World Bank Group Strategy for Fragility, Conflict, and Violence 2020–2025 Cover Three school children in Tongogara Refugee Camp in Chipinge district located South-east of Zimbabwe. The photograph was taken in May 2019 shortly after Cyclone Idai made havoc throughout the area, including in the refugee camp. The already vulnerable refugees experienced their adobe homes and community latrines collapsing, belongings being washed away, and livelihoods and crops as being lost as water canals were damaged. ©Dorte Verner Page ii Young children waiting near the Uganda/South Sudan border before their final destination of the Impvepi Refugee Camp in Busia, Uganda, 2017. UNMISS Page vi A young boy at the Zaatari Refugee Camp in Jordan, where nearly 80,000 Syrian refugees are living. 2017. Sahem Rababah/UN Photo Page xiv Girls sitting on a dead coconut tree, which fell on the ground because of the coastal erosion. Their home village of Jenrok in Majuro, Marshall Islands, is slowly being destroyed by the rising seas. Vlad Sokhin/World Bank Page 4 Group of children in front of building needing repair. Gaza. Natalia Cieslik/World Bank Page 14 The evening water collection in the village of Halayat, Kassala State. The water point was constructed through the support of the Community Development Fund (CDF). Sarah Farhat/World Bank Page 38 The Hootkhail Hospital’s doctors provide day and night services to the villagers. Afghanistan. 2017. Rumi Consultancy/World Bank Page 76 Children listen to their teacher at the Zaatari Refugee Camp, located near Mafraq, Jordan. Mark Garten/UN Photo Page 79 A Sudanese woman and children are pictured in Fanga Suk in East Jebel Marra, South Darfur. Olivier Chassot/UN Photo Page 110 Children fly their kites at sunset. Haiti. Pasqual Gorriz/UN Photo World Bank Group Strategy for Fragility, Conflict, and Violence 2020–2025 WORLD BANK GROUP STRATEGY FOR FRAGILITY, CONFLICT, AND VIOLENCE 2020–2025 i Table of Contents Acronyms and Abbreviations iv Executive Summary vii Introduction 1 Section I: Fragility, Conflict and Violence in the World 5 A. What Is Fragility, Conflict, and Violence? 6 B. Evolution of Fragility, Conflict, and Violence 6 C. Lessons Learned and the WBG Response 8 Section II: Framework for WBG Engagement in FCV 15 A. Guiding Principles 16 DIFFERENTIATION 17 INCLUSION 18 LEGITIMACY, TRANSPARENCY, AND ACCOUNTABILITY 19 SCALING UP PRIVATE SECTOR SOLUTIONS FOR IMPACT 20 B. Pillars of Engagement 21 1. PREVENTING VIOLENT CONFLICT AND INTERPERSONAL VIOLENCE 21 2. REMAINING ENGAGED DURING CRISES AND ACTIVE CONFLICTS 23 3. HELPING COUNTRIES TRANSITION OUT OF FRAGILITY 27 4. MITIGATING THE SPILLOVERS OF FCV 30 C. Areas of Special Emphasis 34 Section III: Operationalizing the WBG’s Strategy for FCV 39 A. Policies, Processes, and Practices: Ensuring the WBG Is Fit-for-purpose 40 B. Programming: Maximizing Impact on the Ground 48 C. Partnerships 52 D. Personnel 56 E. The Financing Toolkit for FCV Settings 61 F. Risk Management in FCV Settings 67 G. Expected Impact at the Country Level 69 H. Monitoring and Reporting Progress 71 Conclusion 77 Annexes 80 Endnotes 111 WORLD BANK GROUP STRATEGY FOR FRAGILITY, CONFLICT, AND VIOLENCE 2020–2025 iii Acronyms and Abbreviations ACLED Armed Conflict Location & Event Data Project EAC East African Community ACReMAP Anti-Corruption and Results Monitoring Action Plan EBRD European Bank for Reconstruction and Development AfDB African Development Bank ECA Europe and Central Asia Region AFR Africa Region ECCAS Economic Community of Central African States AIMM Anticipated Impact Measurement and Monitoring ECOWAS Economic Community of West African States APA Alternative Procurement Arrangements EIB European Investment Bank ARTF Afghanistan Reconstruction Trust Fund ESCP Environmental and Social Commitment Plan ASA Advisory Services and Analytics ESF Environmental and Social Framework AUC African Union Commission ESG Environmental, Social, and Governance CAFEF Conflict-Affected and Fragile Economies Facility ESHS Environmental, Social, Health and Safety CASA Conflict Affected States in Africa initiative ESS Environmental and Social Standard Cat-DDO Catastrophe Deferred Drawdown Option EU European Union CCRIF Caribbean Catastrophe Risk Insurance Facility FAM Famine Action Mechanism CDC Community Development Councils FAO Food and Agriculture Organization CD Country Director FBO Faith-Based Organization CDD Community-Driven Development FCS Fragile and Conflict-Affected Situations CEMAC Central African Economic and Monetary Community FCV Fragility, Conflict and Violence CEN Country Engagement Note FDI Foreign Direct Investment CERC Contingent Emergency Response Component FIF Financial Intermediary Fund CEWS (Africa Union) Continental Early Warning System FM Financial Management CILSS Permanent Interstate Committee for Drought Control FSIN Food Security Information Network in the Sahel FY Fiscal Year CLR Completion and Learning Review GAFSP Global Agriculture and Food Security Program CM Country Manager GBV Gender-Based Violence CMAW Creating Markets Advisory Window GCFF Global Concessional Financing Facility CMU Country Management Unit GCRP Global Crisis Risk Platform CODE Committee on Development Effectiveness GEMS Geo-Enabling Initiative for Monitoring and Supervision CPF Country Partnership Framework GP Global Practice CPIA Country Policy and Institutional Assessment GPGs Global Public Goods CPSD Country Private Sector Diagnostic GPG Fund IBRD Fund for Innovative Global Public Goods CRW Crisis Response Window Solutions CSO Civil Society Organization GRiF Global Risk Financing Facility DDR Disarmament, demobilization and reintegration H&S Health and Safety DFI Development Finance Institution HACCP Hazard Analysis and Critical Control Points DG ECHO Directorate-General for European Civil Protection and HCP Human Capital Project Humanitarian Aid Operations HDP Humanitarian-Development-Peace DFID Department for International Development HDS Health and Safety Directorate DO Development Objective HEIS Hands-On Expanded Implementation Support DOTS Development Outcome Tracking System HIPC Heavily Indebted Poor Country DPF Development Policy Financing IBM Iterative Beneficiary Monitoring DPL Development Policy Loan IBRD International Bank for Reconstruction and DPO UN Department of Peace Operations Development DRDIP Development Response to Displacement Impacts ICRC International Committee of the Red Cross and Red Project Crescent DRM Disaster Risk Management ICT Information and Communication Technologies E&S Environmental and Social IDA International Development Association EAP East Asia and Pacific Region IDD Integrity Due Diligence iv  ACRONYMS AND ABBREVIATIONS IDP Internally Displaced Person OECD Organisation for Economic Co-operation and IE Impact Evaluation Development IEG The Independent Evaluation Group OPCS Operations Policy and Country Services IEG RAP The IEG Results and Performance review of the World PAD Program Appraisal Document Bank Group PCNA Post-Crisis Needs Assessment IDMC Internal Displacement Monitoring Centre PER Public Expenditure Review IFC International Finance Corporation PLR Performance and Learning Review IFI International Financial Institution PNG Papua New Guinea IFMIS Integrated Financial and Management Information PPF Policies and Procedures Framework Systems PRA Prevention and Resilience Allocation IFPRI International Food Policy Research Institute PSW Private Sector Window IFR Interim financial reports RECA Remaining Engaged during Conflict Allocation IGAD Intergovernmental Authority on Development RETF Recipient-Executed Trust Fund IMF International Monetary Fund RPBA Recovery and Peacebuilding Assessment IMPACT Impact Measurement and Project Assessment RRA Risk and Resilience Assessment Comparison Tool SAR South Asia Region INGO International Non-Governmental Organization SSAFE Safe and Secure Approaches in Field Environments IP Implementation