a consolidated report on the world bank’s...

Document of The World Bank

FOR OFFICIAL USE ONLY

A CONSOLIDATED REPORT ON THE WORLD BANK’S GRANT MAKING FACILITIES FOR FY14

May 16, 2013

Global Partnerships and Trust Fund Operations

This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.

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ABREVIATIONS AND ACRONYMS

AAP Agriculture Action Plan

AFR Africa Region

AMIS Partnership for an Agricultural Market Information System

APOC African Program for Onchocerciasis Control

BB Bank Budget

BETF Bank-Executed Trust Fund

BTL Below-the-Line

CA/NT Concentrated agriculture/no-till CCSD

Global Center for Conflict, Security, and Development

CEPF Cristical Ecosystem Partnership Fund

CFP Concessional Finance and Global Partnerships

CfP Call for Proposals CFPTO

Global Partnership and Trust Fund Operations

CGIAR

Consultative Group on International Agricultural Research

CRP CGIAR Research Programs

CSF Civil Society Fund

CSO Civil Society Organizations

DGF Development Grant Facility

DO Development Objectives

ECD Investing in Early Childhood Development

ED Executive Director

FCPF Forect Carbon Partnership Facility

FCS Fragile and Conflict-Affected Situations

FPD Finance and Private Sector Development

FIF Financial Intermediary Funds

FY Fiscal Year

GBV Gender Based Violence GFDRR Global Facility for Disaster Reduction and

Recovery

GFR Grant Funding Request

GHG Green House Gas

GNI Gross National Income

GPO Global Partnership for Oceans GPSA Global Partnership for Social

Accountability

HANSHEP

Harnessing Non-State Actors for Better Health for the Poor

IAD Internal Audit Vice Presidency ICCWC

International Consortium on Combating Wildlife Crime

ICM Implementation Completion Memorandum

IDF Institutional Development Fund

IEG Independent Evaluation Group

ISR Implementation Status Report

K&L Knowledge and Learning

KP Knowledge Platform

LCR Latin American and Caribbean Region

M&E Monitoring and Evaluation

MDG Millennium Development Goals

MDTF Multi-donor Trust Fund

MENA Middle East and North Africa MTBF

Medium-Term Business Plan and Finance Framework

MTR Mid-Term Review

NERICA New Rice for Africa

NGOs Nongovernmental Organizations

OPCS Operations Policy and Country Services

OSF Open Sociecty Foundation

PCD Post Crisis Directions

PCF Post Conflict Fund

PDO Program Development Objective

Q Quarter

RC Regional IDF Coordinator

RETF Recipient-Executed Trust Fund

RF Results Framework

RIC Regional IDF Committee

RKL Research, Knowledge and Learning

SAcc Social Accountability

SC Steering Committee

SDN Sustainable Development Network

SLO System Level Outcomes SMART Smart, Measurable, Achievable, Realistic,

Time-bound

SoD Science of Delivery

SPF State- and Peace‐Building Fund

SRF Strategy and Results Framework

TOR Terms of Reference

TTL Task Team Leaders

VPUs Vice Presidential Units WAAPP

West Africa Agricultural Productivity Program

WBI World Bank Institute

WDR World Development Report


TABLE OF CONTENTS

EXECUTIVE SUMMARY ................................................................................................................ 1

I. CGIAR: A Global Research Partnership for a Food Secure Future ................................... 10

A. Introduction ......................................................................................................................... 10

B. Strategy and Priorities ......................................................................................................... 11

C. Budget .................................................................................................................................. 14

D. Commitments and Disbursements ....................................................................................... 14

E. Results ................................................................................................................................. 15

F. Activities Planned for FY14 ................................................................................................ 17

G. Conclusion ........................................................................................................................... 18

II. The Development Grant Facility (DGF) ............................................................................. 20

A. Introduction ......................................................................................................................... 20


C. Budget .................................................................................................................................. 22


E. Results ................................................................................................................................. 24


G. Conclusion ........................................................................................................................... 28

III. Global Partnership for Social Accountability (GPSA) ...................................................... 29

A. Introduction ......................................................................................................................... 29


C. Budget .................................................................................................................................. 31


E. Results Achieved in FY13 ................................................................................................... 32


G. Conclusion ........................................................................................................................... 32

IV. The Institutional Development Fund (IDF) ........................................................................ 33

A. Introduction ......................................................................................................................... 33


C. Budget .................................................................................................................................. 34


E. Results ................................................................................................................................. 38

F. FY14 Strategic Planning for a Scaled down IDF Program ................................................. 40

G. Conclusion ........................................................................................................................... 41

V. State and Peace Building Fund (SPF) ................................................................................. 42

A. Introduction ......................................................................................................................... 42


C. Budget .................................................................................................................................. 45


E. Results ................................................................................................................................. 47


G. Conclusion ........................................................................................................................... 51

Boxes Box 1: DGF Eligibility Criteria ................................................................................................... 20 Box 2: DGF Scorecard Approach ............................................................................................... 22 Figures Figure 1: Approved CRP Budgets over Three Years ...................................................................... 14 Figure 2: CGIAR Fund Inflows and Disbursements ....................................................................... 15 Figure 3: DGF Governance Structure and Program Review ........................................................... 21 Figure 4: DGF FY98-FY14 Budget Allocation Across Sectors/Categories ................................... 23 Figure 5: Overview of IDF Funds Flow FY13/Q3 .......................................................................... 36 Figure 6: The Commitment Process in the IDF .............................................................................. 37 Figure 7: ICM Rating, Overall Outcome, FY10–FY12 .................................................................. 40 Figure 8: SPF – Disbursement ........................................................................................................ 46 Figure 9: SPF Projects by Region (in percentage) .......................................................................... 47 Figure 10: Bank Status of Countries Where SPF Operates ............................................................... 48 Figure 11: SPF Project Goals Mapped to SPF Fund-Level State- and Peace-Building Objectives .. 49 Matrix Matrix 1: Comparative Information on Five Facilities ...................................................................... 4 Tables Table 1: World Bank Below-the-Line Grant-Making Facilities ....................................................... 2

Table 2: Proposed FY14 DGF Budget Allocations by Network and Sector ................................... 26 Table 3: Summaries of New FY14 DGF-Funded Programs ........................................................... 27 Table 4: IDF Commitment Authority .............................................................................................. 35 Table 5: IDF Grant Approvals, FY10-FY13 ................................................................................... 36 Table 6: IDF Commitments, FY10-FY13/Q3 ................................................................................. 37 Table 7: Grant Disbursements, FY93-FY13/Q3 ............................................................................. 37 Table 8: Status of Board Authorized Budgets, FY10–FY13 .......................................................... 38 Table 9: Sources and Uses of Funds FY11–FY14 .......................................................................... 38 Table 10: ISR Rating, FY12 .............................................................................................................. 39 Table 11: SPF – Sources and Uses of Funds ..................................................................................... 46 Table 12: Donor Contributions to SPF .............................................................................................. 47

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EXECUTIVE SUMMARY

1. The World Bank began providing grants from its own resources in 1970 with the decision to cosponsor the establishment of the Consultative Group for International Agricultural Research (CGIAR). Since then, World Bank grants have been used to provide support for a broad range of development activities that are priority areas for Bank involvement and complementary to regular Bank operations, but which have not been (or cannot be, due to other policy restrictions) addressed by the Bank’s regular IBRD and IDA programs. As the new World Bank Group strategy is finalized and implemented, the role of grant-making facilities will be considered in the context of the full implementation and funding of the new strategy. The strategy will provide the basis for a new corporate business planning and budgeting process to be introduced in FY15, improving selectivity and prioritization by linking funding decisions to the new strategy. This paper therefore focuses on FY14, recognizing that the trajectories for FY15 and FY16 will be revisited in the FY15-17 business planning process. 2. The World Bank currently provides contributions to five operational programs grouped together as “grant-making facilitates” through the “below the line” (BTL) component of the administrative budget. These five programs are separate from the Net Administrative Budget (NAB) and include the following: • Consultative Group on International Agricultural Research (CGIAR) Fund: a financial

intermediary fund and global partnership program administered by the Sustainable Development Network (SDN);

• Development Grant Facility (DGF): the Bank’s umbrella mechanism for providing grants to innovative partnership programs, administered by Concessional Finance and Global Partnerships (CFP);

• Global Partnership for Social Accountability (GPSA): a recipient executed multi-donor trust fund program administered by the World Bank Institute (WBI);

• Institutional Development Fund (IDF): the Bank’s own grant program for capacity building of client governments administered by OPCS; and

• State and Peace-Building Fund (SPF): a recipient executed multi-donor trust fund program administered by Operations Policy and Country Services (OPCS).

3. Last year, a single, comprehensive report on the five BTL grant-making facilities was presented for the first time. This was a first step in responding to requests from Executive Directors for a more holistic and systematic approach to the funding of these facilities, with allocations linked to the Bank’s annual planning and budgetary processes. Prior to FY13, only the DGF annual report was sequenced for presentation in conjunction with the Bank’s annual budget process. Funding for the other facilities was typically addressed in the annual Medium-Term Strategy and Finance Paper (now the Medium-Term Business and Finance Paper, MTBF) and budget documents; more extensive progress reporting on these other facilities has been provided, on an informational basis, outside of the annual planning budget cycle.

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4. As part of the FY13 discussion, Executive Directors provided helpful guidance to further improve the report. More specifically, EDs highlighted four areas on which to strengthen analysis: (1) how each facility fits with the broader Bank directions, notably the Post Crisis Directions (PCD) paper; (2) the rationale for continued financing, including the value-added of Bank contributions to the facilities when compared to overall demands on administrative budget; (3) comparative information on how each facility operates, including decision-making for awarding grants and financial information on cash balances, commitments and disbursements; and (4) how results and lessons learned are taken into account as part of the grant-making process.

5. Since that discussion, work has begun on a new World Bank Group strategy. Consistent with the approach taken by the Medium-Term Business and Finance (MTBF), FY14 should be considered a transition year in light of the ongoing change agenda. Nevertheless, the FY14 budget envelope does take into account emerging priorities associated with the new strategy. Management recommends setting the overall FY14 budget for the five facilities at US$115 million, a US$46 million reduction from the FY13 envelope of US$161 million. The recommendation takes into account demands on the administrative budget, and temporarily redeployment of funds from the grant-making facilities to the net administrative budget above-the-line to fund the Bank’s own work program, supporting some of the costs of transition to the new strategy and scaling up activities in priority areas such as Fragile and Conflict Affected States (FCS). In subsequent fiscal years, the redeployment will be reassessed in the context of full implementation and funding of the new strategy and the role of external grant-making from the Bank’s own resources in that strategy.

Table 1: World Bank Below-the-Line Grant-Making Facilities

Recommended Budget Allocations (in US$ Million)

FY13 FY14

Share of Total FY14 Savings

State and Peace-Building Fund (SPF) 33.3 0.0 72.5%

Institutional Development Fund (IDF) 16.5 9.0 16.5%

Development Grant Facility (DGF) 56.2 51.2 11%

Global Partnership for Social Accountability (GPSA)

5.0 5.0 0%

Consultative Group on International Agricultural Research (CGIAR)

50.0 50.0 0%

GMF Total 161.0 115.2 100%

6. The proposed reductions to individual facilities for FY14 focus on SPF. The recommendation is based on a closer examination of cash balances, contributions and disbursements that followed the FY13 discussion with Executive Directors. While SPF goals are aligned with corporate priorities of strengthened support for Fragile and Conflict-affected States (FCS), the SPF program features significant uncommitted budget authority from contributions received in previous fiscal years. The slower pace of commitments from the SPF in FY13 was due to a comprehensive Mid Term Review of the SPF strategy and portfolio which developed a number of important shifts in the SPF strategy to enhance the impact of SPF funds in leveraging broader FCS country strategies. A strong pipeline of projects grouped around country-wide strategy initiatives is being prepared for FY14, which can be accommodated under the current cash balances. A substantial share of the funds freed up from reducing the SPF allocation to zero in FY14 (i.e., US$33.3 million,

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or 72 percent of the total reduction of the BTL envelope for FY14) are expected to be redeployed to FCS-related work programs within the net administrative budget and used to strengthen SPF programs in FY14. Since SPF commitments can continue at previous levels, this redeployment will increase the Bank’s overall support to FCS. This matter will be addressed more fully in the budget document. 7. The remaining reductions proposed for FY14 will be shared by IDF and DGF. IDF has a smaller available uncommitted budget authority which, together with the projected FY14 funding allocation, will scale down the program to US$15 million for new grants compared with US$25 million for the FY13 operating level. The DGF’s budget allocation is expected to decrease by US$5 million in FY14. This follows cuts to the DGF budget in FY10-FY13 made as part of its strategic reorientation. The impact on the DGF will be mitigated though the exit of long term programs as part of the reorientation begun in FY09.1 CGIAR’s BTL allocation for FY14 will continue at the same level as in prior years, but would be reassessed along with the other facilities in the context of the new strategy and the role of external grant-making in it. GPSA’s annual budget will not be subject to a reduction in FY14, given that it has been set up recently and the Bank made a 4-year funding commitment to GPSA, of US$20 million, in June 2012. 8. During FY14, Management plans to undertake a comprehensive assessment of the Bank’s support for grant-making facilities. This assessment responds to calls from Executive Directors during the discussions of the FY14 MTBF paper for a review of the rationale and effectiveness of the Bank’s funding for these facilities and will inform decisions regarding the role of grant-making from the Bank’s own resources as part of the ongoing work on the World Bank Group strategy. Management’s assessment will take into account a number of considerations, including: the Bank’s constrained net income and budget situation; the considerable volume of Trust Funds that has arisen since the creation of some of the facilities; and the potential for overlap within grant-making activities from the Bank’s own resources. The assessment may lead to recommendations to (a) further reduce or phase out funding for selected grant-making facilities, along with a proposed exit strategy and (b) change the funding approach, moving funding of some facilities above the line, or funding contributions as part of the Bank’s annual net income allocation process. The outcome of this assessment will inform Management’s recommendations for the Bank’s contributions to the facilities beginning in FY15. Management also requested that IAD carry out an Advisory Review of the five BTL facilities. A draft report was completed in April 2013 and will be used to inform the work to be undertaken in FY14.

9. In this context, the FY14 report follows the prior year practice and presents annual reports from each of the five BTL grant-making facilities. The consolidated document allows for consideration of the objectives and priorities of each facility, highlighting recent trends and accomplishments and illustrating the different administrative and operational approaches of each facility. The budget envelope presented for the BTL grant-making facilities for FY14 should be considered indicative. The actual decision on the BTL resource allocation will be made as part of the end-June 2013 Board discussions on the Bank’s Budget for FY14.

10. Matrix 1 provides highlights of each of the facilities based on more detailed information provided in each of the Facility-specific chapters. 1 See FY12 Development Grant Facility Budget and Update on Reorientation of the DGF, (R2011-0126), May 20, 2011.

