Archived - Evaluation of Canada’s Payments to the International Development Association (IDA)
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Internal Audit and Evaluation
Department of Finance Canada
Approved by the Deputy Minister of Finance on the recommendation of
Audit and Evaluation Committee on January 4, 2012
Table of Contents
This report presents the results of the Evaluation of Canada’s Payments to the International Development Association (IDA) that was undertaken by Internal Audit and Evaluation of the Department of Finance Canada between April and September 2011. The purpose of the evaluation was to assess the relevance and performance of Canada’s program of payments to IDA. It was conducted primarily using secondary research, and covers approximately $2.8 billion in statutory payments to IDA over the nine-year period 2002/3-2010/11 (IDA 13-15 replenishments).
Established in 1960, IDA is one of the World Bank Group’s main lending arms that focuses on poverty reduction in the world’s poorest countries by providing them interest free loans, grants and analytic and advisory services. Canada has so far provided close to $9 billion to IDA. Decisions related to Canada’s payments to IDA are made by the Minister of Finance and approved by Cabinet, based on the Department’s assessment of IDA’s past and future plans. The Director of the International Finance and Development Division (International Trade and Finance Branch) is Canada’s IDA Deputy, who represents the Minister of Finance (Canada’s Governor at the World Bank) in donor discussions related to IDA.
Relevance: Canada’ payments to IDA continue to address a clear need. Countries eligible for IDA support lag behind on key measures and targets for economic and social development, with significant proportions of their population living in extreme poverty. Addressing global poverty continues to be a relevant and important priority for Canadians, and World Bank/IDA activities were broadly found to be relevant to addressing the development needs in IDA countries. Canada’s participation in IDA was found to be aligned with the federal government’s roles and responsibilities, and consistent with its priorities.
Performance: Administration of Canada’s program of payments to IDA was found to be effective overall, and comply with the requirements of the Official Development Assistance Accountability Act (ODAAA). The Department’s annual report to Parliament related to its participation in the World Bank, including IDA has improved considerably in recent years, with clearer articulation of Canadian priorities and the progress achieved on these. As the Department’s reporting continues to evolve, there is an opportunity to further strengthen reporting. To this end, the evaluation is recommending that the Department take steps to promote more proactive disclosure of information pertaining to funding decisions and results surrounding these substantial payments.
IDA countries have demonstrated progress on growth, poverty reduction and key development indicators over the past decade. IDA’s performance overall was found to be strong from the perspective of project performance and institutional effectiveness; however, evidence that IDA programs have achieved their expected country-level development outcomes was found to be limited. As assistance strategies for IDA countries continue to be increasingly results focussed, and as IDA’s use of impact evaluations increases, a better picture of IDA’s contribution to development outcomes in recipient countries is expected to emerge. World Bank/IDA management practices were found to be strong, particularly in terms of learning and accountability, and there is evidence of ongoing efforts to continue to improve institutional effectiveness, including aid effectiveness.
In recent years, some notable progress has been made on Canadian priorities related to fragile states, gender, institutional effectiveness and governance and accountability. These remain relevant priority areas for Canada to continue to advance in IDA policy discussions, and to monitor and report on results.
Existing literature on aid effectiveness makes a strong case for the disbursement of aid through multilateral as opposed to bilateral channels due to their wide membership, economies of scale, technical expertise, political neutrality and lower transaction costs. Several recent studies have found IDA to be among the top performing aid organizations. In addition, in recent years, IDA has put in place various measures to improve the efficiency and economy of its operations.
Overall, the evaluation concluded that Canada’s payments to IDA provide good value for money in supporting sustainable poverty reduction and economic growth in poor countries.
Recommendation: The Department should consider enhancing its existing reports to Parliament by: a) providing more information on progress made by IDA in achieving its objectives of poverty reduction and economic growth; and b) providing the rationale for funding allocations to IDA in addition to the amounts for each replenishment.
This report presents the results of the Evaluation of Canada’s Payments to the International Development Association (IDA) that was conducted by Internal Audit and Evaluation of the Department of Finance Canada between April and September 2011. The Evaluation was conducted in accordance with the Treasury Board Policy on Evaluation, and was authorized by the Deputy Minister upon approval of the Department’s Five-Year Evaluation Plan on March 1, 2011. It covers approximately $2.8 billion in statutory payments to IDA over the nine-year period fiscal years 2002/3-2010/11, coinciding approximately with the last three IDA funds replenishment cycles (IDA 13-15) .
IDA is one of the World Bank Group’s main lending arms that focuses on poverty reduction in the world’s poorest countries by providing them interest free loans, grants and analytic and advisory services. IDA funds programs in primary education, basic health services, clean water and sanitation, environmental safeguards, business climate improvements, infrastructure and institutional reforms that aim to boost economic growth, reduce inequalities and improve living conditions in recipient countries. It also coordinates donor assistance to provide relief for poor countries that cannot manage their debt-service burden.
IDA is a revolving fund that relies heavily on contributions from donor countries, including Canada. The Department of Finance administers capital subscriptions for Canada’s commitments to IDA, which are made in accordance with the Bretton Woods and Related Agreements Act (1985). Decisions related to Canada’s payments to IDA are made by the Minister of Finance and approved by Cabinet, based on the Department’s assessment of IDA’s past and future plans. The Director of the International Finance and Development Division of the Department of Finance is Canada’s IDA Deputy, who represents the Minister of Finance (Canada’s Governor at the World Bank) in donor discussions related to IDA policy, performance and pledges to replenish the association’s finances every three years. Three Divisional staff dedicate part of their time to IDA related policy work, averaging approximately one FTE per year. The level of departmental effort dedicated to IDA is cyclical, and is greater in years of replenishment negotiations. Other key governmental stakeholders engaged by the Department in policy development related to Canada’s payments to IDA are the Canadian International Development Agency (CIDA) and Department of Foreign Affairs and International Trade (DFAIT).
Canada’s objectives and priorities related to its participation in the World Bank are articulated in the Department of Finance’s annual report to Parliament, Canada at the IMF and World Bank Group. Canada has three overarching priorities at the Bretton Woods institutions: 1) Governance and Accountability; 2) Institutional Effectiveness; and 3) Sustainable Poverty Reduction and Growth.
Canada’s payments to IDA primarily support the objective of sustainable poverty reduction and growth, targeting world’s poorest countries. Canadian priorities with respect to IDA over the last three IDA replenishment cycles (IDA 13-15) include: voice reforms, development effectiveness, debt-sustainability, gender issues, environment, and more recently support for fragile and conflict affected states, and responding to the financial crisis.
In the Department of Finance Program Activity Architecture, payments to IDA fall under the program activity Transfer and Taxation Payment Programs, and the sub-activity Commitments to International Financial Organizations. The relevant expected results for this program activity and departmental priority are:
- Payments to international organizations are consistent with Canada’s commitments;
- Effective international initiatives to strengthen developing economies.
Canada is currently the 8th largest shareholder in IDA (based on voting power), and has so far provided close to $9 billion in donor contributions to it. Canada’s payments to IDA over the last three IDA replenishment cycles (IDA 13-15) have totaled approximately CAD $2.8 billion. Annual direct program spending by the Department of Finance on payments to IDA in 2010 was $384,280,000. Table 1 below summarizes Canada’s contributions and donor share over the IDA 13-15 period.
|Average Annual Payments
(Actual) (CAD $)
(Actual) (CAD $)
|TOTAL IDA 13-15||2,832,360,000|
Seventy nine countries were eligible to receive IDA funding in IDA 15, and they received a total US$14.5 billion in new commitments in 2010. Eligibility for IDA resources is primarily based on: i) relative poverty defined as gross national income per capita below an established threshold (US$1,165 in FY2011) , and ii) need for concessional resources demonstrated through a lack of creditworthiness to borrow from both commercial sources and the World Bank’s other main lending arm, the International Bank for Reconstruction and Development (IBRD). Allocation of IDA resources among eligible countries is determined mainly based on country performance in implementing policies that promote growth and poverty reduction. One of IDA’s objectives is to direct half of its assistance to Africa provided that the individual country’s performance warrants the assistance.
The main objective of this evaluation was to assess the relevance and performance (effectiveness, efficiency and economy) of Canada’s program of payments to IDA with respect to supporting sustainable poverty reduction and growth, including achievement of the Millennium Development Goals (MDGs). The evaluation also assessed the achievements of Canadian priorities at the Bretton Woods institutions and performance of the Department of Finance in administering these payments. The scope of the evaluation included both financial and advisory services provided by IDA over the period IDA13-15 (2002 to 2010).
