Outcomes 8.5x.8.5 8pg - The World...

OUTCOMESBusiness News, Trends, and Results from Emerging Economies March–June 2007

With multilateral development agencies increasingly focused on deliver-ing programs with meaningful impacts, development partners such asdonors are also demanding more measures of program results to assesshow funds have been invested. The underlying goal of all such evaluationsis to learn from the programs and to channel important lessons back to staffthat are designing and implementing projects.

IFC has a network of results measurement staff in its regional facilities,other donor-funded operations, and departments engaged in advisory work.It shares ideas and practice with foundations and clients such as ShorecapExchange, the Grameen Foundation, and the Ford Foundation, as well aswith donors.

Margrethe Holm Andersen, Deputy Head of the Evaluation Departmentat Danida, the development arm of the Danish Ministry of Foreign Affairs,explains:

“At Danida we have a fairly extensive and comprehensive monitoringsystem, and we use a rating system to assess our progress. Danish embassiesresponsible for development cooperation sign results measurement contractsused to report on what they are doing in the various partner countries. Inaddition, independent evaluations of Danish-funded activities are regularlycarried out by external evaluators. Most of these evaluations are undertakenjointly with partner countries and/or with other development agencies.”

While poverty reduction is the overall aim of Danish development assis-tance, themes such as governance, gender, and environment are consideredcross-cutting themes in all development work, and measurement of theseefforts is based on information about the outcomes of the project e.g. howmany loans are given to women, how many policies are revised, etc.

There is a move for donors to carry out joint evaluations with theirimplementing partners, even though both parties recognize that any pro-gram evaluation inherently faces a trade-off between rigor and cost.

“We are looking at ramping up our evaluation programs and value co-operation with other institutions involved in such activities. IFC’s work inresults measurement is very interesting in this respect. The scope of evaluation

tools that IFC employs is farbeyond what we are currentlydoing within our agencies,”says Thomas Nowotny, Seniorconsultant at the AustrianBusiness Service (AWS).

Proponents for increasedevaluation of developmentprograms include well-knowneconomist and author Profes-sor Bill Easterly, who believesthat foreign aid alone cannotsolve global poverty, but thatsuccess will come only if thereare independent evaluations ofprograms and someone is heldaccountable for negative evalu-ations. (See page 2)

Development with Impact: Measuring the Effectiveness of Programs

“When we embark on a program with a partner suchas IFC, we always begin with the end in mind – i.e.,what sort of results do we want to show after imple-mentation of the program? This calls for inclusion ofevaluation designs at the very beginning of a project toensure that we can actually document results. This isa critical consideration for us, because it helps improvethe performance of development activities to whichDenmark has contributed. In addition, we then have toprovide measurable feedback to the Ministry ofForeign Affairs about targets met.”

–Margrethe Holm Andersen, Danida

Measuring the effectiveness of ProgramsPage 2 Interview with Professor William EasterlyPage 3 Results measurement for Advisory services

Page 4 Partnering with Foundations for private sector development

Page 5 Newmont Mining argues a case for business linkages

Page 6 ‘Shrimping’ in AcehPage 7 Improving primary education in GhanaPage 8 The importance of Local knowledge- a lesson

from St Helena

Table of Contents

Please send your comments to [email protected]. For more information go to www.ifc.org.

Margrethe HolmAndersen, Danida

With donor support, IFC has beenhelping local farmers in South Asia

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William Easterly is Professor of Economicsat New York University joint with AfricaHouse, and Co-Director of NYU’sDevelopment Research Institute. He is anoutspoken critic of foreign-aid programs andlast year rekindled the debate about the effec-tiveness of development in his ironically titledbook, “White Man’s Burden: How the West’sEfforts to Aid the Rest Have Done So MuchIll.” A regular contributor to IFC and WorldBank group discussions about the role of mon-itoring and evaluation in development, hesums up the rising demand for evaluation by

noting continuing uncertainties about the effectiveness of developmentefforts. Below follows a Q & A, based on a presentation he gave at anIFC Results Measurement conference.

Why is results measurement in development institutions so important? Well, the best way to answer that is to have a look at the current reality inthe developing nations of the world, and what one might call the “twotragedies of the world’s poor.”