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Matrix 1: Comparative Information on Five Facilities

Grant Making

Facilities Objectives Governance Structure

Decision Making Structure for Awarding Grants

Recipient (s) Financing Structure Commitments and

Disbursements

Consultative Group on International Agricultural Research (CGIAR) Fund

Reduce poverty and hunger, improve human health and nutrition, and enhance ecosystem resilience through high quality international agricultural research, partnership and leadership.

Fund Council oversees funding decisions for CGIAR Research Program proposals; Fund Council is chaired by the Bank (SDNVP) and complemented by the Consortium Board which oversees management and implementation of strategic objectives and results.

Proposals for CGIAR Research Programs are submitted to the Fund Council by the CGIAR Consortium Board. Each multi-year proposal (usually for a three-year period) is prepared by a lead CGIAR Center in close collaboration with other CGIAR Centers and external partners. Proposals are assessed by the Independent Science and Partnership Council using criteria agreed by the Fund Council and subject to external peer review. Independent assessment reports inform Fund Council decision-making.

Through CGIAR Research Programs, funding is provided to CGIAR Centers and external partners. All CGIAR Centers are members of the CGIAR Consortium and are independent legal entities. External partners receive contracts and grants from CGIAR lead Centers.

Annual Bank Contributions of US$50 million are made to a Financial Intermediary Fund where the Bank is one of 35 donors. The CGIAR Fund Council, of which the World Bank is a member, governs the Fund and makes decisions on multi-year commitments to CGIAR Research Programs. Disbursements are made quarterly based on an approved annual financing plan.

Full disbursement of all funds annually. FY13 new legal commitments US$ million: 50 from the Bank FY13 disbursements US$ million: 50 from the Bank Amount available for new legal commitments US$ million: Not applicable.

Development Grant Facility (DGF)

Encourage innovation, catalyze new external partnerships, and broaden Bank services.

Bank-wide DGF Council consisting of Network and Regional representatives at senior staff level meets annually to review proposals, making recommendations for approval and allocation decisions. Meetings are facilitated by the DGF Secretariat, which is also responsible for annual budget requests.

Annual call for proposals followed by pre-screening by Sector Boards and sponsoring VPs. Proposals are vetted against institutional priorities by DGF Council before Senior Management Endorsement and Board approval of budget envelope. Grants are typically expected to be less than US$750,000.

Independent legal entities with global/regional reach. Bank work which is traditionally funded by Bank Budget (BB) is not eligible for DGF financing.

Annual disbursement of funds directly to individual recipients through grant agreements.

Full disbursement of all funds annually. FY13 new legal commitments US$ million: 56.2 FY13 disbursements US$ million: 56.2 Amount available for new legal commitments US$ million: Not applicable.

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Grant Making Facilities

Objectives Governance

Structure Decision Making Structure

for Awarding Grants Recipient (s) Financing Structure

Commitments and Disbursements


Build capacity of Civil Society Organizations to contribute to country level governance reforms and improve service delivery.

Steering Committee chaired by WBI VP and composed of three donors, three CSOs and three government representatives.

Annual call for proposals, working with Bank Country Directors.

Non-governmental organizations in countries that have “opted in” to the GPSA.

Bank contributions are made to a multi donor trust fund, which allows the Bank to make multi-year commitments to recipients. In addition to the Bank, two external donors currently are contributing to the GPSA. The first call for proposals was held Feb-March 2013. First disbursement is expected in June 2013.

No legal agreements have been signed as yet; expected to be signed by June/July 2013. FY13 new legal commitments US$ million: 0 FY13 disbursements US$ million: 0 Amount available for new legal commitments from the first call for proposals, US$ million: 9.6

Institutional Development Fund (IDF)

Institutional capacity development in client countries and regional institutions to increase impact of the World Bank’s technical assistance associated with policy reforms.

Bank-wide Steering Committee chaired by OPSVP sets guidelines and determines block Regional allocations. Six Regional IDF Committees (RICs) prioritize and approve grants, oversee performance. IDF Secretariat provides administration, coordination and prepares annual budget requests.

Proposals are submitted on an ongoing basis. Regional Coordinators oversee submission of completed proposals to RICs for approval. Grants range from US$50,000 to US$750,000.

The IDF supports public institutions and, with the consent of the government, also private institutions in Bank member countries. The IDF also provides support to regional institutions.

Bank contributions are made to an IDF trust fund where the Bank is the sole contributor. Transfer of Bank budget to trust fund is subject to cash management framework.The use of the trust fund allows the IDF to make multi-year grant commitments to recipients.

FY13 new legal commitments in US$ million: 16.1 up to Q3 (plus US$6.5 million forecast for Q4) FY13 disbursements in US$ million: 14.1 up to Q3 (plus US$4 million forecast for Q4) Amount available for new legal commitments US$ million: 6.65 up to Q3 (reduced to US$3 million by end Q4)

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Grant Making Facilities

Objectives Governance

Structure Decision Making Structure

for Awarding Grants Recipient (s) and

Operations Financing Structure

Commitments and Disbursements

State and Peace Building Fund (SPF)

Improve governance and institutional performance in countries emerging from, or at risk of sliding into, crisis and arrears; support the reconstruction and development of countries prone to, in, or emerging from conflict.

SPF Committee, composed of senior level representatives from each Region and Network, approves grant proposals. The SPF committee is supported by a Secretariat that provides administration, coordination, and knowledge management.

Grant proposals are received in one of three ways: (a) in response to a call for proposals; (b) to address an urgen need; and (c) as part of the development of a country/regional strategy initiative.

National governments and CSOs; in exceptional cases, the Bank may be asked by the recipient (client country) to implement activities on their behalf. The SPF supports recipient activities (RE) through direct grants or contributions to other MDTFs. Regular Bank work which is traditionally funded by Bank Budget (BB) and not characterized as a “recipient activity” is not eligible for funding.

Bank contributions are made to a multi donor trust fund where the Bank is one of six donors. Transfer of Bank budget to trust fund is subject to cash management framework. The trust fund allows for multi-year grant commitments to recipients.

FY13 new legal commitments (not including projects approved in FY13, yet to be legally committed: US$14.3 million FY13 disbursements: US$21.2 million (US$18.5 million to Grants) Amount available for new legal commitments: US$79.5 million

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11. A summary of each report is presented below:

Consultative Group on International Agricultural Research (CGIAR)

12. Since its establishment in 1971, the CGIAR has evolved into a global partnership that advances agricultural research to reduce rural poverty, improve human health and nutrition, and ensure the sustainable management of resources. The CGIAR is the global leader on research around climate change issues related to agriculture. Research is carried out by 15 CGIAR centers in close collaboration with partners, including national and regional research institutes, civil society organizations, academia and the private sector. 13. The CGIAR launched a reform process in 2009 to meet new and growing challenges, including a new approach centered on innovative ways to pursue scientific work and the funding it requires. The reformed CGIAR has an increased focus on impact-driven research and better results, as well as on improving efficiency and effectiveness of the system, measures which have been recognized by donors as good value for money. 14. The building blocks of the new CGIAR include a programmatic approach to research (funding programs instead of institutions) and establishing the CGIAR Fund, a Financial Intermediary Fund (FIF), through which the World Bank’s contribution is channeled. The Bank, as a Fund Council member, participates in the decision-making process of the allocation of resources in the Fund. In addition, the Vice President of the Bank’s Sustainable Development Network is the Chair of the CGIAR Fund Council. 15. 2012 marked the second year of operation for the CGIAR Fund, with 33 percent growth over 2011. Projections indicate that the five year targets of doubling spending to US$1 billion per year to support CGIAR research programs is likely to be achieved this year if donor momentum is maintained. The financial commitments of donors reflect trust in CGIAR’s efficient and effective approach to research and its proven ability to contribute to eradicating poverty, hunger, and malnutrition in a sustainable way. The proposed CGIAR funding from the BTL envelope for FY14 is US$50 million. 16. The CGIAR has a complex funding structure, with most contributions tied to an individual CRP or Center. One of the most important objectives under the reforms was to increase untied funding, called Window 1, to enable a more strategic allocation of resources toward agreed priorities. The Bank continues to lead by example in providing all of its funds to this Window, and is also playing an active role in encouraging others to follow suit, but this is still a work in progress. Although many donors are now providing at least some funding in this form, at present, the Bank is still one of the largest donors to Window 1, and the majority of CGIAR funding remains tied.

Development Grant Facility (DGF)

17. The overall objective of the DGF is to encourage innovation, catalyze new partnerships and broaden the World Bank’s services by convening and building coalitions, and provide financial support to external entities. The DGF establishes grant making as an integral part of the Bank's work to create new development solutions, and an important complement to its lending and advisory services.

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18. FY14 is the first year with tangible benefits from the strategic reorientation of the DGF. The reorientation initiated in FY09 has led to a marked phase-out of long-term programs, thus freeing up more funds for new proposals and mitigating the reduction in overall DGF funding for FY14. Nine new DGF proposals are recommended for funding in FY14, and more new proposals for FY14 than for FY13 were submitted by Regions. All new proposals were aligned with sector, network or regional strategies, and they demonstrate the ability of the DGF to respond to emerging corporate priorities, including Science of Delivery, labor mobility and jobs creation, open data, gender and private sector development. 19. The overall DGF budget envelope for FY14 is recommended at US$51.17 million. Since its inception 15 years ago, the DGF has supported some 245 priority programs with an aggregate Bank contribution of US$2.3 billion.


20. The World Bank has provided direct grant funding to civil society organizations (CSOs) since 1983. The GPSA was built upon this experience and with an aim to directly support activities of CSOs at the country level. The Bank approved US$5 million of budget funding in FY13 and the first GPSA call for proposal was announced in February-March 2013. The first set of GPSA grantees, selected from countries which have “opted” into GPSA, are expected to be announced by the end of FY13.

Institutional Development Fund (IDF)

21. The IDF program provides grant funding to support institutional capacity development in client countries and regional institutions, aimed at increasing the impact of the World Bank’s technical assistance associated with policy reforms. The IDF program is approaching its twentieth year of operation, and its growth stems from activities aimed at enhancing use of financial management country systems, advancing procurement reform, and implementing the first phase of the governance and anticorruption agenda. 22. Through the IDF program, the Bank provides financing for a tailored package of knowledge, technical assistance, training and equipment designed to fulfill capacity gaps identified as part of its ongoing dialog and engagement with borrowing countries. The IDF has unique characteristics in that it facilitates a quick and targeted response to client needs, and it finances capacity building activities in areas where Bank lending has limited reach. The Bank’s new focus on addressing delivery and implementation challenges through Science of Delivery creates a unique opportunity to reorient the program to better serve the Bank and the needs of its clients. The IDF will continue to provide technical assistance, but with a renewed emphasis on the application of evidence-based approaches to support agile and adaptive implementation of development programs. 23. For FY14, the projected new funding from the BTL budget is US$9 million compared with US$16.5 million in FY13. The IDF will continue operating at the FY13 level during FY14. The Steering Committee of the IDF will be meeting to address the issues that are essential for the effective turnaround of the fund in a way that will add value to the Bank’s commitment to institutional strengthening broadly.

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State- and Peace-Building Fund (SPF)

24. The SPF is a multi-donor trust fund managed by the World Bank that was established in 2008. The SPF is dedicated to addressing the needs of state and local governance and peace-building in fragile situations and areas that are prone to, or affected by, conflict. The SPF works in countries and in ways where the rest of the Bank is necessarily more constrained. This includes grant-making in countries that are in arrears and non-members of the Bank, which enables the Bank to maintain its engagement and stay positioned as circumstances unfold. 25. The SPF continues to demonstrate that the Bank, with a contribution of over 80 percent of the total SPF, is committed to the challenges in FCS and the funding of transformative process/programming. There is a growing demand for SPF funding particularly to address newly emerging priorities. For example, the evolving situations in Libya, Syria, Myanmar, Mali, Central African Republic, and other countries have underscored the urgent need to explore early engagement with funding from the SPF. The challenge remains for the Bank and the broader international community to respond to the demand for innovative and flexible support to countries emerging from conflict to minimize the risk that violence will recur. However, in order to maximize the leverage of SPF funds in strengthening the conflict and fragility focus across country programs, the SPF commissioned an independent Mid Term Review (MTR) of the SPF strategy and portfolio implementation. The MTR made a number of recommendations including bundling packages of projects in new “strategy initiatives” for individual countries or regions designed to enhance programs to address conflict and fragility. The SPF Committee limited the consideration of new proposals during the MTR. Following approval of the MTR recommendations, the SPF Committee has recently approved two landmark strategy initiatives for US$20 million for Somalia (consisting of 4 projects) and US$15 million for Sudan (consisting of 5 projects). A pipeline of similar strategy initiatives is under preparation for FY14.

26. SPF’s activities in FY13–14 will continue to focus on operationalizing the recommendations emanating from the SPF MTR and to promote the SPF as a strategic and catalytic FCS Fund that serves as a key arm of WDR 2011 operationalization. The SPF will continue to finance strategic and catalytic interventions and leverage internal and external partnerships to inform and improve development effectiveness in FCS.

27. Taking into consideration the current uncommitted balance, the average legal commitments and the pipeline of projects in final preparation, the Budget document will not recommend allocating new budget to the SPF for FY14. This decision will not affect the commitment volume of the SPF in FY14 in light of the current pipeline of projects.

Conclusion

28. This is the second Board paper on BTL grant-making facilities, an annual process initiated in FY13. The focus of the FY15 Board submission will be guided by the comprehensive assessment of the Bank’s support for grant-making facilities to be carried out in FY14.

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UPDATE ON THE WORLD BANK’S BELOW-THE-LINE GRANT MAKING FACILITIES

I. CGIAR: A Global Research Partnership for a Food Secure Future

A. INTRODUCTION

1. In 1971, the World Bank was a founding member of the CGIAR — the only global agricultural research body dedicated to providing solutions for poor smallholder farmers in developing countries. 2. Today, CGIAR is a global partnership that continues to deliver climate smart solutions for the benefit of the poor. It advances agricultural research to reduce rural poverty, increase food security, improve human health and nutrition, and ensure the sustainable management of natural resources. Research is carried out by 15 CGIAR Centers in close collaboration with hundreds of partners, including national and regional research institutes, civil society organizations, academia, and the private sector. High priority is given to diverse partnerships so that CGIAR can work with those groups best placed to ensure that research leads to sustainable impact and measurable improvements in the lives of the poor. Significant attention is also given to gender sensitivity and capacity strengthening so that research results empower women and poor smallholder farmers and are replicable in developing countries.

3. The results of CGIAR’s research activities are considered international public goods —including improved crop varieties, sustainable farming methods, incisive policy analysis and new knowledge — that are freely available to all and can be adapted to local needs and conditions. CGIAR’s genebanks underpin much of its vital research programs. The genebanks safeguard the world's largest and most diverse seed collections of crops and their wild relatives, as well as other plant genetic resources used in breeding programs. They are indispensable to future food security as they contain genes that confer pest and disease resistance and tolerance to heat, cold and drought.