The evaluation approach was informed by the level of risk associated with this evaluation and existing practice for evaluating multilateral funding programs of this nature. The substantial dollar value of these statutory payments, which represent approximately 40 percent of total direct program spending by the Department, warranted assigning this evaluation a higher risk and higher priority status, and determined the timing of the evaluation.
The evaluation was conducted primarily using secondary research. This approach was deemed to be the most appropriate for this particular evaluation given that Canada’s payments go into a pool of funds to support the activities of an international institution. As it is customary for multilateral funding programs, the evaluation relied to the extent possible on the internal processes and performance information collected by the institution itself. The volume, availability and reliability of existing performance related information, including existing evaluations of IDA projects and programs by the World Bank’s Independent Evaluation Group (IEG), and third party reviews of World Bank and IDA performance further supported this evaluation approach.
Since IDA is only one among several donors that work alongside other government development initiatives, development outcomes, including poverty reduction in IDA countries, cannot be attributed to IDA programs alone. Recognizing this attribution problem, a contribution analysis type approach was used whereby development progress achieved in IDA countries was examined alongside IDA outputs and performance of IDA projects and country assistance programs against their objectives. This analysis, supplemented with findings on IDA’s institutional effectiveness, including relative effectiveness compared to other aid organizations, can provide a reasonable assessment of IDA’s contribution to poverty reduction, and support an overall assessment of the value for money of Canada’s payments to IDA.
Table 2 below presents the evaluation issues and questions, as well as the relevant data sources. Five lines of evidence were used to strengthen the level of rigour of the evaluation study (see section 3.3 for a description of these lines of evidence).
|Lines of Evidence|
|Evaluation Issues||Monitoring Reports||Evaluation Reports||Third
|Internal Documents Review||Interviews|
R1: To what extent do
payments to IDA continue
R2: To what extent are Canada’s payments to
R2.1: To what extent is support to IDA consistent
R2.2: To what extent does
support to IDA
R3: To what extent areCanada’s payments
P1: To what extent have Canada’s payments to
P2: To what extent have Canada’s contributions
P2.1: To what extent has IDA contributed to poverty
P2.2: To what extent is IDA considered an
P2.3: To what extent have Canada’s priorities at
P2.4: To what extent has Canada been effective
P3: To what extent can contributing to
P3.1: To what extent is IDA considered to
The following five data sources were used to ensure that the evaluation findings and conclusions were supported by more than one line of evidence.
1) Results and Performance Monitoring Information: This included information from IDA’s Results Measurement System (RMS), and various annual monitoring and performance reports produced by the World Bank. It also included mid-term and final reviews and related reports undertaken for the IDA 13-15 replenishment cycles.
2) Independent Evaluation and Review Reports: This included primarily a review of 20 Country Assistance Evaluations (CAE) of World Bank programs in IDA countries completed since 2004 by the World Bank’s IEG, and recent evaluations and reviews relevant to Canadian priority themes.
3) Third Party Literature Review: A literature review of relevant third party studies by academics, development think tanks, and other donors and organizations was undertaken to collect background and performance information on IDA performance from an external perspective.
4) Internal Documents/Files Review: This included a review of relevant Acts of Parliament, reports to Parliament, and other administrative, corporate planning and reporting documents, as well as documentation related to the Department’s consultations on its international assistance payments.
5) Interviews: A total of eight interviews were conducted (four interviews with officials from the Department of Finance and CIDA; and four interviews with representatives of civil society organizations (CSOs) that participated in the Department’s 2010 consultations on its international assistance payments). These interviews were used to collect supplementary information on aspects of relevance and performance of Canada’s payments to IDA for which information from secondary sources was not available.
World Bank vs. IDA performance data: Many studies and evaluations reviewed looked at Bank-wide performance, not IDA performance specifically. Where available, findings specific to IDA performance have been highlighted and given more weight in the analysis. In other cases, where IDA specific information was not available, application of general findings to IDA and limits are noted in the report.
Scope of Evaluations: Evaluations of World Bank programs are the best source of evidence available on achievement of longer-term and country level development outcomes in IDA countries. However, given that IEG evaluations examine program relevance and effectiveness over often a ten year period, and the usual lag between program delivery and achievement of outcomes, the assessment of achievement of development outcomes is more reflective of IDA performance in the earlier part of the timeframe covered by this evaluation (i.e., IDA 13 and 14). To overcome this constraint, findings from IEG evaluations are supplemented with more recent monitoring and project evaluation data to provide insights into performance trends and likelihood of achieving development outcomes of the more recent IDA portfolio.
Interviews: A limited number of interviews were conducted with a self-selected sample of CSOs to provide feedback on the Department’s process of consultations on its international assistance payments. Therefore, while findings on the consultation process are not representative of the views of all participants, they do reflect a high degree of consensus among the 4 of 10 CSOs that provided feedback on certain aspects of the Department’s consultation processes.
Canada’ payments to IDA continue to address a clear need. IDA countries lag behind on key measures and targets for economic and social development, and IDA activities were found to be broadly relevant for addressing these needs. Addressing global poverty continues to be a relevant and important priority for Canadians.
Canada’s participation in and support to IDA is aligned with the federal government roles and responsibilities, and consistent with its priorities.
In this section, the relevance of Canada’s program of payments to IDA is assessed through an examination of whether providing support to IDA continues to address a demonstrable need, if it is consistent with Government of Canada priorities, including its Official Development Assistance (ODA) related priorities, and is aligned with its roles and responsibilities.
Overcoming poverty continues to be a significant challenge for many developing countries.Globally, according to the latest data from the World Bank, in 2005, 25 percent of people in low and middle income countries of the world lived on less than $1.25 per day. The Gross Domestic Product (GDP) per capita in these countries in 2009 was $1,721. In comparison, GDP per capita in IDA countries was $625 in 2009 with 43 percent of the population living below $1.25 per day in 2005.
With respect to attainment of the MDGs, recent progress reports by both the UN and World Bank indicate that there remains considerable work to be done towards achieving the MDGs, particularly in the world’s poorest countries. According to the UN, while MDGs are still attainable, without a major push forward, many of the MDG targets are likely to be missed in most regions, and that increased attention to the poorest and most vulnerable is required. The 2011 World Development Report that focuses on development of fragile states further notes that “one-and-a-half billion people live in areas affected by fragility, conflict, or large scale, organized criminal violence. Accordingly, no low-income or conflict affected country has yet to achieve a single UN MDG.” In this context, IDA’s recent focus on fragile states appears to be highly relevant. As the 2011 Global Monitoring Report observes, reaching the MDGs is only one milestone. For example, according to projections by the UN and World Bank, even if the MDG target of halving the proportion of people living in extreme poverty is met (which is likely at a global level, based on current projections), approximately 900 million people will still be living on less than $1.25 by 2015.
The importance of the issue as a global problem is evidenced by ongoing discussions on development, poverty and Africa at consecutive G8 summits since 2002. Poverty remains a top global issue for Canadians according to recent domestic public opinion research. The 2010 instalment of Focus Canada, an annual survey of Canadian public opinion, examined responses to the questions related to key global issues and Canada’s influence in the world since 2002. It found starvation, world hunger and poverty has consistently been seen as an important global issue by Canadians. Foreign aid has consistently been viewed as one of the most important area where Canada is seen as making a positive difference in the world, second only to peacekeeping.
IDA’s mandate and activities in recipient countries were found to be relevant for addressing development needs. IEG evaluations of World Bank programs in IDA countries indicate that Bank strategy in most cases has been broadly relevant to country development needs and situation, and aligned with Government priorities/programs. A 2008 global poll of opinion leaders in 42 countries around the world commissioned by the World Bank similarly found that a majority in most regions of the world see the World Bank (IBRD and IDA) as relevant to their economic and social development efforts. The poll also indicated that opinion leaders were “most interested in seeing the (World Bank Group) take a leadership role in supporting the economic and social development of the world’s poorest countries”, speaking to the high relevance of IDA’s mandate and role within the World Bank Group.
Consistency with Government Priorities
Canada’s payments to IDA are meant to contribute to the Department of Finance’s ongoing priority to maintain an effective international influence. This is deemed to be an important priority as it allows the Department to stay actively engaged with Canada’s key economic partners in order to leverage Canada’s strengths and promote Canadian interests, as well as to advance Canada’s leadership in international financial institutions in developing programs and policies that promote global poverty reduction. To this end, one of Canada’s overarching priorities at the Bretton Woods institutions is “Sustainable Poverty Reduction and Growth—Supporting the IMF and the World Bank Group’s efforts to ensure that the growth and stability they help foster today will have a lasting effect over the long term.” Global poverty reduction through international sustainable development is also one of the federal government’s strategic outcomes, which asserts that “the quality of life in Canada is dependent on the quality of life experienced in other countries” and that “social and economic development in developing countries benefits the social and economic well-being of Canada and the world.” Canada’s payments to IDA support the aforementioned assertion and are consistent with the federal government’s strategic outcome as improving the quality of life in impoverished countries is IDA’s main objective.