The first tragedy is that, as noted by Jeffrey Sachs, 30,000 childrendie from extreme poverty every day. However, many times these deathscould have been avoided—for example, the 1.8 million annual deathsfrom diarrhea which could be prevented with a 10-cent dose of oral rehy-dration therapy.

The second tragedy is that the West has already spent $2.3 trillion onforeign aid over 5 decades, and babies with diarrhea are still not gettingthe 10-cent oral rehydration therapy.

The second tragedy happens because there is no evaluation and noaccountability.

So, in your opinion what is taking the place of evaluation?Well, there is an obsession with Aid and increasing it. Even as early as thesixties there were calls by governments in the West, the World Bank andother institutions to increase foreign aid. Obsession with money spentsubstitutes for evaluation of whether that money actually reaches thepoor, so the second tragedy continues unabated.

In my book, I go into a detailed analysis of how aid alone, over theyears, has failed to end global poverty, and the interventions such as struc-tural adjustment programs that have been spectacular failures. The mes-sage is clear: you cannot succeed in any program unless there is independ-ent evaluation of the program, and someone is held accountable for neg-ative evaluations.

Is the problem just the focus on aid?Well, in addition to a low focus on accountability and evaluation, mostdevelopment agencies embark on what I call “Big Plans” to solve globalpoverty. For example the primary organizations that work to end worldpoverty, including the World Bank, UN, and IMF as well as leading econ-omists such as Jeffrey Sachs, have taken an approach which has all the aiddonors and recipients collectively responsible for meeting 54 worldwidepoverty alleviation goals as stated in the Millennium Development Goals.It is therefore impossible to separate out the effect of agents’ efforts fromother factors affecting goals. One of the principal causes of the SecondTragedy in foreign aid today is that nobody is individually responsible forany one result. Hence, no individual can be evaluated.

What would your recommendations be, then?Professionals spend way too much time agonizing over how to evaluateforeign aid and structural adjustment. But the question we should beasking is, “Why have aid interventions where it is so difficult to tellwhether they are working or not?” What incentives follow from objec-tives for which you can’t hold anyone accountable if they are not met? Isay let’s stop the “Big Plans” and collective fantasies and start doingpiecemeal steps toward what works. Let’s then have independent evalua-tion of aid for individual piecemeal interventions for which somebodytakes responsibility.

And finally…? First, I will note that IFC is moving in the right direction focusing on in-depth and rigorous evaluations. This something there should be more of. Iwill conclude by offering three lessons from my research:

1) Don’t do things that can’t be evaluated.2) Don’t design an aid program such that there are no consequences of

a negative evaluation.3) Don’t use the word “evaluation” when what you are describing is not

an independent evaluation of a specific intervention for which some-body can be held accountable

For more on Professor Easterly, visit:http://www.nyu.edu/fas/institute/dri/Easterly

Five questions for William Easterly Professor of Economics at New York University

William Easterly,Professor of Economics

at New York University

2 OUTCOMES Business News, Trends, and Results from Emerging Economies

Proper and systematic resultsmeasurement is critical to thesuccess of any developmentagency, because it is key toimproving program designand implementation as wellas ensuring sound policyadvice. At IFC we are striv-ing to employ the latest

thinking and approaches in ourevaluation methodology, and weconstantly benchmark our activi-ties against leaders in the field.

Every advisory project in IFC must, at a minimum, track indica-tors of outputs and outcomes and set targets as well as establish base-lines. Projects are currently supervised on a half-yearly basis, andproject completion reports are filed at the end.

A variety of evaluation approaches are applied depending on thespecific business area, the nature of the advisory work, and the coun-try context. Evaluation tools currently being applied range from ran-domized evaluations with large-scale data collection efforts, to sim-ple forecasts of expected costs and benefits based on prior experi-ences. Increasingly, program managers are realizing the benefits ofopening up their programs to systematic evaluation early in the proj-ect life cycle, to get a quick handle on what works and what doesn’t.

