Evaluation goes digital – KfW submits 16th Evaluation Report on the effectiveness of Financial Cooperation

• Digitalisation increasing in importance: new methods for evaluation, new format for report
• “Rigorous impact evaluation” gaining in importance
• Continued high success rate: more than four out of five KfW Development Bank projects are successful
• Results of evaluation support fight against pandemics in developing countries

“Evaluate. Measure. Learn.” is the title under which KfW today publishes the 16th edition of the biennial Evaluation Report, which looks at the effectiveness of Financial Cooperation (FC) with developing countries and emerging economies. For the first time, the report will not only appear in a print version, but concurrently in a digital version, which interactively presents the content on its own website and supplements it with further background information. This change is also indicative of the progressive digitalisation of evaluation work.

“Achieving positive impacts and thus improving living conditions is the main objective of development cooperation – and at the same time one of the greatest challenges. As a result, new digital technologies and innovative, openly accessible data sources such as satellite images are increasingly being used for analysis – and not just due to the coronavirus. We are seeing a significant boost in digitalisation, which is increasingly changing the evaluation work and enabling additional perspectives and analyses, as well as more and more reliable learning,” says Christiane Laibach, member of the Executive Board of KfW Group and responsible for FC.

Together with the French development bank Agence Française de Développement (AFD), for example, the Evaluation Department has developed a new initiative to use freely available satellite data for planning, follow-up and evaluation. The MAPME conservation area database collects openly accessible geodata from various sources, which is used to measure forest losses by visualising carbon storage in the vegetation and soils of conservation areas and thereby to evaluate the effectiveness of the protection in these areas.

Theincreasing degree of digitalisation is also evident in a new in-house app, which enables employees to access all evaluation results from the past interactively, quickly and in a precisely targeted manner. This innovation enables KfW project leaders to use the development bank’s evaluation knowledge directly in order to shape ongoing and future projects.

“In addition to more comprehensive digitalisation, we are increasingly applying rigorous impact evaluation methods to the evaluation process. The initiators of these methods were awarded the Nobel Prize in Economic Sciences in 2019, and their methods allow precise measurement of a project’s impact. We implement them from the very start of selected FC projects throughout their duration, thus supplementing the comprehensive ex-post evaluations,” says Professor Kluve, Head of the Evaluation Department at KfW.

One example illustrates this: in Burkina Faso, money is transferred to mothers to secure the nutrition of their young or unborn children. Mothers of children over the age of two do not receive these payments, which are particularly important because the first 1,000 days can be decisive for a child’s entire life. Which transfer level achieves the highest effect here, and what level of nutrition can be reached in the children within three years? The impact evaluation is able to answer these questions in a final comparison, thus making the current project and future projects that much better.

The impact of 171 projects funded on behalf of the Federal Ministry for Economic Cooperation and Development (BMZ) was examined by KfW’s independent FC Evaluation Department in 2019/2020. In the random sample, which represents the entire portfolio of completed projects, 86% of the projects were classified as successful, meaning they were rated with at least a 3 in a rating system based on school grades according to OECD-DAC criteria. The projects evaluated from the financial sector performed best, with an average score of 2.3 (average score overall: 2.8). One reason for this is the relatively stable framework conditions in countries where financial sector projects are implemented. Most projects in the evaluation portfolio are located in Sub-Saharan Africa (56), which reflects the high number of FC projects on the African continent, given the representativeness of the evaluation work.

Additional results from the 16th Evaluation Report

One thing to learn about combating pandemics is that purely national approaches are not successful due to cross-border infections. This was demonstrated by a programme to combat tuberculosis in the Caucasus, a region with a high degree of population mobility. Accordingly, a regional approach to HIV prevention projects in central African countries was particularly successful.

The increasing number of projects implemented in unstable contexts leads to a higher number of evaluations in this area. Of the 68 projects evaluated, the education sector plays a special role. The results recommend that future projects better adapt measures to locally varying security situations and encourage greater involvement of communities. This is especially illustrated by the examples of projects aimed at improving primary and secondary schools in Afghanistan and Yemen.

In the context of projects using the policy-based lending approach for implementing far-reaching reform measures in partner countries, a water management project in Peru showed that success is significantly related to the leadership by the partner countries, proportional disbursement according to reform steps, and continuous dialogue with the government.

The 16th Evaluation Report is available at:
www.kfw-entwicklungsbank.de/evbe2021_start

Information about KfW Development Bank can be found at
www.kfw-entwicklungsbank.de/en.