IDA’s Alignment with Official Development Assistance Accountability Act (ODAAA) Criteria
The purpose of the ODAAA, which came into force on June 28, 2008, is to ensure that all Canadian ODA abroad is provided, among other things, “with a central focus on poverty reduction and in a manner that is consistent with Canadian values and foreign policy.” To meet the ODAAA criteria, Canada’s contribution to IDA has to: 1) contribute to poverty reduction; 2) take into account the perspectives of the poor; and, 3) be consistent with international human rights standards. To form an opinion as to whether its payments to IDA meet these criteria, the Department of Finance conducts a periodic assessment using various criteria and guidelines, including those used by the OECD’s Development Assistance Committee (DAC) and CIDA. In this assessment, poverty reduction is defined as “improving the social, economic and environmental conditions of the poor and their access to decision making.” Taking the perspectives of the poor into account requires, among other things, ensuring that there is a formal system put in place for the ODA recipients to provide feedback on the adequacy of aids received; and respecting human right standards, considering the existing sensitivities around being perceived as imposing one’s human rights standards on others, focuses primarily on complying “with a general policy of ‘do no harm’.” The extent to which these criteria are met then informs the Department’s overall conclusion. In both its 2009 and 2010 assessments, the Department concluded that payments to IDA met all ODAAA criteria; and therefore, could be considered ODA.
This overall conclusion was confirmed by an independent assessment of these issues that was done as part of this evaluation. For example, payments to IDA were found to be consistent with the ODAAA’s poverty reduction condition on the ground that IDA is a development fund whose main mission is to support the world’s poorest countries in their efforts to boost economic growth, lower poverty and improve the living conditions of their population. To this end, and as discussed above, IDA provided more than US$96 billion during the past three replenishment cycles to more than 79 countries, 39 of which are in Africa. Together, these countries are home to 2.5 billion people, half of the total population of the developing world.
These payments were also found to be consistent with the ODAAA condition on taking the perspective of the poor into consideration given that IDA has put in place various mechanisms to this effect. For example, since the beginning of IDA13, twelve representatives selected by borrower governments participate in all the IDA replenishment related discussions. Furthermore, high ranking government officials from these countries, including presidents, finance ministers and opinion leaders are invited as keynote speakers during the replenishment discussions. More recently, the draft replenishment reports are posted on IDA’s external website to solicit comments from civil society of both donor and recipient countries. The Country Assistance Strategy (CAS) is another means for IDA to take the views of the poor into consideration and to increase country ownership. According to an evaluation carried out by IEG, since IDA10, “CASs have become more comprehensive in their diagnosis of development challenges, and more participatory as a programming process.” The majority of the “CASs are now prepared through a participatory process involving the borrower government, and usually civil society representatives and donors.” These are meant to be opportunities for the borrowers to provide their respective country’s perspectives on the issues under discussion and strengthen the so-called country ownership, and for the lending countries to take the perspectives of the borrowers (the poor) into account in establishing replenishment goals.
With regards to consistency with the international human rights standards, the World Bank acknowledged the interconnectedness between human rights and development as early as 1998 in a publication entitled Development and Human Rights: The Role of the World Bank. The Bank believes that many of the activities of its affiliated organizations such as IDA have human rights dimensions. Accordingly, through such activities as improving poor people’s access to the basic necessities of life and promoting their participation in decision-making and governments accountability to their citizens, as well as “supporting justice reforms, fighting corruption and increasing [the] transparency of governments,” the Bank is indeed contributing to “the promotion of human rights and in the building and strengthening of national human rights capacities in the countries in which it operates.”
The World Bank has historically been criticized for not being able or willing to fully implement policies and frameworks that it has put in place to safeguard the human rights of those who are affected by its sponsored activities; it has particularly been criticized for differentiating between the so-called “socio-economic and development” dimension of the human rights and the “political and civil rights” dimensions. Conflicting interpretation of human rights and the Bank’s organizational culture, including its management structure, decision-making processes and internal power dynamics have been identified as the main reasons for impeding the Bank’s ability to fully integrated human rights into its operations. A review of the literature indicates that the majority of these criticisms refer to some of the past practices. Most of the recent literature tends to view the World Bank in a more favorable light. This has been attributed, to some extent, to a greater awareness of the underlying relationships between development and human rights, as well as to the creation of the Inspection Panel, which was established in 1993 to investigate complaints by those who believe their rights might have been negatively affected by the World Bank or IDA financed projects. Based on the information received from the Inspection Panel, between 2005 and 2010, the Panel investigated at least 12 IDA funded projects that were alleged to have failed to fully comply with the Bank’s operational policies and procedures (two of these had raised human rights related issues, which upon the recommendations of the Panel, the Bank management implemented appropriate corrective actions).
Alignment with Government Roles and Responsibilities
The provision of ODA, including payments to IDA is a component of Canada’s foreign policy and extension of its international relations. Although in the constitution the provision of foreign aid is not exclusively conferred to the federal government, and nor does there seem to be any constitutional requirements to prevent other jurisdictions from providing foreign aid directly, it is accepted that it is the federal government that is in a position to represent Canada internationally; and therefore, be responsible for the provision of ODA in general, and through multilateral organizations in particular.
There are various legislations and acts of Parliament such as the Department of Foreign Affairs and International Trade Act (1985), the Official Development Assistance Accountability Act (2008), as well as the Bretton Woods and Related Agreements Act (1945 & 1985) that establish the roles and responsibilities of various federal government entities both in providing ODA and the level and nature of their interactions with other bilateral and multilateral donors and aid agencies. Canada’s participation in the World Bank Group is authorized by and its payments to IDA are provided in accordance with and in fulfilment of Canada’s obligations under the Bretton Woods and Related Agreements Act. Considering IDA’s unique role in the international aid architecture, which makes it the largest source of multilateral ODA to low income countries, combined with the fact that membership at the World Bank and its affiliated institutions is reserved exclusively for the national governments, Canada’s participation in and provision of payments to IDA are found to be consistent with the federal roles and responsibilities.
Evidence of Duplication or Complementarity
The multilateral aid architecture is described by some as a complex ‘ecosystem’ with many different types of organisations delivering assistance in a variety of different forms. This is to some extent the case with Canada as well where at least 12 federal departments and agencies were involved in distributing ODA in 2009-2010. CIDA, the Department of Finance and DFAIT are the three largest Canadian ODA distributers. Considering this multiplicity of players, the evaluation examined the roles and responsibilities of different players, in particular CIDA and the Department of Finance, to see if they are clearly delineated and to find out if payments to IDA duplicate any other existing payments/programs, including the Department of Finance’s debt forgiveness related payments under HIPC and MDRI.
In 2009-10, CIDA provided in total $760.94 million (both core and earmarked) funding to international financial institutions including some in the World Bank Group. But no funding was provided to IDA. However, out of 20 countries that have been identified as countries of focus for CIDA and are earmarked to receive 80 percent of Canada’s bilateral funding, 14 are IDA-eligible countries. IDA also gets compensated by the donor countries for the amount of its loans forgiven under the debt relief initiatives. The Department of Finance contributes $51.2 million per year towards this initiative. These payments, which are recorded in IDA’s balance sheet as subscriptions and contributions, evidently serve different purpose and were not deemed to be duplicative. The complementary nature of these initiatives and payments was confirmed by all GoC officials interviewed. However, a number of them indicated that the regional development banks that received funding from Canada may also provide loans to some of the IDA countries. Although efforts are made to identify and minimize any duplication, this is an area that the Department needs to be aware of, particularly during the replenishment discussion periods to ensure that there is some degree of policy consistency among various lenders.
As for the clarity of the roles and responsibilities, all GoC interviewees indicated that the roles and responsibilities of different Canadian players, particularly those of the Department of Finance and CIDA were clear and that all players adhered to the existing governance model which assigns the responsibility for leading the file to Finance Canada due to the fact that the Minister of Finance is Canada’s Governor at the World Bank and CIDA’s president is the Alternate Governor. As such, the Department of Finance has overall responsibility to represent Canada at the World Bank and its affiliated institutions, including in developing appropriate policies. In fulfilling its mandate, the Department follows a well established process through which it consults closely with its partners, particularly with CIDA and DFAIT.
