BY ALEX FARLEY AND GUEST | MAR 11, 2024 | BLOG

Start with a multistakeholder convening to review, discuss, and then resolve the leading gender equality funding data issues.

By Alex Farley (Publish What You Fund), Fionna Smyth (Development Initiatives), Hellen Malinga Apila (SDGs Kenya Forum) and Mareen Buschmann (CARE International UK)

Many organizations have attempted to track funding for gender equality in recent years and we’ve all reached the same conclusion: The data is a mess.

For well over a decade, there has been mounting political support for advancing women’s and girls’ rights and economic opportunities. Despite this, the current data doesn’t allow us to know whether rhetoric is being matched with effective investments.

In a year when financing for gender equality is high on the agenda, we must find ways to better measure the programs and impact we’re having. If we really want progress on gender equality, we need a new approach.

We propose a focused multistakeholder effort to increase dedicated financing for gender equality, which would put in place the measurements that allow for tracking progress. This would include setting dedicated commitments to increasing funding for women and girls, the organizations that represent them, and investing in gender-equitable structures and systems, such as caring economies.

To track progress we need better systems. Steps to set these up should include a review of all measurement recommendations to date, resolving outstanding challenges, agreeing on where institutions should align versus where they shouldn’t, and agreeing on a path toward full visibility of all gender financing activities and impact.

The issues with tracking gender financing

In 2015, the Addis Ababa Action Plan on Transformative Financing for Gender Equality and Women’s Empowerment outlined the need for states to “systematically track and prioritize allocation of ODA [overseas development assistance] in support of gender equality and take specific actions to close financing gaps in order to meet new and existing targets on gender equality and women’s empowerment.”

“Under current data, progress is often reported by the number of women a project will reach rather than by impact.”

Many organizations, including Publish What You Fund, the Association for Women in Development, the think tank ODI, Development Initiatives, and CARE, have attempted to track funding for gender equality in recent years. We’ve included a hyperlinked list of some of these resources at the bottom of the article.

The common thread to all these efforts is twofold: 1) there is too little transparency for us to comprehensively understand funding for gender equality, and 2) there are real limitations to the accountability tools that exist to help us do so.

The top three issues that consistently come up are:

The lack of a standardized approach to marking gender projects across all funders as well as inconsistent use of gender marking within funders’ portfolios.

Poor reporting of gender marking at the project or investment level.

Limited understanding of the impact of gender equality funding.

What we need now is agreement on clear steps that will move the gender commitments forward from piecemeal efforts to concerted action and outcomes.

Understanding how funding benefits women, girls, and gender minorities, rather than just counting them, will require a new results-orientated approach. Under current data, progress is often reported by the number of women a project will reach rather than by impact, such as the extent to which funding has closed the gender gap.

Shifting to a results-orientated measurement approach for gender equality is a first step. Agreeing on specific goals for closing the gender gap, backed up by objectives, gender-specific indicators, and ex-ante and ex-post data at an investment level would set us on the results path. If donors, including governments, articulate specific gender-related goals — e.g., narrowing the gender gap in educational attainment or use of financial services — then the conversation becomes a lot more concrete.

Second, we need to get alignment on what we track and how. Too often as with one of the approaches used — the OECD’s Development Assistance Committee gender equality policy marker — gender measurement is a projection of what is intended rather than rigorous tracking of accountability and results. Further, for most of these investments, gender equality is only a secondary objective, rather than the primary focus.

All of this underscores what was  reported by the World Bank this week — that the gender gap is even wider than thought. With only seven years remaining until 2030, a mere 15.4% of SDG Goal 5 indicators with data are “on track,” 61.5% are at a moderate distance, and 23.1% are far or very far off track from 2030 targets.

2024 is an important year for gender equality funding. This year’s priority theme of the Commission on the Status of Women is “accelerating the achievement of gender equality and the empowerment of all women and girls by addressing poverty and strengthening institutions and financing with a gender perspective.”

The World Bank’s new Gender Strategy 2024-2030 is due to be launched in the coming months, and the bank’s International Development Association — a critical gender equality funding resource — is also up for replenishment this year.

Calls for more funding for gender equality and women’s rights organizations are loud and backed by evidence. As is the demand for donors to acknowledge and address the gendered harms of approaches that undermine the rights of women and girls, such as budget and fiscal austerity measures that disproportionately undermine women and girls’ access to public services.

This requires inclusive programmatic and impact data that allows us to understand if we are delivering on commitments and achieving meaningful progress on closing gender gaps. Let’s take advantage of the considerable political support for advancing women’s and girl’s rights and economic opportunities and come together in an organized way to resolve these data issues and move forward with catalytic, effective investments.

We propose a multistakeholder convening that will review, discuss, and then resolve the leading gender equality funding data issues.

This group would include funders, gender experts, women’s rights organizations, feminist movements, and data experts, with representatives from all geographies.

Convening these stakeholders should be done in a structured way, supported by an external convenor, that allows for a full review of the issues, resolution of outstanding challenges, agreement on where alignment is and isn’t needed, and then a timetable for implementation.

A successful example of a convening of this type is the G20 Independent Experts Group on Strengthening Multilateral Development Banks, whose report has led to work by the World Bank to overhaul the way it provides guarantees.

For a gender data stakeholder convening, prior to meeting, key participants should be interviewed and input should be used to develop an outline of potential paths forward. The goal is full visibility of gender financing activities and their impact.

Multistakeholder buy-in to this process is an essential element and while gathering groups of this size can be messy, we know from our experience that they give us the best chance to reach a resolution that has wide and sustainable support in real time.

Ultimately, greater transparency is a fundamental prerequisite to whether our funding approaches to gender equality are working and whether our existing accountability and tracking tools are adequate. 2024 is the year to resolve these longstanding issues, to break the impasse, and to ensure that we can finally demonstrate to women, girls, and gender minorities what is being done in their name.  We owe women, girls, and gender minorities this chance.

Some of the efforts to track funding for gender equality to date

💰 Publish What You Fund’s research efforts to map funding to gender equality, women’s economic empowerment, and unpaid care.

🔎 The Organisation for Economic Co-operation and Development’s Development Assistance Committee member’s GenderNet annual analysis of funding for gender equality and women’s empowerment.

