the sample of regional partnerships was small and the evaluation methodology for these kinds of partnerships is less straightforward than for operations. Hence, management would be less ready to say that regional partnerships typically perform less well than regional operations. There are issues around the sustainability of funding of regional partnerships, and these will be addressed as each Region reviews its approach to the support of regional activities. However, there needs to be room for trying out new ideas. In these cases, sustainability issues will necessarily have to wait for consensus that the partnership lives up to expectations and adequately serves the interests of its member countries. Otherwise, a timely exit is prudent, and that exit could be complicated if long-term funding mechanisms are put in place too early.
Corporate Incentives and Capacities
Management agrees that, as the number of regional operations and partnerships grows, the Bank must continue to learn from experience and share that experience across Regions. With regard to operations, the Africa Region, through its Regional Integration Department, is already playing the knowledge-gathering and dissemination role Bankwide. (That department produced the recent review of experience with the IDA Regional Pilot.) The Global Programs and Partnerships Unit in the Concessional Finance and Global Partnerships Vice Presidency is taking the lead in building the knowledge base on partner-ships, and sharing experience across Regions. Sector families will play a vital knowledgemanagement and knowledge-sharing role, notably on issues such as regional transport, energy, and water management. The Bank's Legal Vice Presidency is developing good practice guidance for lawyers on legal frameworks and implementing arrangements for regional operations and a related database on legal issues and their resolution with regard to regional operations.
Conclusions
The Bank remains primarily a country-focused organization supporting country-owned growth and poverty reduction goals. At the same time, management recognizes that some development issues can be addressed better with a wider focus. On that basis, the Bank has increased its attention in recent years to global and regional work. IEG has confirmed the usefulness of this wider focus, first at the global level, and, with this report, at the regional level. IEG's sample for this review was necessarily small and heavily weighted by new activities, leading management to respond in measured terms. Overall, management very much appreciates this review for helping refine the focus and improve the effectiveness of this newly growing line of work, support for regional operations and partnerships. |
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