4. CGIAR’s 40 years of scientific and research excellence have benefited hundreds of millions of smallholder farmers and other poor people in the developing world. According to a 2011 ex-post evaluation by the Australian Center for International Agricultural Research, for example, rice farmers in Southeast Asia harvest an extra US$1.46 billion worth of rice each year thanks to high-yielding varieties developed by CGIAR scientists. The increased yields are lifting farm families out of poverty and contributing to regional food security. In addition to improving crops, CGIAR’s success stories include a vast array of achievements, such as linking smallholder farmers to high-value markets, strengthening women’s access to land and other assets, applying greener approaches to pest management, providing better policy options, improving children’s nutrition and health, developing vaccines against deadly livestock diseases, and conserving critical natural resources.

5. Despite nearly 40 years of success based on world-class research, CGIAR risked becoming less relevant and effective in the face of new and growing challenges, including declines in funding, fragmentation and duplication of research efforts, failure to capitalize on the growing role of the private sector, and decreased awareness of the changing needs of smallholder farmers. Coupled with complex new challenges arising from climate change, worsening water

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scarcity, land degradation, depletion of fish stocks, and rising costs for food, feed and fuel, CGIAR recognized that it needed to undergo a fundamental process of renewal in order to meet the needs of the changing world. 6. In December 2009, the CGIAR adopted a new business model and set in motion a far-reaching reform process. The new approach emphasizes clear lines of accountability, balances the partnership between those who conduct research and those who fund it, and ensures a more efficient and effective system by streamlining processes, clarifying roles and responsibilities, and reducing duplication in all aspects of its work. The new model also enables stronger collaboration to ensure that the results of agricultural research are fed directly into the hands of policy-makers, the private sector, farmers and other stakeholders to improve outcomes quickly and at scale. 7. As a founding member and one of its major donors, the World Bank has a strong and unique relationship with CGIAR. The World Bank played a major role in CGIAR’s reform, including approval by the World Bank Board to establish the CGIAR Fund, for which the Bank serves as Trustee and hosts the Fund Office. As a Fund Council member, the World Bank participates in the decision-making process regarding the allocation of resources in the CGIAR Fund and its Vice President of Sustainable Development chairs the Fund Council. 8. The World Bank’s investment in CGIAR is closely aligned with the Bank's larger development agenda and its engagement in agriculture and rural development, as well as in a number of sectors that relate to poverty reduction and human development. Agricultural research is an integral part of the World Bank's work, including on environmental sustainability, climate change, and food and nutrition security. Through its research, CGIAR contributes to a major component of the World Bank’s Agriculture Action Plan (AAP) — the generation of new technologies. The CGIAR is also the Bank’s principal partner in addressing certain thematic areas of the AAP, such as raising agricultural productivity, linking farmers to markets and strengthening value addition, and enhancing environmental services and sustainability. CGIAR and the Bank also collaborate to mainstream the results of CGIAR research into Bank projects and to scale up successful programs.

9. In short, CGIAR is an important partner for the World Bank in realizing its major objectives, including its ambition to avert a 4-degree world—a prerequisite for which is research that will deliver a global food system that is high yielding, highly resilient, carbon positive and climate-smart. Moreover, CGIAR is the only global agricultural research body producing top-level science to meet the needs of poor smallholder farmers in developing countries, including providing solutions for climate change adaptation and mitigation.

B. STRATEGY AND PRIORITIES

10. Through the reform process of the past three years, CGIAR has embraced a new approach that is centered on innovative ways to pursue scientific work and the funding it requires. It is bringing donors together for better results and enabling scientists to concentrate more on the research through which they develop and deliver big ideas for big impact. As a result, CGIAR has more dynamic partnerships based on shared values that enable the quicker

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and wider dissemination and adoption of research outcomes, ultimately leading to greater impact on the ground. 11. At the heart of CGIAR’s two-pillar management structure is its Strategy and Results Framework (SRF), which guides the development of a results-oriented research agenda. The SRF enables CGIAR to function as a unified system working together to pursue common goals, objectives and priorities and defines four critical development outcomes: reduced rural poverty, increased food security, improved nutrition and health, and the sustainable management of natural resources. All CGIAR Research Programs are driven by their potential impact on these outcomes. With a more coherent program shaped by the SRF, CGIAR is better positioned to meet current and future research and development challenges and have greater impact on the lives of the poor. 12. CGIAR’s multi-donor trust fund provides stable and predictable funding and harmonizes donors’ contributions to support priorities set out in the SRF. Before receiving funding, CGIAR Research Programs set out their expected achievements and provide verifiable targets so progress can be measured and monitored. Linking funding to results gives donors better value for money and ensures that research translates into tangible benefits for the poor.

13. Current CGIAR Research Programs (CRPs): • Genebanks; • Dryland Systems; • Integrated Systems for the Humid Tropics; • Aquatic Agricultural Systems; • Policies, Institutions and Markets; • Wheat; • Maize; • Rice, or the Global Rice Science Partnership (GRiSP); • Roots, Tubers and Bananas; • Grain Legumes; • Dryland Cereals; • Livestock and Fish; • Agriculture for Nutrition and Health; • Water, Land and Ecosystems; • Forests, Trees and Agroforestry; and • Climate Change, Agriculture and Food Security (CCAFS). 14. Examples of potential impact from some of the CRPs: • Rice. Higher rice yields will raise farmers’ incomes and lower prices, reducing how

much the very poor spend on rice by US$11 billion annually and lifting 150 million people out of poverty. Research will also reduce the number of malnourished people by 70 million and avert about 1 billion tons of CO2 equivalent emissions.

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• Climate change and agriculture. Crops will be less vulnerable to drought, flooding, pests and disease, cutting poverty by 10 percent and the number of undernourished rural poor by 25 percent while reducing green house gass (GHG) emissions.

• Dryland systems. Agricultural productivity and production will increase by 20 to 30 percent in high potential areas and by 10 to 20 percent in low potential areas or on marginal lands, and 87 million people will have better and more secure incomes.

• Grain legumes. Yields will increase by about 20 percent on at least one-fifth of the planted area by 2020, generating US$3 billion in benefits, for a six-fold return on investment.

• Water, land and ecosystems. By 2020, sustainable irrigation will reach 12 million households in sub-Saharan Africa and research will also increase the incomes of 17 million smallholder households in rainfed and pastoral areas of Africa and South Asia.

• Maize and wheat. By 2030, 33 percent higher maize productivity will meet the annual food demand of an additional 600 million people, and 21 percent higher wheat productivity will do the same for 397 million people.

• Forests and agroforestry. Avoided deforestation on 0.5–1.7 million hectares will reduce carbon dioxide emissions by 0.16–0.68 billion tons per year, equivalent to taking 29–123 million cars off the road annually.

15. Based on the belief that if the CGIAR is to have deep and long-lasting impact on persistent rural poverty, hunger and malnutrition, it has to actively engage with issues of social change and gender inequality, the CGIAR’s Strategy and Results Framework specifically identifies gender equity as a cross-cutting theme of high priority for all CGIAR Research Programs. To ensure that research results benefit and empower poor rural women, the CGIAR is committed to addressing gender issues in a systematic manner and integrating gender analysis throughout its portfolio. In November 2011, the Consortium Board approved a CGIAR-wide gender strategy, which was developed in consultation with experts and donors, and appointed a senior gender adviser. Almost all CRPs have already developed and are implementing their own gender research strategies. 16. In 2012, CGIAR’s Gender and Agriculture Research Network convened a workshop on “Addressing the Gender Gap in Agriculture: Opportunities for Collaboration in Gender-Responsive Research.” The network outlined four concept briefs on collaborative research opportunities, developed an action plan for 2012-2013, planned a joint publication, and formulated two recommendations to strengthen the gender mainstreaming efforts of the Consortium: adoption of a CGIAR gender policy and development of a gender-responsive, system-level outcome to ensure that the effects of gender disparities are taken into account in the definition and assessment of CGIAR outcomes and impacts. 17. In November 2, 2012, the second Funders Forum endorsed an Action Plan developed by the Consortium that includes the following components: prioritization, CRP performance management, partnerships, and cyclical updating of the SRF. Prioritization involves the identification of intermediate development outcomes that are linked to system-level outcomes, including at the CRP level, while a CRP Performance Management System will support resource allocation decisions in accordance with agreed priorities. The Action Plan will also define a set of goals and targets for good partnerships and identify activities to move current practice towards

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these goals. The Action Plan promises an increased focus on impact-driven research and better results for the poor.

C. BUDGET

18. CGIAR’s research portfolio consists of 16 CRPs that have been approved by the Fund Council and are being implemented over a three-year period with a total budget of US$3 billion. Figure 1 below illustrates the approved budget of CRPs for 2012–2015.

Figure 1: Approved CRP Budgets over Three Years

(US$ Million)

D. COMMITMENTS AND DISBURSEMENTS

19. All CGIAR available funding is fully committed to approved CRPs. Cash is managed by taking into account that approximately 60 percent of Fund contributions are received from donors during the last quarter of the year. Figure 2 illustrates the 2012 rate of receipts and how the Fund’s ability to make disbursements is affected accordingly.

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W1 & 2 W3 & Bilateral

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Figure 2: CGIAR Fund Inflows and Disbursements

E. RESULTS

20. CGIAR research is both effective and cost-effective. For every US$1 invested in CGIAR, at least US$9 worth of additional food is produced in developing countries. A study on the impact of crop improvement research from 1965 – 1998 (to be updated in late 2013 with more recent data) shows that without CGIAR, developing countries would be producing 7–8 percent less food, 11–13 million more hectares of their land would be under cultivation, per capita food consumption would be 5 percent lower, and 13–15 million more children would be malnourished. Rates of return on CGIAR’s investments in crop improvement research range from 39 percent in Latin America to more than 100 percent in Asia and in the Middle East and North Africa. According to a 2008 study, the annual economic benefits of CGIAR research in Asia alone are US$10.8 billion for rice, US$2.5 billion for wheat, and US$0.8 billion for maize, far exceeding the investment in this work. 21. CGIAR is committed to results-oriented research. During the past year, CGIAR focused on its ongoing effort to improve operational effectiveness, value for money, and impact in the lives of the poor. A number of steps were taken to ensure that CGIAR is effective and efficient in all aspects of its work, to fully reap the benefits of partnership, and to improve the evaluation of research progress.

Research Results: Some Highlights

• Scientists discovered in CGIAR’s extensive seed collections a gene that enables rice plants to produce 20 percent more grain by increasing uptake of phosphorus — an important plant nutrient. The discovery of this gene, which confers tolerance of low levels of phosphorus in soil, will enable farmers working on phosphorus-deficient land to grow more rice, improving their food security and incomes, and reducing use of the world’s finite and rapidly diminishing reserves of rock phosphate.

020406080

100120140160180200

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Inflows Disbursements

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• Research by CGIAR and its partners in Egypt and Ghana has led to improved breeds of Nile Tilapia that grow up to 30 percent faster than unimproved Tilapia, increasing food and nutrition security.

• Field work on poverty, agriculture and natural resource management in West Bengal, India has led to significant water policy changes that could benefit more than 5.6 million smallholders. The lead CGIAR researcher received the Norman Borlaug Award in recognition of her work. In addition, CGIAR’s International Water Management Institute won the prestigious 2012 Stockholm Water Prize in recognition of its extraordinary contribution to the development of new policies and investments in agriculture that have enabled more productive use of water and have enhanced food security, economic development and environmental health around the world.

• Over 50 new varieties of drought tolerant maize have been adopted on more than 1 million hectares across eastern and southern Africa, increasing farmers’ yields by 20-30 percent. Further adoption over the next 4 years will benefit 30-40 million people and provide added grain worth US$160-200 million/year in drought-affected areas of Africa.

• New varieties of common beans have raised incomes and strengthened food security in over 5.3 million rural African households. In Central Africa, the recent introduction of improved climbing beans tripled farmers’ production and significantly increased incomes. The improved climbers also offer greater resistance to diseases and some contain higher levels of iron, improving nutrition and health.

• CGIAR has partnered with Mars Inc. and national research institutes in West Africa to improve the livelihoods of small-scale farmers by developing improved cocoa varieties, securing markets for agroforestry products, and quantifying the potential of trees on farms for climate change mitigation and adaptation. In some areas, cocoa yields have increased by up to four times.

• CGIAR partnered with Maasai communicators in Kenya to help pastoralists better manage their lands, livestock and wildlife resources. Lessons from this project, winner of the 2012 Sustainability Science Award, are being leveraged in the development and adoption of land-use master plans.

• NERICA (New Rice for Africa) varieties that are high yielding, early maturing, drought tolerant and resistant against diseases are boosting rural incomes and food security. To date, 78 NERICA varieties have been adopted in more than 30 countries in sub-Saharan Africa.

• New rice varieties — dubbed “scuba rice” because they can survive under water for up to 17 days during flooding — are saving vulnerable crops and livelihoods across monsoon Asia. Thanks to an innovative approach to seed dissemination with private sector partners, farmers are planting scuba rice at unprecedented rates. More than 4 million farmers in Asia are currently growing the varieties, which offer a yield advantage of 1–3 tons per hectare.

• Four new biofortified food crops were released to farmers in 2012: iron-rich beans in Rwanda, vitamin A-rich maize in Zambia, iron-rich pearl millet in India, and vitamin A-rich cassava in Nigeria. By the end of 2014, rice and wheat high in zinc will be released in Bangladesh and India, respectively. The crops, bred to be rich in key vitamins and minerals are also drought tolerant, virus resistant, and high yielding.

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22. CGIAR’s research has direct benefits for the World Bank’s clients and its results are mainstreamed and used to scale up Bank projects. Below are three examples of how CGIAR research has been used by the World Bank for development impact

Conservation Agriculture/No-till Technology

23. In Kazakhstan, where CGIAR has conducted research and supported adoption of the conservation agriculture/no-till (CA/NT) crop management system in wheat production, the World Bank-funded Agriculture Competitiveness Project (ACP) has in turn supported and contributed to the expansion of the practice. Kazakhstan currently practices CA/NT on at least 1.85 million hectares — a remarkable 200 percent advancement in 5 years. Adoption of the technology has increased wheat production by almost 2 million tons, improving incomes, food security and climate change mitigation. The increase in production is equivalent to about US$580 million in incremental income from 2010-2012, satisfies on average the annual cereal requirements of 5 million people, and is responsible for the sequestration of about 1.3 million tons of CO2 each year. Adoption of CA-NT has also saved farmers about US$15 per hectare in terms of production costs, with total annual savings of US$30 million.