🎯 ODI’s recent effort to map gender-targeted funding in climate adaptation finance.

📖 SEEK Development’s study on funding for women’s economic empowerment.

🌤️ Development Initiatives work on funding for a gender-relevant humanitarian response and gender-responsive climate finance.

📍 The Association for Women’s Rights in Development’s influential macro-mapping of the funding ecosystem for women’s rights organizations.

🗺️ The Lowy Institute’s overview of gaps within the OECD data for gender equality funding and their Pacific aid map.

Gender equality funding data is a mess. How do we fix it?

BY ALEX FARLEY AND SALLY PAXTON | FEB 13, 2024 | BLOG

The World Bank is expected to launch its Gender Strategy 2024-2030: Accelerate Gender Equality for a Sustainable, Resilient and Inclusive Future in early 2024. Despite accountability being core to the draft strategy, there is very little focus on transparency. This is symptomatic of gaps generally in the Bank’s disclosure policies and practices which we believe needs to be addressed in the final Strategy. Fostering greater accountability not only requires a multi-pronged approach but also will be impossible to deliver without greater transparency. We pose five questions to help readers understand the current disclosure limitations in the Bank’s programmatic support for gender equality and why addressing this shortfall both in the forthcoming Gender Strategy and the accompanying implementation plan is essential.

Publish What You Fund participated in the World Bank’s consultation on its draft Gender Strategy including providing a written submission of evidence and recommendations in November 2023 which we discussed with the Bank’s gender team.

One of the three main ‘shifts’ the Bank highlights in its draft strategy is the need to foster greater internal accountability for gender outcomes. At a high level, the Bank’s gender team envisages moving from the 2016-2023 strategy focus to ‘introduce gender tag/flag with accountability in project design’[1] to an additional focus on ‘complementing the gender tag/flag with a mechanism to strengthen internal accountability for gender results in project implementation’ and ‘enhancing gender outcome orientation in-country engagements as One World Bank’ in the new draft strategy.

We pose five questions to highlight some of the gaps in what the Bank currently publicly discloses about its efforts to advance gender equality. We hope the final Gender Strategy and accompanying implementation plan will take up these questions and provide details on how the Bank plans to address the current gaps in disclosure.

1. How much does the World Bank spend on gender equality annually?

The Bank only partially answers this. The World Bank reported its gender equality funding commitments for FY 2023, under the combined themes of ‘Human Development and Gender Equality’, in its annual reports as USD$14,146 million and USD$12,066 million for the International Development Association (IDA) and the International Bank for Reconstruction and Development (IBRD) respectively. The Bank does not publicly disclose the gender-specific volume of funding as a stand-alone figure which means we cannot identify gender-specific funding amounts.

We recognise that there are numerous ways in which the Bank works to advance gender equality through technical assistance or policy support that cannot and would not be appropriate to capture in funding amounts. However, this doesn’t negate the challenge of not reporting at a programmatic level what the Bank contributes to gender equality.

2. How can I identify which World Bank-funded projects support gender equality?

You can’t. The World Bank discloses the total percentage of projects that are gender-integrated at a portfolio level through the use of its tag/flag approach. The gender tag (IDA and IBRD) and the flag (International Finance Corporation (IFC) and Multilateral Investment Guarantee Agency (MIGA)) are the World Bank Group’s in-house system for ranking projects, programmes and activities which can contribute to closing gender gaps. The Bank claims that in FY 2023 more than 90% of IDA and IBRD investments were gender tagged,[2] while IFC has quadrupled its share of gender-flagged investments and doubled its gender advisory services for the same period.[3]

The Bank does not publicly disclose the gender tag/flag at the project, programme or activity level. As such there is also no way to filter and search for gender tagged projects within the World Bank’s Project and Operations data, using the gender tag/flag.

The Bank sometimes indicates where the ‘gender theme’[4] has been applied on project pages as an indication of the level of gender intentionality for a given project. However, the application of the ‘gender theme’ is a separate process from the application of the gender tag.  It is not the equivalent of the gender tag/flag and may be used in conjunction with other themes. While useful for identifying cross-cutting thematic priorities, theme codes are not indicative of funding volume.

3. Where can I find the location of World Bank gender equality projects and investments?

You can’t. Given that the World Bank does not disclose which projects have been assigned the gender tag/flag at the project, programme or activity level, we cannot comprehensively map where gender equality projects are located.

4. Can I see a sector breakdown for World Bank gender equality projects and investments?

No. Similarly to location, without comprehensive disclosure of the gender tagging at a project level we cannot confidently identify how the Bank supports gender equality across sectors.

5. What is the impact of World Bank projects on closing gender gaps?

It’s difficult to find consistent publication of results information, including gender-specific objectives (ex-ante data), or how it performs against these objectives (ex-post) at a project level. The World Bank performs comparatively well in its disclosure of results information in our DFI Transparency Index and Aid Transparency Index. Despite this, when it comes to gender projects, it is less clear from the information available how projects are benefitting women, so much as counting them. This makes accountability and learning a much larger challenge.[5]

It’s time to address gaps in the transparency of the Bank’s gender support.

We welcome the World Bank’s focus on accountability in the draft gender strategy but urge the Bank to recognise the central role of transparency in delivering this objective. The Bank’s efforts to move towards a results-orientated approach which pays greater attention to implementation and results is welcome.

Fundamental to achieving this shift to accountability is ensuring that the Bank gets the basics right – including disclosing basic project information, such as which projects, activities or programmes qualify as gender tagged/flagged and why. These investments should be identifiable in the Bank’s projects and operations data. Such investment level disclosure would provide greater insight into how the Bank supports gender equality with information on location, sector, instrument or funding type, objectives, and importantly ex-ante and ex-post data.

Our recent submission to the World Bank’s consultation process for the Gender Strategy outlines detailed recommendations on how the Bank should improve its disclosure practices in its final Gender Strategy and the implementation plan that will follow. Without these changes, the World Bank is falling behind other funders in its disclosure of gender funding.

[1] The World Bank’s Gender Tag or Flag is the Bank’s internal system for ranking all projects according to whether they address gender equality. The World Bank has not published a guidance note or methodology for how it applies the Gender Tag or Flag approach.