Progress SCD Systematic Country Diagnostic IPF Investment Project Financing SDFP Sustainable Debt Financing Policy IPV Intimate Partner Violence SDG Sustainable Development Goal IsDB Islamic Development Bank SME Small- and Medium-sized Enterprise ISR Implementation Status and Results Report SORT Systematic Operations Risk-Rating Tool JET Jobs and Economic Transformation SPF State and Peacebuilding Trust Fund KTF Korea Trust Fund for Economic and Peacebuilding Transitions STC Short-term Consultant LCR Latin America and the Caribbean Region STT Short-term Temporary LIC Low-Income Country TAA Turn Around Allocation LMIC Lower-Middle-Income Country TDRP Transitional Demobilization and Reintegration Program M&E Monitoring and Evaluation TOCs Theories of Change MDB Multilateral Development Bank TF Trust Fund MDRP Multi-Country Demobilization and Reintegration TPM Third-Party Monitoring Program TTL Task Team Leader MDTF Multi-Donor Trust Fund UCDP Uppsala Conflict Data Project MFD Maximizing Finance for Development UN United Nations MIC Middle-Income Country UNDP United Nations Development Programme MIGA Multilateral Investment Guarantee Agency UNHCR United Nations High Commissioner for Refugees MNA Middle East and North Africa Region UNICEF United Nations Children’s Fund MS+ Moderately Satisfactory or above VAC Violence Against Children MSMEs Micro-, Small- and Medium-sized Enterprises VPU Vice Presidential Unit MTF Mindanao Trust Fund WB World Bank MTR Mid-Term Review WBG World Bank Group NGO Nongovernmental Organization WDR World Development Report NSP National Solidarity Programme WFP World Food Programme NTF Nordic Trust Fund WHO World Health Organization OCHA (UN) Office for the Coordination of Humanitarian WHR Window for Host Communities and Refugees Affairs Young Professionals Program YPP ODA Official Development Assistance YPS Youth, Peace and Security OP Operational Policy WORLD BANK GROUP STRATEGY FOR FRAGILITY, CONFLICT, AND VIOLENCE 2020–2025 v Executive Summary WORLD BANK GROUP STRATEGY FOR FRAGILITY, CONFLICT, AND VIOLENCE 2020–2025 vii The Growing Challenge of Fragility, conflict, the WBG can meaningfully engage to preserve institutional capacity and human capital that will be Conflict, and Violence critical for the country’s future recovery. And when signs i. Addressing the challenges of fragility, conflict, of recovery emerge, the WBG can support governments and violence is critical to achieving the World Bank that are embarking on transformational change. Group’s twin goals of ending extreme poverty and iv. To meet the growing challenges, the WBG is boosting shared prosperity. By 2030, more than significantly scaling up the volume and types of half of the world’s extreme poor will live in countries financial support it provides for FCV in both low- characterized by fragility, conflict, and violence (FCV).1 and middle-income countries. For low-income and Preventing and mitigating FCV challenges is key to lower-middle income countries (LICs and LMICs) that making progress toward the Sustainable Development are classified as “fragile and conflict-affected situations” Goals (SDGs) and to the international community’s (FCS),4 the 18th replenishment of the International broader efforts to promote peace and prosperity. Development Association (IDA18) represented a ii. The global fragility landscape has worsened paradigm shift in terms of both the volume of resources significantly in recent years, impacting both low- and how those resources are provided. The $14 billion and middle-income countries. Violent conflicts available in IDA18 for IDA countries affected by FCS have increased to the highest levels observed over is double the level of IDA17, the previous three-year the past three decades.2 The world is also facing the replenishment period. IDA18 has also introduced a largest forced displacement crisis ever recorded.3 more tailored engagement in different situations of Rising inequality, lack of opportunity, discrimination, fragility, including investing in conflict prevention, and exclusion are fueling grievances and perceptions supporting refugees and host communities, preventing of injustice. Climate change, demographic change, and responding to gender-based violence, engaging in migration, technological transformations, illicit financial situations of active conflict, and supporting transitions flows, and violent extremism are often interconnected, from conflict to peace. posing risks that transcend borders. Many countries Looking forward, the 19th replenishment of IDA also suffer from chronically poor governance. These (IDA19)5 will scale up resources to countries affected factors can increase vulnerability to shocks and by FCV, including through an FCV Envelope that crises and can create regional and global spillovers. offers a structure of incentives and accountabilities They could cause devastating impacts, especially for for countries to reduce FCV risks. For International women, children, youth and people with disabilities, Bank for Reconstruction and Development (IBRD) that could be felt for generations. Without swift and countries, the Global Concessional Financing Facility effective action, FCV risks could both erode gains has provided more than $3 billion in concessional made in the fight against poverty and undermine the assistance to middle-income countries affected by prospects for further progress. refugee crises, and a new IBRD Fund for Innovative iii. Faced with these dynamics, the World Bank Global Public Goods Solutions (GPG Fund) offers Group (WBG) has been changing the way it works incentives for countries to address FCV spillovers. in FCV settings. This work has evolved from a More broadly, the 2018 IBRD and International focus on post-conflict reconstruction to addressing Finance Corporation (IFC) Capital Increase package challenges across the full spectrum of fragility. The highlighted the importance of stronger WBG efforts 2011 World Development Report Conflict, Security, to systematically address FCV in middle-income and Development emphasized the close link between countries, with a view to reinforcing country, regional, security, justice, and development. The 2018 joint UN- and global stability and development. WBG report, Pathways for Peace, called on the WBG v. Recognizing that the private sector lies at the to “pivot to prevention” by further prioritizing inclusive center of a sustainable development model in approaches to development that can help prevent and FCV settings, IFC and the Multilateral Investment mitigate FCV risks before conflict and violence take hold. Guarantee Agency (MIGA) are significantly scaling Furthermore, even in the toughest environments during up their efforts. The 2018 IFC Capital Increase viii  EXECUTIVE SUMMARY package placed strong emphasis on IFC’s growth in viii. An essential premise for the FCV Strategy is IDA and FCS countries. IFC committed to increasing that, given the diversity of FCV challenges, there its share of investment commitments in IDA and FCS can be no one-size-fits-all approach. Operating in to 40 percent by Fiscal Year 2030, with 15-20 percent FCV settings is far from business as usual because in low-income IDA and IDA FCS countries. This would of often rapidly changing circumstances, differing require at least a five-fold increase in investment levels of insecurity, fragile and volatile political volumes from the current level. Similarly, MIGA has situations, macroeconomic instability, low institutional prioritized FCS since 2005. MIGA’s portfolio in FCS capacity, a weak enabling and investment climate has increased continuously since 2013 and stood at for the private sector, higher risks of violence against a record $2 billion in 2019. IFC and MIGA efforts were vulnerable populations, and significantly higher risks further boosted by the introduction in IDA18 of the and costs of engagement. $2.5 billion Private Sector