In several cases, significant changes to program design and imple-mentation have been a direct result of the findings of these evalua-tion efforts. IFC management also uses the findings as a basis forinformed decisions about project replicability and scale-up, andresource allocation. For example, lessons learned from specificagribusiness programs such as the Indonesia Seaweed and the BILT,India, Farm Forestry Program, and early results from the North Andreand Ukraine Dairy Programs, have proven to be broadly relevantthroughout the agribusiness project line, and improved efforts areunderway to determine the point of intervention for IFC in anagribusiness value chain.

The evaluation of IFC’s Alternate Dispute Resolution project,launched in the Balkans, provided insight into the types of informa-tion awareness campaigns and local partnerships critical to programsuccess, and these factors have been carefully considered in planningthe next- generation ADR projects in Karachi. Similarly for the busi-ness registration program in Lima, Peru—experience gained fromthis project evaluation has been instrumental in the design of IFC’snew registration program in Sao Paolo, as well as in the case of theIFC-IDA Business Registration Simplification program in Nigeria.In all these cases, not only have the program design and implemen-tation improved following evaluation and replication; the evalua-tions themselves have improved with experience as well.

Only by asking sharper questions, collecting better data, andapplying increasingly rigorous analysis, can IFC improve the qualityof its advisory services and overall development impact.

Geeta Batra is Principal Operations Officer in the Results Measurement UnitContact: [email protected]

Results Measurement for Advisory Services by Geeta Batra


Lessons Learned in Agribusiness

Indonesia Seaweed Project, BILT Farm Forestry (India), Vinnytsyya Dairy, Ukraine

Findings from randomized and quasi-experimental evaluations of theseprograms have provided valuable lessons for IFC:

• The intervention must clearly target the market failure and the marketfailure must be explicitly identified for the program to be successful.

• It is often difficult and expensive to identify different specific market failures; if you do not understand the market failure, then you cannot solve the problem.

• It is expensive to obtain specific knowledge on the current state of agri-practices in a certain area, or specific advice on what kinds ofknowledge are appropriate in different locations.

• There can often be a hidden logic to current behavior, such that goodadvice in one context is inappropriate for another. Techniques that excelin the laboratory do not necessarily work well on the ground.

• These programs are often expensive to scale up and expand.

The results measurement team

by Nick Cotts: Newmont Mining Africa RegionalDirector Environmental and Social Responsibility

Newmont Mining, Yanacocha, the Foundation Asociación Los Andes deCajamarca (ALAC), and IFC have teamed up to put together a businesslinkages program which will strengthen small businesses in theCajamarca region of Peru. The program will support local small business-es with training and advisory services to link them to new contract oppor-tunities near Newmont’s Minera Yanacocha investment.

The rationale for Newmont getting involved in business linkages pro-grams is that they make business sense and support our global strategy tobecome the gold company of choice. Simply put, if we couldn’t build a busi-ness case for them, we would not spend our time on them.

Why business linkages?Business linkages enable us tobuild relationships and bridgesto the communities around theareas in which we operate.Without these strong relation-ships, which enable us to buildstrong, positive connectionsbetween the company’s inter-ests and those of the commu-nity, we would not be able todeliver our business promiseto increase shareholder value.

In addition to creating shareholder value, such programs are consistentwith our company vision to create value for the communities providinga home for our operations.

The mining sector is an extremely capital-intensive sector. Wespend billions of dollars, over time, to build infrastructure and establishmining operations. That in itself is a huge opportunity that one caneither use or lose. For example, it makes sense to procure locally, as thistranslates to lower costs, as long as we can ensure a reliable supply andquality that meets our standards. So, if we are going to procure on alocal basis, then building capacity and seeing how we can link the busi-ness needs of the company to the abilities of the suppliers is fundamen-tal. In addition, linkages with local businesses create a catalyst forimproved product and service excellence, technical skills, and businessmanagement techniques. This serves to enhance the competitivenessand business savvy of local entrepreneurs.

