Using Evaluative Evidence to Deliver Development Outcomes A World Bank Group Management Report on Implementation of IEG Recommendations FY17-21 September 2021 © 2021 The World Bank Group 1818 H Street NW, Washington, DC 20433 Telephone: 202-473-1000; Internet: www.worldbank.org This work is a product of the staff of The World Bank Group. “The World Bank Group� refers to the legally separate organizations of the International Bank for Reconstruction and Development (IBRD), the International Development Association (IDA), the International Finance Corporation (IFC), and the Multilateral Investment Guarantee Agency (MIGA). 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Cover photo: Getty Images ii Table of Contents List of Abbreviations ................................................................................................................................... iv Acknowledgements ..................................................................................................................................... vi Executive Summary ...................................................................................................................................... 1 Using Evaluative Evidence to Deliver Development Outcomes ................................................................. 5 Functional Perspective ................................................................................................................................. 7 HD: Investments in people for greater equity and economic growth ........................................................ 12 CCES: Integrated climate and development to maximize impact .............................................................. 16 JWSP: Growth coupled with access to productive economic opportunities .............................................. 23 MFD: Multiple sources of finance to support sustainable growth ............................................................. 31 FCV: Lenses to tackle fragility, conflict, and violence ................................................................................. 35 Outcome Perspective ................................................................................................................................. 38 Sharpening the way the WBG aims for outcomes ...................................................................................... 40 Sharpening the way the WBG learns for outcomes.................................................................................... 47 Sharpening the way the WBG measures outcomes ................................................................................... 51 Conclusion .................................................................................................................................................. 55 Annexes ......................................................................................................................................................... i Annex 1. List of Recommendations by Theme (WBG) ................................................................................... i Annex 2. List of Recommendations by Functional Type (WBG) .................................................................... i Annex 3. Management Self-Assessment of Progress Towards Outcomes (WB only) ................................... i Annex 4. IEG Recommendations proposed to retire from future MAR (WBG) ............................................. i Tables and Figures Table 1. Outcome Framework for IEG Recommendations and Management Actions on HD ................... 12 Table 2. Outcome Framework for IEG recommendations and Management Actions on Climate Change and Environmental Sustainability ............................................................................................................... 16 Table 3. Outcome Framework for IEG Recommendations and Management Actions on JWSP................ 23 Table 4. Outcome Framework for IEG Recommendations and Management Actions on Mobilizing Finance for Development ........................................................................................................................... 31 Table 5. Outcome Framework for IEG Recommendations and Management Actions on Fragility, Conflict and Violence ............................................................................................................................................... 35 Figure 1. Share of IEG recommendations by function .................................................................................. 8 Figure 2. Recommendations by function type across the results chain ..................................................... 39 Figure 3. Management’s self-assessment of progress towards outcomes (WB only) ............................... 56 iii List of Abbreviations Health Emergency Preparedness and ACT-A Access to COVID Tools Accelerator HEPRF Response Multi-Donor Fund AFCFTA African Continental Free Trade Area HFC Hydrofluorocarbon AfDB African Development Bank HNP Health, Nutrition, and Population AFE East and Southern Africa HSC Health Systems Connector International Bank for Reconstruction and AFR Africa Region IBRD Development AFW West and Central Africa ICMP Index of Capital Markets Potential Information, Communications and AGF Agriculture and Food ICT Technology Anticipated Impact Measurement and AIMM IDA International Development Association Monitoring ASA Advisory Services and Analytics IEG Independent Evaluation Group CCAP Country Climate Action Plan IEG Independent Evaluation Group International Emissions Trading CCDR Country Climate and Development Report IETA Association CCG Climate Change Group IFC International Finance Corporation CDC Center for Disease Control IMF International Monetary Fund CEM Country Economic Memorandum InfraSAP 2.0 Infrastructure Sector Assessment Program CEPI Coalition for Epidemic Preparedness Innovations IPF Investment Project Financing Initiative for Sustainable Forest CERF Climate Emissions Reduction Facility ISFL Landscapes Internationally Transferred Mitigation CF Carbon Finance ITMOS Outcomes Consultative Group for International Agricultural CGIAR J-CAP Joint Capital Markets Initiative Research Kenya Informal Settlements Improvement Ci-Dev Carbon Initiative for Development KISIP Project CivicTech Civic Technology KKCF Kakuma Kalobeyei Challenge Fund CLR Completion and Learning Review LCR Latin America and the Caribbean CMU Country Management Unit LIC Low-Income Country CODE Committee for Development Effectiveness LMIC Lower Middle-Income Country COMESA Common Market for Eastern and Southern Africa LPI Logistics Performance Indicators COVID-19 Coronavirus Disease 2019 LSMS Living Standards Measurement Study CPF Country Partnership Framework M&E Monitoring and Evaluation CPSD Country Private Sector Diagnostic MAR Management Action Record CRP City Resilience Program MDB Multilateral Development Bank CSF Carbon Support Facility MDTF Multi Donor Trust Fund CSO Civil Society Organization MFD Maximizing Finance for Development Multilateral Investment Guarantees CwA Compact with Africa Initiative MIGA Agency DFI Development Finance Institution MNA Middle East and North Africa DPF Development Policy Financing MPA Multiphase Programmatic Approach DPL Development Policy Lending MRV Monitoring, Reporting, and Verification EAP East Asia Pacific NCCL National Cement Company Limited ECA Europe and Central Asia NCD Non-Communicable Disease EM Emerging Markets NDC Nationally Determined Contributions EnABLE Enhancing Access to Benefits while Lowering Emissions NSW National Single Window Organization for Economic Cooperation ESF Environmental and Social Framework OECD and Development FCI Finance, Competitiveness, and Innovation P&PF Policy and Procedure Framework Programmatic Advisory Services and FCPF Forest Carbon Partnership Facility PASA Analytics FCS Fragile and Conflict-affected States PDO Project Development Outcome FCV Fragility, Conflict, and Violence PforR Program for Results FDP Forcibly Displaced Person PG Practice Group Primary Health Care Performance FIF Financial Intermediary Fund PHCPI Initiative FIG Financial Institutions Group PLR Performance and Learning Review FSAP Financial Sector Assessment Program PM Practice Manager Pollution Management and Environmental GAP Global Action Plan for Healthy Lives and Wellbeing to All PMEH Health iv Partnership for Market Implementation GCRP Global Crisis Risk Platform PMIF Facility GEMS Geo-Enabling initiative for Monitoring and Supervision PPP Public Private Partnership GFDRR Global Facility for Disaster Reduction and Recovery REITS Real Estate Investment Trusts Global Financing Facility for Women, Children and GFF RMS Results Measurement System Adolescents GHG Greenhouse Gas RNFE Rural Non-Farm Economy GP Global Practice SADC South African Development Community GPP Global Partnership Program Green, Resilient, and Inclusive GRID SAR South Asia Region Development SCD Systematic Country Diagnostic TF Trust Fund SDG Sustainable Development Goal TFA Trade Facilitation Agreement United National High Commissioner for SEP Stakeholder Engagement Plan UNHCR Refugees SOE State-Owned Enterprise UNICEF United Nations Children’s Fund Unintentional Persistent Organic TCAF Transformative Carbon Asset Facility uPOP Pollutants v Acknowledgements The preparation of the FY21 WBG Management Action Record was led by Naresha Duraiswamy, Junko Oikawa and Hiroyuki Hatashima under the guidance and supervision of Manuela Ferro, Johannes Zutt, Aisha Williams, Merli Baroudi, Lisandro Martin and Sabine Durier. Debra Ladner, Sebastian Stolorz, Stacy Bhagwandeen and Mariana Camino were members of the core team. Mimoza Velo provided administrative support. We are grateful to the colleagues throughout the WBG who contributed to the Management Action Record: Anderson Caputo Silva, Chris Richards, Ana Fiorella Carvajal, Xavier Jordan, Ernesto Sanchez Triana, Yewande Aramide Awe, Jose Andreu Rajashree Paralkar, Vijay Pillai, Guillaume Kroll, Georgia Harley, Vincent Palmade, Gemma Torras Vives, Antonio Nucifora, William Gain, Feng Zhao, Alethea Dopart, Robert Townsend, Christopher Ian Brett, Karima Saleh, Brett Libresco; Martha Martinez Licetti, Traci Philips, Lydia Tietz, Maria Angelica Sotomayor, Niels Holm- Nielson, Steven Luis Rubinyi, Kristin Panier, Belen Castuera, Elif Cevik Ismen and Edmond Mjekiqi. vi Executive Summary This Management Action Record (MAR) report presents WBG Management’s self-assessment of progress in implementing IEG’s recommendations to deliver development outcomes in key WBG priority areas, as envisioned in the 2019 Reform of the MAR. The report covers a diverse group of 59 IEG recommendations, across 15 IEG evaluations issued in the period of FY17-21. IEG’s recommendations play an important role in guiding and reinforcing Management’s ongoing efforts to advance key thematic areas and should be viewed in the context of Management’s broader strategic plans and other complementary work underway, rather than as stand-alone actions. In alignment with the WBG’s renewed commitment to outcome orientation, the report attempts to maintain a continuous focus on how the WBG’s implementation of recommendations is contributing to outcomes that matter. The report aims to do this by reconstructing an outcome framework for each thematic area to illustrate how responses to IEG’s recommendations, together with other complementary activities, collectively advance WBG progress along a pathway to higher-level outcomes. The report also complements examples from implementing IEG recommendations with an attempt to provide stronger evidence of progress drawing on a multiplicity of sources, and it offers a self-assessment of the strength of evidence to support claims of contributions to selected outcomes. Finally, it is underpinned by a more extensive process of consultation and lesson learning with relevant groups across the WBG. Ultimately, both IEG’s recommendations and Management’s implementation have the goal of reinforcing the outcome orientation that is already prevalent in country teams. Management has taken clear steps to address IEG’s recommendations in all thematic areas despite the unprecedented challenges of the COVID-19 pandemic in FY21, with further room for improvement in a few areas. In several areas, the combination of complementary corporate priorities, strong client demand, and urgent health and economic needs have driven the WBG to a higher level of ambition or in new directions, beyond what was contemplated in IEG’s recommendations. In a few cases, progress has been delayed, largely due to insufficient client demand in the context of the COVID-19 crisis. Management remains committed to closely monitoring such recommendations to understand the underlying issues and to identify potential avenues to address them going forward. Recognizing that categorizing such a diverse range of recommendations oversimplifies their richness, Management has analyzed performance from three perspectives: functional, thematic, and placement on a results chain. Where recommendations call for improvements related to a functional area, such as strengthening diagnostics or scaling up engagement, adopting a functional perspective helps Management identify how the proposed changes are designed to improve the WBG’s ability to deliver results. Recommendations also fall across a broad spectrum in terms of their outcome orientation, with some that are process-oriented and others that more directly focus on strengthening high-level outcomes: discerning where the recommendation lies on the results chain can be helpful in determining the results expected from implementation. Finally, recommendations cover different thematic areas, which for the purposes of this report have been grouped into five thematic “streams� that align with IEG’s work program and WBG priorities. A thematic perspective is prominent because it is grounded in the WBG’s organizational structure and aligns with its culture, incentives, and processes. The paragraphs that follow highlight progress in implementing IEG’s recommendations in each thematic area. 1 Human Development: The COVID-19 global pandemic has brought increased urgency and attention to recommendations on improving health services, which have collectively contributed to more effective WBG support for country health care systems and pandemic preparedness. Corporate commitments reinforced this priority. As IEG noted in a recent evaluation report on fiscal and financial sector vulnerabilities, countries that received Bank Group support “were generally better prepared to respond to a major shock today than previously�, due to timely and relevant analyses at the country level. Based on the COVID-19 experience, Bank interventions are mainstreaming pandemic preparedness in country- level health systems through improved diagnostics to inform the design of relevant lending operations. FY21 also saw increased WBG collaboration in support of public and private interactions in client countries to advance towards universal health coverage and to promote healthy lives and well-being for all at all ages (SDG 3). Finally, WBG efforts to enhance the focus and selectivity of its engagement in partnerships have been critical to its COVID-19 response. Climate Change and Environmental Sustainability: Actions taken in response to IEG’s recommendations on pollution and carbon finance have contributed to the WBG’s multidimensional approach to tackling climate change by helping countries more fully integrate climate and development. The WBG stepped up its support to address growing pollution levels and the climate change effects of greenhouse gas (GHG) emissions through a combination of lending, analytical work, and technical assistance. WBG efforts improved the coherence and alignment of various carbon finance initiatives and instruments under a common governance framework, leveraging the Bank’s Umbrella 2.0 Trust Fund reform. The WBG also introduced measures to more deeply integrate carbon finance activities into country development programs and to align them with the broader poverty reduction agenda. To strengthen clients’ alignment with Performance Standard 3, IFC Management launched several deliberate and targeted advisory projects to build client capacity in designing and developing pollution control measures across a wide range of industries, including in Ghana, Kenya, Tunisia, Pakistan, and Yemen. Jobs, Growth, and Shared Prosperity: In line with its IDA19 commitments supporting the jobs agenda, Management addressed recommendations in four related IEG evaluations by strengthening interventions at the country level to support: a) market creation, b) the rural non-farm sector, c) regional integration, and d) trade facilitation. Through enhanced diagnostics, the Bank and IFC are helping client countries identify market opportunities and address bottlenecks to unleash private sector- led job creation and economic transformation. FY21 has seen progress in improving the effectiveness of WBG interventions to help reduce job losses and push back towards economic growth, shared prosperity, and job creation at the country level. Mobilizing Finance for Development: Actions taken in response to IEG’s capital markets development and carbon finance evaluations have moved the WBG towards an integrated, evidence-informed approach to support capital market development under an overarching strategic framework. Knowledge-sharing platforms and diagnostic tools on country readiness are informing the design of capital market interventions. And as part of efforts to operationalize Article 6 of the Paris Agreement on climate change, the WBG is supporting the development of financial products and risk management to facilitate private participation in carbon markets. 2 Fragility, Conflict, and Violence: In alignment with WBG’s FCV strategy and IEG’s recommendations, IFC has been increasing efforts in this area, continuing to make strides in strengthening the economic self- reliance and resilience of displaced and host communities through catalyzing private sector solutions and investments via its blended finance, advisory and upstream support. IFC’s efforts have been targeted and extensive, focusing on regions with the greatest concentration of forcibly displaced persons and working on both global and regional activities to amplify the longer-term impact. For instance, several advisory projects and sector-specific assessments were initiated in the MENA region to catalyze growth, investment, and jobs for vulnerable communities, including refugees. This report also reviews IEG recommendations focused on strengthening the WBG’s overall corporate effectiveness, measured as its ability to aim for, learn for and measure outcomes that matter. Management has found IEG recommendations to have varying degrees of influence on the WBG’s ability to achieve development outcomes, depending on where they are placed in the results chain. WBG uptake tends to be faster and more comprehensive when recommendations point in a general direction but give Management the flexibility to chart a specific path forward. Such recommendations are facilitating organizational learning by amplifying internal debate, generating stakeholder consultations, and inducing new ways of thinking about significant processes. A key part of the WBG’s efforts to improve outcome orientation across the institution involves defining and implementing a refined country engagement approach to articulate more explicitly and purposefully its contributions to selected high-level outcomes via public and private solutions. This has been complemented by efforts to deepen citizen and client engagement, bring greater selectivity to convening activities, strengthen IFC’s client engagement model, streamline engagement with development partners, improve knowledge management, and increase focus on resilience, including through the development of a Resilience Rating System for projects. Most notably, the FY21 realignment of staff, budgets, reporting lines and decision-making has helped the Bank to respond rapidly and effectively to the COVID-19 pandemic. Recent structural reforms influenced by IEG recommendations have had a significant effect on the way the WBG produces, curates, and uses knowledge, with early evidence suggesting that knowledge sharing has improved even during this challenging period of remote work. A Strategic Framework for Knowledge (SFK) was put in place in March 2021 to strengthen the WBG’s role as a solutions bank that combines financing with global knowledge to generate development responses in a timely, contextual, and integrated way. In line with this Framework and in response to IEG recommendations, the WBG stepped up analytical work to strengthen the nexus between knowledge and operations in key thematic areas, including urban resilience, pollution, capital markets, and the rural non-farm economy. Finally, the WBG is enhancing the results-focus of monitoring efforts by adopting more systematic and robust approaches to collecting data that can help inform decision-making, target interventions, and provide a more comprehensive picture of the results of Bank interventions. In response to IEG recommendations, this includes focused efforts on assessing spillover effects of regional integration projects, monitoring the quality and distributional impacts of health services, measuring urban resilience, and developing more robust beneficiary feedback indicators. 3 Looking across the diverse range of recommendations, Management found that implementation progress varied both in terms of what was delivered (outputs or outcomes) and of how much progress was achieved (ranging from moderate to substantial). Management conducted a self-assessment that entailed defining these terms and categorizing recommendations by level of progress. The purpose of this exercise was to provide an overall picture of where implementation stands on the path to outcomes, based on the available evidence, and to articulate a framework that could be perfected over time. Recognizing that continued reporting over multiple cycles helps to ensure accountability and provides an opportunity to monitor and demonstrate impact, Management was selective in proposing recommendations to retire, generally limiting it to those that have shown substantial outcomes based on the evidence presented in the report. Actions taken by WBG Management in response to IEG recommendations have contributed to more effective support to clients in key areas, though both progress towards outcomes and the robustness of evidence presented vary across recommendations. While this FY21 report represents progress, fully elevating the MAR process to a higher level of outcome orientation is an ambitious undertaking that will continue to evolve over future iterations. Management views this as a joint learning process that will require close collaboration with IEG and continued engagement with units throughout the WBG to further strengthen the outcome orientation of IEG’s recommendations as well as Management’s responses and reporting. This will include defining outcome-oriented milestones, strengthening the quality of evidence to substantiate progress, and increasing the focus on lessons learned. 4 Using Evaluative Evidence to Deliver Development Outcomes 1. In line with the 2019 Reform of the Management Action Record (MAR), this report provides Management’s self-assessment of World Bank Group (WBG)-wide progress in implementing recommendations from IEG evaluations to deliver outcomes in key priority areas. As stated in the FY20 report, the MAR reform aims to improve the relevance, coherence, and practicality of IEG recommendations by enabling Management more flexibly to adapt its strategic responses to these recommendations to developments in the WBG’s internal and external environments. The reform recognized that IEG and WBG Management should ultimately aim at the same objective: to achieve the greatest possible development impact under given resources.1 2. Building from its first edition, this second report is aligned with the WBG’s renewed commitment to outcome orientation. It draws on multiple sources of evidence, both quantitative and qualitative, to establish the causal links between activities undertaken, outputs delivered, and progress towards outcomes, in the context of the WBG’s strategic directions. The report attempts to maintain a continuous focus on how the WBG’s implementation of recommendations is contributing to outcomes that matter. In the current edition of the report, WBG Management proposes several new features to further advance the spirit of the MAR reform. First, it situates the recommendations within an outcome framework for relevant themes that identifies the expected results of their implementation. Second, it complements examples from implementation of the IEG recommendations with an attempt to provide stronger evidence of progress from a multiplicity of sources carefully referenced. Third, it offers a self- assessment of the strength of evidence to support claims of contribution of the implementation of recommendations to selected outcomes. Fourth, it weaves results stories and indicators tracked at the corporate level through the WBG scorecards, into the narrative, whenever relevant. Finally, it is underpinned by a more extensive process of consultation and lesson learning with relevant groups across the WBG and in close consultations with IEG.2 Ultimately, both IEG’s recommendations and Management’s implementation have the goal of reinforcing the outcome orientation that is already prevalent in country teams.3 3. This report is one among several mechanisms Management uses to articulate, manage towards, and report on its contribution to development outcomes.4 The IDA Results Measurement System (RMS), the WBG Corporate Scorecards, and country engagement results frameworks are also shifting to a greater outcome orientation and, in many cases, complement and reinforce MAR recommendations, for example enhancing the results-focus of monitoring and evaluation. While the MAR focuses primarily on selected sectoral or thematic outcomes, the ultimate measure of the WBG’s impact is at the country level, which is reported through the country engagement process. The WBG is taking significant steps to enhance the outcome orientation of this process to maintain a stronger focus on country high-level outcomes. These efforts are also aligned with the Bank’s Strategic Framework for Knowledge (SFK), which emphasizes 1 World Bank Group. 2020. Implementing IEG Recommendations FY15-FY19: A World Bank Group Management Report. World Bank, Washington DC. August 4, 2020. 2 Management and IEG completed five workshops (Human Capital – June 24; Climate Change and Environment Sustainability – June 29; Maximizing Finance For Development – June 30; WBG Corporate Effectiveness – July 1, 2021; and Jobs, Growth and Shared Prosperity – July 8, 2021) to discuss preliminary progress in implementing the agreed recommendations. 3 World Bank Group. 2021. Strengthening WBG Outcome Orientation – A Roadmap. World Bank, Washington, DC, June 4, 2021. 4 World Bank Group. 2021. Strengthening World Bank Group Outcome Orientation: A Roadmap. A paper presented to CODE in July 2021. 5 learning from operations and addressing country level knowledge gaps. The simultaneous shift in the MAR along with these other reporting mechanisms offers the opportunity for a virtuous cycle, whereby different mechanisms reinforce each other toward an increased focus on high-level outcomes. As part of its new chairmanship of the Multilateral Development Banks’ working group for Managing for Development Results (MfDR), Management is also renewing efforts to share lessons from the MAR reform with the wider development community.5 4. This report covers a diverse group of 59 IEG recommendations, across 15 IEG evaluations issued in the period of FY17-21. All recommendations in all past evaluations that had not yet been fully implemented by the time of the FY20 MAR report are considered. Hence the recommendations cover a diverse range of thematic areas, issues, and challenges, from ensuring that WBG support for pollution management is targeted to address priority pollution concerns at the country level to strengthening citizen engagement and ensuring it is meaningful and embedded in country systems. Because the analyzed evaluations and recommendations have not been selected using either a portfolio or an outcome perspective, they are very diverse, and so unified consolidated reporting is very challenging. The report attempts to provide a coherent treatment to these recommendations by linking them to key WBG strategic priorities and themes. As this report provides a snapshot in time of WBG implementation of IEG recommendations, it does not cover the full range of WBG’s strategic priorities. 5. Management has taken clear steps to address IEG’s recommendations in all thematic areas despite the unprecedented challenges of the COVID-19 pandemic, with further room for improvement in a few areas. The quantitative and qualitative evidence demonstrates that the WBG has taken substantial action in 95 percent of recommendations, and roughly half of those actions are already delivering outcomes. In several areas, the combination of complementary corporate priorities, strong client demand, and urgent health and economic needs has driven the WBG to a higher level of ambition or in new directions, beyond what was contemplated in IEG’s recommendations. The few recommendations that have seen delayed progress, for example, monitoring the public policy objectives of trade regulations, may not have had sufficient client demand, given the unprecedented COVID-19 crisis. Another area where outputs have been modest is the Bank’s efforts to build urban resilience by strengthening mechanisms to address crime and violence. For example, while a community mapping pilot in Kenya has shown promising results in identifying and addressing hotspots, further efforts are needed to scale up and replicate the approach. Such recommendations will be closely monitored in the coming months to better understand how the WBG can address them going forward. 6. Management has analyzed performance from a variety of complementary perspectives to uncover variables that facilitate or hinder the contribution to development outcomes. The complete set of IEG recommendations covered in the report varies along several dimensions. Recommendations call for improvements related to a range of different functional areas, from strengthening diagnostics to scaling up engagement. They also cover different thematic areas, which have been grouped into five categories that align with IEG’s work program and WBG priorities. And finally, recommendations fall across a broad spectrum in terms of their outcome orientation, with some that are more process-oriented (for example, calling for more robust collaboration across GPs) and others that are more directly focused 5The MfDR Working Group consists of corporate results management units from 12 MDBs. Its objectives are sharing knowledge and resources and discussing approaches and practices of results management and measurement. This group was formally established by MDB heads in 2002. 6 on strengthening country high-level outcomes. Each perspective is complementary of others and is intended to add more texture to both IEG recommendations and management actions and their connection to WBG’s strategic priorities. Each perspective provides a different angle, using informed judgement rather than objective criteria for the analysis. As both the MAR reform and the outcome orientation agenda cement, more and better data and perfected definitions will further enhance the robustness of the conclusions. 7. The type and source of evidence to demonstrate progress towards outcomes varies, depending on the nature of the recommendation and the availability of data. Ideally, the report aims to demonstrate progress relative to the baseline situation at the time of the evaluation. It also aims to go beyond isolated examples and to demonstrate patterns and trends, triangulating different types of evidence (for example, an increased number of new operations or beneficiaries or an expanded geographic distribution) combined with illustrative stories demonstrating impact. Often a package of activities is initiated in response to a recommendation. In such cases, it is important to view the evidence collectively, rather than at the individual activity level. Given that this approach to the MAR is still new, systems and habits are not yet fully entrenched to provide robust evidence in all areas. Management will reflect on good practices, weakness, and lessons from this new process to enhance guidance on the most impactful types and sources of evidence for future cycles. Functional Perspective 8. Adopting a functional perspective on recommendations helps Management identify the intended function of the proposed changes designed to be beneficial in their effect on the WBG’s ability to deliver results. An analysis of the IEG recommendations found that they fall into several functional categories: stepping up advocacy and engagement; improving monitoring and evaluation; clarifying a strategic framework or approach; expanding data, diagnostics, or knowledge; fostering WBG collaboration; clarifying managerial processes, including resourcing; and sharpening outcome country and client focus. Ex ante, the expected outcomes of functional recommendations can be defined very specifically as the intended effects of conscious and deliberate actions. In reality, they interplay with one another, and are subject to cultural and organizational dynamics that make the outcomes less evident. 7 Figure 1. Share of IEG recommendations by function Sharpening client or country focus Improving M&E 5% Clarifying Managerial including better Processes, including indicators 8% 24% Resourcing Clarifying Strategic Framework or 12% Approach 12% Stepping up 22% Fostering WBG Advocacy and Engagement Collaboration 17% Expanding Data, Diagnostics, and Knowledge Source: OPCS staff analysis. 9. Among the most recurrent types of functional IEG recommendations are those that aim to step- up WBG advocacy and engagement. These recommendations call upon the WBG to initiate, scale up, enhance, or intensify its efforts and support in particular thematic areas. Evaluations focused on pollution management, regional integration, forced displacement, and citizen engagement included recommendations that fall into this category. Responses to such recommendations have seen the WBG increase operational activity in relevant areas. For example, regional integration activities that were previously focused primarily in Africa have been expanded to cover all regions; in addition IFC’s support to strengthen the self-reliance and resilience of displaced and host communities through private sector solutions have been broadened. Scaling up engagement is often an important step in rebalancing the strategic focus of WBG efforts to ensure that important dimensions of a development challenge are not neglected. Success in implementing such recommendations generally depends on client demand. Often diagnostics and technical assistance can complement these efforts by demonstrating needs, identifying opportunities, and generating demand. 