Key Insights from OVE Evaluations on Capital Increase Discussions

Independent Evaluation in the Context of Capital Increase Discussions: OVE s Experience 13 March 2024 ECG Meetings, London Ana Maria Linares Economics Senior Advisor Office of Evaluation and Oversight Inter-American Development Bank CONFIDENTIAL - INTERNAL USE - PUBLIC UPON CONSIDERATION This document contains confidential information relating to one or more of the IDB Access to Information Policy and the IDB Invest Access to Information Policy exceptions and will be initially treated as confidential and, therefore, may be used by IDB and IDB Invest employees only. The document will be disclosed and made available to the public upon completion of consideration.

OVE Evaluations: Key to Capital Increase Discussions Office of Evaluation and Oversight | OVE IDB Group OVE s Mandate and Evaluations Mandate to evaluate the implementation of IDB-9 commitments: defined in Governor s Resolution approving IDB-9 OVE conducted two evaluations: o Midterm Evaluation of IDB-9 Commitments (2013) o IDB-9 s Implementation and Results (2018) IDB: Ninth Capital Increase (IDB-9) Mandate to evaluate the results of MIF II: defined in Donors Resolution approving replenishment Two-phase approach: o Evaluation of IDB Lab Strategic Relevance (2021) o Evaluation of IDB Lab Operations (2021) Evaluation informed discussions about the future and funding model of IDB Lab IDB Lab (MIF): Third Replenishment Mandate to evaluate the effectiveness of the merge-out implementation: the Governor s Resolution creating IDB Invest required an independent evaluation the Board asked OVE to conduct it OVE conducted two evaluations: Evaluation of IDB Invest (2023) OVE Review of the Implementation to Date of the Private Sector Merge-out (2018) The 2023 evaluation has informed discussions on IDB Invest capital increase and new business model IDB Invest: Capital Increase 2 2

Office of Evaluation and Oversight | OVE Midterm Evaluation of IDB-9 Commitments (2012) IDB-9: tied to 22 reforms to strengthen strategic focus, development effectiveness, and efficiency of the IDB OVE assessed 22 reforms grouped into: (i) institutional strategy (ii) operational instruments and processes (iii) results measurement and monitoring (iv) resource management Key challenge: how to efficiently evaluate 22 reforms touching on almost every aspect of the Bank s functioning Summary report with ten priority recommendations - all endorsed but one In-depth findings and suggestions in individual areas included in 22 background papers 3 3

Evaluation of IDB-9: Implementation and Results (2018) Office of Evaluation and Oversight | OVE Assessed results around four intermediate outcomes (reconstructed ToC): o Strategic selectivity in the choice of activities o Client responsiveness and development effectiveness in interactions with clients o Efficiency, accountability, and transparency in resource use o Financial Sustainability Key challenge:how to define the scope - time and resource constraints did not allow evaluating progress on 22 reforms Five broad recommendations called lessons: o Weigh the costs and benefits of top-down mandates in future capital increases o Renew efforts to implement the Development Effectiveness Framework fully o Work on improving governance and strengthening institutional capacity in LAC o Increase openness and transparency o Going forward, IDB may face challenges of relevance and competitiveness seek greater consensus on what type of institution the Bank wants to be 4 4

Evaluation of IDB Labs Strategic Relevance (2021) Evaluation of IDB Lab s Operations (2021) Office of Evaluation and Oversight | OVE Phase 1: focused on IDB Lab s mandates, strategic direction, and corporate setup Phase 2: focused on the extent to which IDB Lab-financed operations allowed it to make progress toward its mission Key challenges: o Tight deadlines if the evaluation was to serve as input for discussions on capital replenishment o IDB Lab s weak information systems did not systematically track important operational information Five recommendations divided into strategic and operational 5 5

Office of Evaluation and Oversight | OVE Evaluation of IDB Invest (2023) OVE evaluated the effectiveness to date of the implementation of the merge-out (reconstructed theory of change) Focus on progress toward achieving the objectives of the merge-out: o Strengthening development effectiveness and impact o Strengthening additionality, maximizing public-private synergies o Maximizing the efficient use of resources o Ensuring long-term financial sustainability Key challenges: o Evaluation covering the entire institution o Governors opened the door to capital increase while the evaluation was underway Evaluation highlighted rapid business growth exceeding volume targets but found weaknesses in effectiveness and additionality 6 6

Office of Evaluation and Oversight | OVE 1. The need to clarify strategic priorities 3. The need to increase transparency and improve knowledge management 2. The need to strengthen development effectiveness tools and results frameworks Common Themes Present in OVE s Recommendations 7 7

1. OVE Recommendations on Clarifying Strategic Priorities Office of Evaluation and Oversight | OVE IDB-9 Evaluations IDB Lab Evaluations IDB Invest Evaluation Update IDB s institutional and sector strategies Revisit the role and content of country strategies and country programming documents Clarify and prioritize the numerous and often conflicting mandates and objectives given to IDB Lab by Donors Strengthen the focus on additionality and strategic level analysis beyond volume targets Redefine the strategic selectivity approach for selecting operations and clients 8 8

2. Recommendations on Strengthening Development Effectiveness Tools and Results Frameworks Office of Evaluation and Oversight | OVE IDB-9 Evaluations IDB Lab Evaluations IDB Invest Evaluation Complete the implementation of the Development Effectiveness Framework (DEF) Strengthen IDB Lab s ability to track and report results and to learn from its activities Enhance capacity for impact management during project supervision and at portfolio level Simplify the Corporate Results Framework 9 9

Office of Evaluation and Oversight | OVE 3. Recommendations on Increasing Transparency and Learning from What Works IDB-9 Evaluations IDB Lab Evaluations IDB Invest Evaluation Revise the policy on information disclosure Improve IDB Lab s ability to better understand how supported solutions evolve after project completion to promote scaling up Identify lessons from operations to inform new ones and develop a strategy to unify knowledge from across the institution 10 10

OVE has been an integral part of the IDB Groups capital increase discussions Office of Evaluation and Oversight | OVE OVE evaluations have informed capital increase discussions (IDB Lab and IDB Invest) or assessed the results of capital increases (IDB) All Governors resolutions on capital increases have required an independent evaluation: o IDB and IDB Lab: the requirement was specifically for OVE to conduct the evaluation o IDB Invest: the Board requested OVE to conduct the evaluation when the Governors resolution called for an independent evaluation Management and the Boards consider OVE s evaluation findings and recommendations an essential element in their discussions about capital increases 11 11

Office of Evaluation and Oversight | OVE Thank you iadb.org/evaluacion @BID_evaluacion Linkedin.com/showcase/idb-ove 12 12