Yanacocha, Peru: Community development and not philanthropyAt the time we initiated our corporate social responsibility (CSR) activities inPeru, during the mid-90’s, we had already evolved to participating in com-munity development and not just philanthropy. What we wanted was toleverage our community development programs and expand them so morecommunities, people, and stakeholders were involved. We also wanted to for-malize the processes that we had already established. This was particularlyimportant in the context of what the country situation was when we firstentered Peru in the late 80’s. Peru, then, was a developing country with cer-tain political instability and significant socio-economic needs in general, andin the communities neighboring our operations in particular. On the otherhand, we had a fairly new company (in terms of international operations)which was growing very quickly. We were also a relatively large companycoming into a small community—at a time when there was littleunderstanding of CSR in a formalsense.

The initial area of focus wastechnical assistance directed at theconstruction sector. We looked tobuild the skill sets within localbusinesses. Equally important washelping these entrepreneurs andinnovators, with the ideas anddesire to work with us, to gainaccess to finance to build theirbusiness. However, from the verybeginning we also were aware ofthe need to ensure that dependen-cy on Yanacocha was minimized. As such, we looked for ways to promotediversification away from our business activities.

The lessons we learned in Peru are also being applied to our linkagesprogram in Ghana, Africa, where again we have a partnership with IFC.

The Case for Doing Business Linkages


Yanacocha mine workers

Mine furnace

About IFC Linkages Programs

IFC’s linkages programs increase value-added services to IFC clients in improv-ing their businesses, while increasing the development impact of IFC invest-ments. Linkages programs are typically two- to three-year advisory programs tostrengthen small and medium enterprises that are linked to IFC’s investmentprojects as suppliers of goods and services. The focus is either on the client’ssupply and value chain development or on income- and employment-generat-ing activities for local communities around the investment project.

The international development landscape has changed with the emer-gence of new, non-traditional sources of funding for international aid.Private foundations have grown to be significant players in thisarena, contributing billions of dollars in charitable aid each year.There are numerous examples of high-profile donors that have made theheadlines in the recent past: for example, Warren Buffett, the billionaireinvestor and Chairman of Berkshire Hathaway, pledged to double theassets of the Gates Foundation, already the largest foundation in theworld, with a $31 billion contribution last year; and soon after, theBritish businessman Richard Branson, pledged to invest billions of dol-lars in cleaner technologies.

Foundations have a vision for social change that complements IFC’smission to reduce poverty in emerging markets. They are valuable partnersbecause of this shared vision and also because of their ability to take risksand move quickly, as well their specialized knowledge and contacts. Insuch partnerships, IFC adds value through its experience in private sectordevelopment, extensive network, field presence, convening power, andability to measure development impact.

IFC has teamed up with various foundations to carry out innovativeprojects in the private sector. Some recent examples include:

n Case Foundation: IFC’s advisory services were paired with Case’sfunding to contribute to the installation of Playpumps-merry-go-round water pumps that provide clean drinking water to ruralregions of Sub-Saharan Africa.

n Kauffman Foundation: A best practices report on women’sentrepreneurship examined initiatives that promote women busi-ness owners’ access to finance in the US and abroad.

n Gates Foundation: Gates joined forces with IFC to fundresearch on improving private health care delivery in Africa.

When taking on some of the most intractable problems of the devel-oping world, having partners who have a track record of getting thingsdone makes all the difference.

Partnerships for Poverty Reduction: IFC and Not-for-Profit Foundations Join Forces

in Private Sector Development

Did you know?International grant-giving byUS foundations has morethan doubled since 1998?


The Case Foundation has worked with IFC to install Playpumpswhich provide potable water to rural regions in Africa

IFC’s regional Advisory Services facility in Aceh and Nias,Indonesia, is working with rural shrimp farmers to increase theyield and quality of their harvests. Decades of conflict and the 2004Tsunami have badly affected the industry and so now efforts are under-way to rebuild the sector. The shrimping industry is an important onein Aceh and is worth over $60 million a year and employs nearly100,000 people.

IFC’s program teaches shrimp farmers global best practices and linksthem to markets. It also introduces farmers to new methods for improv-ing quality and reducing disease in the shrimp.

The program is starting with the growing cycle in March 2007, focus-ing on management training and shrimp pond preparation. Continuousmonitoring of the program and statistical analysis will also be used to illus-trate the effectiveness of these practices. It is expected that the programwill reach 25-40 hectares of ponds this year.