10. Recommendations to expand data and diagnostics aim to strengthen the nexus between the WBG’s knowledge and financing, in line with the WBG’s new Strategic Framework for Knowledge. In response to these recommendations, WBG analytical work often provides a more nuanced context- specific understanding of opportunities, constraints, and priorities to strengthen the design of country strategies and operations. For example, the WBG has undertaken a substantial body of analytical work, including impact evaluations and high-frequency phone surveys, which is closing knowledge gaps and improving the design, sequencing, and targeting of interventions aimed at reducing poverty through the development of the rural non-farm economy. Similarly, WBG diagnostics have helped countries develop the requisite policy frameworks for private sector investment, which is beginning to unlock private capital 8 to support development initiatives. In many cases, the WBG has gone beyond conducting diagnostics and producing knowledge products, presenting evidence that the findings are being applied to help shape operations. 11. Recommendations on fostering collaboration and clarifying managerial processes are internally focused and process-oriented but can help create the necessary conditions for achieving outcomes over time. One example is IEG’s recommendation that the Bank and IFC strengthen collaboration to support public-private partnerships for universal health coverage in client countries. In response, the Bank and IFC jointly prepared and applied guidance to help build government capacity to contract out the delivery of health services. Strengthening collaboration and adopting more integrated ways of working can open new opportunities for the WBG to deliver impact, as demonstrated by the J-CAP initiative, which was designed based on IEG’s recommendation that the Bank and IFC develop a more integrated and aligned approach to capital market development. This type of recommendation, though not directly oriented on specific outcomes, contributes to improvements in the way the WBG organizes itself to deliver strategic priorities. 12. In line with historical trends, improving monitoring and evaluation (M&E), including indicators, is also a recurrent type of functional recommendation. M&E-related recommendations span a range of thematic areas, including health services, regional integration, trade facilitation, citizen engagement, and urban resilience. Many of these recommendations encourage the WBG to develop more robust indicators and to intensify the results focus of M&E efforts, for example tracking the quality and distributional impact of health services in addition to access. In some cases, IEG’s recommendations point to critical elements that have been overlooked by previous M&E efforts. For example, monitoring of regional integration efforts had not adequately captured spillover effects and therefore provided only a partial picture of the impact of WBG work in this area. In response to these recommendations, the WBG has developed and rolled out new tools, approaches, and methodologies, while also building staff and client capacity to implement them. The implementation of these recommendations reinforces Management’s efforts to enhance the results focus of monitoring efforts, as articulated in the Outcome Orientation roadmap. 13. Finally, recommendations to clarify a strategic framework or approach and sharpen the country and client focus of WBG engagements are among the most effective ones to help Management deliver outcomes in the long run. These recommendations aim to enhance the WBG’s effectiveness generally by confirming the WBG’s strategic approach to a sector or thematic area, while recommending ways to sharpen or adjust the focus and prioritize dimensions of growing importance. Such recommendations seem to have the strongest influence and uptake when they align with client demand and are not overly prescriptive, leaving scope to adapt approaches to different country contexts. Absent client demand, the WBG can face difficulty in making progress on the implementation of such recommendations and may need to take preliminary steps to generate demand, for example, through dialogue and analytical work. As observed in the FY20 report, progress in FY21 was particularly notable on recommendations that align with WBG priorities and are reinforced by other mechanisms, such as IDA policy commitments or corporate reporting requirements. 9 Thematic Perspective 14. Adopting a thematic perspective on recommendations allows Management to analyze implementation progress in a horizontal manner for specific themes across different regions. In this section, Management provides a self-assessment of progress in implementing IEG recommendations in five themes representing the sectoral “streams� that IEG identified in its FY21-23 work program: (i) Human Development (HD), (ii) Climate Change and Environmental Sustainability (CCES), (iii) Jobs, Growth and Shared Prosperity (JWSP), (iv) Maximizing Finance for Development (MFD)/Cascade, and (vi) Fragility, Conflict and Violence (FCV). The thematic “streams� proposed by IEG are well aligned with the WBG strategic priorities and its organizational structure together with the imperative culture, incentives, and processes. 15. Management observes that an important factor influencing the uptake of thematic recommendations is the timing of the evaluation. Evaluations conducted too early in a given process are less effective at identifying best practices or reporting on comparative effectiveness of different types of measures. Evaluations conducted too late are more challenging to incorporate into the strategic planning or guidance for the next round. Timing is therefore a condition for effectiveness. For example, IEG’s evaluation on knowledge flow and collaboration across the WBG took place in 2019, about five years after the 2014 reforms had introduced significant changes to the Bank’s organizational matrix structure. Given that the Bank had sufficient experience implementing the reforms, IEG was able to provide a grounded and nuanced analysis of its strengths and weaknesses. This analysis informed impactful recommendations for additional organizational changes that have since been implemented and are proving to be effective. 16. Actions taken in response to IEG recommendations represent only a portion of Management’s efforts to advance WBG practice in key areas, and so this section situates the recommendations within the context of Management’s evolving strategic plans and other actions being taken to deliver high- level outcomes. IEG’s recommendations play an important role in guiding and reinforcing Management’s ongoing efforts to advance key thematic areas and should be viewed in this wider context, rather than as stand-alone actions. The report aims to do this by reconstructing an outcome framework for each thematic area to illustrate how responses to IEG’s recommendations, together with other activities, are collectively furthering the WBG’s progress along a pathway to higher-level outcomes. Each outcome framework presents the WBG’s strategic directions for achieving high-level outcomes in the thematic area, following IEG’s recommendations and other select actions Management is taking, outputs delivered, and immediate outcomes that are collectively contributing to higher-level outcomes. These outcome frameworks have been constructed by Management ex post, grouping related recommendations to facilitate a more structured analysis. Moving forward, a more outcome-focused selectivity criteria jointly agreed between Management and IEG for recommendations to be reported in future MAR could facilitate the strategic relevance of the analysis. 17. The outcome frameworks present a high-level summary of progress towards outcomes in each thematic area, based on actions taken in response to IEG recommendations and other select activities. Each outcome framework starts with a statement of the WBG’s overarching strategic approach to achieving high-level outcomes. The vertical columns on the left present IEG’s recommendations on the 10 bottom and the intended outcomes of those recommendations on the top. For the exact wording of IEG’s recommendations, the numbers in parentheses correspond to the numbered list of IEG recommendations provided in Annex 1. As indicated by these numbers, in some cases, multiple recommendations have been combined in the outcome frameworks presented. The middle section summarizes actions taken by the WBG towards the achievement of those outcomes. The column on the right follows a similar pattern, focusing on other select activities and outcomes that are also intended to advance the WBG’s strategic approach in the thematic area. These limited examples are intended to give a sense of other related workstreams where the WBG is investing significant attention and resources, not to provide a comprehensive view of everything the WBG is doing in the thematic area. The purpose of the outcome frameworks is to situate IEG’s recommendations in the WBG’s broader strategic approach to the thematic area, to articulate the intended outcomes of IEG’s recommendations, and to summarize WBG responses targeting those outcomes. 11 HD: Investments in people for greater equity and economic growth6 Table 1. Outcome Framework for IEG Recommendations and Management Actions on HD Investing in people to promote growth and equity The WBG and countries aim to build human capital through investing in people to promote growth and equity while supporting a robust COVID-19 recovery. During COVID-19, immediate action is needed to deliver essential health services, enhance food security, and help children return to school, but it is also important to resume progress towards the SDGs on poverty, hunger, health, education and gender equality (SDGs 1 through 5). IEG-related stream of WBG work Broader WBG work program The WBG is helping countries achieve intermediate outcomes, incl.: As it works in a broader context: Targeted evidence-based Health care systems that More aligned and more … helps countries implement emergency policy reform and have increased capacity to efficient development health operations, protects the poorest and investments that address engage the private sector financing and co- most vulnerable households, and critical human development for universal health financing, with sustained strengthens health systems… gaps, with pandemic coverage. attention on pandemic preparedness mainstreamed impact. across operations. Intermediate outcomes are targeted in the following WBG actions that Management Undertaking other actions that contribute initiated in response to IEG evaluations: to these results: …developing and applying …developing joint WB-IFC …holding consultations …financing operations, including in FCS, to diagnostics and frameworks guidance notes on with key global partners build resilient health systems. to assess pandemic contracting health care on COVID-19 response. …accelerating the development and preparedness. service delivery. …undertaking joint equitable distribution of vaccines. …implementing MPA …informing operations country readiness …strengthening country capacity to provisions and IDA through the assessment of assessments for vaccine prevent, detect and respond to COVID-19. commitments on pandemic service arrangements deployment. …facilitating access to critically needed preparedness. between state and private …co-convening and co- equipment and training for frontline sector. leading key partnerships. workers. …developing a co- …preventing food insecurity by financing framework with safeguarding agriculture production. the Global Fund. …supporting distance learning initiatives to compensate for school closures due to lockdowns. And in response to specific IEG recommendations: In line with corporate thinking: … that the WBG integrate …increase collaboration on …have a more strategic …aiming to increase the capacity of client pandemic preparedness in public-private partnerships and aligned approach to countries to meet the challenges of its operations… (1) for universal health global partnerships… (3) addressing the health, social and economic coverage and SDG 3… (2) impacts of the COVID-19 crisis, while maintaining a line of sight to the long-term development vision. Source: OPCS staff based on various documentation. 6 Recommendations of Health Care and Rural Non-Farm Economy evaluations were retired from IFC’s MAR after the FY20 progress report. 12 18. The WBG’s approach to building human capital combines urgent actions to aid the crisis recovery with a continued focus on accelerating more and better investments in people for greater equity and economic growth. The direction and pace of WBG progress on health services have CORPORATE INDICATORS been shaped by the urgency of the COVID-19 pandemic and the need for a sustained, coordinated global response. Corporate Through WBG support in FY19-20, 388.8 million people commitments are bringing increased attention to (including 162.1 female beneficiaries) received essential health services and reinforcing these efforts. IEG health, nutrition, and population services, from a recommendations in this theme support the baseline of 83.2 million in FY18. WBG's vision to strengthen human capital, setting Source: WBG Corporate Scorecards. out three pathways for improving the effectiveness of WBG support for country health care systems and pandemic preparedness: integrating pandemic preparedness in WBG operations, greater WB-IFC collaboration on public-private partnerships for universal health coverage, and more strategic and aligned global partnerships. The WBG has undertaken a substantial body of work to implement these recommendations and expects to continue intensifying its focus in this area, even beyond the level contemplated by these recommendations, which predate the pandemic. 19. WBG efforts have made progress in adopting a more outcome-oriented approach to pandemic preparedness that includes governance frameworks, improved knowledge and diagnostics, and better measurement. For example, the WBG is institutionalizing pandemic preparedness diagnostics to more systematically assess gaps and inform the design of country programs.7 The IDA19 commitment8 on pandemic preparedness and the Bank’s Multiphase Programmatic Approach (MPA) in support of the COVID-19 response served to reinforce this priority, resulting in increased WBG support to help client countries better integrate pandemic preparedness plans and governance frameworks in their health care systems. The Bank is supporting 111 operations under the original MPA9 and approved Additional Financing for vaccine deployment in October 2020.10 The MPA included provisions to strengthen core public health functions, global health security, and pandemic preparedness. While more time will be needed for these actions to lead to improved high-level outcomes at the country level, the WBG has demonstrated commitment and momentum on integrating pandemic preparedness into its operations. In partnership with the Resolve to Save Lives Trust Fund and the Center for Global Health Science and Security at Georgetown University, the Bank developed five knowledge products, each covering a core area of pandemic preparedness.11 The Health, Nutrition and Population (HNP) team is working to 7 The Health Emergency Preparedness and Response Trust Fund (HEPRF) awarded grants for Pandemic Preparedness Strengthening in low- and middle-income countries. Launched in FY20, the HEPRF is a Multi-Donor Trust Fund to help countries strengthen their health emergency prevention, detection, and response capacities vis-à-vis major disease outbreaks. Eight beneficiaries (seven countries and one regional recipient) were awarded grants in FY21 to strengthen preparedness. HEPRF supports setting up surveillance systems, estimating resource needs in case of a health emergency, developing preparedness assessments and plans, and conducting simulation exercises. 8 i.e. “Support at least 25 IDA countries to implement pandemic preparedness plans through interventions (including strengthening institutional capacity, technical assistance, lending, and investment)�. 9 https://www.worldbank.org/en/about/what-we-do/brief/world-bank-group-operational-response-covid-19-coronavirus-projects-list 10https://www.worldbank.org/en/who-we-are/news/coronavirus-covid19/world-bank-support-for-country-access-to-covid-19-vaccines 11 (i) Laboratory Networks; (ii) Emergency Operations Centers; (iii) Risk Communications; (iv) Surveillance; and (v) Health Security Workforce Development. 13 institutionalize pandemic preparedness diagnostics12 as a routine client exercise through a guidance note, support to TTLs, and the provision of technical assistance. The guidance note will include key resources and best practice examples to guide future teams in undertaking diagnostics.13 The HNP team also worked with the Global Crisis Risk Platform (GCRP) Secretariat to develop a framework to assess country-level crisis preparedness14 in line with a commitment made under the IDA19 replenishment15and will pilot the draft framework in several countries. 20. As part of an early effort to enhance the outcome orientation of its country engagement products, the Bank began to include country-specific assessments of pandemic preparedness in its SCDs.16 In an effort to make a case for concessional Bank finance in support of pandemic preparedness, and to encourage investments in pandemic preparedness, the HNP team organized a BBL in collaboration with the Poverty GP to discuss and provide initial guidance to teams on integrating an analysis of preparedness and health systems resilience, gaps, and priorities into SCDs, in the aftermath of the COVID- 19 pandemic. The ppt helped WB staff provide inputs on upcoming SCDs (e.g., Honduras). Further, the team is currently preparing a technical note on integrating preparedness and aspects of resilient health systems in SCDs and is available to provide technical assistance.17 21. WBG efforts to improve the strategic alignment of global partnerships has facilitated global coordination in response to COVID-19. To sharpen the strategic focus of its Global Partnership Program, the Bank commissioned an assessment and is using the findings to identify high-impact partnerships aligned with the key pillars of the ‘HNP Strategy Refresh’ and with the WBG Trust Fund reform. The Bank consulted key global partners on vaccine-related research18 and development kicked off with Gavi,19 the Coalition for Epidemic Preparedness Innovations (CEPI), and others was the precursor to COVAX. The WBG also partnered with the World Health Organization, United Nations Children’s Fund (UNICEF), the Global Fund, and Gavi to undertake country readiness assessments for vaccine deployment in 144 countries. 22. While transforming universal health coverage will require a sustained commitment over an extended time horizon, the WBG has made progress on enhancing WB-IFC collaboration on public- 12The Bank undertook 14 Pandemic Preparedness Diagnostics to assess country readiness. These will be used to design lending operations. In Ghana, Liberia and Sierra Leone, the diagnostics evaluated country preparedness by reviewing previous assessments of capacity and response to disease outbreaks. The analytics identified the critical remaining gaps in preparedness and response capacities, estimated indicative costs of required investments and identified potential sources of funding. In Central America, the diagnostics used a mixed-method approach to understand preparedness levels in countries and suggest priority investments. http://operationsmonitoring.worldbank.org/view/#details/global/allprojects/asadetailsactiveperiodic/0633/$~Total$actact,delact$asaActCode ~PPD/ 13 The purpose is to ensure that the pandemic preparedness diagnostics (i) follows a standardized approach; (ii) are largely Bank (BB) financed; (iii) are used to inform investment operations; and (iv) are undertaken every 4-5 years with the government. 14 GCRP Multidimensional Crisis Risk Assessment and Monitoring Approaches – P173164 15 Commitments made during the IDA19 replenishment tasked the GCRP with “the development of metrics to monitor countries’ progress toward crisis preparedness, with a proposed approach to be developed by end-FY21. Once these preparedness metrics are finalized, Management will use them to guide IDA’s country engagements through galvanizing dialogue on their preparedness gaps, and how preparedness may be improved as part of country and regional programming.� 16 The Bank is developing a pandemic preparedness website for teams to support client countries in strengthening their pandemic preparedness capacities. The website, which is being developed by subject-matter experts in preparedness and teams from the knowledge unit, includes a range of key resources for Bank teams to, (i) conduct pandemic preparedness diagnostics; (ii) incorporate pandemic preparedness into the SCDs; and (iii) design interventions to strengthen preparedness in Bank lending projects. The website will include information that makes the investment case to support individual country preparedness and feature seminal reports on the subject prepared by the Bank. https://worldbankgroup.sharepoint.com/sites/Health/Pages/Epidemic-Pandemic-Preparedness-Knowledge-Portal-04152021-140329.aspx 17https://worldbankgroup.sharepoint.com/sites/Health/Pages/Operationalizing-Preparedness-at-the-Bank-04052021-120329.aspx#IPSD 18 https://www.thelancet.com/journals/lancet/article/PIIS0140-6736(20)30763-7/fulltext 19 The vaccine alliance. https://www.gavi.org/ 14 private partnerships for universal health coverage. For example, the Bank, IFC, the World Health Organization (WHO) and the Global Financing Facility for Women, Children and Adolescents (GFF)20 jointly prepared guidance notes to help authorities contract out and monitor health care service delivery. 21 Ultimately, this work, recently pioneered in Ethiopia, aims to ensure universal health coverage through more effective support to country health care systems and a strengthened private sector. The World Bank and IFC also jointly carried out a systematic assessment of the quality of health care in Colombia, covering both public and private service provision. The assessment analyzed the quality of care as well as related strategies, policies, and regulations and capacity to improve quality of care as a condition for the financial sustainability of the health sector.22 20 https://www.globalfinancingfacility.org/ 21https://www.ifc.org/wps/wcm/connect/industry_ext_content/ifc_external_corporate_site/health/publications/covid-19-health-services- contracting-guide 22 https://www.worldbank.org/en/topic/health/publication/external-assessment-of-quality-of-care-in-the-health-sector-in-colombia 15 CCES: Integrated climate and development to maximize impact23 Table 2. Outcome Framework for IEG recommendations and Management Actions on Climate Change and Environmental Sustainability Integrated climate and development to maximize impact Climate change is a major threat, particularly to the world’s poorest and most vulnerable. The WBG integrates climate and development to maximize the impact of climate finance. Its approach to tackling climate change combines: increasing climate finance, prioritizing resources for climate impact, improving and expanding climate diagnostics, reducing emissions and vulnerabilities in key systems, supporting a just transition out of coal, and aligning WBG financing flows with the goals of the Paris Agreement. IEG-related stream of WBG work Broader WBG work program The WBG is helping countries achieve intermediate outcomes, incl.: As it works in a broader context: Scaled up and Increased use of climate Enhanced alignment Strengthened GHG Expansion of reliable, affordable, and recalibrated WBG change mitigation of different WBG emission reduction impact clean energy to end energy poverty. efforts in pollution interventions to address carbon finance through synchronized management aligned local and regional air initiatives and carbon pricing solutions at with local priorities, to pollution and instruments, duly the country-level. be implemented strengthen mainstreamed in through strengthened country capacity to country development country-level pollution comply with programs with monitoring systems. performance standards enhanced poverty on pollution. reduction co-benefits. Intermediate outcomes are targeted in following WBG actions that Management initiated in response to Undertaking other actions that IEG evaluations: contribute to these results: …providing TA to help …developing projects … improving …piloting climate mitigation …increasing investments in renewable countries strengthen that maximize coordination and outcomes using market energy by catalyzing technology and air quality monitoring synergies between internal alignment by methodologies. business innovations and linking and produce reliable, climate and air quality consolidating CF related …establishing Climate incentives with verified results. timely pollution data. management. TFs. Market Club to pilot GHG …helping countries build tailored …developing …providing TA to …improving internal emission reduction energy storage solutions. guidelines to identify support phase-out of processes and guidance activities and share …supporting countries transitioning toxic sites and ozone depleting to better integrate CF knowledge. away from coal by helping close coal estimate health risks. substances. activities in country …helping client countries mines and ensure a just transition for …conducting …developing strategy development programs. incorporate economic affected communities. diagnostics to inform and tool to control …establishing a TF to impact of carbon pricing …strengthening sector governance to Bank projects that and manage enhance social inclusion and credits in NDCs through unlock opportunities for low-carbon, address pollution. Hydrofluorocarbons while reducing Transformative Carbon climate resilient growth. …establishing umbrella (HFCs). emissions. Asset Facility (TCAF). MDTFs for pollution …providing technical …restructuring Ci-Dev abatement and support to low- to support carbon environmental health. capacity clients on initiatives aligned with …conducting pollution pollution control Bank’s wider country assessments and measures. engagement. capacity building …reducing pollution efforts through ESF. risk from waste dumpsite closures. And in response to specific IEG recommendations: In line with corporate thinking: …scale up and …leverage the Bank’s …strengthen …identify carbon pricing …clean up energy systems by driving recalibrate pollution climate change portfolio coordination among solutions that reduce GHG action on renewable energy, energy management support to better address CF initiatives and emissions, consistent with efficiency, and a just transition from to target key priorities, pollution and increase their focus countries’ NDCs, and pilot coal. including pollution strengthen client on country market-based and scalable monitoring systems. capacity to comply with development approaches for reducing (4, 5) performance standards outcomes, especially GHGs. (10, 11) on pollution. (6, 7) poverty reduction co- benefits. (8,9) Source: OPCS staff based on various documentation. 23 Recommendations of Carbon Finance evaluation were retired from IFC’s MAR after the FY20 progress report. 16 23. The WBG integrates climate and development to maximize the impact of climate finance, particularly on the world’s poorest and most vulnerable. Its approach to tackling climate change now combines: increasing climate finance, prioritizing resources for climate impact, improving and expanding TELLING THE STORY climate diagnostics, reducing emissions and vulnerabilities in key The $500 million China Hebei Air Pollution and Prevention project systems, supporting a just transition (P154672) had significant climate mitigation results and global benefits out of coal, and aligning WBG helping China reduce pollution in Hebei which was until recently financing flows with the goals of the among the most polluted urban areas in the world. The project delivered about 5 million tCO2e emissions reductions per year through Paris Agreement. IEG’s interventions such as installation of new stoves in municipalities and recommendations reinforce this the addition of a new energy bus fleet. The tCO2e emissions reductions approach, setting out multiple generated from the installation 1,221,500 new stoves alone was pathways for strengthening pollution equivalent to taking 860,000 passenger cars off the road each year. This was the result of domestic stoves replacement and the reduction responses, improving the impact of in the emission of precursor gases (SO2 and NOx) emissions from carbon finance initiatives, and enterprises, agriculture, and transport. The mean annual population- strengthening urban resilience. On weighted PM2.5 in the larger Jing-Jin-Ji region was reduced from 78 pollution, IEG noted that the WBG had μg/m3 in 2015 to 52 μg/m3 in 2019, and from 83 μg/m3 in 2015 to 54 ramped up its climate change μg/m3 in 2019 in Hebei province. The share of population exposed to health-damaging particulate matter air pollution (PM2.5) was portfolio by 300 percent, helped significantly reduced. Technical assistance provided by the Pollution clients strategize and set policy, and Management and Environmental Health MDTF, supported crucial contributed to emissions reduction technical assessments that contributed to the remarkable air quality and improved air quality monitoring improvements. through its urban transport portfolio. Source: Environment, Natural Resource and Blue Economy Global Recommendations focused on scaling Practice (ENB GP) Team Inputs for MAR Update. up and recalibrating support to focus on key country priorities, including pollution monitoring systems; better leveraging the WBG’s climate change portfolio to address pollution; and strengthening client capacity to comply with IFC Performance Standards on pollution. On carbon finance, IEG commended the WBG’s global leadership on carbon markets with a view to reduce GHG emissions, build capacity, innovate, and provide thought leadership. IEG observed that the WBG helped operationalize the Clean Development Mechanism,24 catalyze carbon markets, and mobilize resources. Recommendations focused on strengthening internal coordination among carbon finance (CF) initiatives; aligning the focus of CF initiatives with country development outcomes, particularly poverty reduction co- benefits; identifying carbon pricing solutions that enhance GHG emission reduction; and piloting innovative approaches for reducing GHG emissions. Finally, IEG recommended that the Bank should systematically incorporate resilience characteristics in projects that build urban resilience. 24. Over the past year, the WBG has scaled up efforts to strengthen pollution management by prioritizing indirect pathways to high-level outcomes, such as client capacity for evidence-based action. For example, the Bank is providing TA to strengthen air quality management in 21 countries, including through establishing and strengthening ground-level monitoring networks and analyzing economically 24The Clean Development Mechanism allows a country with an emission reduction under the Kyoto Protocol to implement an Emission Reduction Project in developing countries. Such projects can earn emission reduction credits. https://cdm.unfccc.int/. 17 effective interventions to reduce ambient air pollution.25 In FY21, TA activities on air quality monitoring and source apportionment began in Egypt26, Nigeria27, and South Africa28, and implementation of similar activities continued in Ghana29 and Vietnam30. This assistance addresses key areas of air quality management.31 It supports the establishment and strengthening of ground-level monitoring networks. It incorporates climate pollutants, notably black carbon, in the development of its Air Quality Management Plans in participating airsheds. It supports analysis of economically effective interventions to reduce ambient air pollution. Bank analytics are helping address priority health risks posed by toxic contamination linked to small businesses, including tanneries, artisanal and small-scale gold mining, and the recycling of used lead acid batteries. With financing from the Pollution Management and Environmental Health (PMEH) Multi Donor Trust Fund (MDTF),32 the Bank helped develop evidence-based guidelines to identify toxic contaminated sites, including a set of uniform guidelines to sample and estimate health risks caused by exposure to heavy metals such as lead, mercury, and chromium. Analytics are also leading to increased and more targeted lending support for pollution management across regions. 25. The Bank is complementing lending with a series of trust funds that reinforce client countries’ efforts to improve public and environmental health outcomes to accelerate progress towards the SDGs. The new Umbrella 2.0 program, PROCLEAN33 was authorized by Management in FY21 and will become operational in FY22. PROCLEAN will support ASA to strengthen client country technical capacity as well as operations (through RETFs) with components on (i) outdoor air quality, (ii) circular economy34, (iii) environmental health, and (iv) integrated management of chemicals and hazardous waste. The MDTF window on the Integrated Management of Chemicals and Hazardous Waste will support specific interventions to mitigate exposure of the poor and vulnerable groups to pollution threats such as lead, mercury, pesticides, chromium, and e-waste. PROCLEAN will also support country-level analytical work in countries where the health benefits from pollution control are largest and will help integrate pollution priorities in country strategies. The Bank had commissioned ASAs on Circular Economy approaches35 in Malaysia, Thailand, the Philippines, and Mexico to help reduce pollution and mitigate climate change. Management has also established MDTFs such as the Clean Cooking Fund for household air quality 25 This includes (i) Beijing-Tianjin-Hebei (Jing-Jin-Ji) region, China; (ii) Hanoi, Vietnam; (iii) Accra, Ghana; (iv) Lagos, Nigeria; (v) Kolkata, Patna and Nationally, India; (vi) Johannesburg, South Africa; and (vii) Cairo, Egypt. 