Window (PSW), which allows them to further scale up their investments in FCS, thus ix. The WBG approach must therefore be adapted complementing IDA’s support for policy reforms that to the distinct circumstances of FCV settings, are aimed at stimulating private sector-led growth. IFC with Country Partnership Frameworks (CPFs) and has also strengthened its engagement in FCS through programs tailored to addressing the root causes the Conflict-Affected States in Africa (CASA) and FCS of fragility. Greater on-the-ground presence is key Africa initiatives, and its advisory support through the in the most challenging environments. And given the Creating Markets Advisory Window (CMAW). protracted and complex nature of FCV, development actors must plan to stay engaged over the long term, including during conflict and crisis situations. The WBG Framework for This requires an acceptance of higher risks by Engagement in FCV development actors, as well as partnerships with a diverse range of stakeholders. vi. The objective of the WBG’s FCV Strategy is to enhance the WBG’s effectiveness to support x. Building on operational and analytic experience countries in addressing the drivers and impacts of in FCV settings, the FCV Strategy articulates a FCV and strengthening their resilience, especially differentiated approach to FCV. It is structured for their most vulnerable and marginalized around a set of guiding principles and four pillars populations. This work is critical to achieving the of engagement that are designed to strengthen the WBG’s twin goals. The strategy sets out a new WBG’s approach and address challenges across the framework for understanding FCV and a robust set full spectrum of FCV. The four pillars provide specific of measures to increase the effectiveness of WBG guidance on how to engage in different types of FCV development support to both low- and middle- settings, help inform CPFs and programs, and ultimately income countries that are dealing with diverse provide more effective and tailored support to both challenges across the FCV spectrum, including high government and private sector clients. They are: levels of violence, forced displacement shocks, and 1. Preventing violent conflict and interpersonal subnational conflict. violence by addressing the drivers of fragility and vii. The FCV Strategy builds on a range of inputs— immediate- to long-term risks—such as climate including successive Independent Evaluation Group change, demographic shocks, gender inequality, (IEG) reviews of WBG engagement in FCV settings, patterns of discrimination, economic and social portfolio reviews, global consultations carried out exclusion, and perceptions of grievances and during 2019, and lessons learned from operational injustice—and strengthening the sources of experience—to systematically address the root causes resilience and peace before tensions turn into full- of fragility as well as the long-term risks that can drive blown crises. or exacerbate conflict and violence. 2. Remaining engaged during conflict and crisis situations to preserve hard-won development gains, protect essential institutions, build resilience, and be ready for future recovery. WORLD BANK GROUP STRATEGY FOR FRAGILITY, CONFLICT, AND VIOLENCE 2020–2025 ix 3. Helping countries transition out of fragility, by downstream, to deliver investments and help create promoting approaches that can renew the social jobs. The strategy therefore emphasizes the WBG’s contract between citizens and the state, foster a role in strengthening the enabling environment for healthy local private sector, and strengthen the private sector-led growth and upstream project legitimacy and capacity of core institutions. development, supporting local private sector actors, enhancing conflict-sensitive approaches 4. Mitigating the spillovers of FCV to support to investments, and helping catalyze and de-risk countries and the most vulnerable and investments in FCV settings. IFC’s Creating Markets marginalized communities that are impacted by strategy, which is critical in the FCV context, focuses cross-border crises, such as forced displacement on looking beyond individual projects to impacts or shocks resulting from famines, pandemics, and on entire markets; this requires a sectoral focus for climate and environmental challenges. project development and advisory work. xi. In addition, the WBG will place special xiv. The FCV Strategy highlights the importance emphasis on six high-priority issues in FCV both of a calibrated response to risk that ensures settings: (i) investing in human capital; (ii) supporting full compliance with WBG safeguards, and a macroeconomic stability and debt sustainability; higher tolerance for the likelihood that some risks (iii) creating jobs and economic opportunities; (iv) will materialize during program implementation. building community resilience and preparedness, Working in FCV settings often carries significantly especially regarding the impacts of climate change higher risks, such as (i) the physical security risk to and environmental degradation; (v) engaging on justice WBG staff, borrower counterparts, and beneficiaries; and the rule of law; and (vi) developing approaches (ii) high risk of violence against vulnerable groups; to dealing with the security sector within the WBG’s (iii) weak or nonexistent institutional capacity, mandate and comparative advantage. Throughout which can negatively affect development impact; WBG engagement in FCV settings, a special focus will (iv) environmental, social, and governance (ESG) be put on gender in line with the WBG Gender Strategy. risks; and (v) fiduciary risks, including fraud and xii. The FCV Strategy articulates the WBG’s corruption. Elevated risks require more proactive comparative advantage in FCV settings. This centers risk management, combined with targeted and on the WBG’s role as a development actor committed to rapid support when risks do materialize. More sustained and long-term engagement that can support specifically, to pursue projects in FCV settings that national systems, strengthen core state functions, and are characterized by increased political and conflict build institutional resilience and capacity. The strategy risks, market uncertainty, and high operational costs, stresses the WBG’s role in engaging with a wide array IFC and MIGA will appropriately balance the increased of clients from the public and private sectors—including risks and costs of expanded FCV engagement national, subnational, and local governments; local with diversification of programs across sectors and micro-, small-, and medium-sized enterprises (MSMEs); countries of operation. and regional and multinational private sector firms—and leveraging financing to incentivize investments and Operationalizing the FCV Strategy influence critical policy reforms that address the root causes of fragility. xv. To carry out the FCV Strategy, the WBG has set out 23 measures to strengthen its effectiveness xiii. The FCV Strategy recognizes the importance in FCV settings. Some of these are also included as of pursuing public and private sector solutions policy commitments under the FCV Special Theme for to help create jobs, deliver services, foster social the IDA19 Replenishment. While full operationalization cohesion, and promote inclusive economic of the strategy will take place through WBG regional growth. Achieving impact at the market and sector implementation plans, country programs, and levels requires an integrated WBG approach in operations covering FCV, these measures are crucial which the World Bank, IFC, and MIGA operate to strengthening the WBG’s approach to the distinct in a complementary manner, both upstream and x  EXECUTIVE SUMMARY nature of FCV settings. The measures are organized which includes IDA and IBRD financing, trust along “Four P’s”: policies, programming, personnel, funds, IFC investments, and MIGA