IEG Releases the First Comprehensive Evaluation of IFC’s Knowledge Services

WASHINGTON - In its 2009 Independent Evaluation of IFC’s Development Results released today, the Independent Evaluation Group (IEG) provides a first global review of International Finance Corporation (IFC) advisory services — knowledge services to private firms and governments in support of private sector development, including customized training or advice on investment promotion and policy. The report finds that about 70 percent of advisory projects achieved overall high ratings for development effectiveness. Performance was strongest in Southeastern Europe and Central Asia and weakest in Latin America and the Caribbean. IEG also found gaps in delivery, particularly matching corporate intent with consistent implementation on the ground, including execution of its pricing policy, ensuring good quality project designs, getting the right staffing mix and effective collaboration with other advisory service providers, including the World Bank.

IFC’s advisory portfolio has grown tenfold, to nearly US$1 billion since 2001, and IFC now has more advisory than investment staff in the field. Substantial growth of this business line raises important questions related to the appropriate balance of advisory and investment services for maximum development impact. IEG finds that despite organizational improvements in the delivery of advisory services, IFC’s expansion came without a coherent global strategic framework. The main performance drivers were client commitment to the project; the quality of IFC’s project design; local presence and level of involvement by IFC; adopting a programmatic approach by carrying out advisory projects in sequence or parallel and complementary to each other; and effective monitoring and evaluation.

“Over the last five years, IFC enhanced the effectiveness of advisory projects, striving to bring greater structure and clarity to its growing product line. However, much work remains to be done, especially in setting a clear strategic vision and a funding mix to ensure long-run sustainability and impact of the business,” said Marvin Taylor-Dormond, Director, IEG-IFC.

The report’s review of IFC investment projects that matured between 2006-08 found that overall 72 percent achieved successful development results — compared to 63 percent last year. Results were strongly affected by local economic conditions, which generally improved up to 2008, and IFC’s work quality in terms of structuring, appraising, and supervising investments. Results for IFC’s investments in early implementation are likely to suffer from the global downturn.

At times like this, IFC’s roles as financier and knowledge provider assume special importance. “IFC is in a unique position to help mobilize funding for private sector clients,” said Vinod Thomas, Director-General, and Evaluation. “Moreover, IFC’s knowledge expertise, with that of the World Bank, is crucial in promoting risk management, governance, and standards to ease the impacts of the current crisis.”

To enhance IFC’s overall development impact, IEG recommends that IFC: effectively manage the tension between protecting the portfolio and responding to opportunities during crisis; define an overall strategy for IFC advisory services, including clear articulation of goals, comparative advantage, staffing approach, and meaningful performance targets; pursue more programmatic (rather than stand-alone) advisory interventions; improve execution of its advisory services pricing policy; and strengthen the performance measurement and internal knowledge management of advisory services projects worldwide.

About IEG

IEG, an independent unit within the World Bank Group, evaluates the relevance and impact of the Bank Group’s support to developing countries for reducing poverty and improving people’s lives. IEG-IFC discloses all of its Board-distributed reports to make the public aware of findings and lessons from evaluations and to promote accountability and transparency.

For more information, including IFC Management’s response to the report, please, visit: www.ifc.org/ieg/reports.

Source: Independent Evaluation Group - International Finance Corporation

Sona Panajyan of International Finance Corporation, +1-202-299-6210, Spanajyan at ifc.org