26 http://operationsportal.worldbank.org/secure/P164419/home 27 http://operationsportal.worldbank.org/secure/P164415/home 28 http://operationsportal.worldbank.org/secure/P164421/home 29 http://operationsportal.worldbank.org/secure/P164417/home 30 http://operationsportal.worldbank.org/secure/P164422/home 31 The Bank had played a significant role in helping China reduce pollution in Hebei which was until recently among the most polluted urban areas in the world. IEG had rated the now completed US$ 500 million China Hebei Air Pollution and Prevention project (P154672) as ‘Highly Satisfactory’ as it achieved significant improvements in air quality in the Jing-Jin-Ji31 region through the reduction in total PM2.5 emissions as a result of domestic stoves replacement and the reduction in the emission of precursor gases (SO2 and NOx) emissions from enterprises, agriculture, and transport. The mean annual population-weighted PM2.5 in the larger Jing-Jin-Ji region was reduced from 78 μg/m3 in 2015 to 52 μg/m3 in 2019,31 and from 83 μg/m3 in 2015 to 54 μg/m3 in 2019 in Hebei province. The share of population exposed to health-damaging particulate matter air pollution (PM2.5) was significantly reduced. Technical assistance provided by the Pollution Management and Environmental Health MDTF, supported crucial technical assessments that contributed to the remarkable air quality improvements. This resulted in the HAP31 program exceeding its PM2.5 reduction targets, both in Hebei province and in the greater Jing-Jin-Ji area. The Hebei Air Pollution and Prevention project had significant climate mitigation results and global benefits. The project delivered about 5 million tCO2e31 emissions reductions per year through interventions such as installation of new stoves in municipalities and the addition of a new energy bus fleet. The tCO2e emissions reductions generated from the installation 1,221,500 new stoves alone was equivalent to taking 860,000 passenger cars off the road each year. 32 https://www.worldbank.org/en/programs/pollution-management-and-environmental-health-program# 33http://operationsportal2.worldbank.org/wb/opsportal/ttw/about?projId=P173410 34 A circular economy is intended to eliminate waste and ensure recycling. 35 Water in Circular Economy and Resilience (WICER) Position Paper 18 management36 and PROBLUE Umbrella 2.0 program for the blue economy37 to complement investment project financing. Finally, the Bank continues efforts to reduce pollution through its ESF, including through the assessment and mitigation of environmental risk and impact in compliance with the ESF’s Environment and Social Standard 3 on Pollution Prevention and Resource Efficiency. 26. The WBG is increasing the use of climate change mitigation interventions to address local and regional air pollution and strengthen country capacity to comply with Performance Standards on pollution. The analytical work conducted under the PMEH-supported Egypt Air Quality Management ASA38 led to a follow-up $200 million Bank-supported Greater Cairo Air Pollution Management and Climate Change project (P172548) approved by the Board in September 2020. In Vietnam, the PMEH- supported Vietnam Air Quality Management ASA39 led to a $84.4 million Bank-supported Vietnam Climate Change and Green Growth DPF40 approved in FY20. A global ASA that assessed how fine air pollution particles (PM2.5) impact health41 and another global ASA on integrated approaches to air quality management and climate change mitigation42 both informed the $750 million Mexico Environmental Sustainability and Urban Resilience DPF43 approved in FY21. Global analytical work on land-based pollution management supported by the PMEH similarly informed the design of a GEF-supported Africa Environmental and Pollution Management Project44. Under the Montreal Protocol operations, the Bank continued to support in FY20 and FY21 the phase-out of ozone depleting substances through focused support aimed at reducing the climate impact of Short-Lived Climate Pollutants (SLCPs), making climate friendly air conditioning more accessible to lower-income consumers, greening local industry and avoiding air pollution from new power generation. The Montreal Protocol operations supported a Programmatic ASA that focused on two South East Asian countries. 45 This leveraged work on lower-Global Warming Potential (GWP) refrigerant technology in the booming air-conditioning sector to deliver TA to local manufacturers and policymakers in energy, industry, and environment. The intent is to accelerate the transformation of the air conditioner market to lower-GWP energy-efficient air conditioners.46 Anticipated outcomes when coupled with future investments include reducing the climate impact of Short-Lived Climate Pollutants (SLCPs), making climate friendly air-conditioning more accessible to lower income consumers, greening local industry and avoiding air pollution from new power generation. 27. IFC Management is increasing upstream advisory efforts to strengthen clients’ alignment with Performance Standard 3 on pollution prevention and control. In FY21 IFC launched an initiative to engage the private sector in waste dumpsite closure projects or investments linked to dumpsites consistent with its Performance Standards and WBG EHS Guidelines based on a risk-based approach. IFC Management launched several deliberate and targeted advisory projects to build client capacity in designing and 36 http://operationsportal.worldbank.org/secure/P174232/home?tab=dashboard; https://www.worldbank.org/en/results/2020/11/10/accelerating-access-to-clean-cooking-the-efficient-clean-cooking-and-heating-program- and-the-clean-cooking-fund; 37 https://www.worldbank.org/en/programs/problue 38 http://operationsportal.worldbank.org/secure/P164419/home 39 http://operationsportal.worldbank.org/secure/P164422/home 40 http://operationsportal.worldbank.org/secure/P171006/home 41 http://operationsportal.worldbank.org/secure/P162099/home 42https://operationsportalws.worldbank.org/Pages/DocumentProfile.aspx?projectid=P162099&DocId=101&IsCovGen=true&removePublic=fals e&stage=AUS 43 http://operationsportal.worldbank.org/secure/P174000/home 44 http://operationsportal.worldbank.org/secure/P167788/home 45 http://operationsportal.worldbank.org/secure/P166806/home?tab=dashboard 46 http://operationsportal.worldbank.org/secure/P167521/home?tab=dashboard 19 developing pollution control measures across a wide range of industries, including in Ghana, Kenya, Tunisia, Pakistan, and Yemen. IFC will report on annual numbers of new advisory projects focused on pollution abatement in the next reporting and, for the clients supported by the advisory projects, it will provide an analysis of client’s performance in terms of E&S risk rating before and after the AS intervention. 28. WBG efforts have improved the coherence, alignment, and mainstreaming of its carbon finance initiatives and instruments with an enhanced focus on poverty reduction co-benefits. The Climate Change Group (CCG) consolidated its Trust Fund portfolio, and going forward it will map all carbon finance initiatives to two new trust funds: the Partnership for Market Implementation Facility (PMIF)47 and the Climate Emissions Reductions Facility (CERF).48 The WBG also introduced measures to more deeply integrate carbon finance activities in country development programs and align them with the broader poverty reduction agenda. These efforts include a shift from stand-alone carbon finance operations to integrated development operations through new guidance for Emission Reduction Crediting49 Projects using IPFs50 and the elimination of parallel processing requirements for carbon finance project components. Another significant achievement is the establishment of a new climate trust fund, the “Enhancing Access to Benefits while Lowering Emissions� (EnABLE) Trust Fund, to enhance social inclusion of vulnerable communities and increase poverty reduction co-benefits. Finally, the Carbon Initiative for Development (Ci-Dev)51 was restructured to increase the uptake of clean energy access technology and enhance development benefits through support for programs that are aligned with the Bank’s wider engagement with client countries and those anchored in a broader IPF operation. 29. The WBG has made progress in identifying carbon pricing solutions that enhance GHG emission reduction. For example, the Bank piloted climate mitigation outcomes in its development operations under the Operationalizing Article 6 Program of the Paris Agreement.52 This was built on the GHG CORPORATE INDICATORS accounting process and ensured consistency with market methodologies. The pilots provided In FY19-20, the WBG contributed to a reduction in GHG practical examples for client countries to better emissions of 133 million tCO2eq/year, up from a baseline understand the country-level decisions needed to of 59 million tCO2eq/year in FY 18. participate in carbon markets under the bottom- Source: WBG Corporate Scorecards. up framework of the Paris Agreement.53 The Bank 47 PMIF supports countries to assess, design and deploy carbon pricing approaches, as a key element in a broader set of government interventions, both explicit (i.e. carbon taxes and emissions trading schemes) and implicit carbon pricing instruments and the interface with other relevant policies and programs. https://pmiclimate.org/ 48 CERF catalyzes transformative climate action through results-based climate finance in support of Nationally Determined Contributions implementation, incentivizing increased ambition by providing additional revenue streams through the generation and payment for emission reduction credits. CERF focuses on three major areas: 1) Natural Climate Solutions, 2) Sustainable Infrastructure Solutions; 3) Fiscal and Financial Solutions. 49 Formerly Carbon Finance Projects 50https://worldbankgroup.sharepoint.com/sites/ppfonline/PPFDocuments/b347b37d609e4d2c8ccfbb72d8d2e9c9.pdf 51 Ci-Dev mobilizes private finance for clean energy access in low-income countries and delivers results-based finance to innovative and transformative business models driven by the private sector. ci-dev.org 52 The Paris Agreement signed in 2016 falls under the United Nations Framework Convention on Climate Change http://operationsportal.worldbank.org/secure/P166499/home?tab=dashboard 53 The Bank pilots market-based products with a view to reduce GHG emissions. The Bank helps client countries access carbon markets through the Climate Warehouse infrastructure under Article 6 of the Paris Agreement. The Climate Warehouse is an information system that connects to different registries of publicly available information on mitigation outcomes. The objective is to enhance transparency among market participants, track mitigation outcomes and reduce the risk of double counting. The Bank supports the Climate Warehouse infrastructure with 20 helped increase the impact of GHG emission reductions through the establishment of a Climate Market Club, a group of 13 national governments54 (including both developed and developing countries) to jointly design modalities for piloting activities under Article 6.255 of the Paris Agreement. The Bank also CORPORATE INDICATORS helped country-clients incorporate the economic impact of carbon pricing and credits in their Nationally Determined Contributions (NDCs).56 In FY19-20, the WBG supported 97 countries (including 21 FCSs) toward institutionalizing disaster risk reduction The Transformative Carbon Asset Facility (TCAF)57 as a national priority, up from an FY18 baseline of 70 produced four crediting blueprints58 in FY21 (i.e. countries. transport sector; urban crediting framework; Source: WBG Corporate Scorecards. price-based mitigation policies; and greening the financial sector). Finally, the Bank supports market-based approaches for GHG mitigation. For example, a guidebook on soil organic carbon Monitoring, Reporting and Verification (MRV)59 will support the broader goal of decarbonizing agriculture and help meet climate targets. One of CERF’s three pillars is devoted to Financial and Fiscal Solutions to expand carbon finance in the financial sector. The SCCFM continues to pilot new market-based and scalable approaches for GHG emissions reduction programs. In FY21, FCPF had signed six emission reductions payment agreements (ERPA)60 with Fiji,61 Vietnam,62 Cote D’Ivoire,63 Indonesia,64 Costa Rica,65 Lao PDR,66 Madagascar67 and Nepal68 for US$160 million in result-base payments. 30. The Bank has adopted a more outcome-oriented approach to urban resilience through more evidence-based designs, and enhanced tracking, supporting clients to better cope with shocks and partners using a decentralized IT approach to connect climate markets and distributed ledger technologies or blockchain. This is anticipated to help countries better understand the infrastructure requirements for participation in carbon markets. 54 Members include Bangladesh, Bhutan, Chile, Ghana, Japan, Kazakhstan, Peru, Rwanda, Senegal, Singapore, Sweden, Switzerland, and Ukraine. https://blogs.worldbank.org/climatechange/unlocking-ambition-through-climate-market-club 55 International transfer of mitigation outcomes to achieve mitigation targets 56 NDCs are non-binding national plans that highlight climate actions with a view of achieving the targets set out in the Paris Agreement. 57 TCAF is designed to address interrelated domestic and international objectives. Domestically, TCAF will assist countries to implement market- based carbon pricing and policy/sectoral mitigation measures in the emitting sectors. tcafwb.org 58 tcafwb.org/knowledge-center 59 Scaling Soil Organic Carbon Sequestration MRV for Climate Change Mitigation http://operationsportal.worldbank.org/secure/P174833/home?tab=dashboard 60 https://www.forestcarbonpartnership.org/countries 61 https://www.forestcarbonpartnership.org/country/fiji https://www.forestcarbonpartnership.org/system/files/documents/Fiji%20FCPF%20ERPA%20Tranche%20A%20%26%20B.pdf 62https://www.forestcarbonpartnership.org/country/vietnam https://www.forestcarbonpartnership.org/system/files/documents/FCPF_ERPA_Tranche%20A-B_Vietnam_Signed.pdf 63https://www.forestcarbonpartnership.org/country/c%C3%B4te-divoire https://www.forestcarbonpartnership.org/system/files/documents/Contract%20Tranche%20A%20and%20B.pdf 64https://www.forestcarbonpartnership.org/country/indonesia; https://www.forestcarbonpartnership.org/system/files/documents/FCPF%20Carbon%20Fund%20ERPA%20Tranche%20A%20%26%20B.pdf 65https://www.forestcarbonpartnership.org/country/costa-rica; https://www.forestcarbonpartnership.org/system/files/documents/Costa%20Rica%20FCPF%20ER%20Program%20Tranche%20A%20and%20B. pdf 66https://www.forestcarbonpartnership.org/country/lao-pdr; https://www.forestcarbonpartnership.org/system/files/documents/FCPF%20Carbon%20Fund_ERPA_Tranche%20A_B%20Lao%20PDR%20Final %20Signed%20Dec%2030%202020.pdf 67https://www.forestcarbonpartnership.org/country/madagascar; https://www.forestcarbonpartnership.org/system/files/documents/Signed%20Contract%20ERPA%20TF0B4710%20%26%20TF0B4711.pdf 68https://www.forestcarbonpartnership.org/country/nepal; https://www.forestcarbonpartnership.org/system/files/documents/FCPF%20Carbon%20Fund%20ERPA-Nepal%20Tranche%20B.pdf 21 chronic stresses. Efforts have focused on incorporating strengthened resilience standards, improved cost- benefit analysis, enhanced inter-jurisdictional alignment, and inclusive approaches. Urban resilience project documents increasingly define design standards in line with verified risks and specify the number of people who are to benefit from the resilience enhancing measures. For example, the Bank is supporting two projects in Tanzania 69 that both integrate urban resilience, rely on extensive data, apply risk informed designs, foster coordination between various jurisdictions, benefit the most vulnerable, mitigate natural disaster risk, and boost local economic development. Urban transport projects use climate and disaster risk modeling to prioritize investments and design project interventions, for example the Western Economic Corridor and Regional Enhancement Program in Bangladesh70 and the Sierra Leone Integrated and Resilient Urban Mobility Project.71 The Bank rolled out a Resilience Rating System for Projects,72 and developed guidance on the analysis and assessment of climate and disaster risk. The WBG approach to building urban resilience emphasizes strengthened building codes and resilience accreditation, for example, the Global Facility for Disaster Reduction and Recovery (GFDRR)73 supported the “Building Regulation for Resilience Program�74 to improve building regulatory frameworks in more than 20 countries. Additionally, IFC developed a Resilience in Housing Index encompassing advisory and financial solutions to help drive resilience in buildings which consequentially improves the resilience of cities. The Index itself is a standardized solution that uses a 5-step scale to rank buildings on their resilience to shocks and stresses. The accreditation process involves (1) the identification of risks (2) adjustment of building design to address vulnerabilities and (3) a disclosure process to showcase a building’s resilience level. The Bank and IFC increasingly support cross-sector and multi-tiered programmatic approaches to address urban resilience challenges, for example, in Kerala, India, where the Bank worked closely with the central government of India and the state government of Kerala since the August 2018 floods to assess the impact of the floods and assist in the recovery. 69 Dar es Salaam Metropolitan Development Project Phase II and Boosting Inclusive Growth for Zanzibar; Tanzania Urban Resilience Program 70 Western Economic Corridor and Regional Enhancement Program in Bangladesh P169880 71 Sierra Leone Integrated and Resilient Urban Mobility P164353 72 Resilience of the project rates the confidence that expected investment outcomes will be achieved, based on whether a project has considered climate and disaster risks in its design, incorporated adaptation measures, and demonstrated economic viability despite climate risks. Resilience through the project rates a project’s contribution to adaptive development pathways based on whether investments are targeted at increasing climate resilience in the broader community or sector. 73 The facility is managed by the World Bank and governed by a Consultative Group including the World Bank Group, the United Nations Office for Disaster Risk Reduction, and several countries. 74 https://www.gfdrr.org/en/building-regulation-for-resilience 22 JWSP: Growth coupled with access to productive economic opportunities75 Table 3. Outcome Framework for IEG Recommendations and Management Actions on JWSP Growth coupled with access to productive economic opportunities The economic impacts of COVID-19 make the need for increased jobs, growth, and shared prosperity even more urgent. The WBG promotes growth that is accompanied by increased access to productive economic opportunities, particularly among those at the bottom of the distribution. To do this, the WBG takes a multidimensional approach that aims to unlock economic opportunities by shifting resources to more productive sectors, upgrading skills and technology, supporting market creation and private sector development, reducing barriers to trade, supporting regional integration, and promoting rural non-farm economic (RNFE) development. IEG-related stream of WBG work Broader WBG work program The WBG is helping countries achieve intermediate outcomes, incl.: As it works in a broader context: Strengthened RNFE support Increased regional WBG support for trade Enhanced financial inclusion integration of pro-poor, increasingly delivered integration initiatives in facilitation based on a through an integrated, tailored evidence-informed through a multi-GP and under-served regions, programmatic approach package of support. market creation WBG wide approach. based on tailored, that mitigates binding interventions in WBG evidence-informed constraints, while country programs. approaches. monitoring public policy impacts. Intermediate outcomes are targeted in the following WBG actions that Management initiated in response to Undertaking other actions that IEG evaluations: contribute to these results: …enhancing CPSDs and …supporting diagnostics … supporting diagnostics …initiating programmatic …increasing access to transaction other diagnostics to to sharpen WBG and technical assistance to interventions on trade accounts. inform WBG country approach on strengthen regional reform at the country engagement and employment generation integration. level. …supporting countries to design operations. and growth in RNFE. …increasing partnerships, …adopting a consistent and implement roadmaps and …supporting clients to …increasing convening, and knowledge approach to diagnosing action plans on financial address bottlenecks in participation in sharing to inform regional constraints and prioritizing inclusion. sectors with high agriculture value chains integration initiatives. interventions. potential for job in line with IDA19 PC. …increasing the quantity …identifying and …leveraging technology for creation and economic …enhancing internal and quality of regional monitoring the public financial inclusion. transformation. collaboration to integration initiatives with policy objectives and …developing tools and facilitate knowledge tailored approaches, impact of trade …improving financial capability by advisory capacities to sharing and strengthen across sectors and regions. facilitation. supporting national financial strengthen IFC risk- cross-sectoral …improving internal …revising Logistics education strategies (NFES). taking in challenging approaches to RNFE at strategies, systems, and Performance indicators environment. the country level. resources, including the (LPI) methodology using …helping countries reform …increasing efforts to IDA Regional Window, to big data and machine national payment systems and address gender-related support regional learning. promote the use of electronic constraints to female integration activities. payments. labor force participation in RNFE. …supporting legal, regulatory, and policy reforms to diversify financial services for individuals. And in response to specific IEG recommendations: In line with corporate thinking: … integrate market … support an integrated, …spearhead strategic …apply a systematic … advance financial inclusion to creation into country context-specific, gender- tailored regional evidence-based approach increase access to useful and strategies, with an informed approach to integration initiatives, in to facilitating trade that affordable financial products and emphasis on enhancing reducing rural poverty regions with high mitigates political services. markets for the poor, through RNFE integration potential. (15, economy constraints, through a risk-informed development. (13, 14, 17,18) while safeguarding public approach. (23, 24, 25) 15) policy objectives. (19, 20, 21, 22) Source: OPCS staff based on various documentation. 75 IFC retired the RNFE and Regional Integration recommendations from the MAR system after the FY20 progress report. 23 31. The economic impacts of the COVID-19 pandemic make the need for jobs, growth, and shared prosperity even more urgent, with 2020 seeing a rise in extreme poverty for the first time in over two decades. The WBG promotes growth that is accompanied by increased access to productive CORPORATE INDICATORS economic opportunities, particularly among those at the bottom of the distribution. To do In FY19-20, WBG supported job-focused interventions this, the WBG takes a multidimensional approach reached 28.5 million beneficiaries, including 11.6 million that aims to unlock economic opportunities by female beneficiaries. This was up from an FY18 baseline shifting resources to more productive sectors, of 13.5 million beneficiaries. upgrading skills and technology, supporting Source: WBG Corporate Scorecards. market creation and private sector development, reducing barriers to trade, supporting regional connectivity and integration, and promoting rural non-farm economic (RNFE) development. IEG’s recommendations contribute to the WBG’s overarching framework for jobs, growth, and shared prosperity, setting out pathways for strengthening the WBG’s approach in each of these areas by: better integrating market creation and private sector development into country strategies, with an emphasis on enhancing markets for the poor; developing and supporting an integrated, context-specific, gender-informed approach to RNFE development; supporting strategic, tailored regional integration initiatives in regions with high integration potential; and applying a more systematic, evidence-based approach to facilitating trade that mitigates political economy constraints, while safeguarding legitimate policy and regulatory objectives. 32. The past year has seen progress in strengthening the integration of pro-poor, evidence- informed market creation interventions across WBG country programs. IEG found that the WBG had contributed to making markets more inclusive, competitive, and sustainable, but that further efforts were needed to improve diagnostics, TELLING THE STORY enhance access for the poor, and monitor risk capacity. In response, the WBG scaled-up the The World Bank’s support to develop special economic Country Private Sector Diagnostics (CPSD) to zones in Bangladesh has been critical to the country’s help diagnose obstacles to private solutions and economic transformation and the drive to create more and identify actions to incentivize private sector-led better jobs. Between 2011 and 2021, the Private Sector growth and job creation. The WBG has been Development Support Project (PSDSP) facilitated more than $3.9 billion in direct private investment and the creation of conducting 58 Country Private Sector over 41,000 jobs. It supported a regulatory reform process, Diagnostics (CPSDs), with the majority in IDA helped build the Bangladesh Economic Zone Authority countries. CPSDs have become more integrated (BEZA) and the Bangladesh High-Tech Park Authority into the programming cycle and are increasingly (BHTPA), and developed 1,500 acres of land, a 14 km informing country strategies and operations as embankment, 26km of roads, eight bridges, three electric substations, and two water reservoirs. well as private sector policy dialogues. For example, the Morocco CPSD highlighted the Source: Results Brief, Special Economic Zones in importance of competition and a level playing Bangladesh: Mobilizing private investment and creating better jobs, May 5, 2021. field to unlocking private investment, leading to follow-on activities with the Moroccan Competition Council and further shaping IFC 3.0 strategic focus on education and TVET (Technical and 24 Vocational Education and Training) and was the basis of the private sector-focused pillar in the CPF. Similarly, the Rwanda CPSD’s reform recommendations in the agribusiness and housing sectors supported policy dialogues that formed the basis for WB and IFC advisory and lending projects. The Ethiopia CPSD showed that significant private investment growth is predicated on addressing performance and governance issues in the enabling sectors (telecom, energy, logistics), and its findings are reflected in World Bank policy finance. Further examples of WBG operations informed by CSPD are provided below.76 33. The Bank and IFC also launched sector-specific diagnostics and deep dives to identify constraints and opportunities for strengthening private sector engagement and is supporting client countries to address bottlenecks in sectors with high potential for private sector led job creation. For instance, a deep dive on Ethiopia’s tourism sector focuses on the need for regional diversification of tourism, education and training, and the integration of private tourism investments and wildlife conservation. Other ongoing CPSDs are focusing on the automotive sector in Pakistan, horticulture in Cote d’Ivoire, and tourism in Madagascar and health and pharmaceuticals in Egypt. Sector-specific working groups on market creation are strengthening linkages among the Bank, IFC, and MIGA and facilitating a more coordinated approach. For example, the WBG Agribusiness Sector Working Group77 helped incorporate the market creation agenda in agribusiness lending operations in 27 countries. 34. IFC developed a range of tools to better assess and manage its risk-taking capabilities in IDA countries and other challenging markets. To maintain financial sustainability while delivering higher impact, IFC continues applying the portfolio approach, financing the proper balance of lower-risk projects with a higher risk-adjusted return and more IDA/FCS exposure where risk-adjusted returns on capital for loans are significantly below IFC averages. Additionally, IFC’s blended finance remains an enabling factor for a large share of IFC’s own-account investments in IDA and FCS, with over a third of investments 76 The CPSD fed into the following CPFs under preparation i.e. Albania (first CPF pillar on the integration to the global value chains), Azerbaijan (central CPF theme of diversification away from oil), Ecuador (second CPF pillar on improving the conditions for private sector development), Serbia (first CPF pillar on sustaining macro-fiscal stability, improving institutions and enhancing conditions for accelerated private sector led growth and employment). South Africa (first CPF pillar on promoting increased competition and improved business environment for sustainable growth and investment in key markets). The CPSD informed the following CPFs completed in FY21 i.e. Central African Republic (second pillar on enhancing the business environment and job creation), Kazakhstan (first pillar on inclusive growth), Malawi (second pillar on promoting private sector-led jobs and livelihoods), Morocco (first pillar on promoting job creation by the private sector), Myanmar (second pillar on fostering responsible private sector-led growth and inclusive economic opportunities), Nigeria (third pillar on promoting jobs and economic transformation and diversification), Philippines (second pillar on competitiveness and economic opportunity for job creation), Rwanda (second pillar on improved conditions for private sector development), Senegal (second pillar on boosting competitiveness and job creation through private sector-led growth). Other market diagnostics fed into several CPFs completed prior to FY21 i.e. Argentina (informed by the Flagship on trade, investment, competition, regulations in enabling services), Croatia (informed by the ASA on competition bottlenecks in professional services), Mexico (informed by the ASA on competition issues at the national and subnational levels in key sectors – transport, agribusiness, tourism and retail), Moldova (informed by CEM on competition issues in agribusiness, transport and financial sectors), Romania (informed by CEM on productivity, competition and SOEs, Ukraine (informed by ASA on competition policy, SOEs, competition issues in key industries). The CPSD fed into the following PLRs i.e. Bangladesh (first PLR focus area on growth and competitiveness), Egypt (second PLR pillar on opportunities for private sector job creation), Mozambique (central PLR theme of promoting diversified growth and enhancing productivity), Uzbekistan (central PLR theme of moving from a government led to a private sector led development model).The CPSDs also fed into recent Bank operations i.e. Angola - Growth and Inclusion DPF; Burkina Faso – 2nd Fiscal Management, Sustainable Growth and Health Service Delivery DPF; Colombia - Resilient and Sustainable Infrastructure for Recovery DPF; Cote D'Ivoire – Competitive Value Chains for Economic Transformation IPF ; Ecuador – 1st and 2nd Inclusive and Sustainable Growth DPO; Ethiopia – Second Growth and Competitiveness Programmatic DPF; Ghana – Economic Transformation Project IPF; Haiti – Private Sector Jobs and Economic Transformation IPF; Jamaica (Jamaica COVID-19 Response and Recovery DPF FY21); Jordan – Youth, Technology, and Jobs IPF; Kazakhstan – Sustainable Livestock Development PforR; Madagascar – Economic Transformation for Inclusive Growth IPF; Nepal – Finance for Growth DPF; Peru (Peru: Strengthening Foundations for Post COVID-19 Recovery FY21); Senegal – 2nd & 3rd Multi- Sectoral Structural Reforms DPF, Jobs Economic Transformation PforR; Ukraine (contributed to the Economic Recovery DPL FY20 and the Second Economic Growth DPL FY21) and Uzbekistan – Sustaining Market Reforms in Uzbekistan DPO, Agriculture Modernization IPF. Also, in Haiti and Pakistan, the CPSDs led to a comprehensive WB-IFC workshop, where a joint program was discussed, and an action plan was developed on leveraging new market creation. 77 WBG Agribusiness Sector Presentation 25 (committed and pipeline) in IDA17 and FCS’ and over half in ‘LIC-IDA17 and IDA17-FCS’ supported by blended finance. IFC is also enhancing tools to mitigate non-financial risks, including piloting a Contextual Risk Framework developed by the ESG team, expanding client-focused early ESG advisory services, and enhancing conflict-sensitive approaches to investments. 