[2] World Bank gender Strategy 2024-2030,: Consultation Draft, 2023, https://www.worldbank.org/en/topic/gender/brief/gender-strategy-update-2024-30-accelerating-equality-and-empowerment-for-all

[3] World Bank gender Strategy 2024-2030,: Consultation Draft, 2023, https://www.worldbank.org/en/topic/gender/brief/gender-strategy-update-2024-30-accelerating-equality-and-empowerment-for-all

[4] World Bank’s gender theme definition can be viewed in it’s Theme Taxonomy and Definitions document, 2016, NewThemeTaxonomyanddefinitionsrevisedJuly012016.pdf (worldbank.org)

[5] The World Bank hosts the Umbrella Facility for Gender Equality (UFGE) which is a multi-donor umbrella facility established to generate knowledge and evidence on transformative solutions for advancing gender equality. The UFEG encapsulates the Bank’s efforts to generate evidence on what works to advance gender equality to influence policy and programme design. The Bank has also produced thematic briefs and retrospective reports of their evidence reviews which can be viewed on their website.

What’s missing from the World Bank’s Draft Gender Strategy? Transparency

2023 has been a challenging year for the aid and development community. However, amid the bad news, there have been glimmers of hope and stories that inspire.

At Publish What You Fund we’ve remained focused on encouraging aid and development agencies to be more transparent about their planning, spending and results. At a time when resources are limited and needs are growing, we believe transparency is still critical for understanding what aid and development finance is having the greatest impact, for knowing if we are on track to meet commitments such as climate finance goals, and for assessing what is needed to achieve change – such as greater locally led development.

We were pleased to see new transparency commitments from the UK government in its recent white paper on international development. After a turbulent few years for UK aid, the government set out its aim for British International Investment – the UK’s development finance institution (DFI) – to become the most transparent bilateral DFI, as measured by our DFI Transparency Index. Prior to this, Paul James, who manages our DFI research, gave evidence on BII’s transparency to the UK’s International Development Committee hearing on the UK’s strategy towards DFIs. During the launch of their annual review, BII CEO Nick O’Donohoe spoke about how the DFI Transparency Index provided an incentive to improve their transparency. The US International Development Finance Corporation (DFC), the top bilateral in the 2023 DFI Transparency Index, also publicly reaffirmed that the DFI Transparency Tool is its guide for the information it continues to disclose.

It was back in January this year when we launched the very first DFI Transparency Index, which revealed that overall, DFIs are not transparent enough, and are not providing evidence of impact, data regarding mobilisation, or proof of accountability to communities. As well as measuring and comparing transparency levels, one of the key aims of the Index is to encourage and guide improvements. So, it’s very encouraging to see BII, DFC and others both use the Index as a benchmark and a stimulus for better transparency. Since publishing the Index, we’ve liaised with the DFC on its transparency policy, engaged with 15 DFIs on specific steps to enhance their transparency, and also produced an in-depth Disclosure Example Book – to help DFIs see what is possible in terms of transparency and overcome perceived barriers. Two DFIs that were assessed in the Index: CAF – Development Bank of Latin America and the Caribbean and the Islamic Development Bank, have since become members of the International Aid Transparency Initiative (IATI).

In September, we also published new research examining 2X investments to assess what DFIs are disclosing. We found a lack of standardised disaggregated information, which makes it almost impossible to get the granular insights that are needed to measure the value, impact, and progress of gender lens investing. Working with 2X Global, we are advocating for the adoption of our recommendations through its new certification scheme. In November, we responded to the World bank’s consultation on its draft gender strategy, urging it to address gaps in disclosure of project and financial information related to its gender investments.

This builds on our work to develop a new, holistic approach to tracking funding for women’s economic empowerment (WEE), which wrapped up in January. Over the previous two years we worked collaboratively with 55 global partners, advisors, researchers and advocates to pilot the approach in Kenya, Nigeria and Bangladesh, and to track national funding in an additional three countries. We published tools so that the approach could be replicated by researchers, policy makers and advocates, and presented our evidence and its implications in a range of reports – which have been downloaded over 15,000 times. In January, we called on funders to match their political support for WEE with increased transparency to ensure investments are effective and catalytic in advancing gender equality.

Setting a baseline for locally led development

In March, with the support of the Modernizing Foreign Assistance Network and its members, we published detailed research to establish an independent, credible, and replicable baseline to measure and track funding for local actors, using US Agency for International Development (USAID) IATI data. Following USAID’s commitment to funnel 25% of its funding to local organisations by 2025, we assessed funding for ten countries over three years and found that only 5.7% of USAID’s funding went to local organisations. This figure nearly doubles (to 11.1%) under USAID’s measurement approach, in part because of a broader definition of local and a smaller definition of what constitutes total funding. If the funding differences are scaled-up to all countries where USAID operates, USAID’s approach would underfund local partners by an estimated $1.43bn per year. Our research helped to put a spotlight on the importance of selecting the right metrics to measure local funding. It was cited by Bill Steiger, former chief of Staff at USAID, in his written testimony before the Senate Foreign Relations Committee on localization, while arguing for a more precise definition of ‘local’. Additionally, Oxfam America used our methodology to replicate the research in a further eight countries.

In August we announced which 50 organisations would be assessed for the 2024 Aid Transparency Index. This followed a consultation on the methodology in the spring. Data collection got underway in November, and our engagement with the assessed organisations has already resulted in several agencies re-starting to publish IATI data after significant pauses. The UK’s Foreign, Commonwealth and Development Office recently committed to achieving ‘very good’ in the Aid Transparency Index. It’s rewarding to see that the Index continues to incentivise improved transparency. We’ll see how this is reflected in the results next summer.

Bringing clarity to private sector mobilisation

A topic that seemed to be on the agenda at every conference this year was the need to scale up multilateral development bank (MDB) finance in pursuit of development and climate goals, and in particular the role of private finance in achieving this. But if MDBs are to attract and encourage greater private investment for emerging and developing economies, we first need a better understanding of what funds are currently being mobilised and what is working most effectively. So in April we initiated work to increase understanding around what works to mobilise private investment through improving how mobilisation is measured and disclosed by leading MDBs and DFIs. We’ve discussed the opportunities and barriers with MDBs, their shareholders, the private sector and CSOs, and will publish our proposals in spring next year.

