Corporate-level evaluation on IFAD’s support to innovations for inclusive and sustainable smallholder agriculture
Innovations in rural development approaches and solutions are crucial to improve the effectiveness of agrifood systems and better meet the rising demand for food worldwide. Innovations are thus critical for IFAD to achieve its mandate of investing in rural people and enabling inclusive and sustainable rural transformation.
The evaluation found that innovations are indeed key in boosting the performance of agrifood systems. IFAD-supported innovations are generally institutional or organizational in nature, and usually originate with IFAD or project staff, based on ideas or solutions already proven in a different country or context. As for developing genuinely novel ideas or processes (especially those addressing smallholder agriculture challenges), loan investment projects have little appetite to provide support in this respect, given the risk potentially associated with such innovations; grants are thus especially useful in promoting them.
Moving forward, the evaluation notes that “bundling” together different innovations to address the diverse challenges across the agrifood system is more likely to lead to transformative change, that can be sustained and scaled up. To enhance the bundling of innovations for transformative change, the evaluation recommends (among other things) setting corporate goals for IFAD’s innovation agenda and implementing an operational framework aligned with these goals, as well as fostering the innovation culture within the Fund.
Corporate-level Evaluation on IFAD’s Engagement in Pro-poor Value Chain Development
The attention to value chain development is becoming increasingly important for IFAD as traditional food systems are being replaced by organized value chains. Over the last decade, the number of value chain- relevant projects supported by IFAD has increased from 41.5 per cent to 72.3 per cent, while the volume of loans approved has gone from 50 per cent to 81 per cent. This major shift posed challenges as the value chain approach was new to many IFAD staff and government staff in charge of managing IFAD-funded projects.
The evaluation found that project design has improved over time, reflecting a better understanding of the value chain concept. However, analytical gaps remain. Few designs have been supported by market intelligence to prioritize the choice of commodities and steps within the value chain in order to achieve pro-poor outcomes.
The evaluation suggests that it is possible to reach out to poor and very poor producers through value chain approaches, but this requires specific attention. The most convincing pro-poor outcomes occurred in projects where IFAD had experience and where multi-stakeholder platforms were created to enable dialogue between value chain actors.
The evaluation recommends that a corporate strategy be prepared for IFAD’s support to pro-poor value chain development that clarifies the objectives and principles of engagement as well as the resources required. It suggests a “programmatic” approach to value chain development, recognizing the need for long-term engagement. Finally, the evaluation emphasizes the importance of promoting an inclusive value chain governance and regulatory environment.
IFAD’s financial architecture
The overarching purpose of the corporate-level evaluation on IFAD’s financial architecture is to independently assess how IFAD creates value for Member States through sound investment decisions and financial strategies contributing to rural poverty reduction. This is the first evaluation of its kind undertaken by a development finance institution and one of the most complex evaluation exercises conducted by the Independent Office of Evaluation (IOE). It examines the policies and systems adopted to mobilize, manage, allocate and disburse financial resources to fulfil IFAD’s mandate.
The evaluation generated a number of important findings and recommendations that merit close attention. The main finding is that the Fund’s financial architecture has been under strain since the Ninth Replenishment period of IFAD’s financial resources. As it stands, it can no longer support an expanding programme of loans and grants. Moreover, the financial architecture does not pass the test of financial sustainability: accumulating losses lead to an erosion of IFAD's equity. Therefore, the evaluation recommends that important reforms be undertaken to address the factors affecting IFAD's financial sustainability, the mobilization of financial resources and the rationale by which these are allocated. It also recommends introducing new and revising current financial products to respond to the demands of borrowing Member States, as well as to internal and external financial governance. Accomplishing these reforms will be essential to ensure the Fund’s financial sustainability, enabling IFAD to fulfil its unique mandate of rural poverty reduction and make a substantial contribution towards meeting the goals set in the Agenda 2030.
The corporate-level evaluation was discussed at the 124th session of IFAD’s Executive Board on 12 September 2018. The Board noted that the findings and recommendations of the evaluation raised vital questions with regard to the future character and structure of the Fund.
