Putting Results First: PforR to Link Disbursements to Development Outcomes. -A World Bank Report.

January 3, 2012 - An increase in child immunization rates and a decrease in student drop-out rates. Safer roads and better governance in schools. Development institutions like the World Bank and others seek goals like these every day. And they are tied together by a common bond: the hope of obtaining better development outcomes and tangible results.

This focus on results is deeply rooted in two existing types of Bank financing:  Loans, grants or credits to support a policy goal and investment lending to finance a specific development project.  These financing instruments bring funding and expertise to developing countries the world over and are the core of the Bank’s work.

Meanwhile, the development landscape is changing rapidly. Bank member countries are expanding their own programs for education, health, jobs, infrastructure, and the effort to lift people out of poverty.  In some cases, these programs still struggle with a gap that prevents the realization of final results. 

A school may be built, but trained teachers are absent. A health clinic may have new equipment, but lacks supplies of needed drugs.  It is important to provide incentives for results to happen.  In many cases, no one solution exists for reaching an end goal. 

Paired with this dynamic landscape is the demand from every stakeholder, including government officials, lawmakers, civil society groups, private investors –and most importantly citizens – to see programs deliver strong results. 

A Program-for-Results consultation meeting in Abuja, Nigeria.

For the first time in 30 years, the World Bank proposes to introduce a new instrument called Program- for-Results or PforR.  This program would be the first of its kind to link the disbursement of funds directly to the delivery of defined, verifiable results.

Demand for this program-based lending comes from countries in all income categories and all regions. Countries are seeking a program-based approach that is integrated, holistic, and focused on performance measurement and results. Some countries also desire a mechanism for better coordinating the support of all external partners, including through possible joint funding.

After two years of preparation and extensive global consultations, PforR will be submitted to the Bank’s Board of Executive Directors for approval on Jan. 24, 2012.

"The objective of this new financing instrument is to link World Bank financing directly to the achievement of development results, outputs, or outcomes," says Joachim von Amsberg, Vice President, World Bank. "Tying disbursements to schools built, to vaccinations given to children, to jobs created – those very specific results of the work of our partner governments."

How Would PforR Be Accessed?

Several factors will determine whether a program is suitable for PforR. The dialogue begins in the context of the country’s assistance strategy and the Bank’s overall assessment of its policies and programs.

Results will be defined by the partner country in consultation with the Bank. They are designed to be program-specific and can include a wide range of outcomes or outputs.  Results can also be key actions that seek to address specific risks or constraints to achieving goals.  Countries may be able to access some advance funds, if needed, to help get a program started.

PforR also aims to strengthen the Bank’s ability to partner with other development institutions. In some cases, only a small portion of a country’s overall budget for a development program may be allocated through PforR. The Bank will be able to help that country build its capacity to manage its program, in collaboration with other partners when needed.

The measuring and verifying of results will be defined around the specifics of each program that utilizes PforR. Depending on the country's circumstances, the program's details, and other factors, this verification network may include government agencies, statistical or audit entities, and third-party groups like nongovernmental organizations and representatives of civil society. 

World Bank principles and standards will be upheld throughout PforR. Up-front assessments will be made on the environmental and social impacts of any program considered under PforR.  Anti-corruption guidelines for the new instrument are mandatory.

We believe that the World Bank, with this new instrument, will be a better partner focused on results, focused on institution building, and focused on better partnerships. We've listened to a wide range of voices and we've built them into the new proposal that we're now keen to take forward.

—Joachim von Amsberg, Vice President, World Bank

There are some important exceptions to the types of projects that can qualify for PforR.  Projects considered as high risk in terms of their impact on the environment or people, i.e. "Category A" -- like large dams, ports or power plants – will not be financed under PforR.  In addition, contracts above specific monetary thresholds will be excluded from the new instrument.

"PforR will help us to leverage the impact of Bank financing by helping to deliver improved performance in larger country development programs," says Paul Bermingham, Director, World Bank.

Consultations and Considerations

Two years of development and global consultations helped refine and develop the PforR proposal.

There were two phases of consultations. During phase one, external consultations – some web based and some face-to-face --  were conducted in more than 33 client countries, six donor countries, and with representatives from  10  shareholder countries from March 1 through June 30, 2011. (Explore a comprehensive archive of the consultation process.)

"Lending for measured results (after the fact) would have huge benefits," wrote Nancy Birdsall of the Center for Global Development in a blog post on Nov. 1, 2011. "Among those are 'ownership' – that borrowing countries would have the responsibility and bear the risks of getting results; and support for better governance as governments would become accountable to their own citizens for results -- instead of accountable to donors."

"As with any new approach, it will be essential to ensure open and timely data and transparent monitoring," added Birdsall.

Phase two included the posting of several key documents about the instrument on the Bank's website. These web-based consultations concluded on Sept. 30, 2011.

"In these consultations we have learned a lot, and we have developed and refined the original proposal for the Program-for-Results financing instrument," says Fadia Saadah, Manager, World Bank.  "We have learned from partners, in particular from partner governments, that they want World Bank support to finance their own programs: Help them strengthen their ability to achieve results and build strong institutions, strengthen the governance arrangement, the oversight over the money,  the systems to prevent corruption,  the systems to avoid any environmental or social damage and raise the transparency and accountability of government programs."

Next Step

The Bank's Board plans to review the PforR proposal on Jan. 24. An updated section of the Bank’s website offers the latest documents and information on the PforR strategy.

"We believe that the World Bank, with this new instrument, will be a better partner focused on results, focused on institution building, and focused on better partnerships," says von Amsberg. "We've listened to a wide range of voices and we’ve built them into the new proposal that we’re now keen to take forward."

A Program-for-Results consultation meeting in Abuja, Nigeria