Development Finance Institutions (DFIs) are not very transparent about the results of their lending, particularly to the private sector, according to a report by Publish What You Fund (PWYF).
The measurement of DFI lending outcomes, and disclosure of such data, was the subject for the study by the nongovernmental organization, based in Great Britain. It researched 20 DFIs, including multilateral ones (like the World Bank) and bilateral ones (like Sweden’s Swedfund).
“In general, we found that the disclosure surrounding private sector operations was low, chiefly due to client expectations that data not be released to protect confidentiality,” PWYF found, commenting that “the lack of disclosure makes it difficult for stakeholders to assess the veracity of DFI claims and the value of their investments.”
“We believe this represents a significant gap in transparency,” the report says.
Questioning the need for broad confidentiality claims, the report says, “In our view, it should be possible to disaggregate data to certain levels (e.g., sector, country, gender, or region) without disclosing information about specific investments or clients.”
The authors suggest further research on whether private sector clients would agree to disclose project level information at an agreed point after the exit or close of an investment. “In addition,” the report states, “clearer criteria would be very useful in determining when client confidentiality is a legitimate concern.”
This topic came up recently in a report by the ombudsman to the private sector lending branch of the World Bank, who found that the presumption of client confidentiality is a major barrier to information disclosure. The report is discussed in a Sept. 10 blog post by Karen Mathiasen, a former US Treasury Department who, among other jobs, worked in the office of the US Executive Director at the World Bank, and now consults with PWYF.
Mixed Transparency Record on Public Sector Lending
For DFI projects with governments, by contrast, there was “significantly more disclosure, though opportunities for improved disclosure practices exist there too,” PWYF concluded. Four DFIs disclosed results for the majority of their investments, but four DFIs did not disclose such results for their projects.
PWYF details its findings in charts about each DFI studied, but without names. “For the time being, in order to retain a focus on the broader sector, rather than identifying practices of individual DFIs, the research team has anonymized the results of the landscape analysis.”
One exception to this policy is a chart showing that most DFIs decline to disclose the predicted and final scores concerning project success. The only DFI releasing such information is the European Bank for Reconstruction and Development.
PWYF also looked at what measurements the DFIs used to gauge results. It concluded that there was “only limited use of indicator definitions or methods that would allow data users to independently investigate reported impacts.” It said, “The majority of indicators disclosed by DFIs either contained no supplementary information about their underlying methodology or basis for calculation.”
The report does not examine DFI access to information policies, nor does it delve into the availability, or not, of the reports that DFIs prepare on project progress or outcomes.
This is the second in a series of reports being done as part of a multi-year DFI Transparency Initiative.
A webinar in the second report produced will be held Sept. 30.