As part of our strategy to make all aid and development finance spending transparent with data that is timely and usable, in September we turned our attention to the transparency of private aid contractors. Despite handling billions of dollars of aid money, the largest players are almost completely un-transparent. The lack of transparency limits our ability to hold private contractors to account, and to understand and analyse international aid flows. We’re advocating for private aid contractors to meet international standards for aid transparency.

We want to thank everyone who has contributed to and supported our work over this year. Together we’re making a difference to the quality and quantity of aid and development data that’s being used. We’ve set out why this continues to matter so much.

This year’s World Bank Annual Meetings in Marrakech largely focused on how the Bank could be bigger, better, and faster in the face of the polycrisis and global challenges that we face.

One important development during the event was the publication of the second volume of the G20 Independent Expert Group (IEG) report “The Triple Agenda”. Taken together with the first volume, the report offers a blueprint for how multilateral development banks (MDBs) can be scaled effectively to increase lending to emerging and developing economies (EMDEs). Central to the reports’ recommendations are the need for MDBs to more effectively catalyse and mobilise private finance in pursuit of development goals.

Why does mobilisation matter? Here, we first take a look at what the IEG said about private sector mobilisation, before outlining three changes that are needed if we are to better understand the mobilisation of private capital and ultimately drive changes that will result in its growth. In short, we need a workable definition and estimate of catalysed private capital, reforms to how mobilisation is conceived and measured, and increased transparency of mobilisation data.

The second volume of the IEG report recommends that:

MDBs should work systematically with the private sector to increase private financing by an additional $500 billion by 2030 including by increasing total private capital mobilization from $60 billion to $240 billion, and making concerted efforts to catalyze a significant volume of additional private finance. This target will be higher or lower for different institutions depending on their context, with higher mobilization rates for private lending arms of MDBs and catalytic agencies like the Climate Investment Funds, and lower rates for agencies that focus more on LICs.

This ambitious target should be welcomed. The additional policy recommendations, including increasing the use of guarantees and making the Global Emerging Markets (GEMS) risk database more transparent, are useful to identify how current mobilisation levels may be increased. It is also helpful to see a target for catalysed capital; to date there has been insufficient attention paid to the ways in which MDBs can help to create the conditions for increase private sector investment in EMDEs. An implied target of US $260 billion (the remainder of the overall target of US $500 billion) suggests that catalysed capital may be greater in volume than mobilised capital.

We cannot escape the uncomfortable fact that the volume of private capital mobilised by MDBs has largely stagnated over recent years. Having reached a high point of US $69.4 billion of private capital mobilised in 2018, volumes have since hovered in the US $63 billion to US $64 billion range since then. To some extent, although not entirely, these numbers may be explained by the economic effects of the COVID 19 pandemic. MDBs have, to date, pursued “originate to hold” business models and been insufficiently incentivised to mobilise significant volumes of private capital, while MDB shareholders have failed to ensure that mobilisation is a priority. A fourfold increase in the mobilisation of private capital will not therefore occur unless MDBs adopt new business models such as “originate to share”, are incentivised to mobilise through the incorporation of targets in key performance indicators (KPIs), and are held to account by their owners.

The need to define and measure catalysed capital

The IEG report recognises the role that catalysed capital can play in ensuring private investment helps to address international objectives, including the sustainable development goals (SDGs). But what is catalysed capital and how can it be measured? Unfortunately, there currently is no adequate answer to this question. The first volume of the IEG report describes the catalysing of capital as:

measures that unblock private investment at the macroeconomic or sectoral level (such as through policy and regulatory changes or institution-building), through complementary public investment or through project development support (such as technical assistance, feasibility studies or early-stage risk capital).

The relationship between MDB activity and private investment can be conceptualised as being on a “spectrum of attribution” in which the causal linkages between the former and the latter vary in strength. Private capital mobilisation would fit in the medium (indirect mobilisation) to strong (direct mobilisation) portions of the spectrum, while catalysed capital would occupy the low portion of the spectrum. The low attribution strength for catalysed capital has perhaps dissuaded MDBs from systemically measuring and disclosing data related to catalysed capital. The MDBs that contributed to the inaugural 2016 MDB Joint Report on mobilisation committed to “continue to explore ways to measure and report on this broader private investment catalyzation”. However, little progress appears to have been made on this commitment to date.

Recognising the current realities of attribution it would be advantageous to agree not only on a definition but a set of guidelines for catalysed private capital – recognising that any measurement is going to be more art than science. A clear and explicit recognition that catalysed private capital data tends towards estimation would possibly make MDBs more comfortable with disclosing these figures.

The need for a better measure of mobilisation

In addition to the need to define and measure catalysed private capital, there is a pressing need to update the current methodologies for measuring private capital mobilisation. Over the last decade, two methods of measuring mobilisation of private capital have emerged; an OECD approach and an MDB approach. While both approaches have made valuable contributions for understanding mobilisation, there is growing recognition that neither approach satisfactorily defines or measures mobilised private capital in a manner that captures all of the ways in which MDBs can leverage private capital.

The OECD and MDB methodologies focus on mobilisation that takes place through co-financing of individual investments. In the case of direct mobilisation, this involves a formal arrangement between an MDB and a private investor, while in indirect mobilisation MDBs are understood to have encouraged private investment by their presence in a deal, in absence of a formal agreement. However, neither methodology considers the possibility that mobilisation may occur either at different points during an investment cycle or at scales larger than single assets. Recent publications from British International Investment and Neil Gregory have emphasised the fact that mobilisation may also occur during or at exit from an investment, and may also be achieved through balance sheet and multiple asset mobilisation.

Why is it important to better capture all methods of mobilising private capital? If we wish to increase the scale of private capital mobilisation – on which there seems to be broad agreement – then it is imperative that we are able to identify the mechanisms that most efficiently contribute to this goal. Since the current methodologies do not measure mobilisation throughout the life of an investment, and focus solely on single investments, we have little evidence regarding the effectiveness of these mechanisms relative to others. Improving the measurement methodology will thus allow analysts and policy makers to guide MDB business models in a way that could maximise future mobilisation volumes.