IFAD’s Decentralization Experience
The Independent Office of Evaluation conducted a corporate-level evaluation of IFAD’s decentralization experience in 2016, covering the period from 2003 through mid-2016.
The evaluation found that the objectives of the decentralization process were broadly relevant to improve the development effectiveness of IFAD-funded operations. In particular, by bringing IFAD closer to its operation and to the country development context and actors, country presence was expected to improve project and strategy design and implementation support, enhance engagement in non-lending activities, improve alignment with country systems and donor coordination, and contribute towards system-wide coherence of the United Nations.
However, IFAD could have learned more from the experience of other organizations and could have been more realistic in its expectations. In particular, the range of activities that country offices were to perform was very broad compared to the resource envelope allocated to them. Moreover, for many years IFAD concentrated on expanding its country presence but paid little attention to re-organizing headquarters.
The report also highlighted that by opening country offices, IFAD was in a better position to provide implementation support to its operations. It is through this support that country offices contributed to better project performance and results, especially in terms of impact and gender equality. But the contribution to non-lending activities (e.g. knowledge management, partnership-building and policy dialogue) was mixed. This was partly due to the limited human and financial resource available at the country-office level for non-lending activities. Moreover, engagement in policy dialogue largely depended on relevant interests and experience of individual staff members.
IFAD’s Performance-based Allocation System
IFAD’s Performance-based Allocation System
Since it was introduced by IFAD's Executive Board in 2003, the Performance-based Allocation System (PBAS) has enhanced the Fund's credibility, transparency and predictability of financial resource allocations to its developing Member States. The core feature of IFAD's PBAS is that country allocations are calculated using a specific formula to generate a country score, using several variables that, put together, determine country needs and country performance. Overall, the PBAS is found to be relevant. The formula should better factor in some key dimensions of IFAD's priorities, such as food security, nutrition and climate change. It also should improve the way it considers vulnerability issues as determinants of country needs. The evaluation finds the system's effectiveness to be on the whole moderately satisfactory. The rationale for including or excluding countries from the PBAS and the underlying mechanisms guiding the capping system should be made more explicit and institutionalized. Among the recommendations, the need to refine the PBAS design, by sharpening its objectives and strengthening the rural poverty focus; streamline the process for better effectiveness; and enhance management and governance, by taking a more corporate approach to the PBAS in general.
|In-house learning event on the CLE-PBAS, 9 March 2016, IFAD headquarters. Photo by Maurizio Navarra.|
IFAD’s Engagement in Fragile and Conflict-affected States and Situations
This is the first corporate-level evaluation on IFAD's engagement in fragile and conflict-affected states and situations (FCS) undertaken by the Independent Office of Evaluation (IOE). It reflects IFAD's growing involvement in such contexts, and growing global interest in FCS. The evaluation focuses on IFAD's work with FCS over a 10 year period from 2004 to 2013.
The evaluation found that IFAD has a critical and distinct role to play in addressing the problems of fragile states which, in turn, are key to achieving a range of United Nations Sustainable Development Goals including the elimination of poverty, the promotion of sustainable agriculture and productive employment and the building of peaceful and inclusive societies.
The evaluation shows that there have been significant improvements in overall project achievement, project effectiveness, IFADÃ's performance as a partner and rural poverty impact in fragile countries. At the same time, the evaluation underlined the importance for IFAD to develop a new policy/strategy for its work in fragile situations, which would ensure even more customized approaches for better development effectiveness
Corporate-level Evaluation on the IFAD Policy for Grant Financing
Corporate-level evaluation. IFAD’s grants programme has a long history, dating back to the Agreement Establishing IFAD. The Executive Board approved a policy for grant financing for the first time in 2003 and a revised policy in 2009.
The overall objectives of this evaluation were to: assess the performance of the IFAD Policy for Grant Financing, in terms of relevance, effectiveness and efficiency; and generate findings and recommendations that will inform IFAD’s strategic directions and priorities for future grant activities.