Working in the ‘field’Six field facilitators for the fisheries program are currently working withshrimp farmers in the Bireuen district of Aceh. The facilitators transferglobal best practices to farmers in pilot villages targeted for cluster man-agement of the shrimp sector. Participating villages were selected throughsurveys conducted in 34 villages in Banda Aceh, Aceh Besar, Pidie, andBireuen to assess which areas are most suitable for the aquaculture inter-vention program. Analysis was of hygiene, farm design, crop history, water source, green belt, and community response.

Bigger and better Shrimp—a winning cocktailIFC has introduced a new shrimp farming method called the PolycultureSystem—a cultivation method in which seaweed is introduced and grownin shrimp ponds. Cultivating seaweed and shrimp together not only pro-vides a new income source for farmers, but also improves the quality ofshrimp. Another key component of the shrimp program is the improve-ment of management practices, as international markets demandimproved standards of food quality and food safety. In addition, the devel-opment of effective private-sector market linkages and the strengthening

of farmer groups are essentialto provide market access.

During a visit to the pilotsites in Aceh Besar and Pidie,some farmers collected smallquantities of seaweed samplesto be planted in their villagesin Gandapura.

“My fellow farmers and Iare willing to learn more onseaweed culture; this is a new

idea that has captured our interest,” said Abdullah Syamaun, a farmer whoparticipated in the site visits.

Dave Lawrence is the Program Co-ordinator at IFC’s PEP [email protected] team: Graeme Harris, Program Coordinator, Arief MuhammedDarmono, Business Development Analyst, and Renaldi Safriansyah, Program Assistant. They are supported by six field facilitators working in villages in Bireuen.

Shrimp on the menu in Aceh, Indonesia

Did you know?A female shrimp weighing 150 gramscaught in deep ocean waters can hatchover 1 million eggs in one spawning. Eventhough only 50% of these will successful-ly hatch into larvae, it’s still enough to

stock about 50 hectares of shrimp ponds in the traditional Aceh tambaks,or 75 football fields.

Within four months, each larva can grow up to 30-40 grams in size, whichequals 10-15 tons of shrimp. This means a single shrimp can hatch enougheggs to serve dinner for 50,000 people!


Shrimp Pond at Tambak, Bireun

Checking shrimp quality

Providing a head start to more Ghanaian childrenthrough better primary educationGhana’s school system has been struggling to meet the nation’s demand forquality education. Most state schools are under-resourced and do not meetthe required teaching standards, and consequently private schools arebeginning to emerge as possible alternatives, even for the poor. In fact,today almost 20 percent of children in primary school are enrolled in privateinstitutions.

But even with their perceived ability to attract more resources and offerbetter education, private schools face their own set of challenges. For example,many schools do not have adequate business management systems, and a hugenumber have problems accessing medium-term finance for their growth andoperational needs

With this in mind, IFC’s Health and Education department, together withthe Advisory Services facility, IFC PEP-Africa, are implementing a programcalled the Ghana Private Schools Support Program (GPSSP), which works tohelp private schools operate more effectively. Through the program, schoolsreceive advisory services to help increase their chances of being approved forfinancing for projects such as classroom expansion and improvement, and theconstruction of libraries and other facilities. The program also helps schoolsattract and retain high-quality staff.

Some lessons Learned from the GPSSP program:

Lesson 1: Advisory services must begin before the investment agreement is signed. The schools need to be prepped to identify their weaknesses as a business.This ensures that they are actually ready to receive and utilize fundingeffectively.

Lesson 2: Misconceptions can create challenges in fundraising. The program has been hampered by the deep-seated perception among tra-ditional bilateral donors that private education is elitist. Until we can provethe pro-poor impact of the program beyond doubt, fundraising will befocused on non-traditional donors such as foundations.

Lesson 3: Careful school selection is critical.The target schools were screened carefully by a team composed of IFC staffand the client bank to ensure that they passed a minimum set of criteria forlending.

Lesson 4: Fostering competition among banks improves the impact ofthe program.Working with a single bank was necessary during the pilot phase, but for afull-scale initiative, the program should be expanded to more banks for com-petitive loan pricing and to offer the schools a choice in banking partner.