It is of course possible that expanding the definition of mobilisation will result in larger volumes of mobilised capital being counted with no discernible change in the operations of MDBs. With this inflationary tendency in mind, it may be necessary to revise the targets set out in the IEG report upwards in light of new evidence.

The need for better disclosure of mobilisation data

Finally, improved measurement of private capital mobilisation will only be of value if we see simultaneous improvements in the disclosure of related data. Current disclosure by both the OECD and MDB Joint Reports lack the requisite level of detail to allow meaningful analysis of what works and what doesn’t. The MDB Joint Reports are typically limited to portfolio-level reporting, with sectoral disaggregation limited to the infrastructure sector. OECD reporting is marginally more disaggregated although limitations still exist.

At a minimum, mobilisation data disaggregated by sector, instrument, and geography is necessary to improve transparency. Ideally, mobilisation data would be fully disaggregated, particularly to allow private sector investors insights into the composition of existing deals and to provide a degree of market confidence to increase private participation in MDB investments. We understand MDBs and their clients hold concerns around data ownership and commercial confidentiality which may necessitate a degree of anonymisation in the publication of fully disaggregated data.

At Publish What You Fund we are currently trying to address each of these three issues through our mobilisation transparency project. We are currently in discussion with a range of stakeholders, including MDBs and DFIs, their shareholders, the private sector, and industry experts, to understand the opportunities and barriers to improving the measurement of catalysed and mobilised private capital, and to increasing the transparency of resulting data.

Early discussions and roundtable events that we have held have indicated a broad-based recognition that, while the existing methodologies have served a purpose, they are in need of reform to capture the evolving business models of MDBs. There has also been acknowledgement that opportunities exist to improve the disclosure of private capital mobilisation data.

As we move forward, we will be developing a set of proposals aimed at improving measurement and disclosure of mobilisation data. We aim to launch these proposals in time for the World Bank Spring meetings, so watch this space.

The three changes we need to improve understanding of private capital mobilisation

The Paris Summit for a New Global Financing Pact held in June sought to address the key issues currently facing development finance. The mobilisation of private finance for development outcomes formed a central part of the discussions during the two day event. While this focus is not new, it has been somewhat reconfigured with emphasis placed on the need to mobilise “at scale”. However, without improved measurement and increased transparency, it will be impossible to tell whether or not these new commitments deliver on their promises.

It is also critical that any new commitments – and the metrics used to measure them – do not incentivise investments with greater mobilisation potential at the cost of those which have the greatest impact. More granular transparency would help to minimise this risk and keep the focus on development and climate impact.

“A key question in the mobilisation debate is how stakeholders will be able to monitor progress and hold MDBs and DFIs to account. There is currently far too little transparency around mobilisation rates.”

One of the central outcomes of the summit has been a (re)commitment to mobilise private finance to meet global financing gaps. The summit’s official communique calls on greater efficiency in mobilisation where “Each dollar of lending by MDBs should be complemented by at least one dollar of private finance. Based on this, we expect from them to leverage at least 100 billion dollars of private money each year in developing and emerging economies”. Similarly, a group of thirty countries called on multilateral development banks (MDBs) “to develop relevant and harmonized metrics for private capital mobilization and set quantified targets that reflect their ambition, while also establishing incentives for staff to mobilise international and local private capital”.

If this commitment doesn’t sound particularly new, it is because it isn’t. MDBs ambitiously targeted high levels of mobilisation in a 2015 declaration that financing for development needed to be transformed from “Billions to Trillions” and that the mobilisation of private finance was a key element of achieving this. The leverage ratios implied in this old objective appeared unrealistic to many, and indeed proved to be so. Analysis of mobilisation from the Overseas Development Institute found that leverage ratios from MDB and development finance institution (DFI) investment ranged from $1.06 for every $1 invested in lower middle income countries, to $0.37 for every $1 invested in low income countries. Meanwhile, Charles Kenny declared the Billions to Trillions narrative to be “still dead” in an analysis of the limited mobilisation achieved by the International Development Association (IDA) Private Sector Window (PSW). In comparison to the previous goals, the new target of leveraging $1 for each $1 invested by MDBs appears more realistic, although it still implies an increase from current rates.

One of the key changes in the narrative surrounding the mobilisation of private finance that emerged from the summit was an emphasis being placed on the need to mobilise “at scale”. To date, much of the focus on mobilisation has been through the lens of transaction-level mobilisation, in effect co-investment of MDB resources with private capital. This is reflected in the current methodologies for measuring and reporting mobilisation; both the OECD approach and the MDB joint approach only capture mobilisation that occurs in individual investments. However, the summit notably focussed on a broader array of tools that may mobilise private finance. The thirty-country vision statement called for “expanding the use of innovative risk-sharing tools and platforms with a strong leverage effect”, reflecting a recognition that to mobilise at scale would require solutions and products that are more attractive to investors that are seeking larger participation such as institutional investors and pension funds. These proposals have strong synergies with recent work from British International Investment and from Neil Gregory that have argued for a reconceptualisation of mobilisation to include mechanisms that occur at levels or stages in the investment cycle that are not currently captured by the existing measurement methodologies.

A note of caution is required when treating mobilisation in this way. MDBs and DFIs have long deployed many of the tools and leveraging mechanisms that are now being hailed as pathways to increasing mobilisation. Given that leverage ratios are currently significantly below those required to close finance gaps for achieving the SDGs and in climate finance, it is necessary for these mechanisms to be deployed at greater volume. Otherwise, there remains a risk that we begin accounting for existing mobilisation that to date has been unaccounted for, while failing to change the absolute amounts of private capital that are mobilised.

The need for new data and more transparency

A key question in the mobilisation debate is how stakeholders will be able to monitor progress and hold MDBs and DFIs to account. There is currently far too little transparency around mobilisation rates. Publish What You Fund’s inaugural DFI Transparency Index found that none of the institutions included in the assessment systematically disclosed disaggregated mobilisation data. While MDBs and DFIs have reported aggregate mobilisation data through a joint report, and the OECD maintains a database and periodic reporting on mobilisation, none of these sources contain detailed, disaggregated data. Without such data it is impossible to see which tools and investments are effectively mobilising private capital, which are less effective, and where future efforts should be focused. One of the key outcomes of the summit was a call for “Multilateral Development Banks to examine and possibly adopt relevant and harmonised metrics for private capital mobilization and to set quantified targets at the institutional level within their Key Performance Indicator (KPI)”. While this call is to be welcomed, if the metrics are to be of real use they must also be transparently disclosed.