35. The WBG has demonstrated progress in supporting an integrated, context-specific, gender- informed approach to reducing rural poverty through RNFE development. IEG found that the WBG had been a leader in the rural non-farm economy, both through its research and some of its intervention, but also noted the need for improved cross-GP collaboration, better integration of poverty and growth approaches, and the need for a more systemic approach to addressing knowledge gaps. In response, the WBG has continued to strengthen measures for a more coordinated approach to the rural non-farm space through its strategy documents, regional updates, and analytic work. For example, the WBG launched a joint Agribusiness Cooperation Strategy to more systematically identified opportunities for cooperation across thematic areas and spatial locations that impact the RNFE, with the aim of strengthening the jobs and growth agenda.78 79 36. The WBG continued to support diagnostics on food systems, rural livelihoods, and agribusiness to sharpen its approach on the RNFE. This work included recent diagnostics on agricultural value chains as it pertained to employment generation and growth. Examples of analytic work completed in FY20 and FY21 include: (i) promoting jobs in agricultural value chains in Bangladesh,80 Ecuador,81 and Uzbekistan;82 (ii) identifying actions to promote growth, trade, jobs, and poverty reduction across foodscapes in Latin America,83 including the rural-non farm economy, together with country-specific analyses on territorial development in Colombia,84 and rural development in Panama;85 (iii) agri-business and value chain development in Bangladesh, Georgia,86 Indonesia,87 and Sudan;88 (iv) advancing women’s enterprises and inclusion in agricultural value chains in South Asia,89 and evaluating the impacts of rural road maintenance on employment among women in Laos;90 and (v) a flagship report on the Digital Transformation of the 78 https://worldbankgroup.sharepoint.com/sites/Files5018/Shared%20Documents/Forms/AllItems.aspx?viewid=268f1fa1%2Dc0e6%2D4788%2 Da2af%2D2638743835b8&id=%2Fsites%2FFiles5018%2FShared%20Documents%2FFY21%20IEG%20MAR%20Update%2FAgri%20IFC%2DWB%2 0Cooperation%2Dfinal%2Epdf&parent=%2Fsites%2FFiles5018%2FShared%20Documents%2FFY21%20IEG%20MAR%20Update 79https://worldbankgroup.sharepoint.com/sites/Files5018/Shared%20Documents/Forms/AllItems.aspx?viewid=268f1fa1%2Dc0e6%2D4788%2 Da2af%2D2638743835b8&id=%2Fsites%2FFiles5018%2FShared%20Documents%2FFY21%20IEG%20MAR%20Update%2FAgri%20IFC%2DWB%2 0Cooperation%2Dfinal%2Epdf&parent=%2Fsites%2FFiles5018%2FShared%20Documents%2FFY21%20IEG%20MAR%20Update 80 http://operationsportal.worldbank.org/secure/P168177/home#deliverable_list 81http://operationsdashboard.worldbank.org/project/secure/sap/forms/aus?projId=P171730&stage=AUS&devliverableid=DLV0324809#basicin formation 82http://operationsdashboard.worldbank.org/project/secure/sap/forms/aus?projId=P171263&stage=AUS&devliverableid=DLV0308268#deliver ables 83 https://documents1.worldbank.org/curated/en/942381591906970569/pdf/Future-Foodscapes-Re-imagining-Agriculture-in-Latin-America- and-the-Caribbean.pdf 84 http://operationsportal.worldbank.org/secure/P172163/home#deliverable_list 85http://operationsdashboard.worldbank.org/project/secure/sap/forms/aus?projId=P172460&stage=AUS&devliverableid=DLV0340334#deliver ables 86 http://operationsportal.worldbank.org/secure/P172025/home#deliverable_list 87http://operationsdashboard.worldbank.org/project/secure/sap/forms/aus?projId=P173189&stage=AUS&devliverableid=DLV0353145#deliver ables 88 http://operationsdashboard.worldbank.org/project/secure/sap/forms/aus?projId=P168312&stage=AUS&devliverableid=DLV0266012#deliver ables 89 http://operationsportal.worldbank.org/secure/P161779/home#deliverable_list 90http://operationsdashboard.worldbank.org/project/secure/sap/forms/aus?projId=P168884&stage=AUS&devliverableid=DLV0359353#deliver ables 26 Agri-food System.91 This latter diagnostic highlights the huge opportunities of digital solutions and entry points for action to improve access to factor, product, and financial markets in order to stimulate the rural non-farm economy. 37. Bank diagnostics also provided insights on the appropriate sequencing of support for private enterprises in the rural space, based on the context and stage of private sector development. As the IEG evaluation indicates, a clearer distinction and continuum between livelihoods programs, often community-driven, and value chains development is needed across different contexts. This is particularly relevant in fragile and conflict-affected situations. A Bank report completed in FY21 on Building Stronger Food Systems in Fragile and Conflict-affected situations outlines how entry points for support varies by stage of private enterprise development. Nascent, often informal, private enterprises can benefit from linkages to livelihood programs to achieve initial productivity gains via cash transfers for entrepreneurship, access to finance, business advisory and training, and safety net programs. Infrastructure can improve links to markets, as can basic product processing and aggregation. More mature private enterprises can benefit from building capacity to connect to local and global value chains, promoting competition and trade, supporting agri-spatial solutions such as special economic zones or industrial parks, and improvements to the overall investment climate, including macroeconomic stability and the availability and reliability of power. Recognition of the stage of private sector development can better tailor support to specific contexts, as highlighted in the above-mentioned report on fragile and conflict-affected situations, and in CPSDs. 38. GPs and Communities of Practice are increasingly collaborating to shape more integrated approaches. For example, the Poverty and AGF GPs are jointly working on rural income diagnostics focused on cross-sector constraints to income growth. In FY20 work was completed in 3 countries i.e. Bangladesh,92 Burkina Faso,93 and Mozambique94 with ongoing work in Nigeria.95 As further evidence of increased collaboration, the number of projects with a greater than rural theme code with co-TTLs from more than one GP increased from a baseline of 20 percent in FY17 to 35 percent in FY20. Examples of cross-GP RNFE interventions include agribusiness and rural transformation (Benin and Nigeria96); rural connectivity (Madagascar);97 and competitiveness (Brazil,98 Senegal,99 Serbia100 and Uganda101). The sharing of knowledge across GPs and WBG institutions is facilitated by two Global Solutions Groups i.e. (i) Rural Livelihoods and Jobs; and (ii) Agribusiness, Value Chains, and MFD; and three Communities of 91 https://openknowledge.worldbank.org/handle/10986/35216 92https://wbdocs.worldbank.org/wbdocs/component/drl?objectId=090224b088197462&standalone=true&Reload=1624542865647&__dmfClie ntId=1624542865649&respositoryId=WBDocs&__dmfTzoff=240 93http://operationsdashboard.worldbank.org/project/secure/sap/forms/aus?projId=P168019&stage=AUS&devliverableid=DLV0258551#deliver ables 94 https://operationsportalws.worldbank.org/Pages/DocumentProfile.aspx?projectid=P168019&DocId=60&IsCovGen=true&removePublic=false &stage=AUS 95 The Nigeria diagnostics faced delays on account of the COVID-19 pandemic. 96https://documents1.worldbank.org/curated/en/598231582340468282/pdf/Nigeria-Ogun-State-Economic-Transformation-Project.pdf 97https://documents1.worldbank.org/curated/en/810821574132477851/pdf/Madagascar-Connectivity-for-Rural-Livelihood-Improvement- Project.pdf 98https://documents1.worldbank.org/curated/en/489161563760847949/pdf/Brazil-Second-Phase-of-Ceara-Rural-Sustainable-Development- and-Competitiveness-Project.pdf 99 https://documents1.worldbank.org/curated/en/803721589594576936/pdf/Senegal-Agriculture-and-Livestock-Competitiveness-Program-for- Results-Project.pdf 100https://documents1.worldbank.org/curated/en/961711573843471628/pdf/Serbia-Competitive-Agriculture-Project.pdf 101https://documents1.worldbank.org/curated/en/305621583463696957/pdf/Uganda-Competitiveness-and-Enterprise-Development-Project- Additional-Financing.pdf 27 Practice i.e. (a) Agriculture Finance; (b) Information and Communications Technologies in Agriculture; and (c) Gender in Agriculture and Rural Development.102 Further, the share of all AGF GP projects screened at concept stage to strengthen pathways to lift the rural poor out of poverty increased from 0 to 100 percent between FY17 and FY20. This screening includes the extent to which projects are tailored and adapted to specific contexts. An IDA19 policy commitment emphasized agricultural value chains, inclusive of the non- farm aspects. The initial IDA19 policy commitment was that at least 66 percent of agriculture and agribusiness projects in IDA countries (from a 50 percent baseline) should include support for participation in value chains, with an IDA19 Mid-term Review target of 58 percent. While COVID-19 had shifted much attention to immediate assistance to ensure food security, 55 percent of the FY21 delivered and pipeline (A+B)103 agriculture and agri-business projects continue to support agricultural value chains. 39. Finally, the Bank is increasingly addressing gender-related binding constraints to female labor force participation in the RNFE. For example, the share of Bank-wide projects with a greater than 50 percent rural theme code that was gender-tagged increased from 65 percent in FY17 to 81 percent in FY20. Such gender-tagged Project Appraisal Documents included:104 (a) analysis to identify the relevant gender gaps (as in access to services, markets or assets) that the project will address; (b) actions to address the gender gaps flagged in the preceding analysis, and (c) indicators to monitor the outcomes of such actions. The Bank will continue to monitor intermediate gender outcomes attributable to its interventions. Examples of projects spanning rural areas with a dominant focus on women include the Women’s Economic Empowerment Project in rural Afghanistan and the Nigeria for Women Project. Several impact evaluations focus explicitly on women’s empowerment. 40. The WBG has scaled up regional integration initiatives across all regions,105 with an increased pipeline of financing and knowledge initiatives in FY20 and FY21, particularly in regions with untapped potential. In response to IEG’s recommendations, this has been accompanied with efforts to strengthen the effectiveness and impact of its regional integration portfolio through improving internal systems and resources, scaling up regional integration initiatives, strengthening diagnostics, and enhancing knowledge sharing, partnerships, and convening. The Bank has taken steps to strengthen its internal systems, procedures, and resources to better support regional integration. Some notable achievements include more consistent integration of cross-border development issues in WBG strategies and board updates, increased allocation of funds for the IDA Regional Window along with more flexible procedures for accessing those funds, simplified procedures for processing regional projects, and the appointment of a Director of Regional Integration for Africa. The IDA Regional Window has progressively broadened its agenda beyond infrastructure connectivity to include support for global public goods, including an increased number of operations supporting the management of shared resources,106 health surveillance 102 More attention is also given to spatial solutions. There is multi-GP and IFC collaboration on the identification of critical spatial areas for interventions in the Sahel and articulating priority actions. Given its importance, this collaborative effort was chaired at the VP level. 103 A&B category indicates that the pipeline operations are in an advanced state of preparation. 104https://documents1.worldbank.org/curated/en/842221583550098164/pdf/Pakistan-Balochistan-Livelihoods-and-Entrepreneurship- Project.pdf 105 Regional integration programs included (i) the Pacific; (ii) the Vietnam, Laos and China corridor; (iii) the Bangladesh, Myanmar and China corridor; (iv) the Nepal, Bhutan and Bangladesh corridor; (v) Central Asia; (vi) Central Asia-South Asia connectivity; (vii) the Caucasus; (viii) the Western Balkans; (ix) Central America; and (x) the Caribbean. 106 https://documents.worldbank.org/en/publication/documents-reports/documentdetail/280421523498466209/benin-cote-divoire- mauritania-sao-tome-and-principe-senegal-and-west-africa-economic-and-monitory-union-coastal-areas-resilience-investment-project; https://documents.worldbank.org/en/publication/documents-reports/documentdetail/309511555812077778/tonga-pathway-to-sustainable- oceans-project; https://documents.worldbank.org/en/publication/documents-reports/documentdetail/904981584324108717/kiribati-pacific- islands-regional-oceanscape-program 28 in the wake of disease outbreaks,107 climate-related issues,108 and vulnerable populations caught in cross- border conflicts and violence.109 The Bank has also continued its support for transport and trade connectivity; for example, the Vietnam, Laos, Thailand, and Myanmar Transport Corridor. Diagnostics and technical assistance are assessing integration potential and strengthening client capacity to further regional integration. For example, the Bank completed a series of trade diagnostics to assess integration potential across regions, including a report on the benefits of “Deep Trade Agreements�, a Regional Economic Memorandum on the Horn of Africa, a study on the economic and distributional benefits of the Africa Continental Free Trade Area, and a report on regional integration in Latin America. The Bank also supported trade negotiation endeavors in several Asian countries under the Regional Comprehensive Economic Partnership (RCEP), focused on global value chains, helping fragile and conflict affected states, and supporting a post-COVID recovery.110 Finally, the WBG strengthened knowledge sharing and partnerships with regional stakeholders. For example, it worked with the African Union to support implementation of the African Continental Free Trade Area (AFCFTA) and helped the African Union identify pan-African and bilateral trade benefits in its negotiation with individual governments. 41. WBG support for trade facilitation is increasingly based on a programmatic approach that mitigates binding constraints, but further attention is needed on monitoring public policy impacts. IEG found that over the evaluation period, the WBG had demonstrated leadership in facilitating trade through its broad scope of work, results, and thought leadership. IEG noted that the WBG had helped reduce trade and transaction costs through its support for border operations, border agencies and infrastructure, and rules and procedures. It had contributed to a global public good through its support for global partnerships, analytic work, and trade facilitation indicators. Further, the WBG had focused on the right countries in the LMIC category111 and in AFR and SAR. Most projects exceeded their corporate scorecard targets. And yet, the WBG needed to do more to identify political economy constraints and monitor the public policy objectives of trade regulation. IEG suggested that the WBG could rationalize its two trade- facilitation indicator sets (i.e. the Doing Business Indicators and the Logistics Performance Indicators) and noted that the WBG should consider programmatic interventions rather than stand-alone narrow interventions. As much as the COVID-19 pandemic highlighted the need to keep critical goods flowing through borders, it also imposed constraints in the global mobility of goods. In response to IEG’s recommendation, the Bank initiated programmatic interventions on trade reform at the country-level to promote a more integrated approach. Recent WBG engagements in the Philippines, the Pacific, Southern 107 https://documents.worldbank.org/en/publication/documents-reports/documentdetail/487971570240865860/africa-fourth-phase-of- regional-disease-surveillance-systems-enhancement-redisse-project https://documents.worldbank.org/en/publication/documents-reports/documentdetail/550521576292519493/africa-union-ethiopia-and- zambia-africa-centres-for-disease-control-and-prevention-regional-investment-financing-project https://documents.worldbank.org/en/publication/documents-reports/documentdetail/164171567389660796/organization-of-eastern- caribbean-states-oecs-regional-health-project; https://imagebank2.worldbank.org/Search/32093933 108https://documents.worldbank.org/en/publication/documents-reports/documentdetail/546561589594553555/south-asia-climate- adaptation-and-resilience-for-south-asia-care-project; https://documents.worldbank.org/en/publication/documents-reports/documentdetail/515131512702151121/burkina-faso-chad-mali- mauritania-niger-senegal-and-permanent-interstate-committee-for-drought-control-in-the-sahel-sahel-irrigation-initiative-support-project; https://documents.worldbank.org/en/publication/documents-reports/documentdetail/280421523498466209/benin-cote-divoire-mauritania- sao-tome-and-principe-senegal-and-west-africa-economic-and-monitory-union-coastal-areas-resilience-investment-project; 109https://documents.worldbank.org/en/publication/documents-reports/documentdetail/406771622153106586/burkina-faso-niger-mali-and- the-states-of-liptako-gourma-integrated-development-authority-community-based-recovery-and-stabilization-project; https://documents.worldbank.org/en/publication/documents-reports/documentdetail/997491590804160101/cameroon-chad-niger-lake-chad- basin-commission-lake-chad-region-recovery-and-development-project 110 A free trade agreement between several Asia Pacific countries. 111 Lower Middle-Income Countries 29 Africa, and Egypt are examples of programs that include trade facilitation as part of a broader trade / connectivity / investment climate program. In the Latin America and Caribbean region, the Bank has stepped up its dialogue on trade facilitation as a key tool for job creation and economic recovery. The WBG adopted a consistent package of baseline analytics to diagnose constraints, needs, and opportunities. This approach has been applied to inform country dialogue in Brazil, India, the Philippines, South Africa, and Egypt. While Management did not commit to harmonizing the Bank’s two indicator sets (i.e. Doing Business Indicators and the Logistics Performance Indicators (LPI)), the Bank has made progress in revising the methodology of the LPI using big data and machine learning techniques. The Bank intends to release the first report using the LPI 2.0 methodology late in FY22. Efforts to increase the identification and monitoring of the public policy objectives and impact of trade facilitation interventions have not progressed in the last year, beyond WB and IFC advisory work on customs and border management facilities dealing with the impact of COVID-19.112 This will be an area of increased focus going forward. 112https://worldbankgroup-my.sharepoint.com/:b:/r/personal/mvelo_worldbank_org/Documents/NARESH/TF%20examples%20- %20Final_diss.pdf?csf=1&web=1&e=gH9qe2 https://worldbankgroup-my.sharepoint.com/:b:/r/personal/mvelo_worldbank_org/Documents/NARESH/Managing-Risk-and-Facilitating-Trade- in-the-COVID-19-Pandemic%20(1).pdf?csf=1&web=1&e=7PkXag 30 MFD: Multiple sources of finance to support sustainable growth Table 4. Outcome Framework for IEG Recommendations and Management Actions on Mobilizing Finance for Development Multiple sources of finance to support sustainable growth MFD is the WBG’s approach to systematically leverage all sources of finance, expertise, and solutions to support developing countries’ sustainable growth. In embracing the SDGs, countries’ resource needs surpass their own budgets and available donor funding. Meeting the SDGs demands that we find solutions to crowd in all possible sources of finance, innovation, and expertise to meet this challenge. The WBG institutions work in concert to help countries transform sectors to reduce poverty and inequality and support growth. They do this by improving the enabling environment, developing regulatory conditions, building capacity, putting in place standards, financing a first mover or innovator, and reducing risks. The aim is to unleash private solutions and help clients tap a variety of financing opportunities, leveraging the private sector in ways that optimize the use of scarce public resources. IEG-related stream of WBG work Broader WBG work program The WBG is helping countries achieve intermediate outcomes, incl.: As it works in a broader context: Strengthened integration of capital Sustainability considered Increased mobilization of private Increased integration of value chains that market development support in the design of capital finance through the WBG’s CF can generate inclusive employment and across the WBG, underpinned by market programs based instruments. promote growth. FSAP findings and a consistent on a comprehensive strategic framework. understanding of available funding sources. Intermediate outcomes are targeted in the following WBG actions that Management initiated in Undertaking other actions that response to IEG evaluations: contribute to these results: …developing a joint WB/IFC .…pooling funds to …undertaking analytical work and …setting up regulatory and institutional strategy for capital markets. strengthen alignment with applying findings to strengthen frameworks. …launching J-CAP to strengthen WBG priorities. the impact of CF. …improving access to markets, WBG collaboration on capital …setting up a MDTF …developing financial products technology, and training. markets development. through J-CAP to secure and managing risk to incentivize …catalyzing private credit. …supporting capital market additional donor funds. private investment in carbon …demonstrating innovations and best solutions in 14 countries. markets. practices. …increasing number and volume of …supporting the bio-carbon …offering risk sharing guarantees. demonstration transactions. agenda. …providing advisory support to strengthen legal and regulatory frameworks. …strengthening diagnostics, tools, and guidance to optimize sequencing of capital market development. And in response to specific IEG recommendations: In line with corporate thinking: … integrate capital market …review funding sources …increase the use of CF …support the growth and development of development across the WBG, with available for capital instruments to leverage private key value chains. interventions underpinned by the market development. (28) investment for transformational FSAP instrument. (26, 27) activities… (29) Source: OPCS staff based on various documentation 31 42. MFD is the WBG’s approach to systematically leverage all sources of finance, expertise, and solutions to support developing countries’ sustainable growth. Meeting the WBG’s twin goals and the SDGs demands solutions to crowd in finance, innovation, and expertise. The WBG institutions work in concert to help countries transform sectors to reduce poverty and inequality and TELLING THE STORY support growth. They do this by improving the enabling environment, developing regulatory conditions, building capacity, putting in place The Bank and IFC worked together under J-CAP to help standards, financing a first mover or innovator, set up the Kenya Mortgage Refinance Company and reducing risks. The aim is to unleash private (“KMRC�) to mobilize long-term local currency financing solutions and help clients tap a variety of financing for affordable housing. The Bank approved a US$250 opportunities, leveraging the private sector in million loan in 2019 to support the establishment of ways that optimize the use of scarce public KMRC. This provided 25% of KMRC’s capitalization. The resources. Capital markets development and CF team supported KMRC with the creation of a legal and regulatory framework, the development of a business play a significant role in the WBG’s approach to plan and a strategy to create investor confidence. IFC leveraging private sector financing and solutions. supported KMRC’s capitalization with an equity Recommendations from IEG’s capital markets and investment of US$2 million, which helped to unlock an carbon finance evaluations are collectively additional 20 banks (incl. cooperatives and MFIs) to advancing the WBG’s approach to maximizing participate in KMRC. J-CAP is now providing transaction finance for development (MFD)/Cascade. These support for a debut local currency bond issuance. recommendations focus on better integration of Source: J-CAP Secretariat inputs for MAR update. capital market development across the WBG, use of the FSAP instrument to inform project design, a review of available funding sources for capital market development with an eye on sustainability, and increased use of CF instruments to leverage private investment. 43. Actions taken in response to IEG’s recommendations have moved the WBG toward a more integrated approach to support capital market development, underpinned by FSAP findings and an overarching strategic framework. To promote a more harmonized and coherent approach, in 2019 the Bank and IFC developed a joint strategy for capital markets development. The WBG also launched the Joint Capital Markets (J-CAP) initiative, as the key mechanism for the Bank and IFC to collaborate on capital markets. Through J-CAP, the Bank helps countries mobilize private funding, and it provides policy and transactions support for capital markets solutions. J-CAP currently supports capital market development in 14 countries, with new countries being added, based on a Framework for Country Selection. This framework was developed in 2020 to help J-CAP take a more strategic and empirical approach to its work. WBG Capital Market Advisory projects are building requisite legal and regulatory frameworks and unlocking private sector funding. For example, the WBG’s advisory engagement in Costa Rica supported regulations for the use of project finance to fund public and private infrastructure, which unlocked $250 million in private funds. Similarly, advisory work combined with other types of Bank/IFC transactions are unleashing private capital in Indonesia, Morocco, Colombia, Peru, and Kenya. The number and volume of related IFC demonstration transactions across J-CAP’s priority countries has grown to over $645 million of IFC commitments and issuances, alongside over $153 million of IFC Local Currency Bond issuances, as of the end May 2021. 32 44. Finally, the Bank has taken steps to strengthen the links between the FSAP and the Bank work program at the country level. This includes the preparation of a Guidance Note to help FSAP teams determine which countries are ready for Capital Markets development work, and to inform the approach and content of interventions. The Philippines is one example where the FSAP has paved the way, and it is now being considered for J-CAP support. A Framework for Country Selection was developed in 2020 to help J-CAP take a more strategic approach to organizing its work. This Framework is supported by an “Index of Capital Markets Potential� (“ICMP�) developed by the Bank. The Framework is used to assess capital market conditions and country potential vis-à-vis capital market development. It is now being used to decide the workflow with reference to the FSAP or J-CAP and expand the capital market program to new countries. 45. While funding remains a challenge, progress has been made in pooling available funding sources, expanding country coverage, and improving alignment with WBG priorities. Capital markets work requires a sustained commitment from national authorities and the WBG. While donor funding is helpful, individual donors’ preferences for specific countries and topics does not always align with WBG prioritization. To create wider country coverage, the WBG has brought various donors together to pool resources and fund different countries under a joint Capital Markets program. The WBG has made substantial progress in ensuring that donor funds are allocated in ways that better align with WBG priorities. The J-CAP initiative has set up a Multi-donor Trust Fund to allow various donors to support different countries, provided the total commitment aligns with the overall needs on the ground. Since its launch J-CAP has secured over US$20 million of new and dedicated funding for its local capital markets development efforts from Australia, Germany, Japan, the Netherlands and Norway, including US$1.5 million of donor funding from Luxembourg and more recently Norway for related knowledge management work. Additional funding is under consideration with selected donors. 46. The Bank’s advisory engagements in Morocco, Costa Rica, and Indonesia have helped those countries develop the requisite policy frameworks for private sector investment. In Morocco, the Bank helped develop the legal and regulatory framework for Real Estate Investment Trusts (REITs). This was to unlock private funding for the Real Estate sector. The REITs currently stand at US$700 million. In Costa Rica, the Bank helped develop regulations for the use of project finance to finance public and private infrastructure which unlocked US$250 million in private funds. In Indonesia, a J-CAP advisory on Green Bonds unlocked the first issuance of green bonds for US$35 million under a program of US$200 million. 47. Advisory work combined with other types of Bank/IFC transactions are unleashing private capital in Colombia, Peru, and Kenya. In Colombia, the Bank advisory on Infrastructure financing, included (i) National Development Bank on credit enhancement; (ii) pension funds regulations; and (iii) regulations for infrastructure funds which mobilized US$7.2 billion in toll roads under PPP contracts of which US$6.2 billion (86 percent) was private investment where US$1.8 billion came from institutional investors. In Peru, J-CAP’s country diagnostic mission led to an IFC investment of US$21 million in Local Currency Bonds, which has helped mobilize further funding from institutional investors and provided SMEs with urgently 33 needed working capital during the COVID pandemic.113 In Kenya, the J-CAP Advisory on Affordable Housing helped develop the legal and regulatory framework and helped operationalize the Kenya Mortgage Refinance Company (KMRC)114 to extend long term finance to mortgage lenders. This was supported by an IPF loan of EUR 219 million. This Advisory also led to a US$2 million IFC equity investment in the KMRC, which was able to mobilize and receive capital subscriptions from 21 shareholders totaling US$19 million. KMRC plans to issue up to US$50 million in bonds in 2021 where IFC will explore opportunities to possibly invest. 48. The WBG has made progress on increasing the mobilization of private finance through CF instruments through analytical work, convening, and support for financial productions and risk mitigation. In response to the IEG’s findings, the Bank undertook analytic work to strengthen the leveraging impact of climate and carbon finance. In 2021 the WBG released a report on transformative climate finance, 115 which explored options to leverage climate finance and carbon markets to enable private portfolio investment in development. The findings of this report are being applied at the sector and country levels. As part of efforts to operationalize Article 6 of the Paris Agreement on climate change, the Bank helped develop financial products and manage risk to incentivize private investment in carbon markets. This included convening an Advisory Group, comprised of private sector entities, governments and project implementing entities, to propose innovative financial instruments, including options intended to mitigate risk. The Bank worked with MIGA to develop an adjustment guarantee,116 which would ensure that a seller country does not double count internationally transferred mitigation outcomes (ITMOs) to demonstrate the achievement of its NDCs. Another notable area of progress is the Bank’s support for the bio-carbon agenda. The Bank, the Carbon Disclosure Project117 and IETA co-organized a workshop in February 2021 to explore the critical role of the financial and private sectors in addressing the funding gap on climate action, and the importance of public-private partnerships to tackle deforestation and climate change. 113 In FY20, J-CAP invested in one of the first SME debt funds in Peru, managed by the COMPASS Group. This fund provides underserved SMEs with access to working capital during the COVID-19 pandemic. The demonstration transaction was part of a broader J-CAP effort to develop innovative solutions that provided SMEs with alternative access to financing via local capital markets. The fund has so far provided more than 1,900 SMEs with access to working capital at an affordable price. Going forward the team plans to expand the product range by introducing other SME financing solutions, such as a multi-originator platform to securitize loans and crowdfunding. 114 The Bank and IFC worked together under J-CAP to help set up the Kenya Mortgage Refinance Company (“KMRC�) to mobilize long-term local currency financing for affordable housing. The Bank approved a US$250m loan in 2019 to support the establishment of KMRC. This provided 25% of KMRC’s capitalization. The team supported KMRC with the creation of a legal and regulatory framework, the development of a business plan and a strategy to create investor confidence. IFC supported KMRC’s capitalization with an equity investment of US$2 million, which helped to unlock an additional 20 banks (incl. cooperatives and MFIs) to participate in KMRC. J-CAP is now providing transaction support for a debut local currency bond issuance. 115worldbankgroup.sharepoint.com/sites/gsg/RDRM/SitePages/Detail.aspx/Documents/mode=view?_Id=575&SiteURL=/sites/gsg/RDRM/ 116 https://www.worldbank.org/en/programs/climate-warehouse 117 This initiative helps cities and companies disclose their environment impact. www.cdp.net 34 FCV: Lenses to tackle fragility, conflict, and violence Table 5. Outcome Framework for IEG Recommendations and Management Actions on Fragility, Conflict and Violence Lenses to tackle fragility, conflict, and violence Fragility, conflict, and violence (FCV) is a critical development challenge that threatens efforts to end extreme poverty, af fecting both low- and middle- income countries. Responding to an increasingly complex fragility landscape, the WBG is taking a broad approach to FCV that aims to address sources of instability and build resilience. The WBG’s support builds on its analysis and strategy in each county affected by FCV and aims to: address the root causes of fragility before they escalate into conflict; remain engaged in crisis situations to preserve human capital and key institutions; strengthen the social contract between citizens and the state; and ensure inclusion of the most vulnerable and marginalized. IEG-related stream of WBG work Broader WBG work program The WBG is helping countries achieve intermediate outcomes, incl.: As it works in a broader context: Improved economic self-reliance and WBG support contributes to a strong response and a resilience of displaced and host Robust diagnostics of localized crime resilient long-term recovery in FCV environments. communities through IFC’s blended and violence underpins the design of finance, advisory and upstream support to Bank support for cities in addressing the catalyze private sector solutions and crime and violence agenda. investments. Intermediate outcomes are targeted in the following WBG actions that Management Undertaking other actions that contribute to these results: initiated in response to IEG evaluations: …securing donor funding (for advisory, …conducting participatory community …supporting community engagement and rebuilding citizen upstream and Blended Finance) to mapping process to identify hotspots trust, along with emergency health response. implement the Prospects Partnership for and integrate public safety …prioritizing support to protect human capital especially of Refugees and Host Communities in East considerations in infrastructure the most vulnerable groups. Africa and MENA for FY21-23. development. …providing support to forcibly displaced populations, as launching projects in MENA to catalyze …scale up and replicate successful pilot. well as the communities that host them. growth, investment, and jobs for …supporting the local private sector including SMEs. vulnerable communities, including …providing temporary income opportunities and refugees. strengthening safety nets for the poorest and most …launching initiatives in the East Africa vulnerable households. region to enhance the enabling environment for the socio-economic inclusion of forcibly displaced persons and to strengthen the resilience of host communities. …rolling out upstream initiatives (project ideation workshops) to develop ideas for bankable projects on access to finance by refugees and host communities in Colombia, Uganda, and Jordan. …providing thought leadership through publications on private sector initiatives and market-based approaches to address forced displacement. …expanding activities and membership of IFC’s Community of Practice on Forced Displacement to increase internal capacity building for private sector solutions in forced displacement contexts. And in response to specific IEG recommendations: In line with corporate thinking: …identify and catalyze private sector …develop localized typology and …support efforts to tackle the COVID-19 pandemic in solutions to promote the self-reliance and identify mechanisms to address crime fragile and conflict-affected settings through a conflict resilience of the displaced and host and violence to inform programs in sensitive approach. communities. (30) areas where crime and violence has been identified as a resilience risk. (31) Source: OPCS staff based on various documentation. 