5 October 2009
The report, entitled "The Potential of Evaluation: Creating Political Space for Dialogue and Action," examines the impact of the World Bank's Independent Evaluation Group's (IEG) findings through the last decade. It finds that Bank management rarely adopts the recommendations of the IEG.
The report states that Bank management rarely adopts the recommendations of the IEG. For example, in 2002 the World Bank's evaluation group found that the Bank had a major knowledge gap concerning the effects of its lending on environmental sustainability. Six years after, the IEG published a report indicating the same failings: the Bank continues to do a poor job of monitoring and evaluating the environmental impacts of the projects it support.
In 2004, the Bank's evaluation unit recommended that the "Bank should not promote extractive industries in countries whose governments lack the capacity to benefit from or manage such investment." Despite this awareness, the World Bank moved ahead in financing the controversial Chad-Cameroon oil and pipeline project. While global oil companies have made large profits from Chadian oil, local people in both Chad and Cameroon have been impoverished and their environment damaged as oil revenues have been diverted to buy weapons and fuel the conflict in neighboring Sudan.
Another critical finding of the IEG is that its public and private sector arm (International Finance Corporation/IFC) might be working at cross purposes. For instance, the World Bank funds projects aimed at forest protection, but the IFC finances palm oil, which is well known to be destructive to forests.
The report highlights that the IEG has repeatedly pointed out the absence of systematic monitoring and evaluation embedded in Bank projects. As a result, we know little about the contribution of the World Bank Group's operations to poverty reduction and sustainable development, the two main pillars of the institution's mission.
One of the main reasons for this problem is the lack of incentives for incorporating meaningful M&E components into projects. The report touches on the well-known problem of an institutional culture that is more geared towards "moving money" than toward ensuring that project outcomes meet the goals of reducing poverty and protecting the environment. This worry of misaligned incentive structure is magnified amidst the substantial increase in the pressure to lend as a result of the global financial crisis.
The report commends the efforts of the IEG in elucidating and deepening our understanding of the impacts of development aid. The findings of IEG reports, if translated into tangible reforms, could improve the effectiveness of development financing by the World Bank as well as other financial institutions.
The paper was written by Korinna Horta, a member of BIC's Board of Directors and former senior environmental economist at the Environmental Defense Fund. She recently presented her report at a panel session together with the World Bank IEG during the 2009 World Bank Annual Meetings in Istanbul, Turkey.
read the report:
The Potential of Evaluation: Political Space for Dialogue and Action, by Korinna Horta, October 2009 (Acrobat PDF, 603 KB)