guarantees— and partnerships (see table 1): complements and aligns both with the IDA19 FCV Special Theme and with the focus on FCV in the 2018 IBRD and IFC Capital Increase package. In addition, IFC and MIGA have specific arrangements to further On policies, the WBG will update the framework with support FCS, including through access to the Private regards to engagement in humanitarian crises and Sector Window and other blended facilities, as well as forced displacement situations, and engagement the IFC-MIGA Partnership Joint Business Agreement. on approaches to dealing with security and military actors within its mandate and comparative advantage. xvii. The implementation of the operational The aim is to ensure that policies, processes, and framework and the specific measures articulated practices are fit-for-purpose, streamlined, and flexible by the strategy will strengthen the WBG’s impact for FCV settings. on the ground in the most challenging settings. To this end, the strategy will offer direction for staff on the WBG’s operational parameters and comparative advantage in FCV settings to support country On programming, the WBG’s strategies and strategies and operations. The aim is to be more operations will more systematically address the drivers selective, adaptive, and geographically targeted on of FCV in their design and will adapt implementation the areas most affected by FCV challenges and on and supervision approaches to the complex and where the WBG’s development support can have rapidly changing dynamics of FCV settings. The the greatest impact. Through increased presence, WBG will also enhance its operations and ensure enhanced skills, and greater incentives for staff in coordinated approaches across its institutions for FCS, the strategy is expected to result in greater on- upstream project development and downstream the-ground support to help government and private capacity building for the private sector. sector clients build capacity and implement projects. xviii. Implementation of the strategy will occur at four levels to ensure that the WBG adapts its approach to the distinct nature of FCV settings: (1) On personnel, the WBG will increase its on-the- through the 23 operational measures outlined in the ground presence in FCV settings, strengthen the link strategy; (2) through corporate strategies, initiatives, between FCV experience and career development, and commitments where FCV is prioritized, such as as well as further invest in the skills, knowledge, and the IDA19 Replenishment, the IBRD and IFC Capital incentives needed for staff to deliver. Increase package, the FY20-22 HR Strategy, and MIGA’s FY21-23 Strategy; (3) through FCV country and regional programs; and (4) through analytics and On partnerships, based on respective operations in FCV-impacted countries. complementarities and comparative advantages, xix. Progress on implementation of the FCV the WBG will further step up its partnerships with strategy will be monitored and reported back humanitarian, development, peacebuilding, security, and to the WBG’s Board of Executive Directors. private sector actors to maximize impact on the ground. There will be stocktaking through annual updates to the WBG Board, a mid-term review on the xvi. The FCV Strategy articulates a tailored operationalization of the strategy by the end of 2022, financing architecture for countries impacted by and a review to be conducted by the Independent FCV challenges, in line with the four pillars of Evaluation Group by 2024. engagement. The WBG’s financing architecture— WORLD BANK GROUP STRATEGY FOR FRAGILITY, CONFLICT, AND VIOLENCE 2020–2025 xi Table 1: Measures to Operationalize the WBG FCV Strategy Policies, Processes & Practices 1 Articulate how the WBG will operate in humanitarian crises, in refugee and forced-displacement situations, and when dealing with security and military actors, particularly in insecure environments, and update Operational Policy (OP) 2.30 on Development Cooperation and Conflict accordingly. 2 Systematize the use of digital solutions in FCV settings, including Geo-enabling for Monitoring and Supervision (GEMS) and remote-sensing technologies, to enhance supervision and implementation. [See also IDA19 FCV policy commitment #5]. 3 Enhance the use of operational flexibilities as needed in FCV settings. This includes providing training to staff and fostering communities of practice to increase awareness among teams of the operational flexibilities that exist in FCV settings, particularly for procurement, environmental and social safeguards, and for financial management. 4 Enhance monitoring and evaluation (M&E) frameworks to build access to more reliable data, design context-specific solutions, and measure impact on the ground in FCV settings, including through the use of information and communication technology (ICT) tools and more fit-for-purpose survey designs to fully capture beneficiary feedback. 5 Enhance the WBG evaluation framework that assesses country programs and operations in FCV settings, including encouraging more realism in objective-setting and project design and implementation, as well as adaptability to dynamic circumstances and situations of low institutional capacity and high levels of uncertainty and risk. 6 Simplify and streamline IFC and MIGA processes to more nimbly address FCV challenges, including streamlining the processing of small loans. Programming 7 Revise the methodology for Risk and Resilience Assessments (RRAs) and ensure that they are conducted systematically for countries impacted by FCV. Each RRA/fragility assessment will analyze FCV drivers and sources of resilience and include operational recommendations that can be integrated into country programming. [See also IDA19 FCV policy commitment #1]. 8 Ensure that country partnership frameworks and operations in FCV settings systematically address the key drivers of fragility and sources of resilience. [See also IDA19 FCV policy commitment #1]. 9 Ensure that operations in FCV settings take security considerations into account throughout the project cycle, including factoring security issues into project design and documentation, implementation, supervision, and monitoring and evaluation. 10 Promote the use of portfolio reviews, conflict filters, and peace lenses in FCV settings to support Bank teams in ensuring that portfolios and operations identify and address fragility drivers and conflict risks, particularly in countries with pockets of fragility. 11 Scale up regional and cross-border programs focusing on key fragility risks. Conduct regional RRAs, which can inform both regional and country programming to address the regional dimensions of fragility. [See also IDA19 FCV policy commitment #2]. xii  EXECUTIVE SUMMARY 12 Systematize conflict-sensitive approaches for private sector investments in FCV, building on country-level contextual analysis and pilot project-level conflict analysis. [See also IDA19 JET policy commitment #6]. 13 Engage across the WBG to develop the private sector and help create markets in FCV settings; this includes upstream project development, SCDs, Country Private Sector Diagnostics (CPSDs), and implementation of the Cascade Approach / Maximizing Finance for Development. 14 Scale up IFC’s special advisory funding and implementation facilities, including IFC’s Creating Markets Advisory Window, FCS Africa, and an expanded Environmental, Social and Governance (ESG) advisory program, to increase support for market development and capacity building; and address FCV needs in MICs not covered by current facilities. Partnerships 15 Systematize partnerships with humanitarian, development, security, and peacebuilding actors at the country level by drawing on the WBG’s comparative advantage as a development actor, enhancing the impact of operations on the ground, and ensuring effective implementation arrangements with third parties as needed. This includes conducting joint assessments such as Recovery and Peace-Building Assessments (RPBAs) more systematically, and deepening coordination at the country level with actors operating in insecure environments. 