This evaluation finds that grants can be an invaluable tool for IFAD to promote its agenda of rural poverty alleviation. Grants have allowed IFAD to collaborate with a wide range of organizations, such as farmers organizations, civil society and indigenous people’s organizations, and international agricultural research institutions. However, the relevance of the policy has been limited by lack of clarity and prioritization. Overall, the effectiveness of the policy has been moderately unsatisfactory, overall though have are signs of improvement since 2010.
IFAD Replenishments Evaluation
The corporate-Level evaluation reveals that replenishment consultations are critical for IFAD's financial sustainability and also provide a unique platform to ensure accountability for results and collective reflection on IFAD policy and strategic priorities. In particular, the changes introduced in the Ninth Replenishment of IFAD Resources have further strengthened the effectiveness and efficiency of the Fund's replenishment processes. At the same time, the evaluation identifies some areas for further development. On the financing side, IFAD would need to intensify its ongoing efforts to mobilize additional resources beyond replenishment contributions to meet the increasing demand for its assistance in all recipient countries. Moreover, the current representation system of IFAD Member States in the replenishment consultations might require some adjustments to better reflect the existing geopolitical and economic landscape. Finally, the evaluation also highlights the value for IFAD to simplify the current results measurement framework, including by more explicitly defining a theory of change for achieving rural transformation.
IFAD’s Supervision and Implementation Support Policy
This first evaluation synthesis report issued by IOE makes an initial assessment of the progress made so far in implementing IFAD’s Policy on Supervision and Implementation Support, identifying promising practices and emerging issues. IFAD’s decision to move to direct supervision and implementation support was one of the most far-reaching changes since the Fund was established. It has facilitated more direct follow-up with implementing agencies to resolve bottlenecks that have emerged during implementation and has allowed IFAD not only to achieve closer cooperation with other partners but also to establish and nurture partnerships with multiple stakeholders. Overall, IFAD should be commended for implementing such decision. However, the direct supervision and implementation support of IFAD operations has posed several challenges. The specific preparations needed for implementing this ambitious supervision policy were inadequate and implementation has progressed at different rates and with different modalities among the five regional divisions. In the longer term, IFAD should now consider drawing on the best practices from the different approaches to increase harmonization, efficiency and shared responsibilities across IFAD departments, and to reduce risk. There is also a need to optimize the division of labour in undertaking direct supervision and implementation support, within IFAD and between IFAD headquarters and its country offices
IFAD's Institutional Efficiency and Efficiency of IFAD-funded Operations
Background and objectives
This report presents the findings and recommendations of the corporate-level evaluation on IFAD's efficiency (CLEE). The CLEE responds to the growing interest in the organization's efficiency in the wake of the 2008 global economic and financial crisis, and the ensuing budget constraints affecting many IFAD member states.
The main audience of this evaluation is IFAD Management and the Executive Board. However, the evaluation will also be of interest to IFAD Member States, multilateral and bilateral organizations, as well as the development evaluation community in general. CLEE covers not only the efficiency of IFAD operations, but also institutional efficiency in a number of critical areas: the management of human resources, results and budgets, ICT, oversight and support functions, leadership and decision-making, and governing bodies. Given its scope and coverage, it has been arguably the most complex and challenging evaluation done by the Independent Office of Evaluation (IOE). The challenge has been exacerbated by the fact that this evaluation is the first of its kind among development agencies, requiring IOE to develop a dedicated methodology, and mobilize extraordinary expertise in evaluation and a range of technical areas. The unique features of this evaluation include the analysis of efficiency at multiple levels – output, outcome, impact and scaled-up outcome and impact, which is very relevant for IFAD. Credit goes to the Executive Board and IFAD Management for their support in this undertaking, as well as for their openness to engage with IOE throughout the evaluation process, and share with us the necessary data, information and documentation required for our analysis.
IOE has been ably supported by a highly credible team of consultants, with country case studies mostly done by national consultants (annex 14). IOE has benefitted from the insightful inputs of two senior independent advisers, Robert Picciotto and Richard Manning, who ensured that IOE and its consultants followed the most appropriate evaluation methodology and process to conduct this evaluation, and who also reviewed and commented on several deliverables, including the draft final report. Their joint analysis on the quality of the evaluation has been included (annex 10). The CLEE also included valuable contributions by several IOE staff at different stages, however, in line with the IFAD Evaluation Policy, as the manager of the CLEE, I take full responsibility and ownership of the contents in the final evaluation report and the overall evaluation process.
