Evaluation Team

The OPEV team included Colin Kirk (former OPEV Director), Jessica Kitakule-Mukungu (Evaluation Manager), Akua Arthur-Kissi (Research Assistant), and other OPEV staff who provided comments.

Objective

The purpose of this evaluation is to assess the African Development Bank’s (AfDB’s) performance as an institution in fulfilling its PD commitments. The evaluation focuses on learning by asking the questions: ‘Are we doing the right things?’ (relevance of the choices the Bank has made to deliver on the PD commitments); and ‘Are we doing things right?’ (effectiveness of the actions taken).

Main Findings

• Overall performance: The review of Bank policies, country strategies, and portfolios shows that the Bank has performed well on ownership and harmonisation principles. The Bank has consistently promoted country ownership and leadership. With its greater field presence, the Bank has increasingly participated in consultative mechanisms and frameworks. The Bank’s performance has not been satisfactory with regard to alignment, managing for development results (MfDR), and mutual accountability, although some progress has been noted in these areas. Performance ratings are consistent with Paris Survey data1 and country visit findings.

• There are a number of areas where the Bank has made good progress towards Paris Declaration principles since 2005: i) The Bank has signed on to the Joint Assistance Strategies (JAS) for a number of countries (Central African Republic, the Gambia, Sierra Leone, Tanzania, Kenya, Liberia, Zambia, and Uganda). ii) It has harmonised its procurement rules and procedures with other multilateral development banks and removed the rules of origin for the African Development Fund (ADF), which were a major impediment to further harmonisation and alignment of Bank support. iii) The Bank has, within the limitations set by the African Development Fund (ADF), increasingly used budget support to respond to the needs of RMCs. IV) It has made substantial contributions to building country capacity in public finance management and statistical capacity V) It has increased its field presence, and as a result has strengthened the Bank’s engagement with RMCs and other development partners -It has made efforts to strengthen the broad-based ownership of its Country Strategy Papers (CPS) and align country programmes with RMCs’ priorities. vi) The Bank has strengthened Africa’s leadership on development through support of regional institutions promoting economic and financial governance. vii) Practices for mutual accountability are emerging as a result of stronger partnerships at the country level.

• Progress has been generally better where the Bank’s mission has overlapped with the aid effectiveness (AE) agenda. The Bank has communicated its commitment to ownership of the aid agenda consistently, through policies and strategies; and its efforts to build RMC capacities for effective leadership have been consistent with this commitment

• Progress has been inconsistent in areas that are not supported by the Bank’s corporate strategy. Alignment with country systems has been ad hoc, often as a result of demands by country governments. A long-term approach has been missing. Performance-related issues (time lapse between approval and effectiveness, low disbursement rates, slow procurement of goods and services) have often been addressed through short-term solutions (training, consultants). The Bank’s cautious approach to risk management has made it reluctant to use country systems, which has slowed progress. The Bank has no strategic stance on the use of more aligned modalities other than budget support and, as a result, progress in the use of common instruments (such as participation in pooled funds or sector budget support) is slow and variable.

• The transition to new ways of working under the aid effectiveness agenda is creating dilemmas and conflicts. Bank staff perceive the inherent tension between the key drivers of Bank performance (risk awareness, disbursement pressure) and the new ways of working under the aid effectiveness agenda. The existing Bank documents do not provide clarity on how choices and challenges resulting from the aid effectiveness agenda should be addressed at the operational level

• Decentralisation offers a unique opportunity to harness the latent capacities and intrinsic motivation available within countries. Delegation of authority to field offices and a stronger focus on technical capacity within the country will help to harness those potentials.

• The Bank has not yet leveraged the opportunities of policy dialogue within the new aid architecture. The Bank has traditionally treated budget support as a funding mechanism rather than as part of a package which includes policy dialogue to support effective country leadership. The Bank often lacks the critical mass of qualified staff on the ground that would enable an effective role in policy dialogue.

• The Bank has missed opportunities to link institutional performance with aid effectiveness principles within its corporate strategy. Reference to aid effectiveness is scattered throughout the Bank’s corporate strategies. There is no overall strategy document to guide the Bank’s approach to aid effectiveness in line with its mission.

• The Bank has not invested substantially in developing and implementing an organisation-wide approach to integrating aid effectiveness principles into its work. The Bank’s efforts over time have been fragmented, inconsistent, and under-resourced. In the absence of a clear rationale and strategy for implementing aid effectiveness principles, aid effectiveness has often been treated as an add-on. Aid effectiveness principles are addressed on a case-by-case basis rather than in response to an overarching strategy for aid effectiveness.