16 Operationalize and deepen partnerships with multilateral development banks (MDBs) at the country level on areas of focus in the FCV agenda, including through more regular joint trainings and joint diagnostics. 17 Continue to consolidate partnerships with regional organizations that have the authority and capacity to address cross-border FCV challenges. 18 Scale up engagement with civil society organizations (CSOs) at the country level in FCV settings, particularly those operating in insecure areas and in proximity to vulnerable and marginalized communities, and those that are women-led and promote women and girls’ empowerment. Personnel 19 Increase on-the-ground presence by deploying more professional staff to fragile and conflict-affected situations, as well as nearby locations. [See also IDA19 policy commitment #6]. 20 Strengthen the link between FCS experience and career development by creating further incentives for WBG staff to work in FCV contexts, and ensuring that FCS experience is systematically recognized and considered as part of performance, talent reviews, and next-assignment planning. 21 Introduce an enhanced FCV learning curriculum for staff working in FCV settings, with learning focusing on increasing operational competencies, analytic competencies, and personal effectiveness. Staff and managers working in or on FCV will be expected to participate in all relevant training. 22 Provide enhanced support for staff well-being, safety, and security before, during, and after assignments in FCV settings, including health and psychosocial support, as well as security awareness and management training. 23 Leverage World Bank staff in countries where IFC lacks on-the-ground presence by providing training and support to World Bank managers and staff who fulfill IFC functions in these contexts. WORLD BANK GROUP STRATEGY FOR FRAGILITY, CONFLICT, AND VIOLENCE 2020–2025 xiii Introduction WORLD BANK GROUP STRATEGY FOR FRAGILITY, CONFLICT, AND VIOLENCE 2020–2025 1 1. By 2030, more than half of the world’s extreme causes of fragility and long-term risks that can drive poor will live in countries characterized by fragility, or exacerbate conflict and violence. conflict, and violence.6 Preventing and mitigating 4. It will be impossible to achieve the twin fragility, conflict, and violence (FCV) is central to goals or to meet the SDGs9 without tackling achieving the Sustainable Development Goals (SDGs) fragility, conflict, and violence. Extreme poverty is and the World Bank Group’s (WBG) twin goals of ending increasingly concentrated in FCS, and global poverty extreme poverty and promoting shared prosperity. It goals will not be met without intensified action there. will also support the international community’s broader It is estimated that today about half of the world’s live efforts to promote peace and prosperity. poor in fragile and conflict-affected situations, and 2. The global fragility landscape has worsened that by 2030 as many as two-thirds of the world’s poor significantly. According to Pathways for Peace: may live in such settings (figure 1).10 This is particularly Inclusive Approaches to Preventing Violent Conflict, striking given that only about 10 percent of the global there are now more violent conflicts globally than population lives in FCS countries, where poverty rates at any time in the past 30 years,7 and the world have been increasing while declining in most of the is also facing the largest forced displacement world (figure 2). More specifically, the 43 poorest crisis ever recorded.8 Rising inequality, lack of countries are either FCS or are located in Sub-Saharan opportunity, discrimination, and exclusion are fueling Africa; all of these have poverty rates of 19 percent grievances and perceptions of injustice. Climate or higher. And historical analysis11 shows striking and change, demographic change, migration, digital diverging poverty patterns (figure 3). Countries with transformation, illicit financial flows, and violent chronic FCS have had poverty rates stuck at over 40 extremism are often interconnected, with effects percent, while countries that have escaped FCS have that transcend borders. These factors can increase cut their poverty rates by more than half. Countries vulnerability to shocks and crises and create regional that have entered the FCS list have seen significant spillovers. They can cause lasting and devastating increases in their poverty rates, while those that have impacts, especially on women, children, youth, never been on the list have seen poverty decline and people with disabilities, that will be felt for steadily, to about 5 percent. generations. Without swift and effective action, FCV 5. This strategy is among the WBG’s contributions risks could both erode gains made in the fight against to the collective global effort to tackle FCV. While poverty and undermine the prospects for progress. the WBG strives to increase its direct impact on FCV, 3. The objective of the FCV Strategy is to enhance it also approaches this task with humility. It recognizes the WBG’s effectiveness to support countries in the intractable challenges of FCV, and that the full addressing the drivers and impacts of FCV and commitment of local and national actors is imperative to strengthening their resilience, especially for the achieve progress. The WBG has prioritized supporting most vulnerable and marginalized populations. To countries’ efforts to mitigate FCV and promote this end, the strategy sets out a framework to support peace and is committed to deepening partnerships countries in addressing diverse challenges across with a diverse set of actors, based on respective the FCV spectrum. While these are often more long- complementarities and comparative advantages.12 standing and acute in low-income and lower-middle- 6. This strategy has greatly benefitted from income countries (LICs and LMICs), the strategy will extensive global consultations held throughout the guide WBG engagement in all countries facing FCV strategy development process. The consultations challenges, including those at higher income levels engaged a wide range of partners, including that are affected by high levels of violence, forced governments, international organizations, global and displacement shocks, and subnational conflict. The local civil society, and the private sector. This captured FCV Strategy builds on successive IEG reviews of lessons and best practices such as (i) the need to WBG engagement in FCV settings, portfolio reviews, tailor interventions and financing to the distinct FCV and lessons learned in fragile and conflicted-affected challenges faced by a country; (ii) the importance situations (FCS) to systematically address the root 2  INTRODUCTION Figure 1: Share of Poor Living in FCS Figure 2: Poverty Rates in FCS Countries 100 Share of poor (%) 40 37% Poverty rate (%) 75 30 66% 50 20 48% 25 10 5% 3 0 0 2000 2010 2020 2030 2000 2010 2020 2030 Economies in FCS Other economies Economies Economies Other economies in FCS Other economies in FCS Source: Corral, Paul, Alexander Irwin, Nandini Krishnan, Daniel Gerszon Note: Three-year moving averages are used between 2001 and 2018 to Mahler, and Tara Vishwanath. 