EBRD Policy dialogue in the SEMED region

Background

The EBRD’s ability to combine non-sovereign investment and policy engagement was an important contributor to shareholders’ decision to offer membership to countries of the SEMED region following the major political upheavals of 2011. The expectation was that a sequenced approach, beginning with technical cooperation and policy dialogue, and expanding relatively quickly into full operational engagement, would enable EBRD to bring its post-Soviet era experience to bear in countries sharing some similar structural and institutional characteristics. These included low competitiveness and economic integration, state ownership or dominance of major sectors, and a legal, policy and institutional infrastructure ill-suited to the more open, market-based democracies that it was hoped might be helped to emerge.

Nevertheless, the evaluation is valuable in another way. In 2015, Bank Management adopted an ambitious enhanced and structured approach to policy dialogue, which was intended as a sharp departure from existing practice in order to address major weaknesses in the Bank’s policy work and delivery identified by EvD and Management’s own analysis. The core proposition of the enhanced approach was that effective policy work must be central to the Bank’s value proposition and that institutional systems needed significant change to accomplish this. The enhanced approach was introduced at almost the same time as EBRD normalised its operational engagement with the new SEMED members, and the SEMED experience therefore represents a case study of how the enhanced approach was implemented in circumstances where there was little in the way of established practice.

This evaluation reviews the content, objectives and, to the extent possible, performance of the Bank’s policy engagement in SEMED between 2011 and 2018. In addition to providing potentially useful findings for future policy work in SEMED, the expectation was also that the evaluation could be valuable if new memberships are considered in the future. 

Main findings and recommendations

The study found significant and successful policy engagements on the ground, both stand-alone and linked to investments. In the latter case, they were an important contributor to expected transition im pact at the design stage.

Resident offices play a leading role, collaboration with other IFIs is generally good, and both public and private clients value the combination of investment and policy work.

There are important gaps in advance planning, monitoring, record-keeping and reporting, which inhibit evidence-based assessment of actual results on the ground.

Work is generally funded ad hoc from technical cooperation funds rather than from the core EBRD budget.

There is little evidence that the broad commitments of the enhanced approach were applied in SEMED countries between 2015 and 2019.

EvD believes that the rationale for the adoption of the enhanced approach remains sound. The absence of a more systematic approach to policy work in SEMED and elsewhere represents a failure to capitalise on a unique institutional asset and build relevance, impact and competitive advantage.