This section assesses the effectiveness of Canada’s program of payments to IDA, examining both the performance of the Department of Finance in administering the payments in accordance with relevant legislation, and the performance of the World Bank/IDA in relation to contributing to poverty reduction and institutional effectiveness. The contribution of Canada’s participation in IDA to the departmental objective of effective international influence is also briefly examined.
Department of Finance
Administration of Canada’s payments to IDA was broadly found to be effective, and comply with the requirements of the ODAAA. There are opportunities to further strengthen departmental reporting through more proactive disclosure of funding decisions and results-oriented performance information surrounding these substantial ODA payments.
Payments to IDA
IDA countries have demonstrated progress on growth, poverty reduction and key development indicators over the past decade. Most IDA projects and non-lending activities have performed well overall and performance has improved since IDA 12. Evidence that IDA programs have achieved expected country-level development outcomes was found to be limited, although there are indications that this will improve over time. IDA’s performance in the Africa region and in fragile states has been identified as an area for improvement.
World Bank/IDA management practices were found to be strong, particularly in terms of learning and accountability, and there is evidence of ongoing efforts to continue to improve institutional effectiveness, including aid effectiveness. In recent years some notable progress has been made on Canadian priorities related to fragile states, gender, institutional effectiveness and governance and accountability. These remain relevant priority areas for Canada to continue to advance in IDA policy discussions and to monitor and report on results.
Administration of payments: A review of annual Department of Finance DPRs for the period 2002 to 2010 indicates that payments were made on time and as committed. In addition, the Department of Finance Canada’s Internal Audit and Evaluation conducted a review of administrative controls over international obligations and subscription in 2007, which concluded that the management framework surrounding the administration of international obligations and subscriptions, including payments to IDA, was considered to be effective in meeting the business requirements of the Department.
Compliance with ODAAA requirements: The ODAAA requires the Department of Finance to hold consultations with governmental and non-governmental organizations and Canadian civil society to seek their views as to whether the international assistance payments it administers, including its payments to IDA, satisfy the Act’s ODA criteria of contributing to global poverty reduction, considering the perspectives of the poor, and adhering to international standards on human rights. ODAAA also requires the Department to provide input to an annual report that is tabled in Parliament by the Minister for International Cooperation. In addition, under Section 13 of the Bretton Woods and Related Agreements Act, the Department tables an annual report in parliament on the operations of the World Bank and IMF affiliated organizations to provide Parliamentarians and the Canadian public an overview of some key developments and activities at these organizations, and to report on the progress made on Canada’s priorities. This section examines the extent to which these requirements are met.
Consultation with governments, international agencies and Canadian civil society organizations: The Department satisfies this requirement by having put in place an online public consultation process. For various reasons, including to encourage a broad range of participation and to facilitate record keeping, the Department has chosen to conduct a web-based consultation. So far, it has held two rounds of such consultations. The first round was held between December 5 and 31, 2008, which resulted in receiving five responses. The second round was held between December 2010 and February 2011, resulting in receiving 10 submissions. As part of this evaluation, all those organizations that have provided a submission in the past were invited to comment on the adequacy of this process and to find out if they had any suggestions for improvement. Although all the interviewees expressed their appreciation for the Department having put in place such a consultation process, some indicated their preference for having a more interactive process whereby both parties could explain their respective positions face to face. They also expressed interest in receiving, along with the existing acknowledgement letter, some feedback from the Department as to why any of their specific proposals/recommendations were accepted or rejected. Furthermore, some of the organizations indicated that to enhance transparency and to further public awareness, the Department should publish the submissions it receives through these consultations.
A review of some of the briefing materials and other internal documents, including a summary of all the submissions received indicated that the departmental officials are using this as an opportunity to appropriately brief the Minister on the results of the consultations. Although the information provided in the Department’s input to CIDA’s Report includes a brief statement indicating that such consultations took place, it does not provide any information on the content of the submissions received or how it is going to be used. Notwithstanding the above-mentioned issues, by setting up an open consultation process, the Department has met the basic requirement of the Act.
Reports to Parliament: The Department provides a sufficient amount of information both in its input to CIDA’s and the Bretton Woods reports to meet the relevant Acts’ basic reporting requirements. A chronological review of these reports clearly indicates that the quality of these reports, particularly the Bretton Woods reports, has improved in recent years. For example, Canada’s priorities at these institutions are better articulated and more information is provided on the status of these priorities in the most recent reports. Going forward, there remain opportunities to further strengthen the quality and completeness of the Department of Finance’s reporting. For instance, the information provided on the consultations held could be supplemented with some information on the nature and outcome of these consultations (i.e., how many and which organizations participated and what was the outcome). To this end and to echo a suggestion that was made by the Halifax Initiative in its 2010 submission to the Department as part of the ODAAA consultations, providing some information in the main body of the report on the outcomes of the consultations and an indication of how the issues raised in these consultations are going to inform departmental priorities at these institutions, will result in creating “a more coherent link” between the consultations and the Report. By the same token, the existing background and progress information provided on Canada’s priorities at these institutions could be enhanced further by furnishing more outcome related information on IDA’s performance in contributing to sustainable growth and poverty reduction. This was an issue that was also noted by one of the CSOs that was interviewed as part of this evaluation who succinctly described both CIDA’s and the Department of Finance’s reports as providing “a lot of information on the commitments, a bit of information on outputs and no information on the outcomes.” A similar absence of outcome oriented indicators and reporting was noted in Finance’s DPRs for the expected result associated with the Department’s payments to IDA (i.e., “to promote the economic advancement of developing countries”). Considering that these reports are opportunities for the Department to communicate with parliamentarians and the public, they should contain a sufficient level of information to give the intended audience a better understanding of IDA’s achievements. Providing outcome related information is particularly important given that ultimately the extent to which an institution such as IDA has contributed to the achievement of its stated objectives should be considered a key factor in informing decision-making related to any future funding allocations. As such, the report would benefit from the inclusion of a separate section in its main body reporting on the progress made by IDA in achieving its main objectives of poverty reduction and economic growth in IDA countries. This does not need to be exhaustive or onerous on the Department, as much of the relevant information is increasingly being collected through IDA’s RMS and by the World Bank’s various groups dedicated to accountability and learning. The Department should also use these reports, at appropriate times, as a means of communicating the justification for increases or decreases in Canada’s level of contributions to a particular institution, in this case IDA.
Some recent studies on donors’ disclosure of aid related information and reporting indicates that Canada’s reporting is lacking a sufficient level of detail. A case in point is a study conducted in 2010 by Publish What You Fund, which is a coalition of civil society organizations that views aid transparency as the foundation for improving governance, accountability, increasing the effectiveness of aid and alleviating poverty. In this assessment, Canada was ranked number 23 out of 30 multilateral and bilateral entities that were assessed. Similarly, in a study conducted by the Center for Global Development entitled Quality of Official Development Assistance Assessment (QuODA), Canada was ranked below average in terms of transparency and learning. Proactive, timely and outcome based information (telling people in a meaningful format what is being done, for whom, and to what effect), could not only improve the quality and completeness of departmental reporting, but also improve, albeit partially, the outsiders’ general perception of aid transparency in Canada.
Recommendation: The Department should consider enhancing its existing reports to Parliament by: a) providing more information on progress made by IDA in achieving its objectives of poverty reduction and economic growth; and b) providing the rationale for funding allocations to IDA in addition to the amounts for each replenishment.
Canada’s payments to IDA support the Association to deliver on its mandate of reducing poverty in the world’s poorest countries. This section follows a contribution analysis structured similar to IDA’s four tier Results Measurement System to assess IDA’s contribution to sustainable poverty reduction and growth in recipient countries. This includes first examination of progress achieved by IDA countries on key development indicators, followed by an examination of evidence of IDA’s contribution to development outcomes in terms of performance of IDA projects, non-lending activities and country assistance programs. This is followed by an examination of IDA’s achievements in Canadian priority areas of fragile states, gender, institutional effectiveness, governance and accountability. The assessment is based largely on evidence from IDA’s RMS, independent evaluations and studies by the World Bank and third party monitoring and evaluation studies. Finally, the Department’s ability to achieve effective international influence through its participation in IDA is briefly examined.
IDA Contribution to Sustainable Poverty Reduction and Growth
Progress in poverty reduction in IDA countries: Progress has been achieved in IDA countries since 2000 on all MDGs as well as improvements in other development indicators for economic growth, infrastructure development, governance and investment climate and human development. However, progress has varied by indicator and according to IDA RMS has been uneven across IDA countries and regions. Annex A, Table 3 provides data on global progress of IDA countries on selected development indicators.