2020. “Fragility and Conflict: On the Front smooth out trends. All displaced populations are included in the figures Lines of the Fight Against Poverty.” Washington, DC: World Bank. for “Economies in FCS.” Figure 3: Poverty Trends by FCS Category (Historical Analysis, 2000-2019) 50 Poverty rate (%) Chronic FCS 40 30 Entered FCS 20 Escaped FCS Recurrent FCS 10 Never FCS 0 2000 2005 2010 2015 2019 Source: Corral et al., 2020. of supporting the most vulnerable and marginalized 7. The FCV Strategy is organized as follows: groups, and addressing the grievances underlying and Section I provides an overview of the FCV landscape. driving FCV; (iii) the importance of vibrant and inclusive Section II describes the framework for WBG private sector development to support job creation engagement across the spectrum of FCV. Section and provide economic opportunities; and (iv) the III sets out how the WBG will operationalize the recognition of the crucial role of partnerships in FCV framework to strengthen its effectiveness. settings to address the drivers and impacts of FCV. WORLD BANK GROUP STRATEGY FOR FRAGILITY, CONFLICT, AND VIOLENCE 2020–2025 3 Section I: Fragility, Conflict, and Violence in the World WORLD BANK GROUP STRATEGY FOR FRAGILITY, CONFLICT, AND VIOLENCE 2020–2025  5 A. What Is Fragility, Conflict, the previous Harmonized List of Fragile Situations. The new FCS List distinguishes between countries based and Violence? on the nature and severity of the issues they face. 8. FCV challenges are context-specific, complex, It will be updated annually. The FCS List for FY20 is and nuanced, requiring approaches tailored to the attached in annex 1 and includes 36 countries and distinct geography, history, and conflict drivers the West Bank and Gaza. The classification uses the of each setting. FCV is often the result of tensions following categories: that have evolved over years, decades, and even • Countries with high levels of institutional and generations, yet its triggers can be immediate. The social fragility, identified based on publicly three elements—fragility, conflict, and violence—are available indicators that measure the quality of often interrelated and mutually reinforcing: policies and institutions and manifestations of fragility. Fragility: Countries with deep governance issues • Countries affected by violent conflict, identified and state institutional weakness are identified based on a threshold number of conflict-related through policy-based and governance indicators. deaths relative to the population. This category will Fragile situations tend to be characterized by deep include two subcategories based on the intensity grievances and/or high levels of exclusion, lack of of violence: countries in high-intensity conflict and capacity, and limited provision of basic services countries in medium-intensity conflict. to the population. Fragile situations tend also to be characterized by the inability or unwillingness of the state to manage or mitigate risks, including those B. Evolution of Fragility, Conflict, linked to social, economic, political, security, or environmental and climatic factors.13 and Violence Conflict: Countries in active conflict are identified 11. Violent conflict has increased significantly in the past decade. Since 2010, the number of major based on a threshold rate of conflict-related deaths. violent conflict events has tripled globally. Much of the Violent conflicts occur when organized groups or increase is characterized by a rise in intrastate conflict institutions, sometimes including the state, use and the proliferation of non-state armed groups. violence to settle grievances or assert power. Recently, the number of deaths from violent conflict Violence: Countries with high levels of interpersonal has fallen slightly, but the footprint of violent conflict and gang violence, with major destabilizing impact, has expanded, with an 11 percent increase in the are identified based on the per capita level of number of locations impacted worldwide.14 intentional homicides. Gender-based violence (GBV) and violence against children (VAC) are also 12. Fragility tends to be chronic and deep-seated. Over the past decade, nearly 30 countries have shown integrated into this definition. chronic fragility; most of these are LICs and LMICs.15 9. Many countries can be affected by FCV, and Where institutions and governments are unable this strategy focuses on supporting all countries to manage the stresses or absorb the shocks of a that face FCV challenges. All countries facing FCV changing climate, natural disasters, or economic and risks—including those experiencing subnational social crises, the risks to the stability of states and conflict, forced displacement shocks, or high levels of societies often increase. Countries tend to follow a interpersonal violence—are at the core of this strategy path-dependent trajectory strongly influenced by their and will be the focus of its operationalization. history or geography, or by their social, economic, and power structures—elements that are all difficult 10. To help differentiate approaches, policies, to change. Tackling fragility—by addressing deep- and instruments so that the WBG can adapt its seated grievances, perceptions of injustice, and engagement to difficult and complex situations and legacies of human rights violations and by improving tailor it to each context, this strategy articulates a governance and institutions’ accountability—is a new methodology to identify and classify FCS. The delicate process that takes place over decades. new classification is embodied in a list that will replace 6  SECTION I: FRAGILITY, CONFLICT, AND VIOLENCE IN THE WORLD 13. What makes people fight, and what they fight 16. As a result of the increased levels of conflict over, are not new issues, but today’s conflicts are and violence, the world is seeing the largest forced happening in a more complex landscape. Fragility, displacement crisis ever recorded. There are about 71 conflict, and violence span country income levels, million forcibly displaced people globally, of whom some and the recent surge of violent conflict in countries 41 million are internally displaced. Forced displacement that have, or had, functioning institutions, upends has become increasingly complex and protracted, with assumptions that it is exclusively a problem for LICs substantial socioeconomic impacts on both refugee and LMICs or that seemingly stable societies are and host communities. More than half of the displaced immune. Many of today’s subnational conflicts are are women; together, women and children comprise taking place in middle-income countries (MICs) about 75 percent. Approximately 85 percent of the with relatively strong institutional capacity, regular world’s forcibly displaced are concentrated in LICs and elections, and capable security forces. Rather than MICs,18 with 72 percent of the forcibly displaced living a direct function of poverty alone, these forms of in lagging regions within these countries. conflict are increasingly linked to a lack of political and economic inclusion and equity as well as grievances 17. FCV both affects, and is affected by, global and perceptions of injustice. Transnational violent factors including climate change, demographic extremist groups have taken advantage of unmanaged challenges, gender inequalities, digital local tensions to root themselves in fragile contexts, transformation, and illicit trafficking. cross national boundaries, and threaten entire regions. • Climate change is a driver of fragility and a threat 14. In addition to violent conflict, interpersonal, multiplier. Both in the immediate term and long gang-related, drug-related, and gender-based term, it can aggravate already fragile situations and violence all pose a major threat to development increase vulnerabilities, exacerbate grievances, and to the well-being of millions. Every year, about and deepen existing fragility. By 2030, climate half a million people die from violence, two-thirds of impacts could push an additional 100 million them victims of intentional homicide.16 In some areas, people into poverty. By 2050, in three regions homicide rates are higher than deaths in conflict zones, alone that have been studied (Sub-Saharan Africa, causing major human suffering as well as economic South Asia, and Latin America), as many as 143 and