Combating Wheat Rust Disease in Ethiopia

24. A new wheat stem rust race, Ug99, has spread to Ethiopia, where wheat is produced on nearly 1.5 million hectares, posing a major threat to smallholder wheat farmers, who produce an annual average of 3.1–3.4 million tons. Using CGIAR’s elite wheat germplasm, new rust resistant and high-yielding varieties were developed by the national wheat breeding program in collaboration with CGIAR Centers and quickly disseminated through the World Bank’s East Africa Agricultural Productivity Program, which focused on fast-track variety release and rapid seed multiplication, ultimately helping to reduce poverty and hunger.

West Africa Agricultural Productivity Program (WAAPP) and CGIAR Collaboration

25. The World Bank WAAPP is a regional program with the aim to generate and accelerate the adoption of improved technologies in the participating countries’ top agricultural priority areas. For example, the national centers of specialization in each country are focusing on improvements in key crops, such as roots and tubers in Ghana; rice in Mali; and cereals in Senegal to generate new technologies in collaboration with CGIAR centers promoting improved R&D conditions and procedures. Recently, 16 accessions of sorghum from Senegal and 2 cassava germplasm from Ghana were developed and exchanged to promote regional cooperation and capacity building across these agricultural research centers.

F. ACTIVITIES PLANNED FOR FY14

26. CGIAR’s ambitious research agenda was developed to tackle the major global development challenges of the century specifically for the benefit of some of the world’s poorest people. Capitalizing on this vast potential requires serious commitment from donors. As a result of that commitment, CGIAR is now growing twice as fast as it did in the past. Over the last 3 years (2009–2011), the annual growth rate has averaged about 10 percent, compared to an average growth rate in funding of 4.8 percent in the decade prior to the reform (1998–2008).

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27. In response to the urgent need to reverse the decline in funding for agricultural global public good research, donors have put CGIAR on track to achieve its 5-year target of doubling spending to US$1billion per year by the end of 2013 to support the suite of CGIAR Research Programs, with the goal of a US$2 billion annual budget by 2020. This increased financial commitment by donors reflects strong confidence in key elements of the reform, including a more efficient and effective approach to both governance and research, with a focus on results and clear lines of accountability.

28. CGIAR’s research activities are extensive and long-term in nature. Detailed information on the individual programs is available on the CGIAR website. http://www.cgiar.org/our-research/cgiar-research-programs/

29. From an organizational development perspective, the top priorities for the coming year include:

• Advance a performance-based system to increase accountability, optimize impact and ensure value for money.

• Fully integrate and internalize gender in terms of research and outcomes. • Strengthen links between evaluation, impact assessment and learning. • Improve priority-setting and foresight. • Enhance strategic partnerships with private sector, CSOs and NGOs to ensure research

results are relevant and lead to change on the ground. 30. Going forward, CGIAR is determined to move to a more performance-based system, an objective that has been incorporated into the Strategy and Results Framework Action Plan, which aims to identify more precise development outcomes in the coming months. In turn, these intermediate outcomes will be used in priority-setting exercises to translate the four system-level outcomes (SLOs) into geographic specific outcomes and assess how each of the CRPs contributes to the SLOs. The Action Plan will also contribute to more robust reporting on the results of CRP research, which will help reduce transaction costs and improve value for money. With funding linked to delivery of outcomes, CGIAR will ultimately have a system based on paying for performance. 31. The SRF Action Plan will be implemented in the coming year by developing a system based on geographically explicit intermediate development outcomes, carefully negotiated with development partners, and with funding linked to delivery of outcomes. The new system can be piloted with volunteer CRPs in 2014 and implemented system-wide after that. This also provides a major opportunity to align the priorities of the CGIAR Consortium with that of our partners, such as the CAADP national investment plans drawn up by many African countries.

G. CONCLUSION

32. To feed 9 billion people in 2050, agricultural production needs to increase by 70 percent in the face of unprecedented challenges: growing water scarcity, land degradation, depletion of fish stocks, rising costs for feed and fuel, and climate change, which threatens to significantly diminish crop yields, particularly in Africa, the most food-insecure region of the world. These challenges are exacerbating the hardships already faced by three-quarters of the world’s poorest

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people who depend almost completely on agriculture for food and income. Many smallholder farmers struggle to grow enough food to feed and nourish their families. They farm on tiny plots with poor soil under rainfed conditions, and often cannot afford fertilizer or other critical inputs. Their yields are low and their harvests are easily destroyed by drought, flood or other extreme weather, with devastating effects on their livelihoods and family’s wellbeing, perpetuating a vicious cycle of poverty and hunger. 33. In order to tackle these challenges and achieve its mission, the World Bank relies on the contributions of agricultural research, and CGIAR is an important partner in this regard. CGIAR is the only global agricultural research system that focuses on crops, livestock, fish and forestry/agroforestry systems of most importance to poor smallholder farmers in developing countries. Without more and better investment in agricultural research, especially the global public goods that CGIAR uniquely provides, the world will not be able to eliminate poverty, hunger and malnutrition and avert a 4 degree warmer world. Agricultural productivity, especially among female farmers, must increase significantly to achieve these critical objectives and reduce pressure on vital natural resources. Research and new innovations are fundamental to increasing productivity, reducing poverty, and achieving food and nutrition security, and doing so in a sustainable way. 34. The World Bank is not a research organization mandated to generate agricultural production technologies and innovations (e.g., improved crop varieties and livestock breeds, sustainable and climate-smart agricultural production techniques, etc.). Through its strong relationship with CGIAR, it accesses cutting-edge science to address the agricultural productivity challenge in developing countries. CGIAR is the Bank's principal partner in addressing key areas of the Agricultural Action Plan, including boosting agricultural productivity, improving smallholders’ access to markets, and enhancing environmental services and sustainability.

35. CGIAR is also the global leader on research on climate change issues related to agriculture. We cannot deal with climate change unless we change the way we produce food and make agriculture a carbon sink, not an emitter. With its critical mass of scientists and partners, CGIAR is already working on this and making it a top priority to develop crops that are even more high-yielding, carbon positive, climate smart, and resilient to drought, heat, flooding and other stresses. This is a technological challenge that requires significantly more resources and long-term financing for sophisticated programs. At this critical juncture in shifting the world onto a sustainable low-carbon global growth trajectory, increased and sustained investment in agricultural research and innovation is more important than ever, especially given the long-term nature of agricultural research.

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II. The Development Grant Facility (DGF)

A. INTRODUCTION

36. The overall objective of the Development Grant Facility (DGF) is to provide seed funding to encourage innovation, catalyze new external partnerships and broaden the Bank’s services by convening and building coalitions. The DGF establishes grant making as an integral part of the Bank's work to create new development solutions, and an important complement to its lending and advisory services. 37. A second objective behind the creation of the DGF was to integrate the overall strategy, allocations, and management of Bank grant-making activities funded from the administrative budget under a single umbrella mechanism, and to establish an overall policy framework for grant making to ensure closer alignment with Bank priorities. When it established the DGF, the Bank’s Board also endorsed detailed eligibility criteria (see Box 1).

Box 1: DGF Eligibility Criteria

The DGF was established in FY98 as the World Bank’s mechanism for providing grant financing for innovative partnerships that are of high value to World Bank clients, but which cannot be adequately assisted through the Bank’s country operations alone.

DGF programs should meet the following eligibility criteria:

• Further the Bank’s development objectives but not compete with regular Bank instruments;

• Operate where the Bank has a distinct comparative advantage and not replicate the role of other donors;

• Encompass multi-country benefits or activities not appropriate to undertake at the country level;

• Provide significant leverage for generating financial support from other donors (DGF funding should be < 15 percent of total recipient program budget);

• Have a grantee with a record of achievement and financial probity; • Maintain an arm’s-length relationship with the Bank’s regular programs; • Have an explicit disengagement strategy; and • Reinforce partnerships with key players in the development arena.

______________________ Notes: The DGF objectives and eligibility criteria were endorsed by the Board in July 1998. See the Development

Grant Facility: FY98 DGF Annual Review and Proposed FY99 DGF Budget (R98-258), October 28, 1998.

38. Over time, the DGF has refined its approach, but maintained its focus on supporting promising partnerships with the potential to achieve strong developmental impacts; contributing to strengthening the Bank’s convening role and leverage. A strategic reorientation of the DGF was initiated in FY09. Refinements have included a separation of institutional-type grants for country-capacity building, for instance, delinking the Institutional Development Fund (IDF) program and the Small Grants Program (which later became the Civil Society Fund and subsequently the GPSA) from DGF governance and reporting arrangements in FY09. This allowed the DGF to focus on truly global and regional partnerships. The Consultative Group for

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International Agricultural Research (CGIAR) was delinked from the DGF in FY10, given its large size and need for a separate and in-depth annual review by Management and the Board. 39. Further reorientation actions were aimed at the fact that the majority of funds were being committed to long-term programs without clear exit strategies, limiting its ability to fund new and innovative partnerships, the original purpose of the Facility. During the FY11 DGF budget discussion, Board guidance recommended further work with program sponsors to reduce the number of long-standing DGF programs and their share of DGF grant allocations to free-up more resources to support new, innovative programs with time-limited funds. A “venture capital” style approach was introduced to increase focus on the provision of seed capital for innovative, results-oriented programs. The Board and Management expressed their support of undertaking more “high risk, high reward” approaches, with an understanding that, as part of the venture capital approach, the success of programs is not always guaranteed and that there are important lessons to be learnt even when programs do not succeed.

Governance

40. While procedures have been streamlined in recent years, the overall governance structure of the DGF has remained as shown in Figure 3. The DGF calls for each grant proposal to have a Bank sponsor. Proposals must be reviewed and prioritized by Sector Boards and the VP of the sponsoring unit to ensure proposals are technically sound and to help reinforce selectivity and strategic alignment. Proposals are then reviewed to ensure DGF elibibility criteria are met and cross-vetted against institutional priorities by a Bank-wide DGF Council, supported by a small DGF Secretariat. 41. The DGF Council recommends allocations to Senior Management according to the merits of the program proposals received. Beginning with FY13, the Board’s decision on the DGF budget allocation was incorporated into the overall Bank Budget for consistency with the other grant-making facilities.

Figure 3: DGF Governance Structure and Program Review

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42. DGF will continue to focus on reducing the dependency of some long-term programs on ongoing DGF financial support, by ensuring adherence to the exit strategies. This will continue to free up funding for new, time-bound programs in line with the DGF mandate of encouraging innovation, catalyzing partnerships, and broadening the scope of Bank services. Turnover from implementation of exit strategies will also create space for the DGF to support the forthcoming World Bank Group strategy. 43. Increased DGF selectivity in several areas will continue over the coming years. To aid in this, the DGF has implemented a scorecard approach (see Box 2) for the selection of new proposals by the DGF Council. In line with the planned FY14 review of Bank support to grant-making facilities, the DGF will review the scorecard criteria to ensure the DGF remains responsive to and closely aligned with the forthcoming World Bank Group strategy.

Box 2: DGF Scorecard Approach

Scorecard Variables and Weights • Innovativeness (30%); • Readiness for Implementation (20%); • Results Framework (20%); • Adherence to DGF Criteria (15%); • Corporate Priorities (10%); and • Proposed Funding Level (5%).

44. The DGF vetting process will continue to ensure close alignment with Regional and Network priorities and strategies. Combined with the scorecard approach, the DGF will remain flexible and thus responsive to broad-based corporate priorities. The nine new proposals for FY14 DGF funding already reflect some of the emerging corporate priorities, including Science of Delivery, labor mobility and job creation, open data, gender and private sector development. 45. A strengthened focus on results from DGF programs will also continue over the coming years. A revised results framework (RF) for the DGF was introduced in FY12 to improve monitoring and reporting and allow programs to demonstrate more clearly how they are achieving results (see below). In addition, the DGF Secretariat continues to explore ways to strengthen feedback loops, gathering lessons learned that can be used to better understand the success factors behind DGF partnerships’ ability to achieve definied objectives.

C. BUDGET

46. Since its inception 15 years ago, the DGF has supported some 245 programs with an aggregate Bank contribution of US$2.3 billion. The DGF disburses grant awards in full directly to recipients in the same fiscal year as they are approved. No funds roll over from one fiscal year to the next.

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Figure 4: DGF FY98-FY14 Budget Allocation Across Sectors/Categories (US$2,305 million)

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Note: * Large programs previously funded under the DGF include CGIAR, Institutional Grant Programs, such as the IDF and precursors to the SPF and GPSA and Special Programs, such as the Partnership for Capacity Building in Africa (PACT)/ACBF.

47. Excluding those large programs that have been decoupled from the DGF, the majority of DGF funding has supported programs in Health, Nutrition and Population, followed by programs in Agriculture and Environment Services; Financial/Private Sectors; and Education, as illustrated in Figure 4. 48. The overall recommended DGF budget envelope for FY14 is US$51.17 million. FY14 is the first year showing tangible evidence of the success of the DGF reorientation strategy, making the DGF more flexible and responsive to its original mandate. Funds freed up from exits and reductions to long-term programs will still enable the DGF to continue its mandate in FY14 of supporting new, innovative partnerships, despite the US$5 million overall DGF budget reduction vs. the FY13 envelope.


49. The annual funding envelope to DGF is fully allocated by the beginning of each fiscal year. One hundred percent of the allocations are disbursed by the end of the respective fiscal year through grant agreements with recipients.

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E. RESULTS

50. Programs receiving DGF funding of US$300,000 or more over the life of the program must undertake an external evaluation every three to five years that is independent of the program’s management. The DGF encourages programs to follow the IEG/DAC Sourcebook of Indicative Principles and Standards for Evaluating Global and Regional Partnership Programs (GRPPs) in terms of process and substance. The Bank, through CFPTO and IEG separately, typically provides feedback and comments on the draft terms of reference for upcoming evaluations. IEG also observes progress in improving the independence and quality of evaluations of global and regional partnership programs (GRPPs) which can include DGF-funded partnerships in which the Bank is involved. A recent example includes an IEG review of the Global Facility for Disaster Reduction and Recovery (GFDRR). 51. A revised DGF results framework (RF) was introduced in FY12 to improve monitoring and reporting, and allow programs to demonstrate more clearly how they are achieving results. A recent review of FY12 proposals and FY13 progress reports indicate the new RF is beneficial and of strategic value to programs, both in terms of enhancing their intrinsic quality and as a program management tool. RFs are now also included in the DGF Grant Agreements as guidance during implementation for the task teams as well as funding and implementing partners. The review points to the strong likelihood of achieving the objectives behind the revision of the DGF RF template in that (i) tangible results indicators are being established; (ii) monitoring and reporting is improving; and (iii) the trends so far in results reporting point to likely improvements in measuring development impact and enhancing program sustainability beyond the period of DGF support.

52. The revised RF requirement to develop the proposed program’s theory of change gives a strong incentive to formulate more realistic, and time- and financing-sensitive Development Objectives (DOs) appropriate to the limited 3-year period for DGF support. This contrasts with earlier RFs, in which long-term goals, Program Development Objectives (PDOs) were expressed without sufficient review of what could be attributed to DGF funding.