Publish What You Fund is currently working on the issue of mobilisation transparency. The work has two aims:

To improve measurement of mobilisation to better capture the totality of mobilisation efforts at MDBs and DFIs.

To introduce a new framework for reporting mobilisation for adoption by the leading MDBs and DFIs.

We are currently holding many discussions with MDBs and their stakeholders as we work towards these goals. Our discussions have indicated that there is a recognition of the need for both better and more data that can help MDBs and DFIs and their stakeholders better understand what works, and what doesn’t, in the drive to mobilise private finance for better development outcomes.

Reflections on the Summit for a New Global Financing Pact: more mobilisation promised, but will we ever know if it has been delivered?

Over the course of our work to help development finance institutions (DFIs) improve their transparency practices, we have heard arguments that certain forms of disclosure are not possible. We’ve also frequently been asked to share instances of disclosure by other DFIs. To help address perceived barriers and to guide improved disclosure, our team has compiled the Disclosure Example Book. It is intended to show what is possible in terms of DFI disclosure and we hope it will be a useful resource for anyone working to strengthen DFI transparency.

In January 2023, Publish What You Fund launched the first edition of the DFI Transparency Index. The Index measures the transparency of 30 bilateral and multilateral, sovereign and non-sovereign DFIs. The Index finds that overall, DFIs are not transparent enough. DFIs are not providing evidence of impact, data regarding mobilisation, or proof of accountability to communities. But progress is being made – use of and adherence to the standards laid out in the DFI Transparency Tool are guiding the efforts of leading DFIs who have improved their disclosure over the last two years.

Following publication of the DFI Transparency Index, the team has continued our engagement with the institutions that were assessed. The meetings have been building on our past collaboration as we try to support DFIs in improving their disclosure. We identified areas of potential improvement, and specific recommendations as set out in our individual DFI profile pages. During these meetings a number of DFIs requested examples of disclosure for a variety of data points. Given the numerous and varied requests, the team decided to put together a Disclosure Example Book that demonstrates instances of disclosure for the survey questions and indicators in the DFI Transparency Index.

The team has drawn examples from across the DFIs we assessed for the Index. The Disclosure Example Book includes disclosure by both bilateral and multilateral DFIs.

The Disclosure Example Book is intended to show what is possible in terms of disclosure. By demonstrating disclosure by peer DFIs, the examples indicate that perceived constraints to disclosure can often be overcome. In some cases, our team has been told that disclosure of a particular type of data is not possible, or that no DFI would be willing to disclose such information. However, through the course of our DFI Transparency Index assessments we often identified instances of disclosure which suggest this is not the case. For example, we have commonly been told that non-sovereign DFIs cannot disclose disbursement amounts due to confidentiality restrictions, yet found that the Danish DFI IFU disclose this data. There remain only a small minority of survey questions where our team were not able to identify examples of disclosure.

It is important to note that the examples contained within the example book are not being promoted as models of best practice. As set out in our methodology, some forms of data should be disclosed either to the International Aid Transparency Initiative (IATI) Standard or in a format that allows bulk download of data (such as a csv. file). For presentation purposes, the majority of examples contained within the book are taken from the web pages or project and organisational documents of DFIs. We have included a screenshot and a link to relevant information. More generally, given the broad range of disclosure practices, we encourage DFIs to identify the most appropriate way to disclose information, while adhering to guidance from the DFI Transparency Tool and the IATI Standard.

We hope that the example book will be a resource to both DFIs and to other stakeholders with an interest in improving DFI transparency. The document demonstrates that there are existing instances of disclosure for the large majority of data points that are assessed in the DFI Transparency Index. We intend to treat the example book as a living document and will update it with new examples when we identify disclosure of new or additional data points.

For more information, or to suggest additional examples of disclosure in line with our DFI Transparency Index, please contact Paul James at paul.james@publishwhatyoufund.org

DFI disclosure: New resource shows what is possible

The 2X Criteria have quickly become the global standard for gender lens investing.

The 2X Challenge mobilised US$11.4 billion for women and girls between 2018-2020. As the people behind the initiative look to develop a “2X Certification” mechanism our gender and development finance institution teams have looked back through the data to see how successful the 2X approach has been so far in channelling funds to women and girls. And the truth is, we can’t tell you. There’s a big transparency problem. Below we share some insights and recommendations which will form the basis of our contribution to the consultations on the Certification process to be held in mid-December.

The 2X Challenge was launched at the G7 Summit in 2018 as a bold commitment to inspire Development Finance Institutions (DFIs) and the broader private sector to invest in the world’s women. The 2X Challenge has certainly galvanised support for gender lens investing across both DFIs and institutional investors. Initially the G7 DFIs set themselves a target to invest US$3 billion with a gender lens. This target was surpassed in 2020 with DFIs committing US$6.9 billion while private capital and “other” capital provided another US$4.5 billion. The majority of leading bilateral DFIs are members of the initiative including the US Development Finance Corporation (DFC) and the UK’s British International Investment (BII). In 2019 the European Investment Bank (EIB) adopted the 2X criteria; in 2021 the European Bank for Reconstruction and Development (EBRD) and International Finance Corporation (IFC) joined the initiative. The 2X Criteria have quickly become the global standard for gender lens investing. A broad range of investors and investee companies are now adopting the 2X criteria. A new US$15 billion target was announced at the 2021 G7 summit.