social disruption. While a majority of the victims million people could become climate migrants, with of lethal violence are young males,17 high levels of potentially destabilizing effects.19 homicide go hand in hand with high levels of GBV and • Demographic challenges such as high fertility VAC, with severe, lifelong impacts on those affected. and youth dependency rates can lead to higher poverty, lower investments in children, high 15. FCV challenges are also increasingly unemployment or underemployment, and the risk international—they cross borders and produce of instability and unrest. regional and global spillovers that often spiral into multidimensional crises. In a world where • Gender inequalities are an aggravating factor communications, finance, crime, and ideas all flow more in fragile situations. They tend to be magnified rapidly across borders, many conflicts have evolved into in FCV settings when regressive gender norms, complex systems with international, regional, national, including those related to masculinities, and and communal links. This explains in part why it is so higher risk of gender-based violence, including challenging to address FCV effectively. Armed conflicts sexual exploitation and abuse, combine with lack and high levels of interpersonal violence heighten of access to health, education, and employment. vulnerabilities, including food insecurity and forced Because the share of women-headed households displacement. Financial crises stress the social fabric tends to increase during violence and conflict, and can lead to more instability and violence. Pandemics promoting economic opportunities for women is more easily take hold in areas where the presence of key. This is also paramount for the successful the state is weak and where there is low trust in service implementation of the Women, Peace, and Security delivery. These dynamics deepen a country’s fragility Agenda of the United Nations (UN). and often lead to situations of protracted crisis. WORLD BANK GROUP STRATEGY FOR FRAGILITY, CONFLICT, AND VIOLENCE 2020–2025 7 • Digital transformation has the potential to play a C. Lessons Learned and positive role in promoting peace but can also widen the WBG Response economic gaps and drive exclusion. It can present uncharted territory when demands for openness 19. The WBG’s work has evolved from a focus are not met, or when criminal networks or extremist on post-conflict reconstruction to addressing groups prey on disenfranchised and marginalized challenges across the full spectrum of fragility communities. (see figure 4). The 2011 World Development Report, • Illicit trafficking and criminal networks Conflict, Security, and Development, introduced have benefitted from greater mobility and a major shift in how the WBG conceived fragility, interconnectedness and, in many contexts, this highlighting that fragility-related challenges cannot exacerbates FCV challenges. Elite capture, be resolved by short-term or partial solutions in the poverty, and inequality are associated with absence of institutions that provide people with increases in a range of illicit activities, including security, justice, and jobs. Building on the 2011 trafficking, corruption, and illicit financial flows.20 WDR, the 2018 joint UN-WBG Pathways for Peace report further shifted the WBG’s approach to prevent 18. Lack of economic opportunities and high and mitigate FCV risks before conflict and violence unemployment exacerbate other FCV drivers. A take hold. Through its expanded engagement in vibrant and inclusive private sector can ignite FCV settings, the WBG has learned many lessons, economic growth, provide jobs and services, and including from IEG reviews, that can inform future help stabilize societies. Yet the domestic private progress.22 In particular, the WBG has matured in its sector in most FCV settings is underdeveloped, and approach to become more adaptive to fluid situations only 1 percent of global foreign direct investment (FDI) and to provide more tailored support depending on goes to FCS countries.21 This means lower prospects context. Key lessons are outlined below. for the private sector-led growth that FCV settings need to lift people out of poverty and that can help create trust, inclusion, and stability. Figure 4: Evolution of the WBG Role in FCV Focus on post-conflict Shifting the focus on Pivoting to prevention, active Development of the first WBG reconstruction development actors’ role to conflict & spillovers Strategy for FCV address fragility and conflict • Initial loans following • IDA18 focus on FCV (prevention, • Strong alignment with IDA19 WWII • First classification of fragile refugees, private sector) FCV Special Theme situations (2006) • Support to Bosnia & • 2018 IBRD and IFC Capital Increase Herzegovina (1996- • 2011 WDR on Conflict, package focus on FCV in MICs 2003) Security and Development • WDR on Governance & Law (2017) • Afghanistan • UN-WBG Pathways for Peace (2018) Reconstruction Trust Fund est. in 2002 2002 2006 2011 2017 2018 2019 Afghanistan First classification of WDR on Conflict, Launch of IDA18 UN-WBG joint report, Launch of WBG Reconstruction Trust fragile situations Security and Pathways for Peace FCV Strategy Fund Established Development 8  SECTION I: FRAGILITY, CONFLICT, AND VIOLENCE IN THE WORLD 20. The WBG should approach its development increasing country allocations, providing more grants engagement with a sense of humility. The WBG is a and debt relief, and using exceptional allocations to large development institution, but its work is only one address specific needs, for example, in countries that element of the larger political economy of a country. are in, or emerging from, conflict. Other important Ultimately, conflicts are resolved by political and examples are the Refugee Sub-Window for IDA- security actors through political processes, and even eligible countries and the Global Concessional the best development strategy or program cannot win Finance Facility for MICs, which provide concessional a war or ensure peace. Nonetheless, development financing to help clients pursue development interventions can help address FCV drivers and yield approaches for both refugee and host communities. In meaningful results in FCV settings, particularly when some FCV settings, the use of multi-donor trust funds they are approached in an inclusive and conflict- (MDTFs) has helped galvanize international support sensitive manner, as outlined in Pathways for Peace. to invest in large development programs, while Development interventions can help reduce or mitigate lessening the burden on new governments with thin fragility risks, strengthen communities’ resilience, capacity. The WBG is still learning what works—the preserve development gains, enable reformers to latest innovation is the FCV Envelope in IDA19, which seize windows of opportunity, and support longer-term creates a strong incentive and accountability structure transitions out of fragility. These should be the focus of to encourage clients to address FCV drivers. WBG engagements in FCV settings. 