In terms of growth and poverty reduction, GDP per capita in IDA countries grew from $411 in 2000 to $625 in 2009 (2000 constant US dollars), and the percentage of the population living on less than $1.25 per day decreased from 48 percent in 2000 to 43 percent in 2005. With reference to meeting the MDGs, IDA countries in the East Asia and Pacific region have experienced significant reductions in levels of extreme poverty, whereas the percentage of the population living in extreme poverty in the two IDA countries in the Middle East and North Africa region has increased since the 1990 MDG baseline year. IDA countries in the Africa region witnessed progress in tackling extreme poverty but remained short of MDG targets. IDA RMS indicates that while progress has been good on primary education and gender goals, particularly in the South Asia region, progress thus far may be insufficient to meet targets for health related MDGs including in HIV/AIDS prevalence, maternal care, and child mortality, especially in the Africa Region.
In relative terms, the World Bank’s 2011 Global Monitoring Report finds achieving the MDGs has been a greater challenge for IDA countries (and most fragile states), whose performance was found to lag on all key MDG indicators, compared to non-IDA countries. The report points to initial conditions and notes that IDA countries have average per capita growth and recent institutional performances well below average. At the same time, the report indicates that “despite the greater distance to the MDGs set by low starting points, the poverty target is within reach for more than 70 percent of IDA countries as a result of more recent economic growth and policy improvement.”
IDA Outputs: IDA’s activities in support of development outcomes in recipient countries have resulted in significant outputs in economic and social development sectors such as education, health, transportation, water and sanitation and private sector development. Some examples of outputs since 2000 are: 3 million teachers have been trained and/or recruited; 2 million classrooms have been built and/or rehabilitated and 300 million textbooks have been purchased and/or distributed; 47 million people have been provided with basic health, nutrition or population services; and 113 million people provided access to an improved water source. Annex A, Table 4 provides further examples of IDA outputs.
IDA Project performance: IDA project performance has been strong overall, and has improved over the past decade. Figure 1 below illustrates the steady improvement in IEG ratings of IDA project outcomes at exit since IDA 11. Seventy four percent of IDA projects reviewed by IEG that exited between FY2007-09 had satisfactory outcomes. While the latest IEG annual report (2011) indicates that Bank-wide project performance has declined recently over the period 2006-9, since peaking in 2006, overall, IDA project performance remains strong at about targeted rates identified for IDA 16.
Figure 1: IDA projects with satisfactory outcomes at exit (%)
In terms of regional project performance, the 2010 IEG annual report indicates that Bank wide project performance in Africa has consistently been the poorest of all regions, and relative outcomes of projects in fragile states have fallen recently from close to overall Bank ratings in 2006 to considerably below them in 2009. Quality Assessment of Lending Portfolio by the World Bank Quality Assurance Group (QAG) similarly found performance of IDA projects reviewed in Africa and in fragile states to be significantly lower on the four quality dimensions it assessed: likelihood of achieving development outcomes, quality of design, quality of implementation and quality of supervision.
Performance of IDA Analytic and Advisory Activities: Performance of two main IDA analytic and advisory activities - Economic and Sector Work (ESW) and non-lending technical assistance- was found to be adequate and improving, but there remain areas that need further attention. IDA has reported that between FY 2004-06 coverage and scope of ESW in IDA countries had expanded, while overall quality was maintained. Between FY 2003-06, the percentage of active IDA-eligible countries covered with core diagnostic products increased from 13 to 54 percent. A review by the QAG found that the Bank was doing satisfactory quality country analytic and advisory work overall; however, performance of these activities fell short of some Bank goals, and more attention was required to Africa and fragile states. An IEG evaluation found Bank-wide, the majority of ESW and technical assistance met their objectives at least to an average extent during FY 2000–06, and recommended the Bank ensure ESW activities in IDA countries are adequately resourced to improve quality and effectiveness. Satisfactory achievement of development outcomes of analytic and advisory activities in IDA countries was 68 percent at the end of IDA 15 (the IDA 16 performance standard is 75 percent). Bank studies have also found a need to better monitor and evaluate the quality and impact of these non-lending services.
Performance of IDA country assistance programs: Evidence that IDA programs have achieved expected country-level development outcomes is limited. Based on existing evaluations, performance of World Bank assistance programs in IDA countries was found to be mixed and less than satisfactory overall, although there are some indications of improvement over time. The World Bank’s IEG conducts periodic evaluations of the Bank’s country assistance programs to assess how well these programs met their objectives, including effectiveness of the relevant CAS. A review of the 20 Country Assistance Evaluations (CAE), completed between 2004 and 2011 of World Bank assistance to IDA-eligible countries, indicates that 60 percent of CAEs rated achievement of outcomes as unsatisfactory. Annex A, Table 5 lists the CAE’s reviewed and their outcome ratings.
More recent analysis of IDA CAS Completion Reports indicates that achievements of county outcomes may be improving over time. According to IDA RMS, of the 20 CAS Completion Reports reviewed and rated by IEG in FY2008-09, 60 percent were rated satisfactory. As evaluations are based increasingly on more results-oriented underlying CAS, a better picture of the Bank’s achievement of development outcomes in IDA countries is expected to emerge over time.
The IEG 2011 Annual Report noted that Bank-wide country program outcomes were consistently lower than project outcome ratings. The report noted that while further work is required to examine this issue, possible explanations for this divergence between project level outcomes and country level outcomes could be the selection of broader objectives and outcome targets in country programs that are more difficult or take longer to achieve. The report also found that unlike project performance which is closely linked to Bank performance, there is a large gap in Bank performance in country programs and country program outcomes. Client performance and external factors were suggested to influence country program outcomes more than Bank performance. At the same time, several CAE’s of World Bank programs in IDA countries that were reviewed identified shortcomings with Bank strategy at the country level related to realism, selectivity, adapting/responding to changes on the ground, as well as the depth and durability of government ownership as factors that compromise achievement of overall country level outcomes.
IDA performance in Canadian priority areas
Fragile States: While IDA support to fragile states has increased, there is room for improvement in IDA performance in fragile states. Further attention to fragile states in IDA 16 is appropriate, and IDA has begun taking steps to strengthen its capacity and effectiveness in fragile states.Support to fragile states is a Canadian priority at the World Bank. IDA commitments to fragile states have increased over the years from US$772 million in FY2000 to US$1.6 billion in FY2009, and eligible countries receive exceptional allocations from IDA. According to IDA’s website, IDA is the Bank’s main source of resources for fragile and conflict-affected countries (33 of the 79 IDA-eligible countries in IDA 15 were considered fragile). As noted thus far, support to fragile states is an area where IDA performance has been less than satisfactory in terms of development outcomes and recent project and institutional performance. Bank assistance to fragile states was the subject of an IEG review in 2006 which examined implementation of a 2002 Bank initiative for fragile states to address mostly unsatisfactory outcomes of Bank assistance programs in these countries. The review acknowledges the difficulties in engaging with fragile states and increased Bank attention to these states, as well as some evidence that the Bank has made a small positive contribution to development in these states in the eyes of in-country, Bank and donor stakeholders. The review also noted substantial progress in donor coordination at the international policy level. Overall, however, the review found that the limited evidence from early implementation experience indicates continued underachievement of country-level outcomes. An IDA progress report on support to fragile states between FY 2007-09 indicates that IDA has taken actions to strengthen its effectiveness in fragile states including increasing staffing of country offices, strengthening analytic work underpinning its assistance to these states and improving cooperation with other international partners. An evaluation of IDA’s work in fragile states is expected to be forthcoming.
Gender: IDA performance on gender integration has demonstrated ongoing learning and gradual improvement.Since 2001, the Bank has developed, implemented and reviewed several successive gender strategies. A recent IEG evaluation that assessed the Bank’s performance on gender and development over 2002-2008 found that Bank-wide, quality, scope and extent of gender improved compared to the previous evaluation period (1990-99). Prevalence of gender mainstreaming in IDA and fragile countries was higher compared to IBRD countries, which was deemed appropriate given higher-levels of gender inequality in IDA countries. The evaluation also found that “Bank support likely contributed to increased gender equality in three domains- investment in human capital, access to economic assets and opportunities, and voice in development.” At the same time, the report noted some important qualifications, most notably a lack of progress in institutionalizing an accountability framework and developing a monitoring system for Bank performance on gender. This and accelerating Bank progress on gender mainstreaming and gender-related MDGs are appropriately Canadian priorities going forward. The Bank’s Annual Gender Monitoring Report for 2009-10 assesses the Bank’s more recent gender performance over FY 2006-10. The report noted that in 2010 about 67 percent of IDA operations and 80 percent of IDA CAS were classified as gender-informed (compared to 43 percent and 67 percent respectively in 2006). Universal coverage of gender in IDA CASs is a goal for IDA 16, in accordance with Bank policy, and a Canadian priority. The 2012 installment of the World Development Report will focus on Gender Equality and Development, an indication of increasing Bank-wide attention to gender.
