In 2013, the World Bank introduced a new Framework for Partnership Programs and FIFs to provide direction and guidance for upstream selectivity around partnership programs. The Framework also introduced the concept of life-cycle management and focused on clarifying the World Bank’s role as FIF trustee.
While the Framework remained largely valid, it needed to be updated to take account of changes in the aid architecture since its development, including the continuing growth of FIFs, and to be deepened in some areas to reflect experience. Following internal and external consultations conducted by World Bank Management throughout FY18 and FY19, in July 2019 the World Bank’s Executive Directors expressed their support for a new FIF Management Framework for immediate implementation.
In line with feedback received during the consultations, a key element of the updated FIF Management Framework to strengthen future selectivity is the articulation of a menu of options for response to global calls for collective action, combined with more systematic internal review processes that take alternatives into consideration.
The World Bank will seek to strengthen its engagement around major new initiatives from the idea stage onward. It will support the design of new FIFs, building on experience, offering proven practice and simple approaches to reduce unnecessary and costly customization, and creating conditions for greater efficiencies and development effectiveness. To facilitate the timely choice of the least costly and complex mechanisms for achieving the objectives of such new initiatives, the World Bank will also develop guidance for a more rigorous consideration of alternatives to achieve objectives at the idea stage and during the concept development process. This approach will be guided by the following principles for selectivity:
- FIFs should be created only when no other reasonable alternative could achieve the objectives, to avoid further fragmentation in the global aid architecture, including proliferating financing, governance, and administrative mechanisms.
- Participation should be consistent with the mandate, strategic priorities, and comparative advantages of the World Bank and should not exceed the World Bank’s risk appetites and tolerances.’
- The establishment of a FIF should be driven by client demand rather than by convenience for donors.
- Assurance of large-scale funding—with an initial donor commitment of at least $200 million—and a reasonable case for financial sustainability should be available at the initiation of a FIF.
- For global or regional partnership programs, pooled funding with closely coordinated decision-making and large-scale implementation across a significant number of IEs will be needed for a FIF to be chosen as an appropriate funding instrument.
The updated Framework also seeks to ensure a more systematic approach to life-cycle management. The World Bank will put in place simple, routine risk monitoring for its own roles in FIFs (including strategic, operational, partnership, legal, and financial risks) to trigger conversations at an earlier stage, when risks are easier to address. It will also increase its regular reporting to the World Bank Board on FIFs as a portfolio. To supplement existing guidance on the World Bank’s role as FIF trustee, the World Bank will also clarify the terms under which it operates as host of a FIF secretariat and serves as FIF IE.