• Approach to fragile states. Over the past decade, the Bank has developed a more explicit and systematic approach to working in fragile states. Key milestones were the adoption of Post-Conflict Assistance Guidelines in 2001; a Post-Conflict Country Facility in 2004; and the Strategy for Enhanced Engagement in Fragile States, with its associated Fragile States Facility (FSF), in 2008. With these steps, the Bank has raised awareness of the special needs of fragile states in its activities, and allocated substantial additional financial resources to respond to those needs.

• Identifying fragile states and applying eligibility criteria. Since 2008, the Bank has taken a number of steps to improve and differentiate its support to fragile states. The eligibility criteria have been applied transparently and, on occasion, a flexible approach has been adopted in response to need. However, the categorization of fragile states and eligibility criteria for financial allocations have raised a number of substantive and operational concerns.

• The volume of AfDB support. Most fragile countries face massive and far-reaching needs to which the Bank has made significant contributions. In some cases, these contributions were catalytic, but were rarely determinant on their own. As an aggregate trend, the Bank’s commitments in fragile states have risen further and faster than in non-fragile states since 1999. Volume allocations have been generally relevant and responsive to changing absorptive and financial management capacity in the countries concerned.

• Use of instruments. The Bank’s instruments and modalities have responded to a good range of country needs and capacities, augmented by new support introduced in 2004 with the Post-Conflict Countries Facility (PCCF) and further strengthened in 2008 with the FSF. The Bank’s regular and special programs have delivered significant results in terms of arrears clearance, infrastructure rehabilitation, and some areas of capacity development. The Bank’s use of budget support has been supportive of country governments emerging from conflict. Of the three functional pillars of the FSF, Pillar II for arrears clearance has performed well against the aims set in the Strategy, Pillar I for supplementary support in post-conflict countries has performed moderately well, while the performance of Pillar III for capacity building and technical assistance has been disappointing.

• Efficiency. Overall, by the AfDB’s conventional efficiency measures, the picture is mixed, in view of the fact that fragile situations require quicker and more flexible action. Since 2008, the FSF has introduced greater flexibility in responding to the needs of fragile states. Arrears clearance has been streamlined. Although projects in fragile states have, not surprisingly, shown below-average performance on standard measures of the Annual Portfolio Performance Review (APPR), Pillar I has been an efficient mechanism for major additional transfers with limited extra burdens. Pillar III has not yet taken programmatic shape as the flexible and efficient vehicle to support capacity building that was intended.

• Organizational effectiveness. Decision making for programs in fragile states has mainly followed the Bank’s normal practices, although with higher-level attention coming into play for arrears clearance and crisis situations, and effective arrangement for managing the dedicated program of technical assistance not yet achieved. Overall, the strategy’s vision of deeper, more considered AfDB-wide engagement in fragile states has not been supported by a realistic and staged implementation plan and the sorts of organizational changes and support systems required. The Bank does not at this stage have the appropriate higher-level arrangements in place to ensure sustained strategic attention and coordination in this area. Staff from the Fragile States Unit (FSU) are not deployed to maximum effect, and program staff are not yet equipped to apply the knowledge of fragility and relevant tools in their work in fragile states. Further decentralization will be an important help, but not a quick fix.

• Quality of response. Although the AfDB’s support to fragile states has been responsive to requests and to urgent needs, in most cases it has not been underpinned by significant analysis of the all-important political context and the drivers of conflict and fragility. No explicit links are made to how the Bank’s programming should fit into national peacebuilding and statebuilding1 objectives, as the strategy envisaged. As highlighted by the first principle of international good practice, this lack of a fragility lens and business as usual approach opens up significant risk of failure and conceivably wider damage from the Bank’s interventions. Although coordination and joint working are especially essential in fragile situations, the Bank’s partnership working has so far been limited and has mainly operated largely at the project rather than the strategic level.