Institutional Effectiveness: Institutional effectiveness is an overarching Canadian priority at the Bretton Woods Institutions. IDA management practices were found to be strong and improving, including in managing for development results and aid effectiveness.
An independent review of internal controls over IDA operations concluded “with some important qualifications, that IDA’s internal controls framework operates to a high standard overall, giving reasonable assurance that the controls operate effectively.” Identified weaknesses included areas of fiduciary controls, and lack of specific focus of transaction-level controls against fraud and corruption. A recent IEG evaluation of Bank Management actions to address these weaknesses found that significant progress had been made in addressing identified weaknesses and strengthening IDA’s internal controls.
Development effectiveness has been an ongoing Canadian priority at the World Bank. The 2009 Multilateral Organization Performance Assessment Network (MOPAN) common approach assessed organizational effectiveness of multilateral institutions and found the World Bank’s performance is perceived to be adequate or better on most of its indicators related to strategic management, operational management, relationship management and knowledge management. The World Bank performed strongest on knowledge management, including monitoring external results and presenting performance information; and operational management, including financial accountability and aid allocation decisions, particularly allocating IDA resources. It performed weakest on aspects of relationship management including adjusting procedures and using country systems, particularly in IDA countries. An assessment of IDA from a recent UK review of multilateral aid found similar organizational strengths and weakness, and gave IDA an overall satisfactory rating on organizational behaviours and values aimed at optimizing performance. Several recent studies have found IDA to be among the top performing aid agencies on various dimensions of institutional effectiveness, such as aid quality, transparency and adherence to best practices in providing aid. These comparative studies are discussed further in section 4.2.2, which examines IDA’s performance relative to other aid agencies. The collective evidence gathered through this evaluation further indicates a strong organizational commitment to managing for development results through monitoring and evaluation and learning from experience. IDA has strengthened its results measurement system and mainstreamed results-based CAS since 2005 by including explicit baseline data, monitoring indicators, and clearly defined outcomes to be reached, which the Bank continues to monitor and strengthen. IDA and Bank management, generally, have demonstrated continuous learning through development, implementation, monitoring and revision of various plans aimed at strengthening performance in areas identified for improvement. Some examples include a five-point action plan to address weaknesses in controls, the development of a new Africa Strategy building on lessons from a previous Africa Action Plan, and consecutive gender action plans to improve Bank performance on gender mainstreaming. More recently and looking forward, the Bank and IDA have committed to increased and more effective use of impact evaluations for systematic learning.
The Paris Declaration on Aid Effectiveness signed in 2005 articulated a consensus on how aid should be delivered and the responsibilities of both the donors and the recipients of aid. The OECD’s report on Aid Effectiveness 2005-2010 assessed progress made by donor and recipient countries on meeting the aid effectiveness targets set out in the Paris Declaration under the five principles of ownership, alignment, harmonization, results and mutual accountability. Data by donor shows that the Bank performed above average and compared favourably against other multilateral organizations and international financial institution’s on its aid effectiveness commitments. In baseline countries for which progress was assessed, the Bank met most targets applicable to it related to alignment of aid with country priorities and systems, and achieved progress (in many cases considerable) on all but one Paris Declaration indicator (aid predictability). Aid predictability is one of the indicators/targets included in Tier 3 of IDA’s RMS.
Governance and Accountability: One of the main criticisms of the World Bank is the lack of participation of developing countries in the institution’s governance and decision-making, which is viewed to undermine ownership, responsiveness and ultimately accountability to its client countries. Increasing voice and participation of developing countries in World Bank institutions has been a long standing priority for Canada. For IDA this has included both a greater say in the institution’s governance and more financing responsibility for emerging market economies. The World Bank has acknowledged the need for governance reforms and has taken some important steps in this direction recently. The President of the WB called for a high-level commission on Modernization of the World Bank Group Governance in October 2008, led by former Mexican President Ernesto Zedillo. The Commission’s report noted that “the World Bank Group’s decision-making process is widely seen as too exclusive, offering many member countries too little voice and too few opportunities for participation.” For IDA, the report recommended the voting structure be tied to more recent contributions, to increase fairness and encourage new contributions.
Since 2008, the World Bank has made progress in phasing in a package of voice reforms, including the addition of a third Chair for sub-Saharan Africa on the World Bank’s Executive Board and an increase in voting power of Part II IDA members (mostly developing and transition countries) from 40.1 percent at the start of voice reform discussions in April 2008 to 45.59 percent as of March 2010. However, as the Zedillo Commission report noted, distribution of voting share in IDA may be more symbolic- the arrangement whereby the most important policy and strategy decisions are made based on consensus among IDA Deputies (senior officials from its donor countries) more seriously hampers influence by developing countries. As discussed earlier, IDA has put in place various processes to increase representation and participation of recipient countries in replenishment discussions. Going forward, the establishment of working groups with participation from donors, recipient countries and Bank staff, to discuss selected development topics is expected to further broaden participation in IDA 16.
Effective international influence: As previously discussed, participation in IDA contributes to the achievement of the Department of Finance’s operational priority of effective international influence. According to interviews with current and former Finance officials involved in IDA negotiations and policy discussions, Canada is able to influence policy discussions through a number of channels. During replenishment negotiations, discussion and consensus with other IDA Deputies, alongside Canada’s status as a top 10 donor, was identified as a key source of influence. Participation in thematic working groups stemming from each replenishment process, as well as the office of the Canadian Executive Director at the World Bank were also identified as important channels for exerting Canada’s influence in non-replenishment years. Building consensus among other donors in developing and advancing Canadian priorities leading up to negotiations for each IDA replenishment round was identified as key to effective influence. This is achieved through involvement in G8/G20 forums and maintaining ongoing informal networks/discussions with G8/G20 counterparts, as well as with other like-minded and influential donors. Some of the noteworthy areas where Canada was viewed to have been successful in influencing IDA policy direction, according to interviews with Finance officials, include: implementation of IDA’s accelerated payments policy; utilization of lessons from the IDA 15 pilot Crisis Response Window in establishing a permanent IDA Crisis Response Window and development of parameters surrounding its use; and strengthening IDA support to fragile states.
Existing literature on aid effectiveness, including various assessments conducted by the OECD’s DAC Secretariat, indicates the comparative advantage of aid disbursement through multilateral channels over bilateral.
Investment in IDA was found to be an efficient and economical way to support sustainable poverty reduction and economic growth in poor countries. IDA was found to be conducting its operations with efficiency and economy.
Multilateral vs. Bilateral: Although nearly 70 percent of all ODA provided by the major donor countries is channeled through bilateral organizations rather than multilateral ones, the debate about which channel is more effective is still a heated one. This debate is believed to be important because “the channel of disbursement can also affect the value and effectiveness of aid.”
The proponents of the bilateral approach argue that the provision of bilateral aid enables the donor countries to develop closer relationships with aid recipient countries which can result in improving the effectiveness of aid. Accordingly, such a close relationship facilitates the donor countries understanding of the recipient countries’ needs and the kind of aid programs that might achieve the best results for the recipient. It also allows the donor countries to have an “in-country presence that enables them to monitor their assistance and ensure that the amount of aid that is wasted or diverted is minimal.” However, the most highlighted problem that they have with providing aid through multilateral channels is the absence of direct oversight or the inability of the donor countries to directly determine how funding should be allocated by a particular multilateral organization. On the other hand, the proponents of multilateral aid argue that multilateral aid is less politicized or politically motivated (less self-serving); it is more focused on poverty reduction and more is given to the poorest countries; it can lead to reduction of aid channels and can be more evenly distributed (avoids the so-called aid darlings); it is more predictable as it is provided on a multi-year basis; it is more transparent and can benefit from economies of scale. As such, multilateral aid providers can use this to “establish systems of international competitive bidding to purchase goods and services at the lowest possible cost and maximize the real value of aid flows.”