35 49. The World Bank Group's FCV strategy aims to enhance the effectiveness of its support to countries in addressing the drivers and impacts of instability and strengthening resilience, especially for the most vulnerable and marginalized populations. The strategy recognizes the critical need for support in situations of forced displacement, the importance of pursuing private sector solutions, and the need for an integrated approach across WBG institutions to achieve impact at the market and sector levels. IEG’s recommendation lies at the center of these issues, calling on IFC to identify and catalyze private sector solutions to promote the self-reliance of the Forcibly Displaced Persons (FDPs) and the resilience of their host communities. 50. IFC continues to make stride in strengthening economic self-reliance and resilience of displaced and host communities through catalyzing private sector solutions and investments via its blended finance, advisory and upstream support. In FY21, IFC’s efforts have been targeted, focusing on regions with the greatest concentration of forcibly displaced persons, and both global and regional activities to help create the longer-term impact for FDPs and their host communities. The approval of US$37.5 million in additional donor funding will support the Prospects Partnership for Refugees and Host Communities in East Africa and MENA for FY21-23. With this funding, IFC aims at catalyzing private sector solutions through advisory and investment support engagements (through blended concessional finance) to create employment, support entrepreneurship, and facilitate increased access to finance opportunities for the FDPs and host communities in both regions. 51. In the MENA region, IFC completed sector-specific assessments of investment and employment opportunities in Jordan, Egypt, Iraq, and Lebanon and initiated projects in these countries focused on catalyzing growth, investment, and jobs for vulnerable communities, including refugees. StartMashreq Program is designed to leverage entrepreneurship as a tool to create employment opportunities and therefore respond to the Mashreq subregion’s persistently high unemployment rate, particularly among vulnerable communities that include women, youth and forcibly displaced persons. Program is working with Flat6labs, IFC’s investment client, to provide business and financial support to high impact startups with potential to create jobs and facilitate private investments in the medium and/or long-term. Another major initiative in MENA is “Ureed�, which aims at becoming a transformative digital marketplace business with a potential to provide income generating opportunities particularly for women. Furthermore, the team is also exploring opportunities to set up an impact fund with a leading venture capitalist in Lebanon to finance social purpose companies and SMEs. 52. In the East Africa region, IFC unveiled several initiatives to enhance the enabling environment for the socio-economic inclusion of forcibly displaced persons and to strengthen the resilience of host communities, together with other partners. These initiatives covered Ethiopia, Somalia, and Kenya. One example that is designed and rolled out by IFC’s FCS Africa team is the Kakuma Kalobeyei Challenge Fund (KKCF)118. The KKCF is the largest single Advisory Services project of IFC across the world with a total budget of US$27 million provided by the Netherlands, the EU, UK’s FCDO, Switzerland’s SDC and Germany’s BMZ/KfW. As of June 2021, the “private sector� and the “social enterprise windows� of KKCF have identified and selected 16 firms as grant beneficiaries. In parallel, IFC’s industry teams (FIG, MAS) 118 https://kkcfke.org/. The KKCF comprises of (a) hands-on support to existing and potential IFC corporate clients (mostly MAS and FIG); (b) a business competition, allocating grants to support private sector firms willing to open operations in Kakuma refugee area of Kenya or scale up already existing operations; and (c) improving the business enabling environment for host and refugee entrepreneurs. 36 are currently in discussions with IFC’s existing and potential clients to expand their operations to the Kakuma area. Moreover, in Ethiopia, together with UNHCR and IKEA Foundation, IFC is developing a shared farming project, which aims at paving the foundations for a potential MAS agribusiness investment within 3-5 years. 53. Increased number of knowledge exchange and thought leadership efforts have been taking place to help IFC better understand how to support private sector in forced displacement contexts. IFC’s thought leadership includes a paper on private sector initiatives in forced displacement contexts for UNHCR’s upcoming publication “State of the World’s Forcibly Displaced 2021� as well as an EM Compass Note focused on the constraints and enabling factors that can help maximize the impact of the private sector in this context. Finally, IFC’s KKCF in Kenya launched a global competition, inviting proposals from businesses and social enterprises to implement projects and invest in a refugee hosting area in Kakuma region. 54. IFC’s upstream teams explore bankable investment projects that would also benefit FDPs and their host communities. A FIG upstream initiative (a series of project ideation workshops) was rolled out in Q1/Q2 FY21 to develop bankable project ideas on access to finance by refugees and host communities in Colombia, Jordan and Uganda. Such effort facilitated FIG upstream team’s recent engagement with UNHCR and the World Bank’s Digital Development team on a potential joint project to build a credit history infrastructure for refugees and vulnerable host communities in Jordan as part of the Opportunity Fund of the Prospects Partnership119 . The Concept Note of the project proposal is under review of the donor. 55. IFC has been increasing its efforts in the forced displacement area and has delivered solid outputs in terms of producing analytics, securing finance, initiating new projects, and sharing knowledge in FY21. As many of these activities have just recently gotten underway and taking into account the outbreak of the COVID-19 pandemic, more time is needed for outcomes to emerge. With evidence from these efforts, IFC’s approach on forced displacement can be further mainstreamed. However, given the increasing efforts, including a robust range of activities and systemic partnerships such as the Prospects Partnership, it is reasonable to expect that over time, IFC’s support will contribute to economic self-reliance and improved resilience among displaced and their hosts. Management will continue reporting on this recommendation. 56. The Bank’s support to address crime and violence will be based on a localized typology. In Kenya, a pilot on crime and violence prevention was conducted under the Kenya Informal Settlements Improvement Project (KISIP).120 The pilot engaged community members in a participatory mapping exercise to address crime prevention using an environmental design methodology. The mapping identified hotspots so that investments made in infrastructure could be adapted to increase public safety, for example through lighting, gates, rehabilitation of public spaces, and others. The pilot resulted in strong demand from the client for scaling up the intervention, and KISIP2 has integrated it into the infrastructure 119 The Prospects Partnership is a multi-partner initiative funded by the Netherlands with more than EUR 500 million funding and implemented by the World Bank, IFC, UNICEF, UNHCR and the ILO. It aims at catalyzing private sector solutions through advisory and investment support engagements (through blended concessional finance) to create employment, support entrepreneurship, and facilitate increased access to finance opportunities for the FDPs and host communities in eight countries in both MENA and East Africa regions. 120 http://operationsportal.worldbank.org/secure/P113542/home 37 intervention under the project. The participatory community mapping process for identifying and addressing crime and violence shows strong promise in Kenya, but further efforts are needed to scale up and replicate the approach. Outcome Perspective 57. Management has found IEG recommendations to have varying degrees of influence on the WBG’s ability to achieve development outcomes, depending on where they are placed in the results chain, as shown in Error! Reference source not found.. Recommendations that aim at clarifying strategic approaches and sharpening client and country focus have the most direct influence because they are aimed at strengthening the country-based model, the most fundamental comparative advantage of the WBG. Given the intention of the MAR reform and the growing focus on outcome orientation across the WBG, it is expected that the share of recommendations in this category will increase over subsequent cycles. Moving further down the results chain, recommendations to step up advocacy and engagement usually suggest ways to strengthen how the WBG delivers intermediate outcomes by modifying the WBG’s overall approach to implementing specific strategic priorities. Recommendations focused on fostering WBG collaboration and improving M&E generally have an impact on early or intermediate outcomes by adjusting specific processes that affect the implementation of strategic priorities. Recommendations to expand data, diagnostics, and knowledge focus on producing outputs that underpin the implementation of strategic priorities. Finally, recommendations to clarify managerial processes aim to strengthen inputs by modifying the way the WBG organizes itself to deliver strategic priorities. While ultimately all IEG’s recommendations aim to improve WBG outcomes, those targeting changes further down the results chain have a less direct impact and require more complementary activities to influence outcomes. 58. Management believes that analyzing recommendations from an outcome perspective is illuminating, even though a significant share of the analyzed recommendations is placed at lower levels of the results chain, because the recommendations are intended ultimately to improve high-level outcomes. IEG’s recommendations are built on implicit logic models that connect shifts in how the WBG works to improved development effectiveness. They focus on actions within the WBG’s control, based on IEG’s analysis that taking these actions will strengthen the WBG’s capacity to contribute to development outcomes. For example, stronger collaboration, expanded diagnostics, and better M&E systems should not be viewed as ends in themselves, but rather as means for achieving faster, better, or more impactful progress in addressing development challenges. That said, it is important to note that in many cases the pathway between the WBG’s implementation of recommendations and the emergence of country-level development results may be long and winding. For example, there are numerous steps in the causal chain from the development of robust diagnostics to improved development outcomes, including designing new tools and approaches, developing staff and client capacity to apply them, using the findings to inform program design, and implementing those programs. Assessing WBG progress in implementing IEG recommendations requires recognizing that these many steps take time and involve factors outside of the WBG’s control, while sustaining a focus on the ultimate ambition. As both IEG’s recommendations and Management actions increasingly shift in this direction, Management expects the MAR process to continually increase its results orientation in future cycles. 38 Figure 2. Recommendations by function type across the results chain Source: OPCS staff analysis using IEG’s classifications of outcomes in RAP 2020. 59. The self-assessment exercise presented in this report reveals that, in general, WBG uptake tends to be faster and more comprehensive when recommendations are more outcome-oriented, pointing in a general direction but giving Management the flexibility to chart a specific path forward. These recommendations require conceptual shifts or strategic adjustments rather than the straightforward application of valid lessons learned from past programs in the design and implementation of new programs. They amplify internal debate, generate stakeholder consultations, and induce renewed ways of thinking about significant topics. They are part of evaluations that facilitated processes of organizational learning. For example, the outcome orientation evaluation accelerated the WBG’s thinking on adjusting country programs to focus more on contributions to high-level outcomes over an extended time horizon. This jump-started extensive WBG-wide consultations and ideation, and new incentives for staff that emphasize taking a long view and using evidence and knowledge to adapt programs in mid- course. 60. From an outcome perspective, IEG’s recommendations ultimately seek to strengthen the WBG’s overall corporate effectiveness, measured as its ability to aim for, learn for, and measure outcomes that matter. While this intention is clearly embedded across all themes, there are a series of recommendations that are more clearly linked to the WBG’s ability to do that over time. These recommendations— contained in IEG evaluations grouped under the WBG corporate effectiveness rubric—are mostly non- sector specific, and within thematic evaluations when they focus on results monitoring and measurement. They are generally situated at lower levels of the results chain and require a significant number of complementary actions to be linked to outcomes, but they situate on their pathway. WBG Management actions in response to these recommendations are discussed in the following paragraphs. The activities and outcomes described in this section are a subset of the WBG’s extensive and ongoing efforts to improve its capacity to deliver on its mandate. IEG’s evaluations play an important role in informing, guiding, and reinforcing these efforts. It is important to stress that progress along this pathway from 39 improved systems and process to improved development outcomes takes time and requires an ongoing process of monitoring, learning, and adapting. Sharpening the way the WBG aims for outcomes 61. A key part of the WBG’s efforts to improve outcome orientation across the institution involves defining and implementing a refined country engagement approach as it articulates the way the WBG helps countries to achieve their longer-term development goals. Using lessons from four outcome pilots, the IEG evaluation on Outcome Orientation and the WBG Strategic Framework for Knowledge, the WBG has adjusted its country engagement guidance to articulate more explicitly and purposefully its contribution to selected high-level outcomes via public and private solutions. The purpose of these adjustments is to ensure that the country engagement approach accurately captures the WBG’s contribution to high-level outcomes and usefully informs decision-making on country engagements, in line with IEG’s recommendations. Management is rolling out the new guidance, with adjusted templates, training, how-to-notes, and hands-on support in FY22. 62. The WBG’s adjusted country engagement guidance offers teams a more flexible approach to articulate and monitor their contribution to selected high-level outcomes, including in the results framework. The changes provide a more structured approach for setting high-level outcomes anchored in the country’s development priorities, and articulating the WBG’s collective contributions to those outcomes, including through indirect pathways and through coordinated Bank-IFC-MIGA support via the MFD/Cascade approach. This new outcome-oriented lens on country engagement cuts across the full range of country engagement products – from SCDs to CPFs to PLRs and CLRs. Throughout, teams and clients will maintain a clear focus on high-level outcomes that matter, using that focus when developing and reconsidering strategic approaches, correcting course during implementation, and reflecting on contributions. This involves ensuring that the CPF narrative includes a focus on high-level outcomes over time, requiring a time horizon that extends beyond the CPF cycle; regular reflections on the country’s progress toward achieving high-level outcomes and course-corrections as appropriate; revisions to the CLR, such that it puts in perspective the results achieved on the CPF objectives and the progress observed on the selected high-level outcomes; and to the extent possible, a more structured identification of key knowledge gaps and an approach to filling those gaps to inform government policy and program. These adjustments, while relevant for all clients, are of particular significance in FCV countries. 63. Complementing these changes, the WBG has prepared an outcome roadmap, identifying 19 activities over FY21-23 to strengthen the Bank’s ability to articulate support to high-level outcomes. This roadmap brings together several workstreams where outcome orientation is central, and learns from recurrent IEG recommendations, facilitating synergies and corporate tracking. The roadmap makes operational the four pathways for outcome orientation presented to CODE in FY20. These activities are not meant to be exhaustive but incremental. They build-up on progress already made across these areas. The roadmap includes activities that help the WBG articulate an improved focus on high level outcomes on themes that represent corporate commitments, such as Gender, Climate, and Jobs and Economic Transformation (JET). These activities identify the high-level outcomes that WBG support should aim towards, presenting tangible quantitative and qualitative measures to track progress at the global, country, and operational levels. Taken together they help reinforce the model through which the WBG 40 aims for outcomes by identifying opportunities to scale-up support, combine lending and non- lending, manage prominent risks, and close knowledge gaps. Importantly, these activities TELLING THE STORY provide the basis to ensure that WBG engagements maintain a continuous focus on the The government of Punjab, in collaboration with the 2030 Agenda and the twin goals. Bank, was able to achieve long-term impact in Punjab’s education system. The Bank used its entire arsenal of 64. Another important aspect of the way the instruments, including investment projects, analytical work, and convening power. A linear path was not WBG aims for high-level outcomes is by using its followed to reach the education outcome, it was rather strong convening power at a global scale, bringing an indirect pathway, in which the Bank brought a system- people and institutions together and facilitating wide approach for education reform built on a shared dialogue to unlock solutions. Given the resources vision, strengthened institutions to implement it, and opportunity costs that convening entails, the produced data to correct course and otherwise guide implementation based on evidence, and provided WBG began to define and apply rigorous criteria stability and mitigated risks with long-term funding and for engaging in new convening activities, in support. response to the IEG evaluation. Efforts to Source: Outcome Pilot on Pakistan Education, OPCS. strengthen selectivity are bringing greater focus and coherence to WBG convening and ensuring a stronger alignment with WBG and country priorities. 65. WB Management has developed a more outcome-oriented approach to TFs and FIFs, starting with heightened selectivity, recognizing aid fragmentation as a potential risk to high-level outcomes.121 The Board approved the first update to the Bank’s Trust Fund Policy in FY21. The Policy formally includes aid architecture fragmentation as a selectivity consideration for new Bank TFs and FIFs and it specifies the criteria that apply to FIFs. For FIFs, the Bank is now fully implementing the 2019 FIF Management Framework, with a stringent selectivity threshold for new FIFs. The selectivity criteria for a new FIF included that there were no reasonable alternatives to meet the purported objectives. It stipulates early discussions around possible new FIFs, and formal internal cross-matrix processes to ensure that new initiatives get senior-level attention early in their development process. This will allow alternatives to be discussed before it is too late. In the last year, the TF architecture was also reconfigured around fewer, larger Umbrella Programs, with management-confirmed roadmaps, including on TFs that will be allowed to expire. As a result, despite more than two dozen inquiries into possible new FIFs since 2018, all have found alternative mechanisms to meet their objectives. Compared to a baseline of more than 500 Bank trust funds, the Bank is now on track to reduce these to some 70 Umbrella Programs and 70 standalone trust funds. 66. The Bank’s revamped TF architecture, combined with the greater role of management in its oversight, is better aligning these funds with Management’s strategic priorities during their lifecycle.122 121In line with Management’s response to the relevant IEG evaluation, progress on trust fund reform is viewed as a sentinel indicator, and the ongoing reduction in the number of trust funds under the reforms is presented here as a proxy for how the Bank is being more selective in its external engagements with greater management oversight thereof. 122While the IEG report defined “convening power� broadly, the Bank responded in the context of TF and Financial Intermediary Funds reforms. The Bank had earlier highlighted in its Management Response to the IEG evaluation that IEG’s broad definition of “convening role� was a 41 The Bank improved FIF lifecycle management with clear risk-based triggers for management discussion. Procedures have been drafted and are in use for risk-based decision-making around significant changes that impact the Bank. While the Bank does not decide on when FIFs exit (by nature of their independent governance), there is now a process for greater transparency on decisions pertaining to extending a FIF. At a portfolio level, the Trust Fund Annual Report, covering both Bank TFs and FIFs, completed its second edition, providing transparent reporting on major changes to the portfolios and updates on the reforms. In the next few months, a new set of Bank TF and FIF Policy and Procedure Framework (P&PF) documents will be issued to formalize rules, procedures and guidance that are already in use. The Bank will continue work to further integrate trust funds into the Bank planning processes. It will also provide added guidance on the integration of TF activities and resources into Bank strategy and planning decisions. This will promote stronger alignment with Management priorities, including stronger regional/country feedback in the Global Umbrella programs. 67. IFC has been streamlining its systems and has been more deliberate and selective in its convening initiatives. Pandemic recovery has become a key corporate priority with an IFC-wide approach. IFC’s global convening has fully transitioned to a virtual approach over the last twelve months to help support this strategic priority. This situation has helped IFC be more specific in what to convene around, as virtual formats require more focused approaches.123 This has positively impacted internal systems by rationalizing decisions on convening initiatives and prioritizing delivery of key services to help clients during the pandemic. It has also allowed for greater monitoring on post-convening outcomes and more systematic alignment to pandemic relief delivery and building back more resiliently. These learnings and improvements have informed key efforts, such as the US$4 billion Global Health Platform providing financing to companies to boost the private sectors capacity to deliver healthcare services and products, including the manufacturing and supply of vaccines, medical equipment, and therapeutics.124 68. IFC’s 3.0 strategy and its areas of strategic focus have also remained central in IFC’s global convening. A key convening initiative, organized for the first time in a virtual format, was the DFI Fragility Forum, co-hosted by the University of Oxford, the International Growth Centre, CDC, AfDB and IFC in March 2021. The DFI Fragility Forum brought together development finance institutions (DFIs) to find creative and collaborative solutions to increase private investment in fragile states. IFC is also working to leverage convenings organized by other MDBs, to provide a private sector point of view in delivering on the priorities such as the WBG’s crisis response, as well as through convening efforts organized by multilateral actors including for example in the UN System, P4G – Partnering for Green Growth and the Global Goals 2030, and the OECD. 69. IFC has also engaged in its own trust fund reform. IFC carried out a comprehensive bottom-up Funding Needs Assessment (FNA), now integrated into the annual budgeting process, for both upstream challenge and that the Bank will implement the recommendations in relation to TFs and Financial Intermediary Funds (FIFs) given that TFs and FIFs play a significant role in financing convening activities and the risk that fragmentation of the TF portfolio can inhibit managerial oversight and selectivity of such activities. 123 Virtual convening activities have included three virtual DFI Roundtables with focus on private sector responses to COVID-19, coordination with partners on the Global Health Platform, and efforts to ensure new signatories to the Operating Principles for Impact Management, among others. IFC is expected to re-evaluate its scope of convening activities and practices once a “new normal� is established post-pandemic, benefiting from the lessons learned from virtual experiences. 124 In the long run, IFC is also keen to increase healthcare security and resilience in developing countries, by helping create local manufacturing capacities for healthcare products. To this effect, IFC has already started efforts to engage with governments and companies to potentially support early stage development of commercially viable projects and strengthening of enabling environments. 42 and advisory activities. This effort is focused on hardwiring the link between corporate priorities, country strategies, resources, and planned activities to ensure that IFC aligns delivery with its 2030 commitments. The exercise will inform IFC’s internal allocations, as well as its corporate fundraising targets. IFC is also streamlining its fundraising efforts and implementing internal efficiencies, while ensuring continued high- quality work and fostering existing partner relationships. 70. Citizen and client engagement is a third critical aspect of the WBG’s ability to aim for outcomes that is covered in the evaluations included in this report. Developing robust, trust-based relationships with citizens and clients provides the WBG a grounded understanding of the most critical challenges, so that programs can be aligned and targeted to meet priority needs. Stakeholder engagement also helps inform risk assessments and mitigation strategies by ensuring that programs remain responsive to changing conditions and concerns. In response to IEG’s recommendations, the Bank and IFC have taken steps to build more impactful and efficient approaches to engaging with citizens and clients, including through enhanced diagnostics, training, systems, and digital platforms. 71. The WB is more systematically integrating Citizen Engagement through the country programs and operations to reflect citizen’s voices and priorities more consistently. It produced a knowledge product in FY20 titled “Mainstreaming Citizen Engagement through the World Bank Group’s Country Engagement Model�125 to strengthen the application of Citizen Engagement in SCDs and CPFs, and it prepared training materials to better integrate Citizen Engagement into country strategy products. The Citizen Engagement framework is being applied across regions. An analytical framework to assess key country indicators on Social Sustainability and Inclusion is under development.126 Another knowledge product entitled “Citizen Engagement in Operations: A Stock-Take of Citizen Engagement in Development Policy Financing�127 was finalized in late FY20, assessing how provisions for citizen engagement were incorporated in Prior Actions for DPF operations. MNA compiled a preliminary database of Citizen Engagement-related prior actions and indicators to serve as a ready resource for DPF task teams. Looking ahead, the Bank will review and strengthen the Citizen Engagement Country Assessment Methodology. The Bank intends to undertake new Citizen Engagement country assessments in Iraq and, Nigeria. The Bank similarly plans to expand the scope of staff learning on Citizen Engagement to include country engagement tools, policy issues, digital tools, and linkages with ESF. 72. The Bank is increasingly adopting a “thicker� approach to citizen engagement to strengthen domestic accountability mechanisms at the country level through country platforms and increased synergies with the implementation of the Environmental and Social Framework (ESF). A policy commitment under IDA19 is intended to help “at least 50 percent of IDA countries to establish and strengthen platforms for engaging with multiple stakeholders in policymaking and implementation to enhance public participation, accountability, and responsiveness�. In line with that commitment, the Bank 125https://openknowledge.worldbank.org/bitstream/handle/10986/34074/Mainstreaming-Citizen-Engagement-through-the-World-Bank- Group-s-Country-Engagement-Model.pdf?sequence=4&isAllowed=y 126 A list of Bank publications on Citizen Engagement in the last year: Technical Note on Citizen Engagement for Health Emergency IPF Operations Impact Evaluation of Cambodia's Implementation of the Social Accountability Framework Building the Foundation for Accountability in Ethiopia Scores, Camera, Action? Incentivizing Teachers in Remote Areas Status of ICT Infrastructure in West and Central African Countries for Building Effective Grievance Mechanisms Learning Note 15: Improving Health Services and Mitigating Risks in Health Reform Learning Note 16: Multiple channels for feedback and engagement in rural water supply in the Kyrgyz Republic 127 https://openknowledge.worldbank.org/bitstream/handle/10986/34075/Citizen-Engagement-in-Operations-A-Stock-Take-of-Citizen- Engagement-in-Development-Policy-Financing.pdf?sequence=4&isAllowed=y 43 introduced a pilot initiative to facilitate dialogue between government and civil society on the Bank’s program in Tanzania. A Citizen Engagement platform is being expanded in Mongolia128 while a new, national social accountability pilot program has been initiated in Zambia.129 A P4R operation in Ethiopia130 included a results area on citizen engagement to strengthen transparency and accountability at the local government level. The Bank established a multi-donor trust fund in Cambodia to scale up a joint Government-civil society operation nationally.131 A baseline of 24 countries was established for the IDA policy commitment, and 13 more countries will be added. The Bank also moved towards increased synergies between the implementation of the ESF and the broader citizen engagement agenda. It has expanded internal training modules on the links between citizen engagement, the Environmental and Social Framework, and Stakeholder Engagement Plans particularly in AFW and LCR.132 73. IFC has maintained focus on increasing the rigor and methodical documentation of client stakeholder engagement activities during project appraisal and supervision as mandated in IFC Performance Standard 1 (PS1 - Assessment and Management of Environmental and Social Risks and Impacts). In late 2019, IFC completed the development of a Training Program on Stakeholder Engagement and Grievance Mechanisms, a ‘101 Foundation Course’. This training is an essential building block around Stakeholder Engagement and Grievance Mechanisms for E&S specialists. It will build their capacity to help clients reach desired outcomes around building trust, obtaining feedback from communities, and addressing concerns in a timely manner before they escalate and become larger, more difficult issues to manage. The course was initially intended for delivery to all E&S Specialists starting in the first half of FY20, however due to COVID this was delayed. The course was revised for virtual delivery in FY21 and the first cohort of newly hired and existing E&S staff are planned to complete the 101 Foundation Course training in FY22Q1. Still in development, a second stage of training is underway delving deeper into more complex and challenging areas of stakeholder engagement and grievance management. This second stage will be primarily aimed at Social Specialists. Management believes these trainings will equip E&S Staff with the skills needed to effectively support clients to meet the requirements in IFC PS1. Of note, IFC is also currently undertaking a portfolio review of project level community grievance mechanisms and its results and recommendations are expected by FY22Q2. Management expects that there will be several outcomes from this portfolio review that are related to IEG’s recommendation on Citizen Engagement such as potential tools and resources for specialists and clients, and an AS program for capacity building of clients. IFC Management strongly supports the actions proposed because they also reflect the findings of the External Review of IFC (and MIGA’s) Environmental and Social Accountability. They are well aligned with the IEG’s Citizen Engagement evaluation recommendation, with capacity building being a common theme for E&S specialists as well as clients in the coming years. 