53. The revised RFs require a sharper distinction between the partnership program’s longer-term goals, and the specific results expected for the period of DGF financial support. Another significant benefit of the new RF is in progress reporting, which has improved in overall quality. In many of the programs reviewed, the Progress Reports clearly delineated baselines, achievements to date, and the final outcome targets for the PDOs and Intermediate Objectives (IOs). The review found that both the DO and IO Indicators are specific, measurable, and time-based. 54. Improved progress reporting significantly enhances the transparency, validity and usefulness of performance data for program management either in terms of modifying low-achieving programs or scaling-up those that are performing well. These improvements in progress reporting would also help ensure the effectiveness of long-term partnerships and enhance resource mobilization beyond the DGF.

55. While reviewing and endorsing FY14 proposals, the DGF Council considered the RFs of proposals in order to ensure alignment of results measurement with the re-oriented DGF strategy,

25

improve selectivity, and match approvals more closely with DGF funding constraints. The Council assessed the causality links between inputs, outputs and outcomes, to ensure that results can be attributable to DGF support and program interventions.


56. After a pre-screening by networks and regions, a total of 11 proposals were submitted for DGF funding in FY14. The DGF Council discussed these proposals and recommended nine of them for financing, using the DGF scorecard approach. In light of the successful DGF reorientation strategy, freeing up funds from ongoing programs that are being reduced or phased out, a total of US$10.25 million could be made available in FY14 for these nine new proposals. 57. The DGF Council also recommended funding for ongoing programs on a no-objection basis, recognizing that prior vetting and prioritization had been carried out by sector units and at network levels. The DGF Council also recommended limited front-loading of funding for selected long-term programs, by advancing budgeted DGF allocations from future years to FY14, supporting their respective exit strategies but without increasing the total financial support for these programs. This frontloading for FY14 applies for the Critical Ecosystem Partnership Fund (CEPF) and the African Program for Control Onchocerciasis (APOC). In total, the recommended allocations to new and ongoing programs and the DGF Secretariat in FY14 total US$51.17 million, in line with the FY14 funding envelope for the DGF. Table 2 shows the proposed FY14 allocations to networks and sectors and is followed by a brief decription of the proposed new activities in FY14.

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Table 2: Proposed FY14 DGF Budget Allocations by Network and Sector

(US$51.17 Million, 50 Programs)

US$M

Sustainable Development Network (SDN) 10.74

Agriculture and Environmental Services

Critical Ecosystem Partnership Fund (CEPF-2) 6.94

Global Partnership for Oceans (GPO) 0.75

International Consortium on Combating Wildlife Crime (ICCWC) 0.75

Legacy Pollution and Health Impacts Affecting Poor Communities 0.60

Partnership for Biosafety Risk Assessment and Regulation 0.40

Partnership for Agricultural Market Information System (AMIS) 0.40

Building Capacity in Food Safety 0.40

Urban/Infrastructure

Construction Sector Transparency Initiative (CoST) 0.50

Social Development

Affiliated Network on Social Accountability (MENA)a/ 0.00

Human Development Network (HDN) 15.29

Health, Nutrition and Population

The African Program for Onchocerciasis Control (APOC) 2.15

UNAIDS Global and Regional Activities 1.65

Research and Training in Tropical Diseases (TDR) 1.25

Research and Development in Human Reproduction 1.20

Population and Reproductive Health Capacity Building Program 1.00

Regional Partnership Program on Health Systems & Policies 0.95

HANSHEP 0.70

Stop Tuberculosis Partnership 0.30

Roll Back Malaria 0.55

Education

Supporting the "Teach for All" Model in the Developing World 1.70

Partnership for Child Development 1.50

Investing in Early Childhood Development (ECD) 0.75

Arab Regional Agenda for Improving Education Quality 0.70

Association for the Development of Education in Africa 0.50

Roma Education Fund 0.39

Finance and Private Sector Development (FPD) 4.93

Consultative Group to Assist the Poor 1.60

Infodev Regional Innovation Networks for Climate Technology 1.50

New Generation of Women Entrepreneurs 1.15 Supporting the Emerging Entrepreneurial Ecosystem 0.35

Toronto Center 0.33

Development Economics (DEC) 1.86

Global Development Network 1.86

US$M

Operations Policy and Country Services Network (OPCS) 6.44

Quality Promotion

Statistical Capacity Building Program

- Marrakech Action Plan for Statistics 2.00

- Program for Education Statistics (PES) 1.50

Open Data Partnership for Development 1.25 Financial Management

Global Partnership to Strengthen Supreme Audit Institutions 1.40

Global Financial Management Partnerships 0.29

Poverty Reduction and Economic Management Network (PREM) 4.36

Public Sector

Jobs and Development 1.05 Global Initiative for Fiscal Transparency (GIFT) 0.75 Network for Integrity in Reconstruction 0.65

Performance-based Public Management in SAR (PER PAL) 0.50 Revitalizing Multilateral Trade Cooperation 0.35 Public Expenditure Management Network in Asia 0.30

Natural Resource Charter 0.26

Gender Girl Hub: Investing in Adolescent Girls and Young Women 0.50

Middle East & Northern Africa (MENA) 1.50

Arab Spring Development Initiative 1.50

Africa Region (AFR) 3.70

South Africa Health Knowledge Hub 2.00 Intra-African Talent/Labor Mobility/ Skills Development Program 1.70

PARTNERSHIP PARTICIPATION GRANTS (PPGs) 1.45

Global Gov. and Strength. Dev. Country Voice (PREM)

- International Tax Dialogue (OECD) 0.15

- G 24 0.15

Sustainable Advancement of Gender Equality (SAGE) 0.15

Cities Alliance (SDN) 0.50

Global Facility for Disaster Reduction and Recovery (SDN) 0.50

DGF Administration Budget 0.90

Total DGF FY14 Budget 51.17

_______________________ Note: Programs indicated in Italics are new FY14 DGF proposals.

a/ Fallow year requested; will return in FY15.

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Table 3: Summaries of New FY14 DGF-Funded Programs

SCIENCE OF DELIVERY • South Africa Health Knowledge Hub (AFR) — US$2 million aims to implement the first

effective response to the tuberculosis crisis among mineworkers through a process of high-level dialogue, multi-sectoral and public-private liaison, knowledge generation, customized solutions and implementation support.

LABOR MOBILITY/ JOBS • Intra-African Talent Mobility Program (AFR) — US$1.7 million aims to establish a

“Schengen” type mechanism on talent/labor mobility and skills development to accelerate economic integration, open borders, common policies and laws in Africa (pilot in five countries).

• Jobs and Development: Multi-disciplinary solutions (PREM) — US$1.05 million aims to strengthen the “open knowledge” agenda through co-generation of knowledge outputs and greater external partnership; raise the profile of the jobs agenda globally through high quality outputs, policy debate and a vibrant community of practice; and contribute to solutions to the jobs challenges based on empirical based evidence from programs on the ground.

OPEN DATA • Open Data Partnership for Development (DEC/OPCS) — US$1.25 million aims to create and

expand a strong global open data community to remove technical and legal barriers to data use and re-use, and engage with the public to apply government data to the challenges of reducing poverty and increasing prosperity in Latin America, Africa and Asia.

• Arab Spring Development Initiative (MNA) -US$1.5 million aims at contributing to the political and economic transformation in the MNA region, by focusing open access to data, knowledge creation and policy dialogue through exchange of best practices from within the region.

PERFORMANCE MANAGEMENT • Global Initiative for Fiscal Transparency (PREM) — US$0.75 million aims at strengthening

transparency, public participation and accountability in fiscal policy, in order to improve the efficiency and effectiveness of public resource use, and ultimately contribute to better service delivery to citizens and more open and inclusive governance.

• PER PAL - Performance based public management in SAR (PREM) — US$0.5 million aims to mainstream performance-based public management across Indian states and SAR countries through peer learning, exchange of experience and emulation among practitioners.

TRADE

• Revitalizing Multilateral Trade Cooperation in a Multi-Polar World (PREM)- US$0.35 million aims to bring research organizations across the world to convene a series of knowledge and advocacy events to influence policymakers to revitalize the current multilateral trade round.

GENDER • New generation of Women Entrepreneurs (FPD) — US$1.15 million aims to develop

comprehensive support programs for women entrepreneurs in South Asia and Africa, as a spin-off of a private sector initiative by Goldman Sachs 10K women.

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G. CONCLUSION

58. FY14 is the first year with tangible benefits from the strategic reorientation of the DGF. The reorientation led to a marked phase-out of long-term programs, thus freeing up more funds for new proposals despite an overall reduction in the FY14 DGF budget envelope. In total, nine new DGF proposals are recommended for funding in FY14. Of note, the Regions have submitted a higher number of new proposals than in FY13. All new proposals were aligned with sector, network or regional strategies and reflect some of the emerging corporate priorities, including Science of Delivery, labor mobility and jobs creation, open data, gender and private sector development. 59. DGF results monitoring and reporting at the individual program level may be expected to support, over time, the aggregation of results at the overall DGF portfolio level. To this end, further efforts are being made to enhance the alignment of DGF results with the Bank’s core sector indicators and the Corporate Scorecard. 60. Further details on the DGF proposals for FY14 are provided in a separate accompanying document “FY14 DGF Supplementary Information.”

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III. Global Partnership for Social Accountability (GPSA)

A. INTRODUCTION

61. The GPSA was approved by the World Bank Board of Executive Directors on June 12, 2012. The Partnership is designed to contribute to country-level governance reforms and development results by supporting civil society organizations’ (CSOs) capacity-building, and knowledge generation efforts to engage in evidence-based social accountability. The GPSA builds upon experience of the World Bank in providing direct grant funding to civil society through the Civil Society Fund (now closed and repurposed into GPSA). It provides more strategic and sustained support to reflect the voice of beneficiaries, promote greater transparency and accountability, and achieve stronger development results. 62. Feedback from extensive multi-stakeholder consultations on the GPSA proposal, as well as from research on the impact and effectiveness of social accountability, pointed to the need for more enhanced and fine-tuned support to fill critical knowledge gaps. There are large knowledge and evidence gaps on what works and why, under what conditions social accountability initiatives are effective, whether successful tools and approaches can be replicated, and how successful social accountability projects can be sustained. 63. The GPSA’s creation complements ongoing work to increase the effectiveness and impact of country-led governance and development reforms, supported by a wide range of actors. As pointed out in the GPSA Board Paper, its creation “is expected to improve harmonization of support for social accountability as other development partners and civil society groups contribute to GPSA goals. The GPSA would seek to build on these efforts and avoid replacing or duplicating what others, both within and outside the Bank, are already doing.”


64. The GPSA is aimed specifically at improving development results by supporting capacity building for enhanced beneficiary feedback and participation. The GPSA contributes to country-level governance reforms and improved service delivery by (a) generating knowledge, networking, and financing to build civil society’s capacity to engage in evidence-based social accountability; (b) supporting Bank teams and government counterparts in embedding social accountability more strategically in their programs; and (c) drawing on the experience, knowledge, and resources of external partners to enable the Bank to scale up its engagement in this area. 65. The GPSA is organized around two main components:

Component 1: Programmatic support to CSOs for social accountability. This component awards grants to CSOs and networks of CSOs working in countries that have opted in to GPSA. Three types of support are covered under this component: (1) Social Accountability (SAcc) initiatives undertaken by CSOs for strengthening transparency and accountability; (2) Core funding to support institutional development of CSOs working on SAcc; and (3) Recipient-executed grants for mentoring nascent CSOs working on SAcc, and Bank-executed grants for technical assistance and capacity-building on SAcc. Grants under this component may be proposed by CSOs for periods between 3–5 years. Under Component 1, grants’ indicative amounts to CSOs and networks of CSOs working in countries that have

30

opted-in to GPSA will range from US$500,000 – 1 million, which will be specified before each Call for Proposals — to be disbursed over a 3–5 year time period.

Component 2: Knowledge Activities. This component encompasses two areas: (1) Supporting knowledge and learning (K&L) activities carried out under Component 1 grants; and (2) A Knowledge Platform for Social Accountability (KP) developed and managed by the GPSA, which will include targeted support for knowledge-generation and exchange activities, and strengthening of practitioners’ networks and communities of practice at the regional and global levels. The GPSA global knowledge platform (GPSA KP or KP) aims to (1) promote knowledge exchange and research on cutting-edge issues related to social accountability; and (2) offer a space to strategically connect a diverse range of development actors seeking increased collaboration, including for sharing practices and learning uptake, for strengthening existing networks, and for supporting emerging networks.

66. GPSA features strong country ownership, requiring explicit government agreement to “opt in” to GPSA. CSOs from these countries are eligible for funding from the GPSA. All activities supported by the GPSA and funded by the MDTF will be consistent with the Guidance Note on Bank Multi-Stakeholder Engagement. 67. In order to ensure an effective alignment with national development strategies and local contexts, the calls for proposals (CfP) at the country level will be based on demands identified by the Bank country teams in consultation with donors, government, CSOs and private sector stakeholders. Within the framework of a participating country‘s development strategy, the GPSA will support social accountability initiatives by civil society that may complement country-led governance reforms or may engage with policymakers and service providers to enhance development effectiveness and service delivery. A particular focus will be to seek synergies and help integrate in-country supply-side governance reforms with the GPSA’s support for demand-side interventions. To the extent possible, and to encourage harmonization and enhance impact, the GPSA will also seek country-level collaboration with other donors, government officials, and stakeholders supporting broad governance reforms and social accountability programs. 68. The GPSA has adopted a robust results framework to systematically measure and quantify results achieved by individual grants and the partnership as a whole. The results tracked include inputs and outputs as well as development outcomes, including, for example, capacity built, improvements in the enabling environment for social accountability, and development effectiveness.

Governance

69. The GPSA governance structure consists of the Steering Committee; the Secretariat and a Roster of Experts. The GPSA Steering Committee (SC) has 10 members. It combines representatives from three key constituencies – government, civil society, donor agencies — whose expertise, experience, interests and reach can contribute to the goals of the GPSA. The composition is the following: three donor agencies (two government bilateral agencies and one private foundation/donor); three CSOs (one from a “part-I” country and two from “part-II” countries) and three representatives from developing country governments. The SC is chaired by a Bank Vice President. For the initial period of the GPSA the Vice-President of WBI will serve as the SC chair. The SC is responsible for providing strategic guidance over the design and implementation of

31

GPSA, including the annual calls for proposals, Results Framework, and Knowledge Platform. It approves the set of grants presented by the Secretariat on a no-objection basis. 70. A small Secretariat, housed in WBI, manages the funding, networking, communications, reporting and administrative tasks of the GPSA. By acting as the Secretariat while also serving as Trustee, the Bank ensures close coordination between MDTF activities and all other partnership aspects, in part by using the same staff to provide operational links between upstream (MDTF donor contributions, SC decision-making) and downstream (grant activities, reporting, results) functions.