To qualify as 2X eligible, investments must fulfil at least one of the 2X criteria. Here we provide an overview of the areas covered by the criteria:

Entrepreneurship – 51% women ownership or the business is founded by a woman

Leadership – 30% women in senior leadership or 30% women on the Board or Investment Committee

Employment – 30-50% share of women in the workforce (depending on sector) and one “quality” indicator beyond compliance

Consumption – Product(s) or service(s) that specifically or disproportionally benefit women

Investments through financial intermediaries – 30% of the DFI loan proceeds or portfolio companies meet the 2X criteria

The question of whether these criteria are sufficient or could be more ambitious is a larger topic that should involve a range of stakeholders. However, as we scoured what data is out there we were surprised by some of the qualifying investments. For example, in the case of two investments in hydrocarbons companies, one of which is based in a tax haven and the other in the global north, it is unclear how they fulfil any of the above criteria. Again, we are not focusing on the criteria here, but rather what we can and can’t see about the investments that make up the US$11.4 billion mobilised to date.

Transparency problems and recommendations

The majority of 2X investors don’t currently identify their qualifying 2X investments. As such it’s impossible to break down the US$11.4 billion number.

For those which do, not all identify the criteria by which the investments qualify. As such it’s not clear whether 2X is driving funding to firms owned, managed, or staffed by women, or whether it’s driving funding to firms which serve female customers.

Despite being aligned with multiple impact investing metrics[i] it’s not possible to see how 2X investments are utilising these. For example, we could not find any investments which showed which of these metrics were being used as indicators, and what the targets for these might be.

In instances where we have been able to identify 2X investments, the large majority of them have been made in financial intermediaries (FIs). Our previous research has demonstrated that DFI FI investments are significantly less transparent than direct investments, often functioning as a “black box” and making it impossible to see the impact of 2X FI investments. The general lack of transparency across 2X investments and the systemic lack of transparency in FI investments therefore combine to exacerbate each issue further.

When you can’t see the investments, or how they qualify, it raises a lot of questions. For example, what is the impact of these investments for advancing gender equality? Is this new funding or is a proportion of the US$11.4 billion due to investments which were already in the pipeline and which just so happen to meet the 2X criteria? What is the detail behind the mobilisation numbers – is this funding from other DFIs, investee collateral, or the private sector? As such we recommend the following steps be incorporated into the certification process:

2X certified investments must be published on investor websites and a central repository should be housed by the 2X Collaborative[ii]

2X certified investments should provide data aligned to the requirements of the DFI Transparency Tool which is quickly being adopted by leading DFIs to ensure transparency and accountability

Impact – and learning from 2X investments – should be at the heart of the work going forward. Publishing results and evaluations is critical to identifying what investments are catalytic and – just as importantly – what didn’t work and why.

We strongly agree that investing in women and girls is vital and urgent. “Invest in women, invest in the world” is the strapline of the 2X Collaborative, the new global industry body that will oversee the development of the 2X Certification. However we implore stakeholders to consider our findings and incorporate them into the certification process. If funds are going to be raised in the name of women those funds must be transparent and the process rigorous.

[i] The 2X criteria and metrics are aligned with the GIIN’s IRIS+ indicators, HIPSO, UN Women WEPs, OECD DAC Gender Marker.

[ii] Open data standards, such as that used by major DFIs – the International Aid Transparency Initiative open data standard, should be reviewed and potentially adopted to ensure harmonisation and comparability of reporting

The biggest challenge for the 2X Challenge? The urgent need for transparency

BY SALLY PAXTON AND GEORGE INGRAM | MAR 6, 2023 | BLOG

By George Ingram, Senior Fellow – Global Economy and Development, Center for Sustainable Development at the Brookings Institution and Sally Paxton, U.S. Representative, Publish What You Fund.

This blog first appeared as part of the Brookings Institution Future Development series.

On January 25, 2023, Brookings and Publish What You Fund launched the first global DFI Transparency Index. Publish What You Fund’s work was the product of over three years of research, collaboration among a range of stakeholders—including multilateral and bilateral Development Finance Institutions (DFIs)—and painstaking efforts to define transparency in a granular way that is consistent with the complex nature of DFIs. This included understanding their business models and the often-competing nature of their missions and stakeholders’ interests.

The end product of this exercise, the DFI Transparency Index, was an assessment of the state of transparency among 30 leading DFI portfolios, with rankings based on 47 indicators.

While no DFI can be considered to have an acceptable grade, sovereign DFIs (working with government guarantees mostly in the public sector) scored higher than non-sovereign DFIs (primarily financing private sector investments). The top scoring sovereign DFI was the Asian Development Bank (AsDB) at 75.9, followed by the African Development Bank (AfDB) at 73, and the African Development Bank (IDB) at 69.9.

Among non-sovereign DFIs, the IFC was the top scorer (54.4), followed by the AfDB (51.4) and the AsDB (46.4). The U.S. International Development Finance Corporation (DFC) was the top scoring bilateral DFI at 38.2.

What is especially encouraging is that transparency improved during the course of developing the Index because of the team’s ongoing engagement with the DFIs. For instance, DFC assessed its disclosure process to have increased the amount of information available by 70 percent. A number of DFIs, such as EBRD and Finnfund, have created bulk download files for their project databases, allowing data users to export and manipulate the data, which was not possible previously.

The DFI Index is the first ever comprehensive effort to assess the transparency of development finance. The detailed assessment and recommendations for each DFI’s transparency is found on the website version of the tables (by clicking on the bar for a DFI).  A shortcoming of the Index is it is a measurement of transparency with time-bound limitations. It is possible that disclosure has changed in the time since the assessment. Also, by setting a limit of fifteen minutes for researchers to finding a specific piece of data, that does not mean the data may not be available somewhere, just that it is too hard to find.

The launch of the DFI Transparency Index included a strong call for transparency by keynote speaker Deputy Assistant Secretary of the U.S. Treasury Margaret Kuhlow, followed by a panel representing DFIs, DFI shareholders, civil society, and an expert in mobilization.

The bottom line? Transparency levels are unacceptably low, especially on critical issues such as development impact, mobilization of private resources, and assurances of disclosure of environmental and social risks to affected communities. The silver lining? Many DFIs now recognize the need for greater transparency—especially if they want to make a case for more resources—and have begun to make improvements in the collection and public availability of data.

The magnitude and complexity of the intersection of global challenges—climate change, pandemic disruptions, and its unequal impacts on the most vulnerable, historic levels of displaced persons and food insecurity, and the Ukraine war—are unprecedented. Policymakers must deal with not only how to address this unprecedented confluence of issues but how to pay for them. In the middle of this global discussion is the role of DFIs as critical players in the solutions to these global challenges.