• Institutional arrangements for aid effectiveness have not been adequate and have led to a fragmented approach. Different parts of the organisation have made some efforts to address AE principles, but overall progress has been fragmented across the organisation. The Bank has not had an effective approach to mainstreaming AE principles in the organisation. It has not provided the organisational arrangements and resources for an aid effectiveness strategy. Capacity to coordinate an action plan on aid effectiveness has been insufficient

Main Recommendations

Recommendations to the Bank :

• Establish the case for aid/development effectiveness within the organisation: The President of the Bank has already made a powerful case for focusing on development effectiveness.20 The evaluation endorses this move. In order to achieve better coherence between aid effectiveness principles and its corporate strategy, the Bank has to make the case that it is in its own interests to strengthen country capacities and leadership if it wants to improve its performance in the long term. The upcoming strategic process will be an opportunity to establish the relevance of development effectiveness principles within the Bank’s corporate strategy. Action points: * The Policy Department (ORPC) is well placed to lead the process. Based on the policy document review undertaken as part of this evaluation, ORPC should examine the strategic fit between development effectiveness principles and corporate strategies. ORPC should clarify the Bank’s policy stance on issues where there are gaps (e.g., conditionalities, funding instruments). * The Chief Economist should prepare a background paper—as part of the examination of critical issues—of the relevance of development principles for the Bank’s strategy. This paper, which would serve as a kind of mid-term strategy review, needs to take into account the outcomes of the discussions around development effectiveness that will take place during that process. In the background paper, the Chief Economist in cooperation with the Strategy Office (STRG), should also clarify the Bank’s comparative advantage based on development effectiveness principles. * The Chief Operating Officer’s (COO’s) office and ORVP should lead the Bank-wide debate around critical issues that seem to create tensions between aid effectiveness and elements of its strategy. A priority issue for debate is the use of country systems. The Procurement and Fiduciary Services Department should present a strategy to strengthen use of country systems, to be debated at headquarters and in field offices. ORVP’s seminars on operational knowledge could provide the platform for these discussions. 

• Mainstream development effectiveness principles: The Bank will only be able to address development effectiveness in a consistent way if the principles are mainstreamed in all parts of the organisation. The Bank needs to make sure that there are clear responsibilities and incentives, and that all staff are pulling in the same direction with regard to development effectiveness. The Roadmap to Aid Effectiveness has been a first step towards raise awareness and consolidating efforts through a Bank-wide approach. Action points: * ORPC should prepare a central document that provides guidance on how Bank support will address aid effectiveness principles. The document does not have to replace existing policy documents, but it should provide clear references to how aid effectiveness principles are addressed in the various policy documents. * ORPC should also provide detailed guidelines for task managers on how aid effectiveness principles should be taken into account at the operational level. The ongoing work on the Bank Group Operational Manual should embed aid effectiveness principles into Bank operations. * The Bank should appoint development effectiveness champions in all three operational complexes who would lead on the preparation and implementation of development action plans to implement AE principles at operational levels. * The Performance Management System should require the inclusion of development effectiveness-related objectives where relevant. Country strategy papers need to include consistent strategies on development effectiveness-related issues (e.g. choice of funding modalities, use of country systems). Country portfolio performance reviews must report on development effectiveness indicators as part of a more standardised format. * The Bank (Policy Department, Procurement and Fiduciary Risk Department, Governance Dept, Chief Economist, and operational departments) needs to review its approach to fiduciary risk management. Work in progress needs to cover all aid instruments, including investment lending. A fiduciary risk assessment instrument to monitor budget support has already been developed. * ORQR will monitor aid effectiveness targets on an annual basis. We recommend focus on the few SMART21 targets that are critical to achieve if the Bank is going to fulfil its commitment to AE principles. 

• Manage strategic decisions: It is not sufficient to formulate policies and strategies and take strategic decisions. Strategic decisions need to be managed purposefully and systematically. This requires a proactive approach to anticipate and mitigate the challenges and risks that accompany change. The example of decentralisation shows that key organisation-wide reforms should be accompanied by the full package of complementary reforms and strategies required, and by management arrangements that ensure a strategic and responsive approach to implementation. Action points: * “Change management” can be purposefully linked to the ongoing decentralisation reform. In line with the Decentralisation Roadmap, we propose that the office of the COO should be responsible for monitoring the transition to new ways of working. The COO will be reporting to the board on the change initiatives. * The Decentralisation Roadmap has a strong focus on strengthening existing field offices. It should explicitly address the need for technical capacity to lead country dialogue, and for stronger selectivity and focus on comparative advantages within the new aid architecture. * The Bank’s HR strategy needs to address the need for “soft skills” required for effective management of development cooperation in an era of H&A. This includes training for existing staff and deployment of additional staff to provide strong capacities on the ground. Training should include soft skills (negotiation, dialogue, etc.) as well as technical skills (risk management, funding modalities, analysis of governance-related issues. etc.). * The Bank needs to make sure that activities in relation to aid effectiveness (training, workshops, and studies) are sufficiently resourced. The reform of trust fund management is a step towards mobilising additional funding for capacity building and dialogue.