C. BUDGET

71. The World Bank has committed to providing the GPSA US$20 million over the period FY13 to FY16, channeled through the GPSA Multi-Donor Trust Fund (MDTF). In addition to the Bank, two external donors are contributing to the GPSA. The Ford Foundation has made a contribution of US$3 million for the first two years of the GPSA to be channeled through the MDTF. Open Society Foundations (OSF) has committed up to US$3 million in parallel funding for GPSA. The GPSA has been working in coordination with its partners to identify other sources of funding.


72. Under the MDTF, there are two Window Trust Funds, one for BETFs (Bank-Executed Trust Funds) and one for RETFs (Recipient-Executed Trust Funds), under which the appropriate Grant Trust Funds will be opened. The GPSA mechanism may also encompass such arrangements as bilateral programs that follow funding criteria harmonized with those of the GPSA, or grants processed by the GPSA but disbursed bilaterally. Disbursements under RETFs are made in accordance with OP12.00 Disbursement Payments made out of a Trust Fund Account or IDA Account. 73. As of May 10th, the GPSA has not yet formally committed any resources, beyond those required to cover the Secretariat costs (US$919,301) and the Knowledge Component (US$250,000). The final decision on the first GPSA grants will be made in June 2013. At its meeting of May 9, 2013, the Steering Committee authorized the GPSA Secretariat to allocate US$9.6 million for the first Call for Proposals.

74. The GPSA operates on a Cash and Contributions Receivables Basis of Commitment. Therefore, the Commitment Authority for the GPSA is limited to Cash received plus no more than 50 percent of Contributions Receivable. 75. The closing date of the GPSA trust fund was extended to FY22, but the administrative costs were kept fixed at its original approval level of US$4.03 million. That means that any increase in resources will proportionally increase the amount available for grants.

76. GPSA follows the procedures for Small Recipient-Executed Trust Fund Grants: Guidance to Staff, which sets out streamlined project processing procedures applicable to small (below US$5 million) and micro (below US$500,000) recipient-executed grants.

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77. Grant Funding Requests (GFRs) will include a disbursement schedule, agreed with the grantee, with funding tranches and milestones/outputs. Each tranche will be disbursed against agreed milestones and outputs reflected in progress reports (financial and narrative) Each grant under the GPSA would be expected to yield specific, measurable, achievable, realistic, and time-bound (SMART) results in one or more of the following “pillars of governance”: (i) transparency; (ii) voice and representation; (iii) accountability; and (iv) learning for improved results.

E. RESULTS ACHIEVED IN FY13

78. GPSA implementation was begun in FY13. The GPSA Operations Manual and Results Framework were defined. The governance structure of the GPSA was established, including the Steering Committee, composed of a balanced representation of donors, developing country governments and CSOs. The Secretariat was established in the World Bank Institute.

79. As of May 10, 2013, a total of 15 countries from all regions have opted-in to GPSA. Twelve of these countries opted in on time to participate in the first Call for Proposals: Bangladesh, Dominican Republic, Honduras, Indonesia, Kyrgyz Republic, Malawi, Moldova, Mongolia, Mozambique, Philippines, Tajikistan, and Tunisia. The first Call was held in these countries between February 11 and March 14, 2013. A large number of CSOs from all 12 countries submitted proposals. The selection process of the grantees is ongoing and expected to be finalized by mid-June 2013, with the first disbursements expected for early FY14. As mentioned above, the Steering Committee approved the allocation of US$9.6 million for this First Round.

80. Twenty-seven Global Partners have expressed their endorsement of the GPSA’s goals and strategy, and are partners with the GPSA. This growing group of Partners includes foundations, CSOs and CSO networks, academic institutions, and international institutions. The GPSA benefits from partnering with these organizations in many different ways, depending on the nature of the organizations. While some partners share lessons from their practical experience, others provide academic knowledge, funding, and networking. The GPSA’s partnership and governance structure reflect good practice distilled from many years of World Bank experience working with over 100 global and regional partnership programs, the feedback from extensive consultations, and the lessons and good practices of other partners at the global and country levels.


81. In FY14, the program will seek to (i) expand its coverage with regard to opted-in countries; (ii) issue its second Call for Proposals; (iii) launch the Knowledge Platform; (iv) provide technical assistance to GPSA grantees; and (v) establish a robust research component, which aims to contribute to knowledge on the circumstances under which different types of social accountability mechanisms produce better development outcomes.

G. CONCLUSION

82. GPSA will start small, learn from experience, and expand on the basis of lessons learned and rigorous demonstration of positive impact.

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IV. The Institutional Development Fund (IDF)

A. INTRODUCTION

83. The Institutional Development Fund (IDF) has from its inception been one in the range of instruments available to the Bank to support institutional capacity development. It finances small scale technical assistance, advice, and training within the framework of objectives set in country partnership strategies. In FY14, the program will align itself with the emerging strategic directions for the Bank. This will be achieved by building on the strengths of the current program, i.e. flexibility, effectiveness, regional VPUs’ ownership and usefulness in MICs and regional contexts. The two main components of this reform effort include, first, orienting future grants to strengthen our client's institutional capacity for evidence based management of development programs, thereby complementing and advancing the corporate priority Science of Delivery initiative; and second, moving towards a leaner and more flexible allocation and administration process for the grants.

84. The IDF program provides grant funding to support institutional capacity development in client countries and regional institutions, aimed at increasing the impact of the World Bank’s technical assistance associated with policy reforms. Established in June 1992 following a Board decision, the IDF commenced operation in FY93. The growth of the IDF stems from activities aimed at enhancing financial management and other systems at the country level, advancing procurement reform, and implementing the first phase of the governance and anticorruption agenda. The IDF program is approaching its twentieth year of operation. Funding within the Bank’s total envelope for Grant-Making Facilities has been in the range of US$16.5 - 17.3 million in each of the last three fiscal years, enabling the gross commitment authority of US$25 million per year established by the Board at inception.

85. The primary objective of the IDF is capacity building and institutional strengthening. It will continue its focus on recipient execution of grant activities. The program operates on the foundation that good governance and effective institutions are essential for governments to improve the efficiency and transparency of public resource management and to enhance the delivery and quality of public services. Through the IDF program, the Bank provides financing for a tailored package of knowledge, technical assistance, training and equipment designed to fulfill capacity gaps identified as part of its ongoing dialog and engagement with borrowing countries. The IDF has unique characteristics in that it facilitates a quick and targeted response to client needs—preparation time is shorter, implementation is confined to three years, and it is accessible by all countries in all Regions regardless of gross national income (GNI) levels. Also, the IDF finances capacity building activities in areas where Bank lending has limited reach. Grant sizes were previously limited to US$500,000 though this ceiling was increased to US$750,000 starting in FY12 to create the potential for greater impact at country level; regional entities may receive grants up to US$1 million.


86. As a fast response instrument, IDF has been particularly effective in fostering collaboration on issues central to the governance and anticorruption agenda; it tackles elements in a country’s public financial management (PFM) systems and its legal and institutional framework to advance greater use of country systems. IDF grants are also used to address institutional initiatives that pave the way for open and collaborative development processes between governments, citizens, and

34

other stakeholders. They are used strategically by country teams to provide targeted interventions to fill capacity gaps identified in the course of country diagnostics or to kick-start reforms necessary for implementing a poverty reduction strategy.

87. The strategic direction for FY14 makes use of results and lessons learned from the Bank’s ongoing engagement with clients to guide in the design of grants incorporating evidenced-approaches to address institutional and implementation challenges. For instance a grant in the Philippines makes a small but important contribution to the goal of ending poverty. Here the IDF is used to strengthen the institutional capacity of National Anti-Poverty Commission by tracking progress of the implementation of the local poverty reduction action plan and analyzing the results to inform policy and strategic decisions related to the overall poverty reduction framework of the Philippines. In another example, the project team in Vietnam is using evidence-based approaches from an earlier Hanoi urban transport project to support the municipal government in Ho Chi Minh City in its efforts at restructuring the growing public transport system.

88. The Bank’s new focus on science of delivery (SoD) creates a unique opportunity to reorient the program to better serve the Bank and the needs of its clients. Going forward, IDF will continue to provide technical assistance, but with a renewed emphasis on the application of evidence-based approaches to support agile and adaptive implementation of development programs. This move will increase the relevance of the IDF program and position it to achieve better development results in FY14 and beyond.

89. The work of institutional development and capacity building with IDF support will continue to incorporate the concepts that have served the program in the past: small, targeted and demand-driven activities to meet specific country circumstances and defined by objectives anchored in the CAS. It will also serve as an instrument for partnering with regional institutions to carry out small-scale activities that form the pillar of a larger effort of regional-level capacity development.

90. As yet, the sector priorities have not been defined, but the focus will be on providing advice and support for better implementation of country programs. However, the themes of strategic importance and client demand recently have been in the areas of clean energy and other environmental concerns, trade, financial architecture, disaster recovery, access to information, monitoring and evaluation in the health and education sectors, social accountability, youth unemployment, public expenditure management, and natural disaster management.

91. Every IDF grant must satisfy the Bank’s fiduciary requirements for financial management and procurement. All goods and services financed under IDF grants are procured in accordance with the Bank guidelines for procurement. In addition, each grant is required to have at least one audit upon completion of its three year period of implementation.

C. BUDGET

92. The IDF was established as a program to be funded entirely from the Bank’s budget and there are no plans for expansion to include other donors at this stage. While the commitment authority was established at US$25 million, the contribution from the Bank’s budget has been less because of income generated by the program. By using a trust fund model of operation, it is possible for the funding from the budget to be supplemented by reflows (undisbursed balance of closed and

35

cancelled grants), investment income gained as part of the Bank’s single investment portfolio (the Pool), and rollover of unutilized regional allocations.

93. For FY14, the projected new funding from the budget is US$9 million compared with US$16.5 million in FY13. This reduction in allocated budget will not affect the ability to sign new legal commitments in FY14 at FY13 levels (see Table 9 for more details). However, it will reduce the uncommitted fund balance, which is used to approve grants in FY14 and to build up the FY15 pipeline (commitment authority). Since the program is funded entirely from the Bank’s budget, this is the main component making up the estimated commitment authority of US$14.7 million in FY14 (Table 4).

Table 4: IDF Commitment Authority (US$ Million)

Source of funds FY13

Actual FY14

Projected

New funding (budget request to the Bank’s Board)

16.5 9.0

Investment income 0.4 0.4

Reflows 4.7 4.5

Net rollover 3.8 0.8

Uncommitted fund balance available for following FY pipeline development 25.4 14.7

94. In view of the envisaged reduced budget, it is projected that the rollover (funding from unutilized earlier allocations) will drop rapidly; investment income will be significantly reduced because of lower cash balances and lower market returns. The reduction of reflows however will be phased in over time as the current stock of grants runs its course. However, the higher projected disbursements shown in Table 4 will reduce reflows in the short term.

95. Although reflows can be quantified, their timing is uncertain as they trickle in over the course of the year. To enable the regions to better plan their work program and for the Secretariat to maintain adequate control on spending limits and commitment authority, the reflows will be rolled over to the next fiscal year as is done currently. This year, the unutilized allocations (rollover) will also be rolled over into FY14 rather than be available for FY13 competition. This will make another estimated US$0.8 million available for FY14.


96. The US$16.5 million received in FY13 from the budget was translated to a commitment authority of US$25.4 million. Each region received a nominal allocation – Figure 5; this represents the value of grants that each region could approve (regional IDF committees approve the grants). The basis for allocation of IDF resources across regions has been in place for the last three fiscal years and is based on a three-year rolling average of approvals. The allocation process is under review by the IDF Steering Committee to adjust for the envisaged reduced budget funding and to incorporate the reorientation of the program and new priorities for FY14.

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Figure 5: Overview of IDF Funds Flow FY13/Q3

Source: IDF Secretariat

97. For FY13/Q3 grant approvals total US$25.3 million for 54 grants. AFR remains the biggest user of IDF resources, accounting for nearly 33 percent of approvals —a trend it has long maintained. Once a grant is approved, a grant notification letter signed by the Country Director is sent to the recipient announcing the approval of the grant. The robust pipeline of requests has resulted in annual approvals totaling US$25 million over the last four years as shown in Table 5.

Table 5: IDF Grant Approvals, FY10-FY13

(US$ Millions) FY FY10 FY11 FY12 FY13

Approvals 25.4 25.6 24.6 25.3

Source: Operations Portal.

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Figure 6: The Commitment Process in the IDF (US$ millions)

Source: IDF Secretariat, Operations Portal and SAP

98. Regions have nine months to finalize the fiduciary arrangements, prepare the grant agreement and complete other relevant steps before countersignature of the grant by the Recipient country. At this point it becomes a legal commitment in the books of the Bank. A small number of grants may require ratification by Parliament before they can be declared effective, but most grants have no effectiveness conditions. For the current fiscal year to March 31, 2013, commitments total US$16.1 million, Table 6, and are projected to reach US$23 million by the end of the fiscal year.

99. Up to the end of FY13/Q3 disbursements total US$14.1 million and the regional breakdown is shown in Figure 6 above. At that rate, disbursements for the whole of FY13 are projected to reach US$18.5 million, the highest observed for the program to date. The trend for the last three years is shown in Table 7.

100. Partly to constant collaboration with the regional teams, the portfolio has been performing well overall, with teams paying close attention to key performance monitoring indicators. Only a small number of grants have been extended as the intent is to implement grants over three years. Grant restructuring is encouraged to adjust and refine original concepts that play out differently as implementation realities unfold and thereby sharpen the results focus of grants. The IDF Secretariat closely monitors low-disbursing grants as part of maintaining portfolio quality.

101. The cash management framework was introduced in FY10 with a view to releasing cash on a quarterly basis to the program based on the level of commitments (grant agreements signed). As a result, cash surplus is maintained at the corporate rather than program level. From the start of the cash management framework up to FY13, up to US$63.4 million was approved as shown in Table 8. To date, US$56.75 million was released and US$6.7 million remains available as of March 31, 2013.

Table 6: IDF Commitments, FY10-FY13/Q3 (US$ millions)

FY FY10 FY11 FY12 FY13/ YTD

Commitments 23.3 26.6 22.2 16.1

Source: SAP.

Table 7: Grant Disbursements, FY93-FY13/Q3

(US$ millions) FY FY10 FY11 FY12 FY13

Disbursements 17.7 16.9 16.7 14.1

Source: Business Warehouse.

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Table 8: Status of Board Authorized Budgets, FY10–FY13 (US$ Millions)

FY FY10 FY11 FY12 FY13 Total Approved budget from BTL 12.0 17.30 17.6 16.5 63.4

Released 12.0 10.65 17.6 16.5 56.75

Available 0 6.65 0 0 6.65

Source: IDF Secretariat.