• Contributions to results. The AfDB has made its most significant contributions in fragile states in the normalisation of their international relations through arrears clearance and consequent debt relief. These are high-level, high-impact effects. Significant contributions have also been made to reconstructing basic infrastructure and providing access to basic services as well as to public financial management reforms. On the other hand, significant opportunities to contribute systematically to capacity building, reconstruction, and reconciliation processes and broader statebuilding have been missed

Recommendation(s) to the Bank:

• The Bank Group’s Boards should considera broader programmatic approach to engage in ‘fragile and stabilizing situations’ where the essential functions and resiliency of state, society and/ or the economy are severely impaired or critically vulnerable to shocks, or where recovery from major shocks is still underway. Such an approach would respond better to the needs of ‘fragile states’ not adequately covered in the FSS, and to RMCs and regions that are currently undergoing stabilization after conflict and/or fundamental political change. It would also open up an important preventive dimension. 54 Strengthened merit-based approaches and leading partnership practice could provide the basis for the Bank to attract additional support for its work in fragile situations, including from non-traditional donors.

• Instead of using a formula-based country allocations for additional funding in the same way as the basic performance-based ADF allocations, the new approach could establish a small number of key objectives and criteria for AfDB assistance, and then allocate the available supplementary ADF, AfDB and other resources responsively (as it has with arrears clearance) on a rolling, merit-based allocation approach. 

• The objectives and criteria should be dictated by more in-depth assessments of needs in individual fragile and stabilizing situations, and by the Bank’s demonstrated strengths in relevant areas.

• This responsive funding should not be subjected to any standard timelines for exit, but available, for shorter or longer-term projects. It should be allocated through more frequent (perhaps quarterly) assessments of context and the strength of proposals emerging from countries and teams.

• Given the high stakes and difficult judgments involved, these allocation decisions would need to be made at a high level with input from specialized staff 

• The intended basic purposes of the current three pillars would be maintained – reinforcing regular operations, supporting arrears clearance, and a highly flexible window for technical assistance and capacity building in fragile and stabilizing situations (sometimes including urgent, up-front needs). 

• Streamline and reallocate responsibilities within the Bank’s structures to enable an effective institutional response to fragility issues 

• The Bank’s country offices, regional and sectoral ,departments should have adequate responsibility and accountability (and adequate resources) for planning and implementing programs in fragile and stabilizing situations (including capacity-building and technical assistance support) and for applying the necessary analytical work and strategic guidance for these activities. A review of the accountability and incentive mechanisms for regional and sectoral departments should be undertaken to encourage more analytical work and adaptive approaches needed in fragile states 

• The Fragile States Unit should be relieved of its current responsibilities for directly managing the technical assistance and capacity building activities under Pillar III, as well as the vague and unrealistic ‘coordination’ and ‘facilitation’ roles assigned in 2008. It should be re-tasked to become a dedicated knowledge resource, with a role in resource allocation to maintain its operational links and its influence in effectively mainstreaming knowledge. The FSU should incorporate the latest practically oriented international guidance55 (see Annex 2) and the Bank’s own experience to rapidly generate practical guidance and operational tools adapted to the AfDB’s needs and current capabilities. This should include guidelines for mandatory fragility-sensitive assessments to be included in Country Strategy Papers – the Bank’s key authorizing tool – and the use of follow-up monitoring (including monitoring of the externa environment) in every program proposal in fragile and stabilizing situations. The unit should also be tasked to provide systematic training for AfDB staff involved to equip them to apply relevant knowledge. 

• The Bank should consider which complex is more likely to provide the leadership for the implementation of the necessary organizational changes required for the whole Bank to deliver on both the valid commitments of its Fragile States Strategy and the major revisions now needed; and to ensure the continuing co-ordination required. The Fragile States Unit should be positioned in this complex 

• With its Africa-wide responsibilities and need to leverage a useful strategic role in all fragile and stabilizing African countries and regions, the Bank should practice and promote more concerted, harmonised and co-ordinated international efforts. It has a unique potential to become a working champion of partnership, of practical experience-sharing rooted in African conditions, and of responding to conditions of fragility across borders. 

• The Bank must invest more effort in existing donor coordination frameworks, especially at the strategic level, and actively help build them elsewhere; push ahead the decentralisation process to fragile states; and empower the country field offices with responsibility, decision making authority and resources. 

• The Bank should prepare an operational plan to deliver the cross-cutting changes required by the Fragile States Strategy, which extend from better external partnerships all the way to stronger analytical work, training and adequate incentives for staff to work in fragile states.