MOPAN Assessment of IDB

In September 2023, MOPAN published its assessment of the Inter-American Development Bank (IDB).
It is the third MOPAN assessment of the IDB, following previous ones in 2011 and 2015-16.

Overview

Established in 1959, the Inter-American Development Bank (IDB) is the main source of multilateral financing in Latin America and the Caribbean, with a mandate to accelerate economic development, social development, and regional integration. The wider IDB Group consists of: (i) the Bank; (ii) IDB Invest, a legally separate entity responsible for lending to the private sector; and (iii) IDB Lab, a trust fund administered by the Bank, which finances private projects designed to boost innovation and entrepreneurship in the region. Specific areas of organisational performance for IDB Invest, including cross-cutting issues and results management, are the focus of a separate MOPAN assessment. The IDB has 48 member countries, of which 26 are borrowing member countries from the region and 22 are nonborrowing member countries. Member countries provide capital and benefit from proportional voting representation in the Bank’s Board of Governors. The IDB has around 2 000 staff based in offices in Washington, DC (headquarters), in each of its 26 borrowing member countries (country offices), and in Japan and Spain (regional outreach/liaison offices).

Key Findings

Overall, the assessment finds that the IDB demonstrates an overall satisfactory organisational performance; however, it faces a challenge in demonstrating the development results of its operations. The IDB’s performance is relatively lower in terms of performance management relative to other areas of organisational performance.

The IDB generally performed well against MOPAN’s indicators for strategic management capability. It has an updated Institutional Strategy that articulated consistent strategic objectives and cross-cutting priorities over the years, though the elaboration of the Bank’s comparative advantage has been less clear. The IDB’s structure is well-aligned with its objectives and cross-cutting priorities, and it is recognised regionally for its strong financial framework. The Bank has continued to invest in its approach to addressing its cross-cutting priorities. However, further work is required, including in ensuring consistent disaggregation of indicators in the Corporate Scorecard (CRF). Efforts in gender equality and climate change/environmental sustainability are relatively more advanced, while those in institutional capacity and rule of law and, to a lesser extent, diversity, are less so. Other areas where further management attention may be merited are mechanisms to facilitate multi-sectoral working and the interface governing relationships between the IDB and IDB Invest.

The IDB scored consistently well for operational management, reflecting the strength of its systems and processes in this area. The Bank’s human and financial resource management systems are strongly results-oriented, and stakeholders widely recognise the IDB as an organisation that mobilises external knowledge and financial resources through strategic partnerships. As a member-owned institution, the Bank must manage the tension between pursuing the strategic development objectives agreed by all members and aligning its support to the priorities of its borrowing members. The evidence suggested that the Bank strikes a reasonable balance in this regard. The IDB has well-established internal control mechanisms to manage integrity risks including fraud, corruption and other risks associated with Bank-provided resources.

Notwithstanding the IDB’s generally strong performance in operational management, the Bank faces a few important risks and challenges that require further attention. There remains scope to improve how compliance with safeguards is managed and to strengthen its approach to defining and reporting risks relating to sexual exploitation and abuse. The assessment, however, notes that the IDB’s new Environmental and Social Policy Framework (ESPF), which supersedes its former safeguards policies, is a positive development in this direction. The Bank could also improve controls around changes in the scope of ongoing projects, to promote flexibility without undermining development logic.

The IDB demonstrates strong capabilities with respect to relationship management and is committed to working in effective partnerships with both its borrowing member countries and external strategic partners. The IDB is a trusted partner, underpinned by its regional expertise and footprint, the broad range of financial and non-financial services that the Bank offers, and the strong technical expertise that it makes available to its partners.

Against a background of generally strong performance in relationship management, the Bank faces a few issues that warrant consideration. Co-ordination with IDB Invest – a key partner for the IDB – remains a work in progress with attention required to align interests given different organisational cultures and scales of resourcing and to improve mutual knowledge about each other’s organisation. The newly approved ESPF establishes clear guidelines for borrowers for protecting people and the environment in the context of IDB-financed projects. But the IDB does not have an explicit corporate policy statement that establishes its responsibility to protect and respond to those affected by IDB projects. There are opportunities to enhance the IDB’s methods for measuring the use of its knowledge products for decision making. And the IDB could strengthen its reporting regarding the timely performance of its operations.

Performance management in the IDB is satisfactory overall, but the IDB scored relatively lower in this capability. The Bank continues to be strongly committed to results-based management approaches, and systems for identifying, managing and accounting for the performance of the IDB’s operations are also generally well-developed. These systems are significantly augmented by the existence of a strongly independent evaluation function that contributes high-quality, credible outputs and a robust system to track action in response to evaluation recommendations. Nevertheless, the Bank faces several important, related challenges that limit its capacity to manage and report performance effectively. These include weaknesses in the quality and scope of data generated by interventionlevel monitoring and evaluation, the extent of data disaggregation, changes in project objectives during execution not reflected in results matrices, and unsystematic processes to promote the uptake of lessons from its Office of Evaluation and Oversight and IDB evaluations and their application to new interventions. The Bank is broadening the scope of its monitoring and evaluation instruments in response to these challenges.

Main Strengths

• Relationship management is a key strength for the IDB. It works collaboratively, adaptively and transparently with country partners based on a deep understanding of local conditions and a commitment to use and strengthen partners’ own systems.
• The IDB also leverages these relationships and its organisational agility to mobilise financial and knowledge resources for the region through the use of strategic partnerships.
• The IDB’s operating model and systems are well-established and robust. Together they ensure human and financial resources are aligned and managed in support of the Bank’s strategic objectives.
• The IDB’s commitment to its cross-cutting priorities is notable; the systems developed to promote gender equality and climate change/environmental sustainability represent a strength relative to the maturity of the IDB’s approach to diversity and to institutional capacity and rule of law.

Main Weaknesses

• Weaknesses in intervention-level monitoring and evaluation represent an ongoing and significant challenge for the IDB’s performance management capacity. Problems arise from both poor-quality monitoring and evaluation (M&E) design and disincentives to revise project objectives when support changes.
• In addition, the IDB faces challenges in demonstrating the achievement of intended results. This stems in part from the above M&E weaknesses but also from the limited information provided on development results by project monitoring reports and the corporate results framework. No routine, systematic analysis of development results is conducted for sectors or cross-cutting issues.
• While the IDB has taken steps recently to strengthen its approach to safeguarding, there remains scope to improve both how compliance with safeguards is managed and its approach to defining and reporting risks relating to sexual exploitation and abuse.
• The uptake of lessons from OVE and IDB evaluations and their application to new interventions is not yet fully systematised. Inter-American Development Bank Group Management has a number of relevant initiatives underway to strengthen this.