102. At the end of March, the uncommitted cash balance at the program level was US$21.6 million while grants not yet committed was US$24.4 million. The additional funds to fill the gap will be drawn down from the balance available from earlier years’ budget allocations but not yet released. Based on the assumptions that grant agreements will be finalized and countersigned in FY14, the program has sufficient funding to commit US$24.8 million for the existing FY13 stock of approvals as well as, for FY14, to make new grant approvals and continue to sign legal agreements in FY14 at the FY13 level. For building up a pipeline in FY14 that will lead to legal agreements signed in FY15, internal approvals of roughly US$15 million (made up of US$9 million new money and uncommitted budget from previous year) are available. This is a reduction of about US$10 million compared to FY13 internal approvals. Table 9 provides the details of sources and uses of budget approvals through the cash management framework.

Table 9: Sources and Uses of Funds FY11–FY14 (US$ Millions)

Source of funds FY11 FY12 FY13 FY14

Actual/ Projected

Projected

New funding (budget request to the Board) 17.30 17.60 16.50 9.00

Uncommited budget from previous years 0.00 5.28 5.24 3.33

Opening Cash balance 35.67 25.33 25.00 20.00

Reflows/cancellations 6.72 4.68 4.50 4.30

Investment income 0.54 0.39 0.39 0.30

Total Cash available in FY 60.23 53.28 51.63 36.93

Allocation to child funds/new legal commitments signed in FY

(29.33) (23.43) (23.03) (22.10)

Legally uncommitted balance available for following year pipeline development

30.90 29.85 28.60 14.83

E. RESULTS

103. Evaluations have been conducted periodically for the IDF program over the years. The most recent evaluation was concluded in FY11 and the findings were positive. The feedback from the clients surveyed confirms that the IDF is a valued instrument particularly for MIC clients and has helped to design and deliver short-term interventions to help address institutional challenges faced by grant recipients. The evaluation provided some recommendations on how to enhance the

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effectiveness and relevance of the program. Examples of implemented recommendations include: (i) allow Regions to select regional focus areas and expand the sectors options so that grants are country owned and country driven; (ii) consider relaxing limitations on spending categories, but do not abandon them altogether; (iii) allow regions to retain allocated funds from cancelled grants that are non-performing; and (iv) provide technical support to help strengthen grant supervision, M&E.

104. The results orientation for IDF grants is encouraged throughout the project cycle, from preparation to closing. All regions are required to have an M&E expert to ensure that requests have well-defined monitoring indicators and good baselines, thereby increasing the potential for greater impact. For each funding request, the Regional IDF Committee evaluates proposals on the basis of CAS alignment and the fit with country and regional priorities, design, results framework, and readiness for implementation. These quality assurance steps are aimed at reinforcing the link between project activities and outcomes and ultimately country-level results.

105. The IDF program has policies and procedures in place to track progress on indicators. This is accomplished through the Implementation Status Report (ISR) that is disclosed publicly. Each active grant is required to complete at least one ISR every 12 months and an Implementation Completion Memorandum (ICM) within six months of closing (or a Note on Cancelled Operations in the event disbursements are less than 5 percent of the grant).

106. Based on FY12 data, 179 ISRs were required of which 83 percent were completed; this is slightly higher than the compliance rate of 79 percent for the previous year. The ISR ratings summary shows that 83 percent of grants were on track to achieving their goals based on development outcome (DO) ratings while 81 percent of grants were rated “moderately satisfactory” or higher in terms of implementation progress (IP) (see Table 9). These ratings are largely aligned with the trends observed in regular lending operations and other trust funded operations.

107. As an illustration of results achieved, an IDF grant leveraged resources from the Caribbean Development Bank to prepare several studies and a sub-regional education strategy which has been endorsed for implementation by nine states; other donors have bought into this strategy for implementation (and it is now being used as a model for development of other sub-regional sector strategies); activities have resulted in improved capacity for education statistics (some countries that did not have any statistics are now publishing a statistical abstract early enough to influence planning for the next school year); and the funded work has contributed to the harmonization and integration agenda under the economic union for the Caribbean states by creating a framework for joint planning and implementation.

108. The IDF provides a window for engagement with clients to pursue new areas of reform or to pilot new areas of support that will either lay ground work for future engagements or help the Bank and clients to learn from failures. An example is a US$300,000 IDF grant in Suriname - the first Bank operation in the country in more than a decade, which represents a major part of the Bank's re-engagement with this client.

Table 10: ISR Rating, FY12 FY FY10 FY11 FY12 FY13

Moderately satisfactory or higher

83% 81% 89% 86%

Source: IDF Secretariat.

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109. Based on data for FY12, the IDF Secretariat compiled a summary of ICM ratings that showed 87 percent of these IDF grants were rated “moderately satisfactory” or better in terms of achieving expected development outcomes (Figure 7). This represents a gradual improvement over the last three fiscal years.

Figure 7: ICM Rating, Overall Outcome, FY10–FY12

Source: and SAP

F. FY14 STRATEGIC PLANNING FOR A SCALED DOWN IDF PROGRAM

110. The ongoing budget discussions and the declining funding trajectory call for a review of the operation of the program, its priorities and a strategic allocation of the resources. The IDF program will continue to operate as a Bank-funded grant-making facility to drive the Bank’s vision of engaging on capacity issues aligned with country partnership objectives. The projected change in the funding level was recently announced and the Steering Committee of the IDF will be meeting to tackle the issues that are essential for the effective turnaround of the fund in a way that will add value to the Bank’s commitment to institutional strengthening broadly.

111. High level discussions so far places emphasis on a sharpened focus of grants in FY 14 and to prioritize those proposals that directly and explicitly address institutional capacity gaps related to clearly articulated delivery and implementation challenges and bottlenecks. As such, lessons learned from the application of evidence-based approaches to support capacity development will directly contribute to building the science of delivery and improve the way results can be achieved on the ground.

112. At an operational level a number of actions have been proposed to accommodate a smaller resource envelope. Some of the proposed strategic moves under consideration involve fine tuning the operational aspects of the program for FY14 (a) to provide for strategic client engagement with the potential for contributing to the science of delivery; (b) to adjust the existing policy framework to reinforce selectivity and to limit recipient eligibility to scarce resources; (c) to harness greater synergies through a Bank-wide approach (as opposed to a regional approach) to managing the pipeline for new grant requests; and (d) to streamline the preparation in OP2 to lower transaction costs. The proposed measures will serve to ensure that the strategic directions are consistently applied for the next round of grants approved under the IDF program.

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G. CONCLUSION

113. The Bank’s new focus on science of delivery (SoD) creates a unique opportunity to reorient the program to better serve the Bank and the needs of its clients.

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V. State and Peace Building Fund (SPF)

A. INTRODUCTION

114. The State- and Peace-Building Fund (SPF) established in 2008 is a multi-donor trust fund managed by the World Bank. The SPF is dedicated to address the needs of state and local governance and peace-building in fragile situations and areas that are prone to, or affected by, conflict. SPF contributors in addition to the World Bank include bilateral donors such as Australia, Denmark, Germany, the Netherlands, Norway, and Sweden. The objectives of the SPF are: • To support measures to improve governance and institutional performance in countries

emerging from, or at risk of sliding into, crisis and arrears; and • To support the reconstruction and development of countries prone to, in, or emerging from

conflict. 115. The SPF works in countries and in ways where the rest of the World Bank is necessarily more constrained. This includes grant-making in countries that are in arrears and non-members of the World Bank. This enables the Bank to maintain its engagement and stay positioned as circumstances unfold. In many situations, this creates “points of entry,” for example, where IDA/IBRD might wish to resume activities or build a new program but has a limited in-country foundation upon which to start. The SPF serves as a catalytic fund that pilots innovative approaches to working in FCS and supports activities that could be scaled up through IDA/IBRD financing. In addition it continues to support state- and peace-building results in countries with limited or no IDA/IBRD financing. 116. Working alongside IDA/IBRD and country level trust funds, the SPF can both complement and supplement the work of the Bank in collaboration with other partners. This has been demonstrated through the SPF support in the Philippines, where conflict prevention is a primary objective of the Country Assistance Strategy. Currently there are a number of major World Bank engagements in conflict-affected areas in the country, as well as strong donor cooperation. Alongside these major engagements, the SPF-funded ‘Encouraging Resilient Communities in Conflict-Affected Areas project’ is helping to provide a strong analytical basis to inform more effective and coherent strategic planning and operational responses as well as contributing to institutional capacity building for peace through data collection and analysis.

117. The grants provided by the SPF contribute to the Bank’s and the international community’s efforts to address the most intractable problems that fragile and conflict affected countries/regions face and, at the same time, provide a rich source of lessons for future projects. The timeliness of SPF grants, rather than their short-term focus, can sometimes be the basis for long-term results. Transition processes seldom conform to the normal timetables for development assistance; and because windows of opportunity are often quite narrow (such as the upheaval and transition in the Middle East and North Africa), the SPF can play a key intermediate role. Strategically the SPF can also assist to mobilize significant action outside the World Bank, including at the global development level through quick catalytic support in the aftermath of natural disasters or humanitarian emergencies (example Somalia) that have significant consequencest.

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118. In fragile states in arrears and lacking broader Bank lending engagement, the SPF has provided additional value beyond supporting individual projects. Often in these countries, the SPF is the only, or one of a few, sources of financing that provides a basis for continuing World Bank country engagement.2 In Somalia, SPF support represents 50 percent of all grant funding approved since 2009. In Zimbabwe, SPF grants total 38 percent of funding. In these situations, the value of SPF is not only in the accomplishment of project outcomes but in the value-added of maintaining engagement with counterparts, civil society, and other donors. Many projects in these countries have strong links to state- and peace-building goals and address core drivers of fragility and conflict. 119. By design, the SPF is sensitive and responsive to the different risk profile in FCS countries, particularly in situations of prolonged incapacity, and to the heightened risk of inaction in FCS. The average SPF project size is US$2.5 million, with duration of approximately 3 years. Thematically, most SPF projects fall into one of two main categories, governance or economic development. Governance projects cover a range of sectors, including fiscal/economic governance, land reform, mining and energy, and health. Economic development projects range from youth, jobs, and rapid employment programs to private sector development, rural development and agriculture and often include a participatory approach. SPF projects take on well considered and mitigated risks, often laying the groundwork for an upcoming new operations funded by the Bank or other donors. The SPF creates an enabling environment for the coordination among relevant partners, including the UN and multilateral and bilateral agencies that is so critical to the success of work in FCS. 120. In 2012, a Mid-Term Review (MTR) of the SPF was carried out by an external team with the objective of: assessing the degree to which the SPF has achieved its original objectives and remains “fit for purpose”, given the new ways of working in FCS. With a robust evidence base, the MTR has set a renewed direction for the SPF to ensure that it can reach its full strategic and operational potential. The MTR recommendations and conclusions set out the vision and priority reforms necessary to improve the impact of SPF financing through; stronger alignment with the goals of the SPF; greater effort to be more strategic by shifting the business model to support for strategy initiatives; pilot how the Bank can operate differently in FCS; strengthen Fund level partnerships and governance; improving the Fund’s strategic value by increased investment in analytic work and research and learning products that can inform future and larger Bank investments and operations in FCS. 121. The SPF’s revised results framework which was developed with the Fund’s FY12 engagement strategy continues to be utilized to focus SPF financing and measure cross-portfolio impact. The results framework will remain a fundamental tool to guide the prioritization of proposals for SPF support both to transformative strategies and stand-alone project proposals. 122. Beyond the operationalization strategy of the WDR 2011, the SPF has a key role to play in supporting the New Deal for Engagement in Fragile States. The SPF is supporting country teams in their efforts to help governments take forward New Deal principles at the field level, and at the same time engaging with other partners, such as the UN, in promoting joint approaches to New Deal implementation.

2 There are 10 grants to countries in arrears (Somalia and Zimbabwe) or to territories with special status (West Bank and Gaza).

44

123. In FY13, the SPF launched a dialogue series with other global FCS-focused funds (UN Peacebuilding Fund, AfDB Fragile States Facility, EU Instrument for Stability, and UNDP’s Thematic Trust Fund on FCS) to promote joint assessment, joint monitoring, joint programmatic financing and joint support for New Deal implementation. These regular exchanges contribute to improving the coherence and impact of each Fund’s activities and the teams have started exploring opportunities for joint work in countries of common interest such as Yemen, Liberia, Somalia and South Sudan. 124. The closing date of the SPF has been extended from 2014 to 2016.


125. The SPF Engagement Strategy for FY12/FY13 built on the lessons learnt from the SPF experience and capitalizes on the momentum generated by the release of the 2011 World Development Report and the Bank’s accompanying commitment to a new way of doing business in fragile and conflict-affected situations (FCS). This resulted in a change in the SPF’s strategic approach from funding discrete project interventions to supporting a “package” of projects in those countries/regions that are engaging in, or committed to, a transformative strategy. Support to Strategy Initiatives will allow for a more cohesive response to countries that are on the ‘cusp’ of change. The projects within the framework of the Strategy Initiative are designed to respond to the priority need in the country/region and will generating new approaches to addressing conflict and fragility. 126. The re-focus and prioritization of support to Strategy Initiatives while targeting results does not require any fundamental changes to the Fund’s guiding principles. The SPF goals of peacebuilding and state-building, defines peacebuilding as addressing the internal and external stresses that increase vulnerability to violence and state-building as building capacity and legitimacy of institutions to manage these stresses. This definition remains consistent with the SPF Board paper, which also highlights peacebuilding and state-building not as separate objectives but rather as interrelated, complementary processes. 127. The SPF committee has endorsed Country Strategy Initiatives for Somalia and Sudan and a regional Strategy Initiative for LAC. Strategy Initiatives’ for regional activities in LAC and country level support to Yemen are in their final stages of development. In addition, with the support of Global Center on Conflict, Security and Development (CCSD), Strategy Initiatives are under preparation for Cote D’Ivoire, Liberia, Democratic Republic of Congo, and East Timor. These initiatives can pilot approaches and influence the use of larger pools of resources that might potentially be mobilized through IDA allocations, other multidonor trust funds within the Bank, and complementary financing from donor partners. 128. In FY14 the SPF will continue to provide grants that complement and enhance the Bank's work program. Future applications are likely to focus on: • Prevention of or recovery from conflict and fragility, subnational violence, or an element of

such violence related to organized criminality; • Creating a cross-border multi-country strategy endorsed and supported by several country

directors; and

45

• Building broader partnerships that integrate joint programming with several partners or regional organizations in support of shared goals.

129. The SPF will continue to prioritize support to countries/regions that are engaging in, or can demonstrate commitment to, a transformative strategy that aligns with the Bank’s new fragility and conflict paradigm. In addition the SPF will continue to accept stand-alone project proposals that can demonstrate a compelling case of urgent need, rare window of opportunity, or high innovative value.