In terms of process, special effort was made by IOE throughout the evaluation to minimize surprises and maximize learning and dialogue. For example, emerging evaluation findings were discussed with IFAD Management in a timely manner, both informally and formally. Management was given the opportunity to review and comment on the emerging findings in an interim report, and their feedback was duly considered by IOE in the preparation of the draft final evaluation report, where they also had a chance to comment. The main findings were presented to the Evaluation Committee and the Executive Board for their feedback before the preparation of the final evaluation report.
The CLEE found that a number of initiatives to enhance efficiency and effectiveness have been undertaken in recent years, including in the course of the evaluation. They include the introduction of direct supervision and implementation support, expanded country presence, the Change and Reform Agenda, commitments related to efficiency undertaken in the context of IFAD9 consultations, a more transparent and strengthened budget process, and the even more recent Strategic Workforce Plan.
On the operational front, IFAD is engaged in a fundamental transition from a focus on financing individual projects to a programmatic approach that links knowledge work, policy dialogue and partnerships to projects in each country, with growing attention given to the scaling up agenda. It will take time for the full benefits of many management decisions and reforms to be realized fully. At the same time, there are a number of opportunities for increased efficiency at different levels, and they are enumerated in the report. In pursuing these opportunities, IFAD Management and the Executive Board must be mindful of the trade-offs between efficiency at these different levels.
With respect to the governing bodies, CLEE finds that their overall architecture is complex, but it works. The non-resident nature of the Board is a positive characteristic but it does contribute to an overloaded agenda. There are opportunities for the Governing Council to delegate to the Executive Board, and for the Board to delegate to Management. The report includes a dedicated chapter on the efficiency of IFAD governing bodies, with many interesting findings that deserve reflection.
Recommendations. The evaluation has a number of important findings and recommendations that merit close attention. The overarching recommendation is that IFAD "Raise the bar for IFAD's own performance as a partner to promote scaled-up impact of IFAD-supported operations". This recommendation is grounded in the rationale that for IFAD to make a significant impact, it must leverage its resources manyfold by attracting partner resources on a very large scale to replicate and scale up pioneering, innovative IFAD-funded operations and activities. This requires that IFAD become the center of excellence in its niche by raising the bar on its own performance. It compels IFAD to aspire to the threshold of ‘satisfactory or better' performance as against the current practice of ‘moderately satisfactory or better'. That is the first step toward excellence in all aspects of operations, and toward developing IFAD-supported projects and country programmes that can lead to the desired levels of scaled-up impact.
This recommendation is supported by seven sub-recommendations:
- Scaling up of high impact, innovative approaches emerging from IFAD-supported projects and programmes should become the objective of IFAD's business model;
- Articulate and implement a clear vision for country presence and how IFAD would operate in a decentralized environment;
- Manage oversight and support units, including critical ICT functions, with a clear focus on increasing service quality and cost efficiency;
- Better manage scarce budgetary resources towards high-quality results;
- Manage strategically the skills composition, cost and performance of the workforce;
- Focus oversight by the governing bodies on key strategic issues, with more attention to discussing results, lessons and evaluations;
- Instill an institutional culture of accountability and performance, and strengthen the reporting for results.
With respect to the governing bodies, the evaluation also recommends the introduction of a code of conduct, a normal feature of international financial institutions, and the development of broad terms of reference for Executive Board members to assist Member States in designating their representatives. Discussions on the CLEE by the Evaluation Committee and the Executive Board have resulted in broad agreement on the recommendations, and highlighted the critical importance of effective and timely follow-up. Management and IOE agree that the best way forward is to combine the recommendations of the evaluation and the efficiency-related commitments undertaken in IFAD9 consultations into a single, consolidated action plan for further enhancing IFAD's efficiency.