The most comprehensive study of multilateral aid architecture has been undertaken by the OECD’s DAC. In both the 2008 and 2010 iterations of these studies, the member countries’ multilateral strategies, including the perceived advantages of multilateral disbursement of aid, were discussed. Some of the most cited advantages of multilateral aid over bilateral aid included their economies of scale and ability to pool resources, technical expertise, political neutrality, and low transaction costs. The multilateral organizations were also found to be more flexible and able to react more quickly to increase their outflows in response to economic crises, as demonstrated in 2008. Furthermore, evidence presented in the DAC and some other reports depicts multilateral aid institutions as being more compliant with aid quality standards, less fragmented, and to allocate a higher proportion of country programmable aid to low income countries and fragile states. Based on this evidence, the North-South Institute recommends that the Fourth High Level Forum on Aid Effectiveness, that will take place in Busan, Korea in December 2011, to “promote channeling more development aid through well managed, transparent and efficient multilateral agencies.” This was also the main recommendation of a panel that was commissioned by the Australian Government to undertake an independent review of its aid effectiveness. The review examined the rationale for increasing Australia’s multilateral aid, particularly through core funding. It concluded that multilateral organizations’ “wide membership gives them greater legitimacy and weight in addressing challenging issues and coordinating donor efforts; they have neutrality which allows greater scope for dialogue with recipient countries; and their large size enables them to undertake programs beyond the capacity of bilateral donors such as Australia.” Furthermore, it stated that “channeling funds through central multilateral budgets can involve fewer donor staff resources than funding and delivering programs bilaterally.” The Study, however, cautioned that not all multilateral organizations are the same, as while “some are high performers, the effectiveness of others is seen as patchy, with concerns ranging from perceived institutional complexity, lack of transparency, [and] higher absolute cost.” The following section examines how IDA fairs in terms of efficiency in comparison to other multilateral organizations.
IDA’s relative efficiency compared to other multilateral organizations: For various reasons, including the proliferation of multilateral aid agencies in recent years, many donors either unilaterally or in collaboration with other like minded donor countries have attempted to assess the efficiency and effectiveness of multilateral institutions. This is also the case with some civil society organizations and academics, as well as some of these multilateral institutions themselves. Several of these recent comparative studies were reviewed as part of this evaluation to find out how IDA’s relative effectiveness and efficiency has been assessed. Although each of the studies reviewed was carried out independently, using its own methodology and approach, most of them found IDA/World Bank as an effective and efficient institution that relatively provides good value for money. For example, the Center for Global Development 2010 Quality of Official Development Assistance (QuODA) report found IDA as the only multilateral institution that scored in the top 10 on all four dimensions of aid quality it assessed i.e. maximizing efficiency, fostering institutions, transparency and learning, and reducing burden. According to the updated data for 2011, IDA scores above average on most applicable QuODA indicators, including the share of allocations to poor countries and to recipients top aid priorities, use of programmatic aid, and implementation of International Aid Transparency Initiative data and reporting standards. Another recent comparative study of best practices in providing aid concluded that “the top rated agency in terms of best practices is the World Bank’s IDA,” noting also the prevalence in general of multilateral development banks in top-ranks. The World Bank was also found to be the top scoring agency in Publish What You Fund’s 2010 Aid Transparency Assessment. The UK’s most recent Multilateral Aid Review found IDA to be one of the top multilateral organizations for spending aid where it is needed most. IDA was also found to have comparative advantage over other assessed multilateral organizations in terms of the breadth and quality of its technical knowledge, expertise and global reach. Its financial management and cost and value consciousness were found to be satisfactory. An earlier assessment by the US Office of Management and Budget found IDA’s performance adequate, which meant that although it was “performing”, it needed to set more ambitious goals, achieve better results, improve accountability and strengthen some aspects of its management practices. In most of these studies, the World Bank/IDA was found as one of the better performing institutions both among other multilateral organizations and international financial institutions (it should be noted that in those studies that included bilateral agencies IDA was also ranked higher than the majority of bilateral aid agencies).
Actions taken by IDA to improve its efficiency, effectiveness and economy: The World Bank, in response to demands by donor countries, has in recent years undertaken various reforms and initiatives to enhance value-for money and the operational efficiency of its affiliated institutions, including IDA. These undertakings range from expanding its results measurement system, to enhancing service delivery through further decentralization of its staff and decision-making from headquarters to country offices, to improving its risk management, transparency and managing for results, to promoting better use of information technology and knowledge management. At the same time, IDA has pursued developing closer collaboration and coordination with the IMF and other bilateral and/or multilateral development institutions, including various UN agencies, to ensure coherence and harmonization of its assistance with those of the other donors, as well as to support and engage in global and large scale initiatives. It has also undertaken initiatives such as harmonizing its procurement and financial management systems and processes, and putting in place operational policies to maximize the efficiency, economy and transparency of its operation. IDA’s existing procurement policies has enabled it to purchase goods, works and services in lowest price from qualified bidders from all over the world. The decentralization of its operation resulted in IDA now having offices in 72 out of 79 IDA countries. Through the use of an Investment Lending Model, the World Bank institutions try to differentiate between low risk and high risk projects. This differentiation allows these institutions to decide on the complexity of procedures and level of supervision that is required for a particular project (according to this model, low risk projects receive simpler procedure and less enhanced supervision, which allows for more resources to be devoted to high risk projects). These undertakings have resulted in IDA being able to reduce both its lending costs and increase speed of loan delivery. This has also enabled IDA, as illustrated in the exhibit below, to operate in a flat budget in real terms since 1999 despite the fact that both its commitments and disbursement increased over that time period.
Figure 2: IDA’s disbursement vs. its administrative costs
|Recommendation||Management Response||Planned Action||Lead||Target Date|
|1a. The Department should consider enhancing its existing reports to Parliament by providing more information on progress made by IDA in achieving its objectives of poverty reduction and economic growth.||Agree. While poverty reduction and economic growth cannot be directly attributed to international assistance provided by any single donor (multilateral or bilateral), steps will be taken to improve how the Department reports on results achieved by IDA to Parliament.||A section on results achieved by IDA will be included in the annual Report on Operations Under the Bretton Woods and Related Agreements Act, starting with the report due to be tabled in Parliament by March 31, 2012.||The International Finance and Development Division of the Department of Finance, which is responsible for drafting the applicable sections of the Report on Operations Under the Bretton Woods and Related Agreements Act.||March 2012|
|1b. The Department should consider enhancing its existing reports to Parliament by providing the rationale for funding allocations to IDA in addition to the amounts for each replenishment.||Agree. The Department has a well-established system to help determine our allocations to IDA. Steps will be taken to ensure that this is better communicated to Parliament.||A section on the considerations that were taken into account to determine Canada’s pledge to IDA will be included in the annual Report on Operations Under the Bretton Woods and Related Agreements Act to Parliament. This would be included once every three years, after replenishment negotiations for a given IDA cycle are finalized.||The International Finance and Development Division of the Department of Finance, which is in charge of drafting the applicable sections of the Report on Operations Under the Bretton Woods and Related Agreements Act.||March 2012|
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Annex A: IDA Performance Data Tables
|MDG and Indicator|
| GOAL 1: Eradicate extreme poverty
| Poverty headcount ratio at $1.25 a day
(PPP) (% of population)
| Malnutrition prevalence, weight for age
(% of children under 5)
| GOAL 2: Achieve universal
| Primary completion rate, total
(% of relevant age group)
| GOAL 3: Promote gender equality
and empower women
| Ratio of girls to boys in primary and
secondary education (%)
|GOAL 4: Reduce child mortality|
|Mortality rate, under-5 (per 1,000)||143||120||105||97||95|
| Immunization, measles (% of children
ages 12-23 months)
|GOAL 5: Reduce maternal mortality|
| Births attended by skilled health staff
(% of total)
| GOAL 6: Combat HIV/AIDS, malaria
and other diseases
| Prevalence of HIV, total (% of population
|GOAL 7: Ensure environmental sustainability|
| Improved water source (% of population
| GOAL 8: Develop a global partnership
| Mobile and fixed-line telephone subscribers
(per 100 people)
|GDP per capita (constant 2000 US$)||334||411||503||588||625|
|Governance and Investment Climate|
| Cost of business start-up procedures
(% of GNI per capita)
|Time required to start a business (days)||69||60||37||34|
|Infrastructure for Development|
| Household electrification rate
(% of households)
|External debt, total (% of GNI)||58||46||28||23||23|
|Fertility rate, total (births per woman)||5||4||4||4|
|GDP per capita growth (annual %)||2||2||6||3||4|
|Life expectancy at birth, total (years)||56||58||67||72||73|
|Urban population (% of total)||26||29||30||32||32|
|Source: IDA RMS (accessed August 22, 2011)|
|SECTOR||IDA INVESTMENT (ODA flows 2000-2009) (USD millions)||RESULTS (Illustrative)|
|Water Supply and Sanitation||7,426.2||
|Private Sector (Banking and Financial Services)||5,694.0||
|Source: World Bank; IDA Results-At-a-Glance; IDA factsheet, March 2011; IDA ODA flows data: OECD CRS (accessed Oct. 4, 2011).|
|Year completed||Timeframe covered||Overall Outcome Rating|
|EAST ASIA AND PACIFIC|
|EUROPE AND CENTRAL ASIA|
|LATIN AMERICA AND CARIBBEAN|
|MIDDLE EAST AND NORTH AFRICA|
 The IDA 13-15 period was July 1, 2002 to June 30, 2011
 The latest IDA replenishment, IDA 16, was concluded in December 2010.