C. BUDGET

130. As of March 31, 2013, the SPF had received a total of US$208.7 million, comprising of the World Bank contributions (US$166.7 million), donor contributions (US$38.8 million), and investment income (US$3.2 million). The SPF’s current legally uncommitted balance is US$79.5 million. The SPF will be able to maintain its commitment levels in FY14 as estimated based on the current projects in preparation and past commitment levels, without any additional budget authority being required from the Board. 131. The average yearly approvals of grants is approximately US$34 million. In FY13 this dropped to US$25 million. This reduction was due primarily to the decision of the SPF Committee not to do a call for proposals in FY13 and focus on project implementation roll-out of the new Strategic Approach of the SPF and the Mid Term Review. The new approach to support the development of Strategy Initiatives would enable the SPF to have a more holistic response to fragile and conflict affected situations. However, the development of a “package” of projects rather than an individual standalone project has led to increased preparation time for the teams. 132. In order to assist teams in the development and processing of Strategy Initiatives and to address the delays identified in the implementation of this new strategy, the SPF Committee reviews the request for funding at the concept stage which following endorsement by the committee allows for individual projects under the initiatives to be approved once the project documents have been finalized. This will allow for a “roll out” process of projects under the strategy initiative rather than ‘bunching’ for committee approval. 133. In FY14, the SPF secretariat will re-launch a call for submission of applications for funding. The last call for proposals was carried out in FY12. This call, in line with the key recommendations of the MTR, will inform of the priority focus of the SPF on the development of Strategy that can have an impact both on reducing the internal and external stresses that increase vulnerability to violence and building institutional capacity and legitimacy to delivery citizen security, justice, and jobs. The SPF will also prioritize projects that contribute to early results and confidence building that lay the foundation for medium to longer-term institutional transformation. It is anticipated that the call will increase the demand for SPF funding in FY14.


134. The SPF has approved commitments of US$136.8 million for projects, knowledge and learning activities and program management costs. The SPF committee has approved 62 projects across the regions for a total amount of US$133.7 million (of which seven projects remain to legally commit funds).

46

135. The SPF committee has in April 2013, endorsed a Strategy Initiative for Somalia (five projects) for US$20 million with one project (US$4.5million) receiving approval to finalize the full Project Paper. The Strategy Initiative for Sudan (five projects) for US$15 million has also received endorsement by the committee. Strategy initiatives and projects for ECA region and Yemen in the amount of approximately US$16 million are pending review by the SPF Committee. In addition, projects for approximately US$49 million are under preparation.

Table 11: SPF – Sources and Uses of Funds (as of May 14 2013, in US$ Million)

Category Sources Approvals Approvals to be

Committed

Contributions, total 208.7

World Bank 166.7 Donors 38.8

Investment income 3.2 Projects approvals 133.7 18.2 Program management costs and Knowledge and learning activities

8.0

Total 208.7 141.7 18.2

Note: Figures do not include endorsed initiatives for Somalia and Sudan 136. While the SPF saw a drop in legal commitments in FY13, project disbursements have increased considerably since the SPF inception (Figure 8). As of May 9, 2013 a total of US$76.3 million has been disbursed (US$67.2 million to grants). Slow disbursement in the initial phase of projects is characteristic of all projects that are supported by the SPF. However, as the portfolio matures, disbursement has picked up reflecting the fact that almost 65 percent of all committed funds have already been disbursed. Given the context in the fragile states where SPF funded projects operate certain projects face delays in implementation (Cote D’Ivoire, Guinea Bissau, and the Central African Republic).

Figure 8: SPF – Disbursement (as of May 14, 2013, in US$ Million)

FY09 FY10 FY11 FY 12 FY13Disb. in US$ millions 0.7 5.8 18.8 23.6 17.9

0

5

10

15

20

25

Disbursement Trends

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137. US$38.8 million that has been received from donors and an additional US$3.7 million has been committed for FY14 and FY15. New contributions and commitments have been received in December 2012; Denmark US$5.4 million and Norway US$2.7 million. AUSAID and Germany have indicated that they will provide additional contribution in FY13/FY14. The last Administrative Agreement was signed in FY11 with Germany (Table 12).

Table 12: Donor Contributions to SPF (as of May 14, 2013, in US$ million)

Donor Contribution Australia 4.3 Netherlands 14.1 Norway 6.0 Denmark 10.6 Sweden 2.9 Germany 0.9

Total 38.8 138. The Africa Region accounts for 49 percent of all SPF grant commitments followed by the Middle East and North Africa (MENA) region at 19 percent. Figure 9 below shows the regional distribution of the SPF portfolio.

Figure 9: SPF Projects by Region (in percentage)

139. As part of the efforts to implement a cash management framework for major IBRD-funded trust funds, including SPF, it was agreed that cash will be transferred to the fund twice a year based on existing and expected legal commitments during a year.

E. RESULTS

140. The SPF carried out a Mid-Term Review (MTR) since the last reporting period with the objective of: assessing the degree to which the SPF has achieved it original objectives and is “fit for purpose” given the new ways of working in fragile- and conflict-affected situations (FCS) and the strategic direction given by the 2011 World Development Report: Conflict, Security, and Development (2011 WDR).

AFR 49%

EAP 9%

ECA 8%

LAC 13%

MENA 19%

SA 2%

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141. The MTR found that to date, the overall performance of the SPF portfolio has been moderately satisfactory based on a review against a series of both traditional Bank and FCS-focused indicators.

i. Performance Against Standard Bank Indicators 142. On project progress towards their respective development objectives (PDOs), the MTR found that of the 34 SPF projects either complete or well into implementation, 85 percent (29 projects) were on track to meet their PDOs (23 of these projects were assessed as satisfactory; six were assessed as moderately satisfactory). 143. On disbursements, the portfolio’s disbursement rate3 is 55 percent, has improved from the Fund’s lower disbursement rates in FY09 (5 percent), FY10 (11 percent) and FY11 (31 percent). On timeliness, the MTR has found that the SPF’s own project processing is relatively efficient, but that factors related to the wider project development process often cause bottlenecks and delays, and have in certain situations hindered the Task Teams ability to respond rapidly to urgent situations. In addition, external factors also play a role (weak implementing partner and government capacity, volatile political and security conditions).

ii. Performance Against FCS Indicators

144. On the SPF’s flexibility to support projects in a range of FCS settings, the MTR found that the SPF, owing to its broad project eligibility criteria, is well suited to support responses to address various forms of modern violence and fragility. While the majority of SPF projects operate in FCS, SPF projects also support projects in MICs experiencing sub-national conflict, states at risk of sliding into conflict, and countries in arrears (Figure 10). In Somalia, the SPF and its predecessor trust funds have played a critical role in ensuring the maintenance of a World Bank ‘presence’ in the country during the sustained conflict and fragility (and arrears to the World Bank) since the fall of the Siad Barre regime in 1991. Bank execution on behalf of the recipient has also meant that a wide cohort of Somalia experts inside the Bank have also stayed engaged on the country. Recently-approved SPF Strategy Initiatives are also increasing the Fund’s attention to criminal violence as well as the regional and transnational drivers of conflict and fragility.

Figure 10: Bank Status of Countries Where SPF Operates

3 Measured by total cumulative disbursements divided by the total cumulative legal commitments

IDA or IBRD, 76%

Somalia

Zimb. Sudan WBG

S. Sudan

Arrears, Special Status 24%

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145. The MTR also assessed how the portfolio as a whole is contributing to higher-level state- and peace-building objectives. A mapping of the Fund’s portfolio to the SPF’s Fund-level results framework found that 53 percent of projects primarily focus on reconstruction and development objectives (peace-building), and 47 percent primarily focus on governance and capacity building (state-building). 146. Grants from the SPF have sought to tackle critical, sensitive issues which are at the core of a country’s peacebuilding process (Figure 11). In Cote d’Ivoire, the gender-based violence (GBV) project articulates that violence against women is a complex issue that can only be addressed by understanding how it relates to women’s social and economic disadvantage and discrimination. This warrants challenging gender inequality, promoting women’s rights, and creating social, political, and economic environments in which they are empowered to enjoy those rights. Curbing GBV, therefore, requires social change, which is a critical part of a wider peacebuilding process, as documented in others parts of the world, like in Afghanistan (all things considered equal).

Figure 11: SPF Project Goals Mapped to SPF Fund-Level State- and Peace-Building Objectives

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147. On flexible implementation arrangements for FCS settings, the MTR found that the SPF, as a recipient-executed financing instrument, is utilizing a diverse set of partnership arrangements. The largest recipients of SPF funds are national governments (42 percent) and non -governmental organizations (36 percent). The SPF also finances projects in cooperation with the United Nations, international NGOs, and through existing multi-donor trust funds. 148. On country context and alignment with country strategy frameworks, the MTR found that the SPF is often successful in supporting improved governance approaches and more conflict-sensitive support from development partners. However, while individual projects are generally making progress against their own PDOs, in many cases, SPF project-level PDOs were not always selected with higher level state- and peace-building objectives embedded into project designs or with an aim of influencing broader Bank strategies and country portfolios. 149. Projects supported by the SPF have assisted governments in addressing key drivers of conflict. In Columbia, forced displacement is a serious humanitarian and social issue. While the government has increased budgetary assistance to IDPs, especially in term of providing better access to education and health care, less progress had been made on land and assets restitution. The goal of the SPF funded project “Protection of Land and Patrimony of Internally Displaced Persons” has been to diminish the risk of impoverishment of the displaced population by continuing to scale up the application of measures for protection of property. The project builds on previous efforts funded by the Post-Conflict Fund (PCF) which helped create the basis for a “peace pillar” in the 2005 CAS progress report that aimed to support a more comprehensive program to address the social, political, and economic inclusion of Colombia’s conflict-affected populations. Furthermore, the information, knowledge, and experience gained during the three phases of the project played a key role in the development of a comprehensive land restitution policy for displaced people in the country. 150. On the role SPF projects play within the context of the Bank’s broader country engagement, projects funded that are catalytic or complimentary in nature are the most effective. In fragile states in arrears and lacking broader Bank lending engagement, the SPF is just one of a few sources of financing that provide a basis for continuing World Bank country engagement.4 In Somalia, SPF support represents 50 percent of all grant funding approved since 2009.


151. SPF activities in FY13-14 will continue to focus on operationalizing the recommendations emanating from the SPF Mid-Term Review and to promote the SPF as a strategic and catalytic FCS Fund that serves as a key arm of WDR 2011 operationalization. The SPF will continue to finance strategic and catalytic interventions and leverage internal and external partnerships to inform and improve development effectiveness in FCS.

4 There are 10 grants to countries in arrears (Somalia, Zimbabwe) or to territories with special status (West Bank and Gaza).

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152. The SPF six key areas of focus are: • The SPF will prioritize the development and submission of strategic initiative applications to

the Fund recognizing that when SPF initiatives are built into country programs, there is greater chance for impact.

• The SPF will continue to capitalize on potential complementarities to IDA financing to FCS,

and adjust as necessary in line with the findings of the IDA 16 MTR and plans for IDA 17 allocations to FCS. Long-term, the SPF could serve as a catalytic fund that promotes IDA turnarounds, pilots’ approaches that could be scaled up through IDA financing, and continues to support state- and peace-building results in countries with limited or no IDA financing.

• Pilot “how” the Bank can operate differently in FCS: The SPF aims to promote the financing

of projects that pilot “how” to operate differently in FCS environments. This will require an adaption of guidelines and procedures to ensure that the necessary flexibility is allowed to respond to the challenges of FCS settings. The SPF will also test new approaches to portfolio management with support from Global Center on Conflict, Security and Development (CCSD) and broader FCS community of practice.

• To ensure that the SPF captures lessons from its efforts to pilot new, innovative and

impactful approaches in FCS environments, the SPF is launching a new Research, Knowledge and Learning (RKL) strategy. Analytic work and RKL products initiated and disseminated by the SPF can inform future and larger Bank investments and operations in FCS, thus improving the Fund’s strategic value.

• Revise the Governance Structure of the SPF to improve its strategic and catalytic role. The

SPF has revised the SPF Committee TOR to focus on striking a balance between providing strategic direction for the Fund and technical support on effective approaches in FCS. The SPF Committee will also focus additional attention on working with sectors/regions to encourage relevant applications to the Fund, and monitoring overall performance of the SPF.

153. The SPF Secretariat will continue to expand its portfolio monitoring and enhanced implementation support. A monitoring system or “dashboard” for the SPF portfolio is being developed alongside the revised SPF results framework to track portfolio performance and draw lessons from SPF interventions. The SPF Secretariat is also focusing urgent attention and providing assistance on those projects that are under-performing, under-reporting, have stalled implementation and/or restructuring needs identified in the MTR. Additional SPF Secretariat and broader CCSD support for early project design and addressing implementation bottlenecks has been put in place.

G. CONCLUSION

154. The SPF as a Multi-donor Trust fund continues to demonstrate that World Bank with a contribution of over 80 percent is committed to the challenges in FCS and the funding of transformative process/programming. The World Bank and the international community have devoted increasing attention to states with weak and underperforming institutions and, more generally, to countries in fragile and conflict-affected situations (FCS). With weak institutions and

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conflict, FCSs face a great deal of difficulty in achieving the Millennium Development Goals (MDGs), and innovative financing is required to address this substantial gap. 155. With the completion of the MTR, the SPF will in FY14 prioritize the implementation of the key findings of the report. The SPF will also promote the use of funding to support new initiatives under the G7 plus, countries in arrears and new emerging countries in crisis such as Mali and Central African Republic. 156. Grants support by the SPF currently are addressing issues such as improved governance, institutional performance, reconstruction, and development, and minimizing the recurrence of violence by promoting stability and maintaining human and institutional capacity. In FY14, the SPF will in collaboration with the Global Center on Conflict, Security and Development (CCSD) and relevant sectors will expand and enhance its knowledge, learning and impact analysis agenda to learn from these initiatives and to examine how these are contributing to the overall objectives of the fund. 157. There is a continuous demand for SPF funding particularly to address newly emerging priorities. For example, the evolving situations in Libya, Syria, Myanmar, Mali, Central African Republic, and other countries have underscored the urgent need to explore early engagement with funding from the SPF. The challenge remains for the World Bank and the broader international community is to respond to the demand for innovative and flexible support to countries emerging from conflict to minimize the risk that violence will recur.

158. While the MTR of the SPF clearly concludes that the SPF is “fit for purpose,” and that it has a role to play in responding to the emerging needs in conflict and fragile affected situations, there is a need over the coming year to examine the role of the SPF in relation to the Banks evolving agenda in FCS and new allocations to FCS under IDA 17. This review would allow the World Bank and donors to the SPF to re-examine (a) the strategic direction of the fund; (b) adjustments to overall priorities; and (c) sustainability. The results of this review would be reported at the next reporting period.

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