74. Development continues on IFC’s Sustainability Rating Tool (SRT), which aims to strengthen the rigor and documentation of IFC’s review of client performance, including that related to Stakeholder 128 http://www.irgen-tur.mn/en 129 Voice and Accountability: Community Empowerment for Improved Local Service Delivery in Zambia http://operationsportal.worldbank.org/secure/P173472/home 130 http://operationsportal.worldbank.org/secure/P103022/home 131 https://www.worldbank.org/en/news/press-release/2020/03/20/scaling-up-social-accountability-in-key-public-services-in-cambodia 132 https://worldbankgroup.sharepoint.com/:p:/r/sites/Connect/explore/SDV/DFGG/_layouts/15/Doc.aspx?sourcedoc=%7B7a925100-cc05- 4565-afd1-34c43cc88396%7D&action=edit&mobileredirect=true&cid=226C1D9D-786D-4A29-8578- 3227CD0487C8&select=webDavUrl%2Csize&wdLOR=cAAC3E4BD-97D0-46AD-AFE8-4E2B138E2301 44 Engagement and Grievance Mechanisms. The SRT tool will guide E&S specialists’ structured evaluation of a client’s performance against all relevant Performance Standards requirements, including Stakeholder Engagement and Grievance Mechanisms. The Pilot Beta stage is expected to commence in FY22Q2. IFC Management expects that once completed in late FY22, SRT will help IFC evaluate overall client performance on any chosen issue and will include new templates for collecting and monitoring data. 75. IFC has been conducting extensive consultations to better understand existing client engagement practices and identify areas for improvement. Consultations have been ongoing with staff from industry and regional departments, as well as other key stakeholders, aiming to develop a consistent client segmentation approach, aligned with IFC’s corporate strategic priorities. The consultation process was completed in FY21, and a draft client segmentation approach will be proposed for consideration to IFC’s Management in Operations in FY22, allowing for the system diagnostics process to be completed in FY22 and implementation in FY23 (subject to availability of IT resources and alignment with the delivery of other IT priorities). In the context of client segmentation, IFC will seek to establish and adopt clear criteria for the segmentation of clients, which is expected to facilitate the assignment of client management roles, particularly for strategic clients.133 76. IFC has introduced initiatives for an efficient and client centric approach in processing its investments, to allow for a faster delivery to clients. IFC Management has taken several steps concentrated around IEG’s finding in this management action area including: (1) The Accountability and Decision Making (ADM) Framework: the ADM framework for Investment and Advisory operations defines clear roles and accountability for decision making at each stage of the project cycle, while simplifying the approval process. In FY21, the ADM is live and running and generating efficiencies in processing investments. The framework has been continuously monitored and adjusted to incorporate lessons learnt from its pilot phase. Given the progress made in the launch and implementation of the ADM, IFC Management believes the framework is a fully functioning system and recommends discontinuing its reporting going forward; (2) the IFC Fast-Track COVID-19 Facility (FTCF): The FTCF is a successful example of how combining streamlined internal procedures (e.g. expedited concept and investment reviews) with delegation from the Board can result in significantly lower processing times. This allowed for the expeditious support to repeat clients during the immediate crisis response phase, when rapid liquidity support was essential to IFC’s clients. IFC is working towards expanding this approach to eligible clients in FY22; and (3) Business Platforms: IFC is further developing the concept of Platforms, which is an approach that involves clustering similar investment projects to address a systemic development challenge. This approach will bolster business development efforts around development challenges, enable the offering of standardized products and support rapid delivery to clients to meet its 2030 Capital Commitment goals. Examples of such Platforms include the IFC Fast-Track COVID-19 Facility, and its extension to the Base of the Pyramid Facility. IFC Management is currently focused on collaborating with the EDs and Advisors to build a blueprint for this approach, and subsequently will be seeking Board approval for the overall principles in FY22. 133A recommendation “Streamline procedures and processes for strategic clients and strengthen criteria for additionality for strategic clients, including for the justification of incremental additionality in repeat projects addressing the same market failure.� was complete in FY20 and had been retired in agreement with IEG. 45 77. IFC has established clear accountabilities and strengthened incentives for staff to build stronger client relationship management, while nurturing long-term strategic partnerships. The new competency framework for operations, launched in FY20, provides a clear roadmap of the various career options available to operational staff, and offers greater definition on the skills, duties, and accountability for staff in different roles and at different seniority levels. Through this broader effort, IFC Management has also identified the behaviors that drive successful client engagements, which are now fully integrated within the competency framework, as it applies to business development, transaction processing, and portfolio management, as well as roles of staff in business development, portfolio, advisory services, country management roles and upstream. 78. IFC has been working arduously to both reinforce its systems and better organize its client relationships for a more consistent and connected approach to leverage business opportunities. As previously mentioned, a consultation process with industries/regions on the client segmentation approach included discussions on potential IT solution. In FY21, these consultations led to an agreement to start mapping existing client-related systems. In FY22, IFC will be exploring several activities related to mapping and understanding the system solutions deemed necessary to strengthen IFC’s client management activities, as part of IFC’s overall operations activities. These system related efforts aim to identify IFC’s existing systems capabilities and the requirements to address IFC’s operational needs to access, store, manage and share client information, including the design of a client engagement template to allow staff to systematically and consistency capture information on strategic clients. Moreover, as part of this workstream, IFC had planned to conduct a revamp of its client survey to get a holistic view from both investment and advisory clients to be implemented in FY22. In the meantime, enhancements to the existing survey were made by seeking additional feedback on IFC’s COVID-19 client engagement support. 79. IFC Management has made strong progress in establishing links between country needs, potential client engagements, its diagnostic work and WBG country strategies. 134 Through IFC Sector Deep Dives, global sector strategies are defined through the application of consistent and standardized frameworks, and measurements and act as a diagnostic template for identifying trends, opportunities, and gaps for IFC / WBG product lines. In FY20, three Sector Deep Dives (Textiles, Housing, Fintech) were delivered to the Board through technical briefings. These Deep Dives identified the key strategic pillars to focus on going forward and specific interventions to develop new client and investment opportunities at a sector and regional level. Three Sector Deep Dives were delivered in FY21 to the Board i.e., Funds, Agtech, and Chemicals. In FY22, the Digital Infrastructure Deep Dive has already been presented to the Board in July. 80. Country Private Sector Diagnostics (CPSDs) have become a more vital and integrated part of the strategy and programming cycle with the vast majority of CPSDs informing IFC Country Strategies and Business Plans in addition to SCDs/CPFs. During FY21, the analytical approach of CPSDs has taken the implications of COVID-19 into account, with the result that there was emphasis on how to safeguard and support private sector participation and investment. (Please refer to paragraph 32 for an additional progress update.) 134 For the purpose of its implementation, monitoring and reporting, IFC Management merged into this recommendation, another recommendation “Identify areas of integration of client approaches with sector and country strategies and programmatic approaches� in agreement with IEG. 46 81. IFC has been encouraging efforts to promote a culture that is more conducive to innovative and risk-taking approaches towards new project opportunities. These efforts have been especially geared towards supporting IFC’s efforts in the strategic areas of Upstream and Creating Markets and included the following: (1) System-related: Ongoing enhancements of IFC’s systems and reporting with an objective to improve tracking of upstream activities and related investments, allowing for enhanced incentives, recognition, and “pre-investment� upstream work; (2) Greater incentives: Development and roll-out of comprehensive upstream incentive program by launching monetary and non-monetary incentives which are designed to support upstream work and counteract IFC’s historic tendency to favor the teams involved in the ‘last-mile’ of client investments. Examples of monetary incentives include: (i) the upstream “Top- up,� an extra pool of money to reward staff across all units who contribute meaningfully to upstream activities, launched as part of the FY20 performance cycle; and (ii) the upstream Milestone Awards, for which 12 winners of the inaugural round of awards were announced by IFC’s MD/EVP in April 2021. Examples of non-monetary incentives include: (i) upstream experience will be highly desirable for candidates being considered for G2+ level positions, technical and managerial; and (ii) as part of the recently announced Manager Rotation Program, those who have actively engaged in Upstream efforts will be given preference for their next roles; and (3) Increased resources: Starting in FY22, IFC will be expanding its country-driven budgeting approach, piloted for Upstream projects in FY21 – across both advisory Services and upstream projects. This integrated process will align the planning and budgeting of upstream and advisory activities with IFC’s country strategies and corporate priorities. Sharpening the way the WBG learns for outcomes 82. Recent structural reforms have had a significant effect on the way the WBG produces, curates, and uses knowledge, addressing each of IEG’s recommendations, with early evidence suggesting that knowledge sharing has improved even during this challenging period of remote work. The WBG’s comparative advantage lies in the synergy between its knowledge and financing. It is an independent generator and broker of global knowledge that informs development policy. It has a leading role in setting the agenda for global discussions on poverty reduction, shared prosperity, and the SDGs. Recent developments call for a renewed effort to ensure the WBG’s continued knowledge leadership. IEG’s key recommendation was that the Bank better link the Global Practices and Regions to improve coordination and enhance client responsiveness. Prompted by this recommendation, the Bank remapped region-facing Directors, Practice Managers (PMs), and staff from the Practice Groups (PGs) to the Regions beginning in FY21. The newly-created Managing Director for Development Policy and Partnerships and the reporting Global Directors hold clear accountability for knowledge generation and management. In addition, the adjustment of the operating model helped to clarify knowledge and operational goals, roles, and mechanisms across the matrix. 83. Under the realignment, Management aligned budget with accountability, strengthening the foundations for more outcome-oriented knowledge flows. Regional Directors and Global Directors have full control over their budget and staff, with more refined responsibilities – Regional Directors for country programs including operations and country-level knowledge; Global Directors for global-level knowledge. The integration of trust fund resources into the budget will improve transparency around the use of Trust Fund expenditures. In keeping with IEG’s suggested course of action, the reforms enhanced links between 47 the GPs and Regions by strengthening the region-facing responsibilities of GPs to improve client responsiveness and quality of services. Country Directors and their reporting CMU staff, and Regional Directors and their reporting GP staff report to a single Regional Vice President, with a unified line of accountability and decision-making. This aligns structural accountabilities with staff’s intrinsic focus on addressing country challenges. Moreover, Regional Directors cover multiple interrelated GPs, reducing the transaction costs of cross-sector collaboration. As the reform crystalizes, Management will continue exploring additional opportunities to remain enhancing knowledge flow and collaboration and effective resourcing of knowledge, irrespective of where it locates. 84. The readjusted operating model delivered during its first stress test of responding to the coronavirus global pandemic. The WBG mobilized knowledge and expertise from across the institution, building on the experience with Ebola and Avian Flu, and emergency response operations around the world. It did so to rapidly develop and scale up a program first to help address the immediate public health challenges of the pandemic, and then to mitigate its social, economic, and long-term effects. The Practice Groups and Regions continue to work together to translate these programs into actionable and customized country-based solutions that cut across sectors and sometimes countries. Teams in fact have developed a culture of rapidly developing and sharing implementation lessons across country boundaries. Management monitors and reviews the model on an ongoing basis and regularly adjusts, consulting and informing the Board as relevant. 85. A Strategic Framework for Knowledge (SFK) was put in place in March 2021 to strengthen the WBG’s role as a solutions Bank that combines financing with global knowledge to generate development responses in a timely, contextual, and integrated way.135 To realize the WBG’s full knowledge potential, the SFK intends to: (a) increase the relevance, quality, and impact of knowledge products; (b) improve knowledge flow and collaboration across the WBG; and (c) absorb learning from its operations and ensure the WBG’s continued role as leader in development innovation. The Framework is implemented by strengthening systems, incentives, and human capital, and leveraged through improved outcome orientation and performance metrics.136 86. Many IEG recommendations embedded in thematic evaluations support the WBG’s overarching approach to integrating knowledge into the solutions it provides to clients and the global community. 137 Recommendations set out pathways for strengthening linkages between knowledge and more effective solutions across four sectors: conducting research and analysis to close knowledge gaps on reducing poverty within the RNFE; developing a frontier global knowledge program on capital markets development; conducting diagnostics on urban system risks to ensure a coordinated approach among urban resilience interventions at the country level; and strengthening and expanding analytic assessments on pollution to help countries prioritize pollution concerns. The WBG has made progress on each of these recommendations, through a combination of research, analytics, diagnostics, and knowledge sharing activities. These activities employ a range of methodologies, but all aim to deepen understanding of 135 “Realizing the World Bank Group’s Knowledge Potential for Effective Development Solutions: A Strategic Framework� - March 2021 136 The SFK has “Improve outcome orientation and performance metrics� as a cross-cutting theme. 137 This section of the report pertains to stand alone data, knowledge sharing and knowledge management as it helps the WBG strengthen its outcome orientation. It excludes discussion of diagnostics more tightly linked to specific operations and commissioned as part of the preparation or implementation of investment financing. The latter is discussed under the individual sub-themes mapped to Human Capital; Climate Change and Environment Sustainability; Jobs, Growth and Shared Prosperity; and Mobilizing Finance for Development. 48 development challenges and inform more targeted, evidence-based, and integrated solutions. These efforts are summarized below. 87. Closing Knowledge Gaps on the Rural Non-Farm Economy. The WBG has moved towards strengthened knowledge on reducing rural poverty through impact evaluations, high-frequency phone surveys, and a range of other analytics, particularly relevant in the COVID-19 context. Improved analytics helped close knowledge gaps, and the Bank strengthened its tracking of income and employment impact. Bank supported impact evaluations are providing insights and lessons to improve the design of rural interventions. In FY20-21, four impact evaluations138 were completed, eight impact evaluations are currently ongoing,139 and five are at pre-concept, covered a broad variety of topics.140 The Bank’s support for high-frequency phone surveys is providing critical insights on how the COVID-19 pandemic is impacting rural households and enterprises. In response to the COVID-19 pandemic, Bank-supported rapid phone surveys to monitor the impacts of COVID-19 on households and individuals are ongoing in more than 100 countries. With other partners, the Bank developed a new COVID-19 High-Frequency Monitoring Dashboard of harmonized, comparable information through over 90 indicators covering 14 topics across 50 countries.141 Further, the Bank’s COVID-19 Business Pulse Survey has collected high frequency data from enterprises in 48 countries to better understand the impact of the pandemic on businesses across countries, with a particular focus on SMEs.142 The evidence collected will feed into upcoming SCDs. Moreover, the Bank’s Enterprise Surveys in over 146 countries, which cover larger enterprises, are now complemented with micro-enterprise and informal enterprise surveys.143 These evaluations and surveys generated valuable lessons, increased the pool of knowledge, and will help improve future program design. 88. Developing a Frontier Global Knowledge Program on Capital Markets. The Bank’s increased emphasis on knowledge sharing and learning on capital market development is advancing a more evidence-informed approach to capital market development. The Knowledge Management Agenda on capital markets is anchored in a deep dive in core strategic sectors. Key analytics help strengthen an understanding of how capital markets work. 144 Sectoral pieces go deeper into how Capital Markets can help mobilize financing for strategic sectors. 145 The analytics cover frontier topics, for example the 138 P132069: Ceara Rural Development and Access to Markets project (Brazil) P155244: Evaluating Efficient ways to Promote Sustainable Land and Water Management and Payments for Ecosystem Services (Ghana) P150143: Promoting Productive Inclusion and Resilience among the Poor: Multi-country RCT of the Sahel Adaptive Social Protection (Sahel) P155240: Protecting livelihoods and the environment: Sustainable forest management (Burkina Faso) 139 P144873: Rural Roads and Agricultural Value Chains (Rwanda); P166391: Lake Victoria Transport Program Rwanda Corridor (Rwanda) ;P131070: Leveraging Land Markets Towards a Rural Transformation (Rwanda) ;P172073: Gender and Cash Transfers IE El Salvador (El Salvador) ; P172573: Cash for assets and women's empowerment in Kenya (Kenya) ; P166755: The route for development: complementary effects of improved roads and agricultural extension services (Mozambique) ;P164520: Impact Evaluation of the SAIP Project (Rwanda) ; P172877: Optimal Incentivizes for Adoption of Improved Agricultural Inputs (Mozambique) 140 Pre-Concept Note: Cash for assets and women's empowerment (Rwanda); Pre-Concept Note: Cash for assets and women's empowerment (Syria); Pre-Concept Note: Joint Resilience IE in the DRC Congo, Dem. Rep.; Pre-Concept Note: Resilience in the Sahel (Mali); Pre-Concept Note: Resilience in the Sahel (Niger). 141 https://www.worldbank.org/en/data/interactive/2020/11/11/covid-19-high-frequency-monitoring-dashboard 142 https://www.worldbank.org/en/data/interactive/2021/01/19/covid-19-business-pulse-survey-dashboard 143 https://www.enterprisesurveys.org/en/methodology/current-projects 144 Foundational Pieces: Capital Markets Development: A Primer for Policymakers; Asian Funds Study; The impact of SOEs Listings on Capital Market development (forthcoming); Pension funds and financial repression (forthcoming) 145 Sectoral Pieces: Sovereign Funding and Debt Management in a sustainability-focused world: a practical guide for the EM sovereign issuer; A toolkit to analyze the potential of capital markets solutions for SME financing; Overview Assessment of Providers of Long-term Finance for Small and Medium Agribusinesses; How Can Digital Platforms Facilitate Access to Finance along Agriculture Value Chains? 49 potential for Fintech to help mobilize development finance. 146 The WBG complements these technical pieces with Toolkits, Webinars, and a Community of Practice to support country operations. 147 The J-CAP initiative helped secure funds to strengthen the Knowledge Management agenda. The Bank and J-CAP management are taking a more structured approach to knowledge, which includes annual discussions on the specific Knowledge Management Plan at the start of each FY. J-CAP held a flagship conference, “J-CAP 2020,� which attracted the participation of over 350 government, industry and WBG leaders from across five continents. 89. Helping Countries Prioritize Pollution Concerns. The Bank’s analytic work on pollution is helping countries prioritize their pollution concerns and informing operations. Through a combination of country environmental analyses, ASA, and diagnostics, the Bank is developing a more granular understanding of the drivers and impacts of pollution, which is informing the design of operations. The reference below itemizes the analytic work.148 The Bank is also strengthening knowledge management and learning activities for both staff and clients, and it monitors the number of WBG staff and client country representatives that receive training on pollution management and environmental health. 146 Selected Issues and Frontier Topics: The impact of COVID-19 on Fintech 147 Webinars: (i) “IFC and World Bank promote SME financing through securitization in Africa: the case of NSIA Banque Côte d’Ivoire ABS� (25 Aug. 2020); (ii) “How Can J-CAP Tap into MIGA’s Capital Market Solutions?� (20 July 2020); (iii) “Private Sector Perspective of Capital Markets Development" (Apr. 2020); and “IFC and World Bank promote SME financing through credit funds in Peru: the case of Compass transaction� (27 Oct. 2020) 148 The Bank undertook Country Environmental Analyses in Lao DPR and Egypt. This informed the design of the Lao DPR project on waste and pollution, and the Egypt Greater Cairo Air Pollution Management and Climate Change project [http://operationsportal.worldbank.org/secure/P172548/home?tab=dashboard]. In addition, it completed a country environmental analysis for Ghana and conducted a cost of environmental degradation study in Croatia and cost of air pollution study in Lagos. Other Bank supported pollution-related diagnostics included country assessments on drivers and health impacts of ambient air pollution in Slovakia; and policy notes on managing pesticides for greener growth in Lao PDR. A series of diagnostics on air quality management in North Macedonia, Kosovo, and Bosnia and Herzegovina informed the design of the Western Balkans Green Growth DPO. Other work reviewed lessons from the experience of Mexico City, Beijing and Delhi in tackling air pollution. Bank ASA on air pollution included the: performance of satellites for measuring air pollutants that cause mortality in low- and middle-income countries; and health effects of constituents and sources of PM2.5 air pollution; dust component of air pollution. These studies emphasized the need for ground-level air quality monitoring networks in Bank client countries where such networks are weak or non-existent. They concluded that the use of satellite for predicting air quality, notably PM2.5, in low and middle-income countries was associated with significant errors. The analysis highlighted the need for air pollution control efforts in Bank client countries to address fossil-fuel based sources of PM2.5, notably coal burning and diesel-fueled vehicles, and PM2.5 constituents such as sulfate (an important marker of coal combustion) associated with the most toxic component of PM2.5, and closely associated with cardiovascular disease. Bank ASA on land-based pollution focused on: artisanal and small-scale gold mining-land-based pollution; toxic contaminated sites for small tanneries; risk-analysis approaches to evaluating health impacts from land-based pollution in low and middle-income countries; and guidance for sampling and appraisal of environmental health impacts of toxic contaminated sites for recycling of used lead acid batteries. The Bank commissioned analytics on Circular Economy approaches in Malaysia, Thailand, Philippines, and Mexico to strengthen pollution prevention and climate change mitigation. Other examples include Water in Circular Economy and Resilience (WICER) Position Paper Water in Circular Economy and Resilience (WICER) India Chennai case Water in Circular Economy and Resilience WICER Cambodia Phnom Penh case Water in Circular Economy and Resilience WICER China Lingyuan case Water in Circular Economy and Resilience WICERIndonesia cases Meeting Circular Economy Targets In Croatia; Aligning with EU Waste Package ReportTransition to a Circular Economy: Practices, Business Models, Economic Instruments and Opportunities for Mexico https://wbdocs.worldbank.org/wbdocs/component/drl?objectId=090224b0884c4816&Reload=1624404912164&__dmfClientId=162440491216 4&__dmfTzoff=240 Land-Based Approaches For Marine Litter Prevention Through Waste Management And Circular Economy Initiatives (P169269) Support To Solid Waste Management Within The Framework Of Meeting The Circular Economy Targets In Croatia (P171628) Three communities of practice (CoPs) with a membership across the WBG have been active in the Pollution Management Global Solutions Group. The CoPs convened online events in FY21 and played an important role in strengthening Bank lending operations through peer review function, influencing project design through diagnostics and fostering knowledge exchange. 50 90. Assessing Resilience of Urban Systems. The WBG expanded its diagnostics to support a coordinated approach to improve urban resilience at the country level. When it finances multiple interventions to build urban resilience in a country, the portfolio of interventions is increasingly informed by wide-ranging TELLING THE STORY diagnostics of urban system risks. The objective is to ensure that the The Bank and the Global Facility for Disaster Risk Reduction (GFDRR) different lending programs supported Lifelines Report in 2019 highlighted the importance of better complement and are aligned with understanding infrastructure disruptions and infrastructure systems each other to help cities adapt and resilience. It concluded that the cost of infrastructure disruptions on transform in the face of stresses and households and firms in low and middle-income countries amounted to US$391 billion to US$647 billion each year. The work undertaken for the shocks. 149 For example, through the Lifelines report was used to assess the resilience of transport networks in City Scan tool,150 the Bank’s City African cities, and the resilience of the power network in Bangladesh. It Resilience Program (CRP) is also informed the framework of the WBG-developed Resilience Rating strengthening the capacity to plan System that provides standardized criteria and guidance to decision for and mitigate adverse impacts of makers to better measure urban resilience. natural disasters and climate change Source: Global Facility for Disaster Reduction and Recovery (GFDRR) ahead of the curve. Through FY21, team input for MAR report. the City Scan was deployed in more than 80 cities globally, assisting teams to factor in urban system risks further upstream to facilitate complementarity and coordination of downstream investments. IFC’s Guidance Note on Urban Resilience is building staff capacity to identify and discuss resilience needs and opportunities with city clients. IFC developed a Guidance Note and initiated the process of socialization and dissemination to staff through webinars and small group meetings. The Guidance Note aims to help staff understand what Urban Resilience is, who to reach out to within IFC for support, and where to articulate the resilience impacts of their projects in IFC’s project documents. Sharpening the way the WBG measures outcomes 91. Across multiple evaluations, IEG recommended that the WBG strengthen the results focus of monitoring efforts by adopting more systematic and robust approaches to tracking the outcomes of its work. These recommendations call for the collection of monitoring data that can help inform decision- making, target interventions, and provide a more comprehensive picture of the results of Bank interventions. Recommendations focus on assessing spillover effects of regional integration projects, monitoring the quality and distributional impacts of health services, measuring urban resilience, and developing more robust beneficiary feedback indicators. These recommendations reinforce the WBG’s 149 The Bank and GFDRR supported Lifelines Report in 2019 highlighted the importance of better understanding infrastructure disruptions and infrastructure systems resilience. It concluded that the cost of infrastructure disruptions on households and firms in low and middle-income countries amounted to US$391 billion to US$647 billion each year. The work undertaken for the Lifelines report was used to assess the resilience of transport networks in African cities, and the resilience of the power network in Bangladesh. It informed the framework of the WBG-developed Resilience Rating System that provides standardized criteria and guidance to decision makers to better measure urban resilience. https://openknowledge.worldbank.org/handle/10986/31805 150 https://www.gfdrr.org/en/crp 51 ongoing work to increase the results-focus of monitoring efforts in corporate priority areas, such as gender and climate change. Overall IEG’s ratings of M&E quality have trended in a positive direction in recent years, in line with ongoing efforts to improve M&E across countries and sectors. Recommendations in this section complement and reinforce these efforts. 92. Assessing Positive Externalities of Regional Integration. Regional projects require that investment in one country should seek to positively impact one or more of the other countries participating in the project. This could include generating cross-border positive externalities or mitigating negative ones, which can be economic or social. IEG recommended that the Bank improve its capacity to assess the spillover effects generated by IDA Regional Window projects. In response, the Bank has been providing more detailed guidance to staff on how to articulate and monitor the externalities of IDA regional projects. DFI works closely with project teams involved in IDA Regional Window operations throughout the project preparation cycle to ensure that project documents explicitly describe the externalities being generated, as well as the collaboration or collective action required to sustain them. The guidance has focused on ensuring that the benefits of project externalities are systematically reflected in PDOs, and that the results stemming from these externalities are articulated and measured as part of Results Frameworks. Support to teams on this question has been compiled in a guidance note to be integrated into the Regional Window guidelines. Preparation of the note entailed reviewing active and closed IDA Regional Window-funded projects across regions and sectors to identify best practices in measuring externalities. 151 The guidance is being integrated in the FY22 Regional Window guidelines for staff and posted on the IDA19 intranet website. This is expected to ensure a more systemic and accurate tracking of externalities generated by Regional Window operations in order to build a more comprehensive picture of the impact of the regional integration agenda. 152 93. Measuring the Quality and Distributional Impacts of Health Services. In response to IEG’s recommendation, the Bank has taken steps to ensure the improved availability of timely data on the quality and distribution of health services. These efforts are helping to better connect the provision of health services to improved health outcomes. The Bank began to measure community-level integration and gender disparities in primary health care access. The Bank joined a global initiative to improve the measurement and performance of primary health care systems in low and middle-income countries. The Primary Health Care Performance Initiative (PHCPI)153 helped focus the global health agenda on measurement of primary health care, of which quality and equity are essential attributes. The initiative developed a set of key standard indicators that are used to systematically assess primary health care performance across countries. Yet data gaps at the country-level limits the ability of the initiative to give a full picture of primary health care. Nearly a third of projects focused on providing services to communities, be it through community health workers, outreach services, and community engagement. A limited number of projects tracked the removal of financial barriers to access to care. A little over 40 percent of HNP projects included at least one indicator intended to understand and mitigate inequities in their results framework. These included indicators measuring gender inequities through gender disaggregation or by monitoring the receipt of essential services amongst women. There was some tracking, albeit limited, of the targeting of specific priority populations, including refugees, indigenous 151 The project review built on foundational work undertaken by the Africa region to develop appropriate sector-specific spillover indicators. 152 The project review will build on foundational work undertaken by the Africa region to develop appropriate sector-specific spillover indicators. 