UK aid channelled through the World Bank’s International Development Association provides good value for money
31 May 2022
- ICAI review of UK aid’s support to the International Development Association finds approximately £1 billion in recent annual investment provides “good value for money”, and awards green-amber rating.
- Aid watchdog noted IDA’s good performance and strong alignment with UK development priorities, and recognised the effectiveness of the UK’s influencing approach.
- But called for FCDO to advocate for stronger focus on climate action, increased accountability for the ‘leave no one behind’ commitment, and compliance with agreed standards for environmental and social protection.
- ICAI reported stakeholders’ views that a recent funding reduction may not seriously impact the UK’s ability to influence IDA, providing the UK continues to invest in its relationship with the Bank.
UK aid channelled through the World Bank instrument for the poorest and most fragile countries provides good value for money, but the UK could do more to advocate for improvements, according to a new report from the Independent Commission for Aid Impact (ICAI).
The aid watchdog has today published its review of the Foreign, Commonwealth and Development Office’s (FCDO) support to the World Bank’s International Development Association (IDA) – the world’s largest source of favourable finance for low-income countries and fragile states. Up to now, the UK has been IDA’s largest donor for over a decade, with approximately £1 of every £12 of UK aid channelled through it, around £1 billion a year. In 2021, the UK announced it would reduce its next contribution to IDA by about half compared to its previous funding commitment.
ICAI’s review assesses the effectiveness of UK aid channelled through IDA between 2015 and 2021, and how well the UK has used its position as one of IDA’s largest donors to shape its policies and operations. ICAI found that IDA’s strong alignment with UK development priorities over the period – such as poverty reduction and supporting women and girls – its ability to generate significant amounts of funding from other sources, and the scale and reach of its operations and expertise provided “good value for money”.
The aid watchdog recognised the UK’s successful approach to influencing IDA, enhanced by the scale of its funding, strong technical inputs and expert networking across IDA, other donors and borrower countries. ICAI reports that, when asked about the recent reduction to the UK’s IDA contribution, stakeholders thought the UK could remain influential, provided it does not reduce the engagement and technical expertise that it invests in its relationship with IDA. ICAI awarded a green-amber score and made five recommendations.
Chief commissioner, Dr Tamsyn Barton, who led the review, said:
“The World Bank’s International Development Association is an important source of concessional finance for low-income countries, whose ability to move at scale has proved itself in times of crisis. Our review found that the UK’s significant contributions to it provides good value for money.
“But there’s still room for improvement. FCDO needs to make use of its strong influencing skills to drive change, pressing for measures to address climate change, broaden inclusion of disadvantaged people, consult affected citizens and ensure programmes do no harm.
“While there’s a risk that the recent decision to reduce the UK’s financial contribution to IDA lessens the UK’s ability to influence and advocate for change, stakeholders told us this wouldn’t necessarily be the case as long as FCDO continues to use its technical expertise and strong network”.
ICAI emphasised that the UK should push for a stronger focus on climate action if it wants IDA to meet its own climate ambitions. The report advises FCDO to help IDA to develop a comprehensive approach to the inclusion of disadvantaged people, and to hold the Bank to account for meeting its commitment to ‘leave no one behind’. Key to this, ICAI said, is the implementation of IDA’s ‘co-prosperity’ goal, that aims to generate fast economic growth for people living on the lowest incomes.
The aid watchdog praised IDA’s COVID-19 response which it said “broke records” for working at speed and with flexibility at scale, thanks in part to “sheer hard work”. Although the report noted it was too soon to assess the impact of this effort, ICAI said IDA quickly became an essential source of funding for social protection for those who lost their livelihoods and for vaccines in low-income countries.
ICAI reported that FCDO could do more to push for implementation of strict environmental and social safeguards – which aim to ensure aid programmes do no harm but rather benefit communities and the environment. While it is government authorities which are responsible, the Bank has a vital role in supporting implementation. The report also found that the Bank’s consultation with people affected by IDA programmes was not consistently sufficient.
The World Bank’s anti-corruption and fraud controls are generally considered to be strong, however ICAI said it was concerned that pressure to invest increasing amounts of money in countries where national financial systems are often weak, may have an impact on IDA’s ability to ensure that funding is used for its intended purpose.
ICAI made five recommendations for the FCDO:
- to advocate for action-focused targets for IDA’s climate change work
- to set strategic objectives for its own country level engagement with IDA
- to hold IDA accountable for meeting the ‘leaving no one behind’ commitment
- to work constructively with others to improve the implementation of environmental and social safeguards
- to strengthen key country partnerships with IDA to bolster public financial management and anti-corruption programmes.