MDBs Publish COMPAS: How is the Score Card?

05/03/2008
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MDBs Publish COMPAS: How is the Score Card?

Since the publication of the 2006 report, Multilateral Development Banks (MDBs) participating in the Common Performance Assessment System (COMPAS) process have improved their efforts to better manage for results. All participating MDBs contributed to this improvement as each of them registered improved performance compared with their performance in the 2006, the report says. The overall performance of MDBs improved in four of the seven categories of indicators for public sector operations, but remained somewhat stable in three of them. The overall improvement in MDB performance stemmed, in particular, from improved efforts in the following indicators categories: (i) country capacity to manage for development results, (ii) country strategies, (iii) projects, and (iv) harmonization among development agencies.

According to the report, since the 2006 report, the number of countries whose capacity has been assessed has increased, as has the number of countries in which MDBs provide assistance to strengthen domestic capacity to manage for development results. The quality of country strategies prepared by MDBs also seems to have improved, the report says. In MDBs that conduct independent ex-post evaluations of country strategies, the improvement is reflected in the higher proportion of evaluated country strategies that show "satisfactory" or better results, compared with results in the 2006 report. The improvements in this proportion range, the report says, from 12% to 45%.

The efforts of MDBs to adopt a managing-for-development-results approach in all stages of their respective project management systems, from design to implementation, have improved since the 2006 report. This trend was supported by improvements in a number of areas. Across MDBs, the proportion of projects whose design incorporates a strong results framework explicitly showing the baseline data, monitoring indicators and clearly defined outcomes to be reached registered an average increase of 13%. As well, MDBs made progress in strengthening the focus of their supervision activities on results. In MDBs where the proportion of supervision reports that explicitly focus on expected outcomes was less than 100%, this proportion improved significantly, with increases ranging from 5% to 100%. Despite the overall progress made in project cycle management, some areas continue to require more effort from the MDB community. Although these areas vary from one MDB to another, in general, they include reducing delays in project implementation, improving proactive measures aimed at addressing project issues and strengthening the use of outcome indicators in Project Completion Reports (PCRs).

Regarding harmonization among development agencies, the report says that MDBs have continued to work together towards sharing experiences, harmonizing policies and procedures, and collaborating on activities such as joint missions, joint analytical work and joint country assessments. In this regard, the MDB community was a major stakeholder in the Third Round-Table on Managing-for- Development Results, which took place on February 5-8, 2007, in Hanoi, Vietnam. The performance of the MDBs remained stable in some areas. These areas include the Allocation of concessional resources. All MDBs, which provide part of their financial assistance on concessional terms, maintained the current practice of allocating these limited resources to their respective eligible member countries mainly on the basis of performance. Key performance elements taken into account include countries’ policies and institutions as well as the performance of the MDB portfolio in the country. In addition to performance, some MDBs also take into account a needs factor in the allocation of concessional resources.

With regard to institutional learning from operational experience, MDBs have put in place various mechanisms that they use to identify lessons from their own experiences and apply them in the design and implementation of new operations. No major changes were, however, noted in these mechanisms over the past year. The report indicates that MDBs have also put in place various mechanisms to train staff on results-based management approaches and to link staff performance and results to compensation and incentives. Overall, no major changes were noted in these areas; however, MDBs have continued to strengthen their efforts to improve staff training and to increase the integration of MfDR-focused training into all aspects of project management and staff training.

Private Sector Operations

For the first time, the COMPAS report includes an analysis of MDB private sector operations. Rather than focusing on progress made since the last COMPAS, the report focuses on efforts made by MDBs to adopt MfDR approaches in private sector operations and to harmonize systems and frameworks for monitoring and evaluating private sector operations. The report suggests that more work will likely be required to refine the indicators to ensure common interpretation and improved reporting by all MDBs. Data provided by the MDBs shows that supporting private sector development is an important aspect of operations by all MDBs participating in the COMPAS. The Asian Development Bank (AsDB), the African Development Bank (AfDB), the InterAmerican Development Bank (IADB), the Islamic Development Bank (IsDB) and the World Bank all have dedicated departments or separate entities leading their private sector development efforts. The core mandate of the European Bank for Reconstruction and Development (EBRD) is to promote private and entrepreneurial initiatives in its countries of operations. Data also shows that the efforts by MDBs to strengthen results orientation apply to their private sector operations as well. The focus on results applies to key phases of private sector operations, from strategy design to project implementation, ex-post evaluation, and learning from operational experience.

There is growing recognition among all MDBs that private sector investment is essential for development. This is reflected in the proportion of country strategies that include an explicit strategy aimed at promoting private sector development — ranging from 75% to 100% across the reporting MDBs. The design of an MDB strategy to support private sector development in a given country is informed by a variety of assessments, including evaluations carried out by MDBs independent evaluation offices and assessments of the business environment conducted by management. Private sector operations will always remain dependent on market conditions and on private sector demand for MDBs products and services. With respect to project evaluation, MDBs have placed great emphasis on the definition of criteria and standards for rating, tracking, and reporting on results achieved in their private sector operations, the report says.

These efforts are supported by the Evaluation Cooperation Group (ECG), a partnership of MDBs independent evaluation offices, established to promote good practices among MDBs in the area of evaluation. The ECG (at that time without IsDB) had originally agreed on "Good Practice Standards" (GPS) for private sector evaluation in 2001, covering such areas as the evaluation framework (for example, representative sampling and maturity of operations), and independence of the evaluation function. The ECG carried out a first external benchmarking in 2002, agreed on a second version of the GPS in 2003, carried out a second external benchmarking in 2004 (published in 2005), and agreed on a third version of the GPS in 2006. According to the second benchmarking, the compliance of MDBs with the GPS varied, ranging from 8% to 92%. Several MDBs conducted a self-assessment against the latest (2006) version of the GPS and reported on it in the 2007 COMPAS. The next external benchmarking against the GPS is scheduled for 2009. Most MDBs assess the level of success of their private sector operations in terms of development outcomes, financial performance, economic performance, environmental and social performance and private sector development impact.

However, variations were noted in the application of the GPS, with respect to the framework and standards applied, the ‘representativeness’ of the samples, and the review function independence. An interim assessment of development results measurement systems, carried out in 2007 in all MDBs (except in the IsDB), showed that MDBs were making progress, the report says.

AfDB Performance

According to the report, efforts by the AfDB to strengthen the results orientation of its operations led to improvements in such areas as assessment and strengthening of country capacity to manage for results, the design and implementation of country strategies and projects, and harmonization with other development agencies. The AfDB, the report says, made efforts to better focus project supervision on results, with the introduction of a new supervision report format and the implementation of the first quality of supervision assessment. In addition, the share of country strategies independently evaluated ex-post that show "satisfactory" or better results increased by 12%, while disbursement rate increased by 20%. There is still room for improvement in other areas, such as increasing the use of outcome indicators in PCRs and improving the definition of baseline data, expected outcomes and monitoring indicators in country strategies and projects. Regarding the private sector, guidelines to assess operations success ratings of operations and track development results at approval, during supervision, and at evaluation are in the process of being implemented, the report underscores.