153 The Bank, WHO, UNICEF, the Gates Foundation and other agencies participate in the initiative. https://improvingphc.org/ 52 populations, or those with high clinical risk for certain adverse health outcomes. There is a need now to measure equity vis-à-vis income, financial coverage, and geographic disparities within countries. The PHCPI team based in the HNP Global Engagement unit has begun to compile experiences, tools, and resources developed either by the Bank or by partners. It is building a repository for project preparation, implementation, and the preparation of ASA or trust fund applications. The team provides support to formulating projects results framework and component design, in addition to offering primary health care assessments as part of ASAs. The goal is to offer a stronger evidence-based and increased consistency among projects in measuring quality and equity in health care. 94. Improving measurement of health sector preparedness and the quality of health services. The Resolve to Save Lives Trust Fund aims to address a pervasive challenge, i.e. that of measuring and financing preparedness. It supports preparedness financing analytics and the preparedness components of investment operations.154 An expert advisory group is being established to develop a standardized measurement and monitoring approach for preparedness financing.155 Proposed activities include: (i) propose a standardized definition of preparedness financing; (ii) review Vietnam’s and Indonesia’s health security financing assessments, other disease program subaccounts, and the recent experience in estimating financing for a nutrition program; (iii) develop a check list of investments for preparedness- specific and preparedness-sensitive health system investment activities; (iv) develop a standardized methodology to track expenditures for preparedness, including for R&D; and (v) introduce dedicated lines into existing global datasets to allow complete, systematic monitoring of development assistance and domestic resources spent on preparedness. Two such examples are the IMF mandatory government financing statistics and the OECD CRS. The Bank is also increasingly measuring High-quality Primary Health Care. Based on the dimensions of high-quality care (i.e., comprehensive, continuous, well- coordinated, accessible, and person-centered services), 74.6 percent of Bank projects from the past decade included measures of the ‘quality of services delivered’ in their results frameworks. Measurement of quality largely emphasized patient satisfaction and the comprehensiveness of primary care services. Efforts to measure the coordination of care across different levels of health care systems have improved slightly over the past five years but remain limited. Measurement of the continuity of care has remained constant. Indicators of technical quality (e.g., provider competence or adherence to guidelines) and/or experiential quality (patient satisfaction and beyond) are limited and will be remedied moving forward. 95. Measuring Increased Urban Resilience. IEG found that the WBG had innovated with different approaches to building resilience in cities with different needs and capacities but noted challenges in assessing how innovations were contributing to building resilience over time. The Bank has taken several steps to address this finding, including the development of a Resilience Rating System, the launch of the Country Climate and Development Reports (CCDR), and the incorporation of reliance in IFC’s AIMM framework. To help measure increased resilience to climate change and natural hazards, in FY21, the Climate Change team developed a Resilience Rating System, which has been piloted in several city-level Bank projects. It is intended to incentivize donors and countries to engage in more and better climate 154 This is a global initiative where the Bank administers the Trust Fund. Grants under this Trust Fund that were or are active in FY21 include: Bangladesh, Cameroon, Nepal, Pakistan, Sri Lanka, 4 OECS countries (Dominica, Grenada, St. Lucia and St. Vincent & the Grenadines), and 14 West and Central African Countries participating in the REDISSE Program. 155 This is one of the recommendations outlined in the World Bank’s thematic report for the Global Preparedness Monitoring Board (GPMB), entitled “Pandemic Preparedness Financing: Status Update� 53 adaptation, enhance transparency, and improve reporting on actions taken to manage risk.156 The Bank also tracked contributions to the IDA19 Results Measurement System157 Tier II DRM Indicators relevant to urban resilience. The CCDR, a new core country analytic product, has been launched to capture the interplay between each country’s development goals and climate change. It is anticipated to incorporate country-level climate resilience considerations in strategic planning on urban investments. CCDRs will make use of cross-country indicators and benchmarking, providing a comparable set of indicators across countries. Several urban transport projects, for example in Nepal, India, and Sierra Leone, have included resilience in their PDOs, PDO-indicators and intermediate results indicators to improve tracking of urban resilience.158 Finally, IFC tracks resilience impacts through its AIMM framework when it is a core outcome of a cities project. IFC is also beginning to track cities investment, advisory and upstream projects that mention resilience. In FY21, more than 20 advisory and upstream projects in the urban infrastructure portfolio mentioned resilience compared to only four in FY19. Moreover, in FY20 IFC supported the efforts of San José, Costa Rica, to become a more sustainable and resilient city through an investment to help revitalize three main road corridors and rehabilitate storm water drainage systems in flood-prone areas. The investment is supported by advisory services to help the municipality improve urban mobility, encourage the construction of green buildings, and strengthen its capacity to deliver services. Additionally, IFC has used the Bank’s Rapid Diagnostic tool in two potential client cities in Asia and is seeking to support cities’ resilience efforts when appropriate. The framework for IFC’s Cities Advisory Platforms now incorporates resilience elements. These processes are being refined, including through engagement with Sector Economists covering key urban sectors to ensure consistency of the AIMM approach. 96. Incorporating beneficiary feedback indicators in IPF operations. This is intended to strengthen implementation and outcomes, enabling the Bank to monitor both engagement with beneficiaries and the responsiveness of project implementation to beneficiary concerns. The Regions have increased performance rates on beneficiary feedback indicators in Bank operations, with overall compliance on the inclusion of a beneficiary feedback indicator at the project design stage increasing from 94 percent in FY19 to 99 percent in FY20.159 Compliance during project implementation – as measured by reporting on beneficiary feedback indicators within 3 years of project approval – has been uneven with only 62 percent of projects approved in FY17 reporting within 3 years.160 As the use of beneficiary feedback indicators at design has been largely mainstreamed, increased emphasis will be placed on improving beneficiary feedback reporting during implementation. This enhanced focus on implementation will allow for more systematic identification of good practices and reporting on the results of citizen engagement activities. Efforts to mainstream beneficiary feedback in investment operations include the addition of a Citizen Engagement cross-cutting theme “tag� in the Project Portal. Task Teams can now propose beneficiary feedback indicators for consideration, enhancing the efficiency of corporate reviews. This platform focuses task teams on the need to include such indicators at the time of project preparation and provides 156 The Resilience Rating System aligns the current corporate climate commitments related to adaptation and resilience, namely Climate and Disaster Risk Screening, Climate Co-Benefits, and Climate Indicators in one process. 157 IDA19 RMS 158 PDO indicator: People benefiting from improved resilient roads; intermediate results indicators for Strategic Resilient Mobility Investments: Project roads with climate adaptation and resilience interventions and Sidewalks improved. 159 (i) November 2020 Update (pg. 5) and (ii) November 2019 Update (pg. 5). 160 LCR registered more progress in this regard where reporting on the beneficiary feedback indicators during project implementation increased from 56% on the FY17 portfolio to 100% for the Q1&Q2 FY18 portfolio. 54 good practice guidance. 161 The Bank will continue to finetune and streamline the criteria and definitions of beneficiary feedback indicators and undertake analysis to differentiate between light and more intensive, “thick,� citizen engagement in projects. While this would strengthen monitoring, caution is needed not to be overly complex and reduce client compliance, particularly in FCV and other challenging contexts. The strength of a Grievance Redressal Mechanism as a Citizen Engagement indicator depends on its capacity to solve complaints and to continuously improve results as per the feedback obtained, including from project beneficiaries. The Bank will review lessons from social accountability impact evaluations to map the most effective instruments for impact evaluation and apply these to Bank operations, as appropriate. Conclusion 97. As this report has shown in detail, progress in implementing IEG recommendations varies across recommendations, in terms of both what is being delivered (outputs or outcomes) and how much (ranging from moderate to substantial).162 Given that the recommendations vary widely in terms of the thematic areas and functions they cover, it is difficult to develop specific detailed measures of moderate progress or substantial progress that can be consistently applied. Even so, some general principles can be articulated. Moderate progress would mean that a new approach, direction, or funding source has been identified, developed, and perhaps piloted, but not yet mainstreamed or brought to scale. This often entails undertaking several key steps, for example, carrying out a needs assessment, conducting stakeholder consultations, developing guidelines, building staff or client capacity, commissioning analytic work, and piloting new approaches in select projects or locations. Achieving moderate progress requires the investment of sufficient human and financial resources to demonstrate a serious commitment to meaningful change, even if that change is still in process. Communication and outreach on the new approach would be another indicator of progress, as it signals the WBG’s commitment to moving in a new direction. Substantial progress requires a more advanced stage of implementing a recommendation. This means that a new approach or direction has been embedded, institutionalized, or mainstreamed in WBG systems or its operating model. Indicators of substantial progress include structural or policy changes, scaling up of a new approach across multiple regions and GPs, increased allocations of funding, or corporate commitments aligned with the new direction or approach. 98. In considering whether recommendations are delivering outputs or outcomes, this report recognizes that outcomes fall along a continuum from outputs to early, intermediate, and high-level outcomes, as articulated in IEG’s 2020 RAP report. Applying this framework to the implementation of IEG recommendations, outputs would be the direct deliverables of World Bank actions, which lead to the achievement of outcomes - broader changes in behavior or new ways of working that are embedded in how the Bank aims to deliver strategic priorities. Outcomes can be further disaggregated into early, intermediate, and high-level, depending on their role in achieving long-term development objectives. As illustrated in figure 2, early outcomes modify specific processes that affect the implementation of strategic priorities, whereas intermediate outcomes modify the overall way WBG implements strategic priorities, and high-level outcomes modify the frameworks that govern how the WBG engages on strategic priorities. 161 https://worldbankgroup.sharepoint.com/sites/EAP/Pages/EAP-Corporate-Commitments.aspx 162 As mentioned previously, very few recommendations have seen little or no progress, and those will be given special attention going forward. 55 Figure 3. Management’s self-assessment of progress towards outcomes (WB only) Source: OPCS staff analysis. 99. Figure 3 illustrates Management’s self-assessment of the level of progress towards outcomes by recommendation, combining implementation progress (moderate or substantial) and evidence of achievement of results (outputs or outcomes).163 The highest percentage of recommendations have resulted in the achievement of substantial outputs, cutting across all types of recommendations. In many cases, robust evidence is not available to classify some of the substantial results into outcomes, and that makes this category larger than the next one. This is followed by substantial outcomes, which also includes a variety of thematic areas. A more limited number and less diverse range of thematic areas achieved moderate outcomes and moderate outputs. It is normal that many recommendations have not yet achieved substantial outcomes, given that it takes time for actions and outputs to translate into outcomes, especially for recommendations that are more process oriented. Analyzing the level of progress by date of the evaluation confirms a correlation, as most recommendations that have achieved substantial outcomes are from evaluations that took place in FY17 and FY18. It is also worth noting, that even when fully implemented, some recommendations will not achieve high-level outcomes, without other complementary actions, some of which may be outside the WBG’s span of control. 100. While categorizing progress on implementing recommendations involves a degree of subjectivity, this initial effort aims to provide an overall picture of the level of results achieved, based on an assessment of the evidence provided. Recommendations placed the lowest and highest in the 163 Recommendations that apply to IFC-only have not been included in this section of the analysis, and the corresponding Annex 3. 56 results chain (moderate outputs and substantial outcomes) were easy to identify, based on the evidence provided, but in many cases, it was more challenging to distinguish between the middle two categories – substantial outputs and moderate outcomes. Given this fact, unless the evidence could fully justify a rating of moderate outcomes, the lower category was assigned. While there was an effort to be rigorous and methodical in conducting this exercise, it was not intended to be a definitive methodology, but rather to articulate a framework that could be perfected over time. A list of recommendations by level of progress is contained in Annex 3.164 Going forward, Management will collaborate with IEG to further refine these categories and develop more detailed criteria for assessing progress. Moving forward 101. Management recognizes that continued reporting over multiple cycles helps ensure accountability and provides an opportunity to monitor and demonstrate impact. Hence, Management is being selective in proposing recommendations to retire. This is limited to recommendations that are considered to have shown substantial outcomes based on the evidence presented in the report. In one exceptional case, Management proposes to retire a recommendation that has achieved substantial outputs, as further progress is dependent on country uptake and outside of the WBG’s span of control. Also, following the MAR reform principles, as established in the FY20 MAR Update, Management proposes retiring the recommendations from the RNFE evaluation, as this year is the fourth implementation update. Finally, exceptions may be considered in the future in cases where more suitable alternate reporting mechanisms are in place. In such cases, Management reporting will continue through another mechanism, but retirement is recommended to avoid duplication of efforts and to keep the MAR report manageable in size. Specifically, Management suggests retiring the recommendations contained in Annex 4. 102. While this FY21 report represents progress, fully elevating the MAR to a higher-level of outcome orientation is an ambitious undertaking that will take several iterations to develop and fine-tune. Management views this as a learning process that will require collaboration with IEG and continued engagement with units throughout the WBG to further strengthen the outcome orientation of both IEG’s recommendations as well as Management’s responses and reporting. The experience of this round has highlighted several areas where continued efforts could improve the quality of the process going forward. One area that requires additional work and dialogue is defining outcome-oriented progress milestones. While the intention of the MAR reform was to move away from predefined targets and indicators, allowing greater flexibility, it might be useful to develop further the framework for defining levels of progress that can be applied across a diverse range of recommendations. Such a framework would also be helpful in determining when, as attempted in this report, it is appropriate to retire recommendations, particularly those focused on areas where the WBG expects to remain engaged in a continual process of improvement, with no clear endpoint. Another area that can be strengthened going forward is the quality of evidence provided to substantiate progress, including more consistent use of quantitative data, for example, increases in the number of countries applying a new approach or scaling up operations relative to pre- evaluation baselines. Finally, future iterations of the MAR will aim to increase the focus on lessons learned to better discern which recommendations have been most influential and why and further unpack how recommendations have influenced Management’s thinking and change of direction. 164 The self-assessment in Annex 3 covers recommendations related to the World Bank. 57 Annexes Annex 1. List of Recommendations by Theme (WBG)165 # IEG Recommendation Theme Implementing Institution 1. To develop sustainable capacity to address pandemics, systematically integrate, in Investment in WB World Bank Group–financed projects and ASA, awareness and preparedness plans People for and governance frameworks for pandemic control with the client country’s own Greater Equity health system. [Health Services] and Economic 2. Strengthen World Bank and IFC synergy to support public-private interactions in Growth WB client countries to contribute to SDG 3 and universal health coverage. [Health Services] 3. Enhance the strategic alignment and selectivity of World Bank Group engagement WB in ongoing and future GPPs. [Health Services] 4. Strengthen World Bank’s efforts, including through technical assistance and Integrated WB capacity and institution building, to develop client country pollution measurement Climate and and monitoring systems, especially in countries where such capacity is low. Development to [Pollution] Maximize 5. Intensify efforts to scale up and recalibrate the World Bank’s efforts in pollution Impact WB management to address the most important pollution priorities. [Pollution] 6. Leverage the World Bank Group’s climate change portfolio to better combat local WB and regional air pollution and other applicable forms of pollution. [Pollution] 7. For clients that lack the required knowledge, IFC should strengthen their support to IFC help these clients to better comply with Performance Standards on pollution by offering advisory services. [Pollution] 8. The WBG should further strengthen coordination among its different CF initiatives WB and instruments to enhance complementarity, avoid fragmentation, and harmonize their results frameworks. [Carbon Finance] 9. The WBG should strengthen the client country focus of its CF activities, integrating WB them with country programs, in accordance with client demand and international agreements, enhancing their economic development benefits in client countries, and especially promoting poverty reduction co-benefits in low-income countries (LICs). [Carbon Finance] 10. The WBG should identify complementary and country-specific interventions that WB enhance the GHG emission reduction impact of carbon pricing solutions, consistent with countries’ Nationally Determined Contributions. [Carbon Finance] 11. The WBG should continue to pilot new market-based and scalable approaches for WB reducing GHG emissions, including those that focus on underutilized sectors and underserved countries. [Carbon Finance] 12. At the corporate level, the World Bank and IFC should clarify their approach to the Growth coupled WB RNFE, and as part of it, how the World Bank Group engages across its institutions, with access to GPs, and partnerships to promote nonfarm economic development to reduce productive poverty in the rural space. [RNFE] economic 13. The World Bank Group should strengthen and deepen gender analysis during opportunities WB project preparation of rural nonfarm projects and more consistently use the results of this analysis, to address gender related binding constraints to female labor force participation in the RNFE. [RNFE] 14. To bridge the identified gap, the World Bank and IFC should more flexibly and WB relevantly select and design projects in a manner tailored to the specific stage and nature of a country or area’s structural transformation and adapted to the needs and dynamics of the target rural population. [RNFE] 15. Initiate high-level, strategic commitments to regional integration in all operational WB regions, in addition to the Sub-Saharan Africa region, with tailored approaches. [Regional Integration] 16. Rebalance the Bank Group regional integration projects emphasizing regions with WB high integration potential, and regional public goods. [Regional Integration] 17. Intensify partnerships with traditional and non- traditional regional stakeholders to WB promote collective action, knowledge sharing within and across regions to foster regional integration. [Regional Integration] 165 Numbers assigned in this annex to each recommendation are maintained in all annexes for ease of reference. i # IEG Recommendation Theme Implementing Institution 18. In order to enhance effectiveness, the World Bank Group should promote an WBG approach of complementary (simultaneous and/or sequential) interventions in trade facilitation reforms in countries where trade is a client priority and World Bank Group has a comparative advantage, substantiated by consistent diagnostics. [Trade Facilitation] 19. The World Bank Group should identify and mitigate political economy constraints WBG to trade facilitation reform implementation through systematic application of its tools for stakeholder analysis and consultation (including public private dialogue). [Trade Facilitation] 20. The World Bank Group should systematically apply a differentiated approach to WBG identify and monitor, where relevant, the public policy objectives of trade regulations relating to public health, safety, the environment, good governance, formality, and the rule of law. [Trade Facilitation] 21. World Bank Group should rationalize its own two major trade facilitation indicator WB sets to build on the virtues of each of them, and to enhance their responsiveness to implemented reforms. [Trade Facilitation] 22. Enhance the understanding of market creating opportunities and associated WB/IFC constraints at the country level and ensure that such knowledge is adequately reflected in the CPF process to allow for a more strategic deployment of Bank Group programs and interventions. [Creating Markets] 23. Enhance access to markets for the underserved groups, including the poor, and WB entailing adequate M&E provisions to understand how market creation affect the poor. [Creating Markets]166 24. Regularly assess the risk-taking capabilities of IFC to carry out its market creation IFC activities in IDA and other structurally weak economies in a financially sustainable way. [Creating Markets] 25. Integrate capital market development within the Bank Group across different areas Multiple Sources WB/IFC of support. [Capital Markets] of Finance to Support 26. Enhance the use of the FSAP instrument to underpin capital markets interventions’ Sustainable WB/IFC design. [Capital Markets] Growth 27. Review funding sources available for capital market development and their impact WB/IFC upon program design and sustainability. [Capital Markets] 28. The WBG should increase its use of CF instruments to attract and mobilize finance WB that supports transformational activities and leverages private investments. [Carbon Finance] 29. Identify and catalyze private sector solutions to promote the self-reliance and Tackling IFC resilience of the displaced and host communities. [Forced Displacement] Fragility, Conflict and Violence 30. In urban areas where the client has identified crime and violence as a resilience risk, WB the World Bank’s support should be based on a localized typology of crime and violence that is informed by relevant analytic work. This approach should be supported by an assessment of the mechanisms most effective at reducing crime and violence within operations. [Urban Resilience] 31. The Bank Group should reform the country level results system to ensure that it Sharpening the WBG accurately captures the Bank Group contribution to country outcomes and usefully way the WBG informs decision making on country engagements [Outcome Orientation] aims for outcomes 32. The design and implementation of World Bank projects that build urban resilience WB should systematically incorporate resilience characteristics and articulate their application throughout the project cycle. These should include the following: (i) design standards in line with resilience risks, (ii) cost-benefit analysis in line with resilience risks, (iii) city and inter-jurisdictional coordination, and (iv) inclusive approaches for vulnerable people. [Urban Resilience] 33. Adopt clear criteria for the selection and segmentation of clients according to IFC IFC strategic priorities including for upstream project development, cascade and creating markets. [IFC Client Engagement] 166 IFC retired the recommendation after FY20 in agreement with IEG as several activities to focus on underserved groups have been mainstreamed into the IFC work program. ii # IEG Recommendation Theme Implementing Institution 34. Establish clear accountabilities and incentives for strategic client relationship IFC management. [IFC Client Engagement] 35. Strengthen the business development function and support systems by, inter alia, IFC increasing the transparency and accountability for client interactions and their outcomes and integrating client management databases into IFC’s information architecture. [IFC Client Engagement] 36. Strengthen the capacity to operationalize findings of country and sector diagnostic IFC work to develop new clients and investment opportunities. [IFC Client Engagement] 37. Bolster IFC’s internal incentives and resources to systematize support for upstream IFC approaches across IFC departments [IFC Client Engagement] 38. Scope engagements and contributions to major global convening initiatives more WB/IFC deliberatively. [Convening Power] 39. Enhance how the World Bank and IFC’s internal systems and processes support WB/IFC managing major convening initiatives over their life cycle. [Convening Power] 40. Improve links between the World Bank’s global and country work. [Convening WB Power] 41. As it defines future corporate priorities for citizen engagement, the World Bank WB should reflect in those priorities the need to achieve greater depth and quality of the citizen engagement activities it supports. [Citizen Engagement] 42. The World Bank should encourage and support efforts of its regional, country and WB Global Practices teams to establish, where appropriate, “thick� citizen engagement that is regular and continuous, uses multiple tools, and is embedded in country systems. [Citizen Engagement] 43. The World Bank should seize the opportunity of the implementation of the ESF to WB leverage citizen engagement mechanisms—beyond consultations and Grievance Redress Mechanisms—to reach the objectives of managing social risks, strengthening country systems, and promoting social inclusion. [Citizen Engagement] 44. IFC should ensure that its clients’ stakeholder engagement activities required by IFC Performance Standard 1 in projects with affected communities are carried out during appraisal and supervision of the projects and systematically documented. [Citizen Engagement] 45. Strengthen the approach to knowledge in the GPs and GTs with clear goals, roles, WB and mechanisms, budgets commensurate with mandates, and metrics for knowledge uptake, quality, and influence. [KFC] 46. Improve budgeting systems to better incentivize knowledge flow and collaboration. Sharpening the WB [KFC] way the WBG learns for 47. Ensure there is ongoing monitoring of the operating model and more continuity in WB outcomes change management efforts to enhance the organization’s ability to attain its knowledge flow and collaboration goals. [KFC] 48. Better link the GPs and Regions to improve coordination and enhance WB responsiveness to clients. [KFC] 49. Review the existing quality assurance arrangements to improve the quality of WB knowledge embedded in advisory and financing services. [KFC] 50. The World Bank Group should work to close knowledge gaps about what works to WB reduce rural poverty within the RNFE. [RNFE] 51. In countries where the rural economy is a key part of the solution to ending poverty, WB the World Bank Group should (in partnership with donors and client countries) collect information on both formal and informal rural enterprises and their constraints and performance to help better inform the Systematic Country Diagnostic. [RNFE] 52. Strengthen knowledge management within the capital market area and develop a WB/IFC frontier global knowledge program. [Capital Markets] 53. When the World Bank Group finances multiple interventions that build urban WB/IFC resilience in a country, such a portfolio of interventions should be informed by iii # IEG Recommendation Theme Implementing Institution diagnostics of urban system risks, to ensure that they are complementary and coordinated. [Urban Resilience] 54. Strengthen the World Bank’s country analytical work on pollution, in particular such Sharpening the WB analytical work that allows countries to prioritize their pollution concerns based on way the WBG a countrywide and comprehensive assessment and deploy such analytical work to measures cover more countries and target countries more strategically.