The EBRD’s Investment Climate Support Activities

Background

This evaluation identifies the principal objectives and components of the Bank’s work on investment climate (IC) improvement, assesses the effectiveness of design and delivery, and presents findings and conclusions that may contribute to programmatic performance in the future. Its intended scope includes efficiency and resource deployment across multiple work streams and observable contributions toward IC improvements, including analysis of the Investment Climate and Governance Initiative (ICGI) and other initiatives, and case studies. Its principal purpose is to draw out findings relevant to existing and emerging operational and strategical priorities and provide evidence-based insights useful for future programme design and delivery and internal learning.

Main findings

There is no clearly articulated institutional strategy for investment climate

Since the 2013 ‘Stuck in Transition’ report, the Bank has made multiple efforts to strengthen its IC support. This includes new institutional architecture to strengthen policy dialogue, various IC initiatives, a dedicated governance team, and a redefined transition concept which emphasises ‘well-governed’ and ‘competitive’ as key transition qualities. Fourteen current country strategies explicitly prioritise improved investment climate/business environment and a level playing field for investors. These steps reflect implicit recognition of the need for a more systematic response to the deep-seated IC challenges in the COOs. Nevertheless, the Bank has not yet drawn up a more comprehensive strategic vision. The ICGI includes many positive elements but lacks a strategic framework, observable targets and a timeframe to assess performance. It is an initiative with strategiclevel aspirations but without an agreed strategy for execution. 

Objectives are clearer at country level, and a workable country-level model is in place

In four specific country cases the Bank’s intended role and operational priorities were grounded in identified challenges and the Bank’s operating context; objectives are clear and inputs relevant to their achievement. MOUs between the EBRD and partner governments on governance and corruption improve the strategic fit of Bank activities and contribute to mutual trust and commitment.

Transaction-specific work is much better supported than multi-year or multi-country efforts

Administrative processes are geared towards transaction-driven engagement and often fail to support longer-term, transformational initiatives. Although the Bank has specific IC expertise within various teams, inputs and activities are widely dispersed across different teams both in Headquarters (HQ) and Residential Offices (ROs). The Bank’s field presence is a clear strength – the application of context-specific local knowledge and skills put the Bank ahead of some of its international counterparts. In some instances, particularly in newer countries of operations, the very fact that the Bank is on the ground is a symbol of transition and a transition impact in itself. However, horizontal mobility is limited and blockages to sharing information, especially between HQ and ROs, can lead to gaps or inconsistencies in relations with external partners.

Activities beyond those that are transactiondriven are often short of funding and human resources, and rely exclusively on donor funds. The lack of a structure/support for multi-year or multi-country work should be addressed.

There are successful individual IC support activities, but higher effectiveness is only just emerging across work streams, particularly for ICGI

Many specialist policy teams – governance, legal transition, economists, integrity and compliance, civil society, policy hubs in banking – deliver good outputs and outcomes for specific elements of investment climate. Many enable new transactions, while others work to change institutions and behaviours (that is, business compliance networks). Project-byproject assessment, even when compiled as in the ICGI biannual review, is insufficient to understand gradual progress in a complex area. Short timelines, diverse donors, intermittent inputs and activities need more coherent and systematic monitoring and reporting.

It is difficult to establish causal links between activities and specific outcomes

IC support activities have often developed ad hoc and opportunistically, without clear and measurable goals or intended results; monitoring and internal evaluation has focused on inputs, activities and outputs. The lack of higher-level goals means that there are no metrics and baselines against which progress can be measured in a meaningful and reliable way. Poor documentation and/or inconsistent delivery of IC support activities are real obstacles to linking activities to outcomes. 

Internal learning from operational experience is limited and inconsistent

Despite recent changes, there is insufficient internal communication and collaboration on IC support. A knowledge management system is only just emerging and remains partial. Although cases of successful internal knowledge management and sharing do exist, they are more personality-driven than institutionally enabled. Platforms on which to share lessons and develop new approaches are limited. A hierarchical, siloed approach and a limited corporate culture of sharing still frustrate drawing full value (and competitive advantage) from accumulated experience.