This article is a summary of a winning “Smart Lesson” submitted by TanyaScobie, Health and Education Sector Operations Officer of IFC and PEP [email protected], and Sam Akyianu, Operations Officer, GPSSP, PEP Africa/[email protected]


About Smart Lessons: Smart Lessons in Advisory Services program is afirst of its kind in the World Bank Group. It fosters peer-to-peer dialogue spanning all IFC business lines and sectors through the submission of easilyaccessible, four-page notes on lessons in advisory services.

The Ghana Private Schools Support Program IFC is providing advisory services, as well as financing, through a risk-sharingfacility with a local partner bank. IFC’s advisory services help the schoolsimprove their ability to operate as effective, sustainable businesses, therebyimproving their risk profile. More specifically, support is provided in schooldiagnostics, strategic and business planning.

So far, IFC has helped 17 schools develop business plans, which has resultedin the partner bank disbursing US$1,724,000 to 11 schools. The program’s suc-cess has been recognized by the financial sector—three other banks haveasked to join the GPSSP, which won the IFC 2006 Corporate Award for innova-tion and development impact.

“Like other parents, I want to give my children the best educationpossible to prepare them well for the future. Even though public

education is free, private schools offer far better education, and they are affordable.” –Ghanaian father

St. Helena is a 39- square mile British dependent territory located in themiddle of the South Atlantic, with fewer than 5,000 inhabitants. St.Helena has dependencies of its own—one of which is Tristan da Cunha.Tristan is relatively rich thanks to a lucrative lobster industry. So, why not St.Helena too? Well, there was a St. Helena lobster development project, about

20 years ago. Courtesy of aBritish government develop-ment aid project, a boat wassent out with equipment and atrainer to teach the local fisher-men, who for many many yearshad not disturbed the marinelife, how to catch lobster.

Within a few months the“industry” had blossomed butjust as quickly it died- the lob-sters had been fished out. Therehas been no lobster fishingindustry since, although theodd lobster is caught occasion-ally. Today, St. Helena’s localwaters are relatively barren andcannot support concentratedfishing of particular species.

So what can we learn from this?Lesson: If local people have not been exploiting a particular resource,

there may be a good reason. The development aid program came in withgood intentions but achieved the reverse. Read Jared Diamond’s “Collapse”for more drastic examples of how societies have destroyed the environmentsin which they lived.

Laurence Carter is Director of the IFC Small and Medium Enterprise Department.Prior to joining the IFC, Laurence worked for 10 years in Botswana, Swaziland, Malawiand St. Helena. He is a regular contributor to the World Bank PSD blog.

Why St. Helena? Because it is one of the most aid-dependent economies in theworld. Because there have been many attempts to develop the island’s private sectorand the aid business has not always been good at learning from experience. If we lookclosely, we are humbled by history. Above all, because St. Helena is a wonderful place.Tapping into the seam of stories about St. Helena gives one a feeling similar to thatwhich the geologist who discovered Botswana’s first diamond mine in 1967 must havehad—excitement at finding little gems which can bring a lot of pleasure to people. For more about St. Helena go to: http://www.sthelenatourism.com

And Finally...

A lesson from St. Helenaby Laurence Carter

OutcomesInternational Finance Corporation2121 Pennsylvania Ave., N.W. Washington, D.C. 20433 USA E-mail: [email protected]

Outcomes is a quarterly newsletter published by the Small and Medium Enterprises department ofthe International Finance Corporation (IFC). The IFC is the private sector arm of the World Bankgroup, set up with a mission to promote sustainable private sector investment in developing andtransition countries, helping to reduce poverty and improve people’s lives.


IFC’s advisory services (AS) have expanded rapidly in scope, geographic coverageand staffing. Currently, nearly one third of the Corporation’s staff is engaged in full-time delivery of advisory services, with the vast majority based in IFC’s regionalfacilities. This work is increasingly seen as a core IFC business line, enabling us toachieve our mission in ways and places that might not be possible through invest-ment products alone.

IFC has 12 facilities covering sub-Saharan Africa, Middle east and North Africa(MENA), Asia and the Pacific, Southeast Europe and Central Asia (SECA) and LatinAmerica and the Caribbean (LAC).

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