What is the role of transparency? It is essential for accountability, provides important information for market decisions on what and how to finance, and informs the case for additional financial support for DFIs.

How do we know, therefore, whether the resources being spent are working? How can we measure success if there is no information on results? How do we know if DFIs are crowding in essential private capital and not crowding out the private sector?

At the outset, as the DFI Index demonstrates, critical information has simply not been disclosed. How do we know, therefore, whether the resources being spent are working? How can we measure success if there is no information on results? How do we know if DFIs are crowding in essential private capital and not crowding out the private sector? As Sam Attridge, senior research fellow at the Overseas Development Institute (ODI), put it—we don’t know how, who, and where money is being mobilized and we don’t even know what a good leverage ratio is.

The demand for transparency is not just an exercise to have more transparency. The end game, as so clearly stated by Nadia Daar at Oxfam International, is transparency for the sake of better development outcomes, for maximizing positive impact for people and communities, and for minimizing risk to these same populations.

There were no illusions that tackling the transparency issues with DFIs was going to be easy.  Publish What You Fund’s approach to making change was deliberate—it needed to be a multi-stakeholder effort, taking the time to research and understand different perspectives, to listen, and then to work collaboratively to finding a consensus on the way forward. From this we have seen change start to happen.

The panel discussion underscored the value of this approach:

The collaborative process, with everyone in the same room, was truly “unique,” working together in a respectful way about what was possible. That is how change happens.

Those that received some of the highest rankings approached the DFI Index from a whole-of-organization approach. The AfDB, the second ranking multilateral DFI, made “transparency the business of the whole bank.” DFC, the highest ranking bilateral DFI, put together a cross-departmental working group and increased the amount of information available by 70 percent.

Appreciate the value of external pressure by both civil society and shareholders and find internal champions who will work with you.

Making change of this scope requires a change in culture.

Indexes, when well-constructed, are valuable global public goods and invite healthy competition.

Just in the course of the project, data on almost 2,000 new investments were published by IDB Invest, the AfDB, and the AsDB, representing information on more than $50 billion.

The blanket use of commercial confidentiality as a reason not to disclose has begun to be lifted. Much of this information is already available behind third party paywalls, so it exists—but not enough is publicly available.

DFC has developed a new capital mobilization measurement system which will enable it to change the culture from getting money out of the door to driving capital where most needed. It has also refined its development impact system and will be making specific results and information available immediately.

AfDB plans to utilize the lessons and practices on disclosure of results from the sovereign side to the non-sovereign side.

U.S. shareholders will press for the IFC’s (already the most transparent DFI) and World Bank’s results data to be made available to the public.

This first DFI Transparency Index has set the baseline to measure further progress. Especially as DFIs, policymakers, shareholders, and other stakeholders grapple with how best to use the DFIs to confront the global issues of today, we now have a tool to measure the transparency building blocks that are essential for effective use of capital to meet our global needs.

Development finance is opaque, but transparency is improving

BYGARY FORSTERANDPAUL JAMES|JAN 25, 2023|NEWS

New global index shows world’s leading development banks are not transparent enough

The first ever ranking of the transparency of development finance institutions (DFIs) highlights a startling lack of public disclosure. The inaugural edition of the DFI Transparency Index, launched today by Publish What You Fund, examines the transparency of 30 DFI operations, with combined assets of $2 trillion. It reveals that:

Across the board DFIs are insufficiently transparent. This is especially the case for non-sovereign (private sector) operations.

Critically, DFIs are not providing evidence of impact, data regarding mobilisation, or proof of accountability to communities. The lack of disclosure around results and mobilisation limits the ability of stakeholders to ensure that DFIs are investing in the most impactful ways and mobilising private finance efficiently.

For many DFIs, even basic information about their investments is not publicly available.

But progress is being made. Many of the DFIs included in the Index have committed time and resources to improving the transparency of their operations, using Publish What You Fund’s DFI Transparency Tool.

The International Finance Corporation (IFC) was ranked as the most transparent non-sovereign (private sector) DFI in the assessment, scoring 54.4 out of 100. The rest of the top five positions in the non-sovereign assessment were filled by the African Development Bank (AfDB), Asian Development Bank (AsDB), European Bank for Reconstruction and Development (EBRD), and IDB Invest.

The AsDB was ranked as the most transparent DFI in the analysis of sovereign (public sector) operations, scoring 75.9 out of 100. The rest of the top five positions in the sovereign assessment were filled by AfDB, the Inter-American Development Bank (IDB), EBRD and the Asian Infrastructure Investment Bank (AIIB).

The US International Development Finance Corporation (DFC) was the top ranking bilateral DFI.

Gary Forster, CEO of Publish What You Fund, said:

“The launch of this report marks a moment of reckoning for DFIs and their shareholders. The mandates of DFIs – to build markets, drive impact and be socially responsible – require them to be transparent in order to demonstrate what is possible – to each other, to the market and to the communities where they operate. However, the dearth of information about impact, mobilisation and accountability to communities raises some serious questions about the difference these organisations are making and how effectively their capital is being applied. Meanwhile our work has shown that commercial confidentiality arguments need to be challenged as they are being used too liberally. The silver lining is the progress we’ve seen in the past year as leading DFIs have engaged with us to improve their disclosure.”

Paul James, who researched and authored the report, said:

“Multilateral and bilateral development banks are operating in the face of mounting and urgent global crises – from health to debt, food to climate. $2.4 trillion needs to be mobilised each year for climate finance alone, according to recent estimates. So it’s crucial that the investments of our financial institutions have the desired impact, and are effective in mobilising greater investments. The lack of transparency that the Index found on these issues is concerning. But we’re hopeful that DFIs will take on the actions we have highlighted and work with us to improve their transparency.”

The Index report makes five main recommendations for DFIs to improve their transparency, including:

Improve transparency around assurance of disclosure to project affected people

Disclose high risk financial intermediary sub-investments

The DFI Transparency Index report provides further details of the findings, recommendations and ranking.

Publish What You Fund

Contacts

Sally P. Paxton

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