[Pollution] outcomes 55. Improve measurement of the quality of health services and the distributional effects WB of health services projects. [Health Services] 56. The World Bank should strengthen the monitoring of its citizen engagement WB activities by systematically adopting results framework indicators that are results oriented. [Citizen Engagement] 57. Strengthen the design of IDA Regional Window supported projects to improve the WB assessment of spillover effects and to generate evidence based on robust indicators. [Regional Integration] 58. The Bank Group should systematically identify and track progress of interventions WB/IFC that build urban resilience to chronic stresses and acute shocks, across its institutions. [Urban Resilience] 59. IFC should support its public and private sector Cities Initiative clients through IFC available resilience risk assessment and mitigation tools to strengthen development impacts. [Urban Resilience] iv Annex 2. List of Recommendations by Functional Type (WBG) # IEG Recommendation Functional Type 4. Strengthen World Bank’s efforts, including through technical assistance and capacity and institution building, to Stepping up Advocacy develop client country pollution measurement and monitoring systems, especially in countries where such and Engagement capacity is low. [Pollution] 5. Intensify efforts to scale up and recalibrate the World Bank’s efforts in pollution management to address the most important pollution priorities. [Pollution] 6. Leverage the World Bank Group’s climate change portfolio to better combat local and regional air pollution and other applicable forms of pollution. [Pollution] 28 The WBG should increase its use of CF instruments to attract and mobilize finance that supports transformational activities and leverages private investments. [Carbon Finance] 10. The WBG should identify complementary and country-specific interventions that enhance the GHG emission reduction impact of carbon pricing solutions, consistent with countries’ Nationally Determined Contributions. [Carbon Finance] 11. The WBG should continue to pilot new market-based and scalable approaches for reducing GHG emissions, including those that focus on underutilized sectors and underserved countries. [Carbon Finance] 42. The World Bank should encourage and support efforts of its regional, country and Global Practices teams to establish, where appropriate, “thick� citizen engagement that is regular and continuous, uses multiple tools, and is embedded in country systems. [Citizen Engagement] 15. Initiate high-level, strategic commitments to regional integration in all operational regions, in addition to the Sub-Saharan Africa region, with tailored approaches. [Regional Integration] 17. Intensify partnerships with traditional and non- traditional regional stakeholders to promote collective action, knowledge sharing within and across regions to foster regional integration. [Regional Integration] 1. To develop sustainable capacity to address pandemics, systematically integrate, in World Bank Group–financed projects and ASA, awareness and preparedness plans and governance frameworks for pandemic control with the client country’s own health system. [Health Services] 23. Enhance access to markets for the underserved groups, including the poor, and entailing adequate M&E provisions to understand how market creation affect the poor. [Creating Markets] 29. Identify and catalyze private sector solutions to promote the self-reliance and resilience of the displaced and host communities. [Forced Displacement] 7. For clients that lack the required knowledge, IFC should strengthen their support to help these clients to better comply with Performance Standards on pollution by offering advisory services. [Pollution] 56. The World Bank should strengthen the monitoring of its citizen engagement activities by systematically adopting Improving M&E, results framework indicators that are results oriented. [Citizen Engagement] including better 57. Strengthen the design of IDA Regional Window supported projects to improve the assessment of spillover effects indicators and to generate evidence based on robust indicators. [Regional Integration] 20. The World Bank Group should systematically apply a differentiated approach to identify and monitor, where relevant, the public policy objectives of trade regulations relating to public health, safety, the environment, good governance, formality, and the rule of law. [Trade Facilitation] 21. World Bank Group should rationalize its own two major trade facilitation indicator sets to build on the virtues of each of them, and to enhance their responsiveness to implemented reforms. [Trade Facilitation] 55. Improve measurement of the quality of health services and the distributional effects of health services projects. [Health Services] 58. The Bank Group should systematically identify and track progress of interventions that build urban resilience to chronic stresses and acute shocks, across its institutions. [Urban Resilience] 44. IFC should ensure that its clients’ stakeholder engagement activities required by Performance Standard 1 in projects with affected communities are carried out during appraisal and supervision of the projects and systematically documented. [Citizen Engagement] 59. IFC should support its public and private sector Cities Initiative clients through available resilience risk assessment Expanding Data, and mitigation tools to strengthen development impacts. [Urban Resilience] Diagnostics, and 36. Strengthen the capacity to operationalize findings of country and sector diagnostic work to develop new clients Knowledge and investment opportunities. [IFC Client Engagement] 22. Enhance the use of the FSAP instrument to underpin capital markets interventions’ design. [Capital Markets] 24. Regularly assess the risk-taking capabilities of IFC to carry out its market creation activities in IDA and other structurally weak economies in a financially sustainable way. [Creating Markets] 54. Strengthen the World Bank’s country analytical work on pollution, in particular such analytical work that allows countries to prioritize their pollution concerns based on a countrywide and comprehensive assessment and deploy such analytical work to cover more countries and target countries more strategically. [Pollution] 49. Review the existing quality assurance arrangements to improve the quality of knowledge embedded in advisory and financing services. [KFC] i 47. Ensure there is ongoing monitoring of the operating model and more continuity in change management efforts to enhance the organization’s ability to attain its knowledge flow and collaboration goals. [KFC] 22. Enhance the understanding of market creating opportunities and associated constraints at the country level and ensure that such knowledge is adequately reflected in the CPF process to allow for a more strategic deployment of Bank Group programs and interventions. [Creating Markets] 52. Strengthen knowledge management within the capital market area and develop a frontier global knowledge program. [Capital Markets] 30. In urban areas where the client has identified crime and violence as a resilience risk, the World Bank’s support should be based on a localized typology of crime and violence that is informed by relevant analytical work. This approach should be supported by an assessment of the mechanisms most effective at reducing crime and violence within operations. [Urban Resilience] 53. When the Bank Group finances multiple interventions that build urban resilience in a country, such a portfolio of interventions should be informed by diagnostics of urban system risks, to ensure that they are complementary and coordinated. As part of this effort to build urban resilience, emphasis should be placed on developing sustained engagements to help cities adapt and transform in the face of stresses and shocks. [Urban Resilience] 13. The World Bank Group should strengthen and deepen gender analysis during project preparation of rural nonfarm projects and more consistently use the results of this analysis, to address gender related binding constraints to female labor force participation in the RNFE. [RNFE] 50. The World Bank Group should work to close knowledge gaps about what works to reduce rural poverty within the RNFE. [RNFE] 51. In countries where the rural economy is a key part of the solution to ending poverty, the World Bank Group should (in partnership with donors and client countries) collect information on both formal and informal rural enterprises and their constraints and performance to help better inform the Systematic Country Diagnostic. [RNFE] 8. The WBG should further strengthen coordination among its different CF initiatives and instruments to enhance Fostering WBG complementarity, avoid fragmentation, and harmonize their results frameworks. [Carbon Finance] Collaboration 25. Integrate capital market development within the Bank Group across different areas of support. [Capital Markets] 2. Strengthen World Bank and IFC synergy to support public-private interactions in client countries to contribute to SDG 3 and universal health coverage. [Health Services] 48. Better link the GPs and Regions to improve coordination and enhance responsiveness to clients. [KFC] 40. Improve links between the World Bank’s global and country work. [Convening Power] 41. As it defines future corporate priorities for citizen engagement, the World Bank should reflect in those priorities Clarifying Strategic the need to achieve greater depth and quality of the citizen engagement activities it supports. [Citizen Framework or Engagement] Approach 43. The World Bank should seize the opportunity of the implementation of the ESF to leverage citizen engagement mechanisms—beyond consultations and Grievance Redress Mechanisms—to reach the objectives of managing social risks, strengthening country systems, and promoting social inclusion. [Citizen Engagement] 18. In order to enhance effectiveness, the World Bank Group should promote an approach of complementary (simultaneous and/or sequential) interventions in trade facilitation reforms in countries where trade is a client priority and World Bank Group has a comparative advantage, substantiated by consistent diagnostics. [Trade Facilitation] 34. Establish clear accountabilities and incentives for strategic client relationship management. [IFC Client Engagement] 37. Bolster IFC’s internal incentives and resources to systematize support for upstream approaches across IFC departments [IFC Client Engagement] 19. The World Bank Group should identify and mitigate political economy constraints to trade facilitation reform implementation through systematic application of its tools for stakeholder analysis and consultation (including public private dialogue). [Trade Facilitation] 3. Enhance the strategic alignment and selectivity of World Bank Group engagement in ongoing and future GPPs. [Health Services] 16. Rebalance the Bank Group regional integration projects emphasizing regions with high integration potential, and regional public goods. [Regional Integration] 32. The design and implementation of World Bank projects that build urban resilience should systematically incorporate resilience characteristics and articulate their application throughout the project cycle. These should include the following: (i) design standards in line with resilience risks, (ii) cost-benefit analysis in line with resilience risks, (iii) city and interjurisdictional coordination, and (iv) inclusive approaches for vulnerable people. [Urban Resilience] 38. Scope engagements and contributions to major global convening initiatives more deliberatively. [Convening Power] ii 12. At the corporate level, the World Bank and IFC should clarify their approach to the RNFE, and as part of it, how Clarifying Managerial the World Bank Group engages across its institutions, GPs, and partnerships to promote nonfarm economic Processes, including development to reduce poverty in the rural space. [RNFE] Resourcing 14. To bridge the identified gap, the World Bank and IFC should more flexibly and relevantly select and design projects in a manner tailored to the specific stage and nature of a country or area’s structural transformation and adapted to the needs and dynamics of the target rural population. [RNFE] 45. Strengthen the approach to knowledge in the GPs and GTs with clear goals, roles, and mechanisms, budgets commensurate with mandates, and metrics for knowledge uptake, quality, and influence. [KFC] 46. Improve budgeting systems to better incentivize knowledge flow and collaboration. [KFC] 39. Enhance how the World Bank and IFC’s internal systems and processes support managing major convening initiatives over their life cycle. [Convening Power] 27. Review funding sources available for capital market development and their impact upon program design and sustainability. [Capital Markets] 33. Adopt clear criteria for the selection and segmentation of clients according to IFC strategic priorities including for upstream project development, cascade and creating markets. [IFC Client Engagement] 31. The Bank Group should reform the country level results system to ensure that it accurately captures the Bank Sharpening client or Group contribution to country outcomes and usefully informs decision making on country country focus engagement. [Outcome Orientation] 35. Strengthen the business development function and support systems by, inter alia, increasing the transparency and accountability for client interactions and their outcomes and integrating client management databases into IFC’s information architecture. [IFC Client Engagement] 9. The WBG should strengthen the client country focus of its CF activities, integrating them with country programs, in accordance with client demand and international agreements, enhancing their economic development benefits in client countries, and especially promoting poverty reduction co-benefits in low-income countries (LICs). [Carbon Finance] iii Annex 3. Management Self-Assessment of Progress Towards Outcomes (WB only) # IEG Recommendation Level of Progress 3. Enhance the strategic alignment and selectivity of World Bank Group engagement in ongoing Substantial outcomes and future GPPs. [Health Services] 8. The WBG should further strengthen coordination among its different CF initiatives and instruments to enhance complementarity, avoid fragmentation, and harmonize their results frameworks. [Carbon Finance] 9. The WBG should strengthen the client country focus of its CF activities, integrating them with country programs, in accordance with client demand and international agreements, enhancing their economic development benefits in client countries, and especially promoting poverty reduction co-benefits in low-income countries (LICs). [Carbon Finance] 10. The WBG should identify complementary and country-specific interventions that enhance the GHG emission reduction impact of carbon pricing solutions, consistent with countries’ Nationally Determined Contributions. [Carbon Finance] 11. The WBG should continue to pilot new market-based and scalable approaches for reducing GHG emissions, including those that focus on underutilized sectors and underserved countries. [Carbon Finance] 25. Integrate capital market development within the Bank Group across different areas of support. [Capital Markets] 26. Enhance the use of the FSAP instrument to underpin capital markets interventions’ design. [Capital Markets] 27. Review funding sources available for capital market development and their impact upon program design and sustainability. [Capital Markets] 45. Strengthen the approach to knowledge in the GPs and GTs with clear goals, roles, and mechanisms, budgets commensurate with mandates, and metrics for knowledge uptake, quality, and influence. [KFC] 46. Improve budgeting systems to better incentivize knowledge flow and collaboration. [KFC] 47. Ensure there is ongoing monitoring of the operating model and more continuity in change management efforts to enhance the organization’s ability to attain its knowledge flow and collaboration goals. [KFC] 48. Better link the GPs and Regions to improve coordination and enhance responsiveness to clients. [KFC] 49. Review the existing quality assurance arrangements to improve the quality of knowledge embedded in advisory and financing services. [KFC] 5. Intensify efforts to scale up and recalibrate the World Bank’s efforts in pollution management Moderate outcomes to address the most important pollution priorities. [Pollution] 14. To bridge the identified gap, the World Bank and IFC should more flexibly and relevantly select and design projects in a manner tailored to the specific stage and nature of a country or area’s structural transformation and adapted to the needs and dynamics of the target rural population. [RNFE] 15. Initiate high-level, strategic commitments to regional integration in all operational regions, in addition to the Sub-Saharan Africa region, with tailored approaches. [Regional Integration] 22. Enhance the understanding of market creating opportunities and associated constraints at the country level and ensure that such knowledge is adequately reflected in the CPF process to allow for a more strategic deployment of Bank Group programs and interventions. [Creating Markets] 38. Scope engagements and contributions to major global convening initiatives more deliberatively. [Convening Power] 39. Enhance how the World Bank and IFC’s internal systems and processes support managing major convening initiatives over their life cycle. [Convening Power] 40. Improve links between the World Bank’s global and country work. [Convening Power] 42. The World Bank should encourage and support efforts of its regional, country and Global Practices teams to establish, where appropriate, “thick� citizen engagement that is regular and continuous, uses multiple tools, and is embedded in country systems. [Citizen Engagement] 56 The World Bank should strengthen the monitoring of its citizen engagement activities by systematically adopting results framework indicators that are results oriented. [Citizen Engagement] 1. To develop sustainable capacity to address pandemics, systematically integrate, in World Bank Substantial outputs Group–financed projects and ASA, awareness and preparedness plans and governance frameworks for pandemic control with the client country’s own health system. [Health Services] i # IEG Recommendation Level of Progress 2. Strengthen World Bank and IFC synergy to support public-private interactions in client countries to contribute to SDG 3 and universal health coverage. [Health Services] 4. Strengthen World Bank’s efforts, including through technical assistance and capacity and institution building, to develop client country pollution measurement and monitoring systems, especially in countries where such capacity is low. [Pollution] 6. Leverage the World Bank Group’s climate change portfolio to better combat local and regional air pollution and other applicable forms of pollution. [Pollution] 32. The design and implementation of World Bank projects that build urban resilience should systematically incorporate resilience characteristics and articulate their application throughout the project cycle. These should include the following: (i) design standards in line with resilience risks, (ii) cost-benefit analysis in line with resilience risks, (iii) city and inter-jurisdictional coordination, and (iv) inclusive approaches for vulnerable people. [Urban Resilience] 12. At the corporate level, the World Bank and IFC should clarify their approach to the RNFE, and as part of it, how the World Bank Group engages across its institutions, GPs, and partnerships to promote nonfarm economic development to reduce poverty in the rural space. [RNFE] 13. The World Bank Group should strengthen and deepen gender analysis during project preparation of rural nonfarm projects and more consistently use the results of this analysis, to address gender related binding constraints to female labor force participation in the RNFE. [RNFE] 16. Rebalance the Bank Group regional integration projects emphasizing regions with high integration potential, and regional public goods. [Regional Integration] 17. Intensify partnerships with traditional and non- traditional regional stakeholders to promote collective action, knowledge sharing within and across regions to foster regional integration. [Regional Integration] 23. Enhance access to markets for the underserved groups, including the poor, and entailing adequate M&E provisions to understand how market creation affect the poor. [Creating Markets]167 41. As it defines future corporate priorities for citizen engagement, the World Bank should reflect in those priorities the need to achieve greater depth and quality of the citizen engagement activities it supports. [Citizen Engagement] 43. The World Bank should seize the opportunity of the implementation of the ESF to leverage citizen engagement mechanisms—beyond consultations and Grievance Redress Mechanisms— to reach the objectives of managing social risks, strengthening country systems, and promoting social inclusion. [Citizen Engagement] 50. The World Bank Group should work to close knowledge gaps about what works to reduce rural poverty within the RNFE. [RNFE] 51. In countries where the rural economy is a key part of the solution to ending poverty, the World Bank Group should (in partnership with donors and client countries) collect information on both formal and informal rural enterprises and their constraints and performance to help better inform the Systematic Country Diagnostic. [RNFE] 52. Strengthen knowledge management within the capital market area and develop a frontier global knowledge program. [Capital Markets] 53. When the World Bank Group finances multiple interventions that build urban resilience in a country, such a portfolio of interventions should be informed by diagnostics of urban system risks, to ensure that they are complementary and coordinated. [Urban Resilience] 54. Strengthen the World Bank’s country analytical work on pollution, in particular such analytical work that allows countries to prioritize their pollution concerns based on a countrywide and comprehensive assessment and deploy such analytical work to cover more countries and target countries more strategically. [Pollution] 55. Improve measurement of the quality of health services and the distributional effects of health services projects. [Health Services] 57. Strengthen the design of IDA Regional Window supported projects to improve the assessment of spillover effects and to generate evidence based on robust indicators. [Regional Integration] 58 The Bank Group should systematically identify and track progress of interventions that build urban resilience to chronic stresses and acute shocks, across its institutions. [Urban Resilience] 18. In order to enhance effectiveness, the World Bank Group should promote an approach of Moderate Outputs complementary (simultaneous and/or sequential) interventions in trade facilitation reforms in countries where trade is a client priority and World Bank Group has a comparative advantage, substantiated by consistent diagnostics. [Trade Facilitation] 167 IFC retired the recommendation after FY20 in agreement with IEG as several activities to focus on underserved groups have been mainstreamed into the IFC work program. ii # IEG Recommendation Level of Progress 19. The World Bank Group should identify and mitigate political economy constraints to trade facilitation reform implementation through systematic application of its tools for stakeholder analysis and consultation (including public private dialogue). [Trade Facilitation] 20. The World Bank Group should systematically apply a differentiated approach to identify and monitor, where relevant, the public policy objectives of trade regulations relating to public health, safety, the environment, good governance, formality and the rule of law. [Trade Facilitation] 21. World Bank Group should rationalize its own two major trade facilitation indicator sets to build on the virtues of each of them, and to enhance their responsiveness to implemented reforms. [Trade Facilitation] 30. In urban areas where the client has identified crime and violence as a resilience risk, the World Bank’s support should be based on a localized typology of crime and violence that is informed by relevant analytic work. This approach should be supported by an assessment of the mechanisms most effective at reducing crime and violence within operations. [Urban Resilience] 31. The Bank Group should reform the country level results system to ensure that it accurately captures the Bank Group contribution to country outcomes and usefully informs decision making on country engagements [Outcome Orientation] iii Annex 4. IEG Recommendations proposed to retire from future MAR (WBG) Management proposes to retire 20 IEG Recommendations. Of these, two pertain to the IEG evaluation on Health Services, three to Carbon Markets, five to the RNFE. four to Capital Markets, five to KFC, and one to IFC Client Engagement. Management proposes to retire from the MAR the two IEG recommendations related to the IEG evaluation on Health Services. The first focuses on strengthening World Bank and IFC synergy in support of public-private interactions in the provision of health care. While the WBG will continue to engage in this area, Management will report on progress on SDG 3 and Universal Health Care through the IDA RMS and corporate scorecard but not through the annual MAR Updates. With regards to enhancing the selectivity of WBG engagement in global partnerships, Management proposes to cease reporting on this recommendation on account of two factors. The first is that considerable work has already been done in this regard by reviewing ongoing partnerships and aligning that with the HNP strategy. This is reflected in the consolidation and rationalization of trust funds. The second consideration is that partnerships have become more salient in the context of the ongoing pandemic situation, and much of the WBG’s ability to respond today has been premised on its strategic partnerships with multilateral and non-profit actors. The partnerships the WBG has developed with WHO, UNICEF, GAVI, and SAPI to name a few instances have been critical. The applicability of this IEG recommendation is perhaps less salient in the current context. Management proposes to retire three recommendations pertaining to the IEG evaluation on Carbon Markets. Management advises to cease reporting on the first three recommendations pertaining to Carbon Markets (i.e. to strengthen coordination amongst different carbon finance initiatives, enhance the client country focus of its carbon finance activities and emphasize the GHG reduction impact of carbon pricing solutions). Substantial progress has been achieved in these three areas and it’s not clear what more can be done in this regard, given that factors impacting further progress largely lie outside of the WBG’s control. Management will retire the five IEG recommendations on the RNFE. The first recommendation suggests that the Bank clarify its approach to the RNFE and that it enhances the needed internal collaboration in that regard. The second recommendation is intended to strengthen gender analysis as it pertains to the RNFE and to better address gender-related binding constraints in the RNFE. The third recommendation is envisioned to better align project design with the needs and dynamics of the target rural population. The last two recommendations suggest the need to close knowledge gaps on the RNFE and to be more systematic in the collection of information and data pertaining to rural enterprises. The IEG evaluation on RNFE was discussed at CODE in FY17. As the discussion above indicates, key actions have been substantially completed and the WBG has moved towards the recommendations’ intended outcomes. It is not clear what more could be achieved. Also, given that this is the fourth year of reporting on this evaluation, the FY20 MAR reform rules require retirement. As the WBG recognizes that the RNFE remains an important avenue for rural poverty reduction, it will continue to mobilize the RNFE agenda as recommended by IEG. Further reporting on this important agenda will be achieved through other reporting mechanisms to the Board through IDA19 and IDA20 reporting tools, the JET Agenda and through the SCDs, CLRs and CPFs as appropriate. i Management will retire the four IEG recommendations that pertain to Capital Markets in this thematic area. The recommendations were intended to integrate capital market development in different sectors of WBG engagement, enhance the use of the FSAP instrument in the design of capital market interventions and streamline funding sources available for capital market development. The fourth recommendation relates to the development of a frontier knowledge program on Capital Markets. The IEG evaluation on Capital Markets was discussed at CODE in FY17. As the MAR for this evaluation ends in FY21, this will be the final Management update for this report. There has been good progress here. Very considerable work has been done in all four areas. Key actions have been substantially completed and the spirit of the IEG recommendations met. Management proposes to retire all five IEG recommendations on Knowledge Flow and Collaboration. Management considers the readjustment of the Bank’s operating model in FY20 a full response to the IEG evaluation on Knowledge Flow and Collaboration. The full effect of Management’s actions will only become evident over multiple years, as systems, processes, and signaling influence staff mindsets and behaviors. Management therefore proposes to remove this evaluation from annual reporting and utilize IEG’s planned evaluation update on knowledge flow and collaboration in FY24 as the next entry point for focused discussion on how the operating model is functioning. Management proposes to retire one IEG recommendation on IFC Client Engagement. Management considers IFC’s actions in response to the recommendation – Establish clear accountabilities and incentives for strategic client relationship management – The IEG recommendation is addressed as part of two initiatives launched by IFC’s management: I. The new HR competency framework for Operations, launched in FY20, provides a clear roadmap of the various career options available to staff with a greater definition of duties and accountabilities for staff in different roles including the behaviors that drive successful client engagements as it applies to business development, transactions processing and portfolio management. IFC’s management considers the initiative complete and proposes to retire reporting on the progress; and II. Investment processing initiatives aim to introduce an efficient and client centric approach in processing investments (Accountability and Decision Making (ADM) framework, IFC Fast-Track COVID-19 Facility (FTCF), New Business Platforms) to allow for faster delivery to clients while differentiating by risk and complexity of the project. Given an ongoing Board engagement on these initiatives, going forward IFC’s management proposes reporting as part the Board engagements and discontinue reporting on the progress for the purpose of future MARs. ii # IEG Recommendation Rationale 1. Strengthen World Bank and IFC synergy to support public-private [Health Services] Key actions substantially interactions in client countries to contribute to SDG 3 and universal completed. Reporting on World Bank support for health coverage. [Health Services] pandemic preparedness and control will be absorbed in future reporting on the World Bank 2. Enhance the strategic alignment and selectivity of World Bank Group Group’s COVID-19 response. The WBG will continue engagement in ongoing and future GPPs. [Health Services] to report on progress on SDG 3 and Universal Health Care through its IDA RMS and Corporate Scorecard but not through the annual MAR Updates. 3. The WBG should further strengthen coordination among its different [Carbon Finance] Management similarly proposes CF initiatives and instruments to enhance complementarity, avoid to retire the three recommendations pertaining to fragmentation, and harmonize their results frameworks. [Carbon Carbon Finance under this thematic area (i.e., to Finance] strengthen coordination amongst different carbon 4. The WBG should strengthen the client country focus of its CF activities, finance initiatives, enhance the client country focus integrating them with country programs, in accordance with client of its carbon finance activities and emphasize the demand and international agreements, enhancing their economic GHG reduction impact of carbon pricing solutions), development benefits in client countries, and especially promoting given that much work has already been done in poverty reduction co-benefits in low-income countries (LICs). [Carbon these three areas and the spirit of the IEG Finance] recommendation has been met. Although many of 5. The WBG should identify complementary and country-specific these factors lie outside the control of the WBG, interventions that enhance the GHG emission reduction impact of much has been achieved in the three areas. carbon pricing solutions, consistent with countries’ Nationally Determined Contributions. [Carbon Finance] 6. The WBG should continue to pilot new market-based and scalable approaches for reducing GHG emissions, including those that focus on underutilized sectors and underserved countries. [Carbon Finance] 7. At the corporate level, the World Bank and IFC should clarify their [RNFE] The spirit of the IEG recommendations was approach to the RNFE, and as part of it, how the World Bank Group addressed through Management’s engagements engages across its institutions, GPs, and partnerships to promote across WBG institutions over the last several years nonfarm economic development to reduce poverty in the rural space. to promote nonfarm economic development to [RNFE] reduce poverty in the rural space. In light of the 8. The World Bank Group should strengthen and deepen gender analysis objectives of the MAR Reform and the shift towards during project preparation of rural nonfarm projects and more outcome orientation, any further reporting will be consistently use the results of this analysis, to address gender related achieved through other reporting mechanisms, binding constraints to female labor force participation in the RNFE. including IDA18 and IDA19, as well as SCDs, CLRs [RNFE] and CPFs, where relevant. 9. To bridge the identified gap, the World Bank and IFC should more flexibly and relevantly select and design projects in a manner tailored to the specific stage and nature of a country or area’s structural transformation and adapted to the needs and dynamics of the target rural population. [RNFE] 10. The World Bank Group should work to close knowledge gaps about what works to reduce rural poverty within the RNFE. [RNFE] 11. In countries where the rural economy is a key part of the solution to ending poverty, the World Bank Group should (in partnership with donors and client countries) collect information on both formal and informal rural enterprises and their constraints and performance to help better inform the Systematic Country Diagnostic. [RNFE] 12. Integrate capital market development within the Bank Group across [Capital Markets] Management will retire the three different areas of support. [Capital Markets] recommendations pertaining to capital markets, 13. Enhance the use of the FSAP instrument to underpin capital markets given the very considerable work done in all three interventions’ design. [Capital Markets] areas. Management considers that key actions have 14. Review funding sources available for capital market development and been substantially completed. Moreover, the IEG their impact upon program design and sustainability. [Capital evaluation on Capital Markets was discussed at Markets] CODE in FY17. As the MAR for this evaluation ends in FY21, this will be the final Management update for this report. 15. Strengthen the approach to knowledge in the GPs and GTs with clear [KFC] Management considers the readjustment of goals, roles, and mechanisms, budgets commensurate with mandates, the operating model a full response to the IEG and metrics for knowledge uptake, quality, and influence. [KFC] evaluation. The full effect of Management’s actions iii # IEG Recommendation Rationale 16. Improve budgeting systems to better incentivize knowledge flow and will only become evident over multiple years, as collaboration. [KFC] systems, processes, and signaling influence staff 17. Better link the GPs and Regions to improve coordination and enhance mindsets and behaviors. responsiveness to clients. [KFC] Management proposes to remove this evaluation 18. Review the existing quality assurance arrangements to improve the from annual reporting and utilize IEG’s planned quality of knowledge embedded in advisory and financing services. evaluation update on knowledge flow and [KFC] collaboration in FY24 as the next entry point for 19. Ensure there is ongoing monitoring of the operating model and more focused discussion on how the operating model is continuity in change management efforts to enhance the functioning. organization’s ability to attain its knowledge flow and collaboration goals. [KFC] 20. Establish clear accountabilities and incentives for strategic client Management considers IFC’s actions in response to relationship management. [IFC Client Engagement] the recommendation – Establish clear accountabilities and incentives for strategic client relationship management – The IEG recommendation is addressed as part of two initiatives launched by IFC’s management: I. the new HR competency framework for Operations, launched in FY20, provides a clear roadmap of the various career options available to staff with a greater definition of duties and accountabilities for staff in different roles including the behaviors that drive successful client engagements as it applies to business development, transactions processing and portfolio management. IFC’s management considers the initiative complete and proposes to retire reporting on the progress; and II. investment processing initiatives aim to introduce an efficient and client centric approach in processing investments (Accountability and Decision Making (ADM) framework, IFC Fast- Track COVID-19 Facility (FTCF), Business Platforms) to allow for faster delivery to clients while differentiating by risk and complexity of the project. Given an ongoing Board engagement on these initiatives, going forward IFC’s management proposes reporting as part the Board engagements and discontinue reporting on the progress for the purpose of future MARs. iv