This study considers why conflict and fragility matter—for the World Bank and for bilateral donors that are contributing larger than ever amounts to its budgets. It outlines the particular development challenges confronting international actors in fragile and conflict-affected countries, and gives a summary of the Bank’s evolving approach to those challenges.
The study then sets out certain key problems which, despite recent improvements, continue to reduce the quality of the Bank’s impacts. Noting the inconsistencies in the Bank’s approaches, it assesses the factors that determine the Bank’s ability to deal with, and help address, the immense complexity of its operating environments. It concludes with recommendations for improving approaches to those complexities.
Key findings:
- In conflict-affected and fragile contexts, governance and economic systems very often favour a small group of competing elites who also determine policy formulation and public expenditure. Such systems are immense obstacles to the kind of ‘open access’ societies on which sustainable poverty reduction depends. Yet, because the Bank’s decision-making remains focused on formal policies and institutions and is structured in line with the orthodoxies of ‘alignment’ and ‘results’, its effectiveness is impaired.
- It is vital that the Bank’s performance criteria and administrative budget institutionalise a multidisciplinary approach to the challenges of its operating contexts—in analysis, implementation and evaluation. Without such shifts, the Bank will continue its tendency to take ‘context as the starting point’ only on an ad hoc basis on the initiative of individual senior staff members. The Bank is improving its discourse on these issues but, institution-wide, the quantity of assistance still remains the principal determinant of ‘success’. Yet the hard lessons of experience underline that it is as much the process as the expenditure that matters: the how, not the how much.
Issues for the World Bank:
Issue 1: Understanding how fragility affects operations and how operations affect fragility.
- Informal ‘institutions’, power relations and ‘systems of meaning’, such as caste or ethnicity, have profound impacts on governance and access to economic opportunity. Yet the Bank, institution-wide, underplays the importance of these dynamics and the effects of its activities on them. The Bank’s main analytical tool (the Country Policy and Institutional Assessment—CPIA) centres primarily on formal institutions and policies. Despite staff awareness of power dynamics and local politics, as an institution the Bank’s approach to economic reform and project activities can still be overly technical. It can even appear detached from the conflict realities of the context.
- In recent years, the Bank has sought to improve its knowledge on a wider range of contextual dynamics. Multidisciplinary analysis (including on social impacts) is, however, not yet systematically integrated into internal decision-making processes. Sensitivities amongst member countries mean that necessary changes to the CPIA, which is shared with partner governments, remain some way off. Such sensitivities should not, however, prevent deeper, multidisciplinary analysis from being embedded in the internal working practices of country-, research- and results-assessment teams.
Issue 2: Adapting the approach to the context.
- The Bank is guided by a principle of country ‘ownership’. Under its constitution, it is obliged to agree on projects with partner governments. However, even if governance capacity-building remains a vital task, it should also be recognised that the ‘State’ can be a major part of the problem. With the alternative approach of ‘shadow’ alignment remaining ill-defined and their own vested interest in ‘low transaction costs’, the Bank and donor partners need to take care not to rush into formal alignment with government. An over-focus on the executive government capacity may undermine progress. Sustainable outcomes depend on patient engagement with all major stakeholders. This is necessary so as to help change the ‘cultures of power’ that have been driving conflict.
Issue 3: Matching human resources to operational realities.
- In recent negotiations over IDA15, major donors such as the UK have pushed the Bank to pay greater attention to social analysis and social impact assessments. With quantitative evidence as the primary criteria for decision-making, the Bank tends not to systematically focus attention on the human dimensions of the context (culture, traditions and other ‘systems of meaning’). Effective engagement in fragile contexts requires not only knowledge but adequate staff numbers.
Issue 4: Defining effectiveness.
- Efficiency must not be conflated with effectiveness. For country assistance as a whole and for projects, ‘results’ remain recorded largely on the basis of technical statistical measurements, with insufficient articulation of spatial, gender or identity group distribution. The Bank’s focus on ‘economic’ development, combined with external pressure for it to spend still more money, tends to make the speed and absolute quantity of disbursements the main benchmark by which ‘success’ is measured.
Issue 5: Bank and/or donor?
- Among board members and internally, there is a core tension as to the Bank’s role. Is it purely a financial institution that provides lending to recipient governments, or a donor that uses money and expertise to help ‘transform’ the development contexts in which it works? With a deepening International Development Association (IDA) discourse about providing grants rather than loans in the poorest countries and a strong commitment to ensure ‘pro-poor’ development, many of the Bank’s operations show it to be increasingly playing a ‘change agent’ role. Improved performance in fragile countries will partly depend on how well all its stakeholders come to a shared understanding about this role and its implications.