 LOE may be closer to 2FTEs in replenishment years vs. less than one FTE in non-replenishment years.
 Department of Finance (2011a), p.10. These priorities have been more or less constant since 2006 and broadly reflect the main priority areas identified in these reports since 2002.
 Based on the Program Activity Architecture in the Department of Finance 2010-11 Report on Plans and Priorities.
 Up to 2010; Department of Finance (2011a), p.47.
 In addition to regular annual payments, an additional payment of $34.3 million was made during IDA 15 to reach Canada’s IDA 15 commitments.
 Department of Finance (2011a), p.39
 This threshold is updated annually.
 IBRD serves middle income countries with capital investment and advisory services.
 IEG is independent of program management and reports directly to the Executive Committee of the World Bank.
 World Development Indicators database (accessed Aug 22, 2011); all figures are 2000 constant USD.
 IDA RMS (accessed Aug. 22, 2011); all figures are 2000 constant USD.
 UN (2010).
 World Bank (2011b). p.1.
 World Bank (2011a), p.1.
 Environics Institute (2010); Survey of a representative sample of 2,020 Canadians.
 See Annex A, Table 4 for a list of CAEs reviewed; In 4 CAEs this issue was not specifically discussed.
 The Gallup Organization (2008).
 Department of Finance (2011b), p. 11.
 Department of Finance (2011a). Governance and Accountability and Institutional Effectiveness are the other two priorities.
 TBS(2010); p. 78.
 Department of Finance’s 2008-09 and 2009-10 Assessments for IDA.
 CAS sets out the level and type of assistance the World Bank Group will provide to a country, usually for a four year period. The CAS should link a country’s development priorities to selected World Bank Group support. It is also intended to promote coordination with other development partners.
 Gwin, C. (2002), p. 48.
 ODAAA defines this as those standards that are based on international human rights conventions to which Canada is a party and on international customary law. This includes: International Covenant on Economic, Social and Cultural Rights; International Covenant on Civil and Political Rights; Convention on the Elimination of all Forms of Discrimination against Women; Convention on the Rights of the Child; International Convention on the Elimination of All Forms of Racial Discrimination; Convention against Torture and Other Cruel, Inhuman or Degrading Treatment or Punishment; Convention on the Rights of All Persons with Disabilities (Source: the Department of Canadian Heritage Website).
 World Bank (1998),p. 9.
 See Kaufmann, D. (2006), p. 15; as well as Clark, D.L. (2002), p. 1-2.
 World Bank (2010a); p. 1.
 Note that according to OECD 2008 Report on Multilateral Aid, the most common arrangement for managing multilateral aid in OECD countries is for the ministry of finance to manage core contributions and lead policy dialogue with the IMF, the World Bank Group and other major development banks.
 These were established by the World Bank and IMF to provide debt relief to eligible countries (impoverished countries, including IDA countries, that agree to undertake economic reform) to reduce/eliminate their external debt.
 This includes both ODA and other official assistance expenditures. CIDA (2011), p. 14.
 IDA 2010 Financial Statements: World Bank (2010b).
 Wording of this performance indicator varies from year to year in the DPRs reviewed. There was some year to year variance in actual vs. planned payments, but on balance payments amounts were as committed for each replenishment cycle.
 Publish What You Fund (2010).
 The Centre for Global Development is part of the Washington, DC, based Brooking Institution whose mission is described to be conducting research to advance a more open, safe, prosperous and cooperative international system.
 Broadly speaking, these are the main trusts of aid transparency principles that are developed by Publish What You Fund.
 The four tiers of IDA’s RMS are: progress Tier 1: IDA country progress; Tier 2: IDA-supported development results; Tier 3: IDA’s operational effectiveness; and Tier 4: IDA’s organizational effectiveness.
 World Bank (2011a), p.28
 IEG (2010a); 75% of the total of 389 projects that closed between FY2007-09 were reviewed.
 IEG (2011) and IDA (2011).
 Compiled from data in IDA RMS (accessed October 18, 2011).
 QAG (2009a,b); the sample consisted of primarily projects approved between FY03-06, including 72 IDA projects.
 IDA (2006).
 QAG (2008). The study looked at both IDA and IBRD projects and found no significant differences.
 IEG (2008).
 IDA (2011).
 The apparent gap between IDA project outcomes and achievement of development outcomes at the country level was also observed in the CAE’s reviewed. All CAE’s look at portfolio performance/quality, including the proportion of projects in the country rated satisfactory (based on projects evaluated at exit, which took place during the fiscal years covered by the CAE). The range of projects rated satisfactory in the 20 CAE’s reviewed (based on value of commitments) was 63-87%.
 IDA (2009).
 IEG (2006); 23 of 25 Low income countries under stress (LICUS) reviewed were IDA-only countries.
 IDA (2009).
 Department of Finance (2011a).
 2001 Gender Strategy, 2007 Gender Action Plan; 2011-13 Gender Transition Plan.
 IEG (2010b); this assessment was based on detailed reviews undertaken in 12 focus countries of which 7 were IDA-eligible.
 This reflects satisfactory attention to and treatment of gender issues, including analysis, actions, empowerment and monitoring and evaluation.
 IEG (2010c). The review was undertaken to fulfill a commitment to donors during IDA 14 replenishment negotiations, and was the first of its kind for an international development financial institution.
 MOPAN (2009). The World Bank is assessed at an institutional level and across 9 countries, including 5 IDA countries: Ethiopia, Mozambique, Pakistan, Senegal and Uganda. A limitation of this study is that these countries represent only a small portion of total World Bank lending limiting generalizations from the study. The MOPAN assessment is based on perceptions of donor country members including Canada, and direct clients/partners of these institutions.
 COMPAS (2009).
 The World Bank is a signatory to the Paris Declaration.
 OECD (2011); this is a Bank-wide assessment; however, 78% of baseline countries studied were IDA-eligible.
 Department of Finance (2011a).
 IDA members are fall into two categories: Part I members consist primarily of high-income developed countries and Part II members made of mostly developing and transition countries.
 World Bank (2010c). As a result of both subscriptions by members and a donor financed trust fund for IDA-eligible countries to take up voting shares available to them based on financial contribution. Trust fund was financed by four donors: France, Norway, Spain and Switzerland.
 World Bank (2008), p.4, also OECD DAC (2010), p. 11.
 Hunter, Shireen, p. 162.
 The US Congressional Budget Office (1997), p. 10.
 Ibid, p. 11. Also Kopinski.D. (2009)
 OECD DAC (2010), p. 21.
 Picciotto, Robert, p. 11. The High Level Forum refers to a gathering of aid officials and representatives of donor and recipient countries who are trying to enhance the effectiveness of international development cooperation through standard setting, regular monitoring and sharing of good practices.
 Dinham, Martin, p. 57-65.
 Ibid. P. 8.
 Ibid. P. 8.
 Birdsall, N. and Kharas, H. (2010). The Centre is part of the Washington, DC, based Brooking Institution that describes its mission as conducting research to advance a more open, safe, prosperous and cooperative international system. For more see CGD website.
 Easterly, W. and Pfutze, T. (2008). The study authors conceded that their assessment was based on partial data, reflecting missing or unreliable data on the part of aid agencies. This is an issue also noted by some of the other studies reviewed.
 Publish What You Fund (2010).
 See Expectmore.gov. Office of Management and Budget assesses the performance of all US federal programs using its standard program assessment rating tool, which is based on 25 questions on program’s performance and management. Programs are then rated based on whether they are performing or not performing. Those identified as performing, then, are sub-categorized as effective, moderately effective and adequate.
 World Bank (2010d),p. 2-23.
 World Bank (2010e), p. 13.
 Bassani, A. (2011, July 12).
 OECD (2010), p. 85.
 World Bank (2010e)