23. The WBG needs to do more to improve project 21. CPFs and programs need to be better performance in FCS. While performance in FCS has tailored to address FCV drivers, based on FCV improved markedly, it is below that of non-FCS. In tools and analytics. In many cases, Systematic part, improvements to project performance can come Country Diagnostics (SCDs) and CPFs in FCS have indirectly through better strategies and programming not looked markedly different from those in non- and a stronger on-the-ground presence, but direct FCS. While WBG analytics on FCV drivers have efforts are also needed. IEG calls for simpler and improved over time, their recommendations have not more pragmatic project designs in FCV settings, always carried over into CPFs. The result is a partial including by encouraging teams and clients to make disconnect between enhanced analytical capacity more realistic estimations of results and risks from and the WBG’s portfolio of operations. Ensuring that the outset. Interestingly, crisis-related operations programs in FCV settings are truly tailored to FCV tend to perform well, likely because they are focused, drivers requires a two-pronged approach. First, WBG simple, and realistic: this offers a lesson for other analysis must be made more relevant to operations. programming in FCV settings. Projects in fluid And second, as IEG suggests, CPFs should environments need built-in flexibility that allows for incorporate the analysis and recommendations of rapid adaptation to changing circumstances. In some Risk and Resilience Assessments (RRAs) “more FCV settings, it can range from difficult to impossible forcefully,” focus more systematically on FCV drivers, to plan accurately over a standard five-year project and translate these more directly into country time horizon. Hence teams should seize opportunities program priorities. to adjust and correct course early and often. FCV settings tend to have lower implementation capacity, 22. WBG financing arrangements should be so more proactive and hands-on supervision with calibrated to the specific needs of FCV settings, clients is often needed, and this should be factored with appropriate incentives and accountabilities. into planning and resourcing for the implementation The traditional approach to aid effectiveness, in which phase. IEG evidence also underscores how capacity countries with low institutional capacity received little building is critical to the sustainability of public service finance, has at times limited the WBG’s effectiveness delivery in FCV settings. in FCV settings. Over the last decade this has changed, with a growing recognition that by allocating 24. Experience also highlights the importance of more resources through tailored mechanisms, impact good governance in addressing FCV challenges, in FCV settings is possible. IDA has made many and the WBG has a comparative advantage in adjustments to its allocation framework, including supporting core governance functions. The WBG WORLD BANK GROUP STRATEGY FOR FRAGILITY, CONFLICT, AND VIOLENCE 2020–2025 9 has learned that the effectiveness of development 26. As the WBG takes on increasing challenges, programming in any sector, from health and education its operational guidance should be adapted to agriculture and jobs, will be realized only if a and updated to remain fit-for-purpose. In some country’s underlying governance is sufficiently robust ways, WBG engagement has evolved faster than and inclusive. Governance weaknesses tend to be its operational guidance. For example, the WBG key chronic drivers of FCV. The WBG should therefore increasingly engages with non-state, civil society, focus on supporting clients to improve governance military, or security actors, in contexts such as over the long term, including by enhancing citizen humanitarian crises or forced displacement situations, security, strengthening the rule of law, building where greater policy clarity would be helpful for systems of accountability, enhancing systems for teams. In other ways, the WBG already offers a service delivery, and fostering citizen engagement. range of operational flexibilities, but teams have not Progress on governance may not be linear, but the always pursued these, either because of a lack of effort is a worthy investment in future resilience and awareness, overall risk aversion, or a sense that teams stability. It can help to address horizontal and vertical may not receive support from management and/or inequities, build legitimacy and trust in institutions, shareholders. Efforts are needed to ensure that teams address FCV drivers, and mend the social contract, are aware and feel empowered to draw on flexibilities while also providing the foundation for sectoral as needed so that practice aligns with policy. programming to achieve better results. 27. Engagement in FCV settings has broadened 25. Another key lesson is the importance of the WBG’s perspective on managing risk. FCV sourcing, developing, and supporting WBG staff settings have large residual risks, not all of which can working in FCV settings. Having the right staff be mitigated, and additional risks may materialize on the ground is essential for effectiveness and during project implementation. At times, the WBG and project performance. Resident staff are better able to other actors in the international community may have understand the political economy; provide proactive been too optimistic about the complexity and risk support to clients in preparing and implementing levels in FCV settings, and the extent to which these operations; find practical, agile, and best-fit solutions can be managed and mitigated. There have been to problems; build relationships with partners, times when risks materialize, prompting the WBG to including civil society organizations (CSOs); travel pull back or shy away from further risk, which is not to supervise project activities; and ensure that always consistent with the WBG’s role in tackling the operations become more tailored to FCV drivers. Like most important development challenges. Looking other institutions, however, the WBG has struggled forward, the WBG should use a comprehensive to attract staff to work in FCS, and there remains an and candid approach so that it can take informed impression among staff that working in FCS is not risks, mitigate unforeseen risks proactively, seize always career-enhancing. With strong management opportunities, and remain steady in fluid situations—in attention, the staffing footprint in FCS has increased full compliance with WBG environmental, social, and significantly in recent years, and this will continue fiduciary standards. during the IDA19 period, including through new recruitments. Training and capacity building for 28. WBG engagement in FCV settings entails staff has improved but could be enhanced further. higher costs. Working effectively in FCV settings Moreover, staff working in or on FCV need to feel inherently requires new investments in data and that WBG management recognize and value their analytics, greater investment in security and staff efforts in these tough environments. In particular, the welfare, expansion of the WBG’s on-the-ground WBG needs to do more to enhance the employment presence, more proactive implementation support, value proposition for staff focusing on FCV, including and more collaboration with partners. These factors through mentoring, next-assignment planning, and all create budgetary pressures. WBG budget career progression. Security is also a primary concern allocations for FCS have increased,23 and they will for the WBG’s presence on the ground. require a sustained focus for the WBG to be effective in these settings. 10  SECTION I: FRAGILITY, CONFLICT, AND VIOLENCE IN THE WORLD 29. Partnerships are critical, and the WBG has horizon— including for project gestation, a long-term learned that these should be mission-driven and commitment to sector-wide regulatory and policy grounded in the comparative advantages of each reform, and more focus on client capacity building and partner. Over the years, the WBG has worked with proactive implementation support. It can be extremely wide range of partners—from local CSOs, the private challenging to find bankable private sector projects. sector, and bilateral donors to other multilateral 32. For IFC and MIGA, working in FCV settings development banks (MDBs) and UN agencies. also means dealing with significant reputational Effective partnerships have often been built from the and financial risks. Reputational risks include issues ground up by in-country staff who seize opportunities related to sponsors’ (lead investors’) integrity, such as to achieve better results for clients. Experience previous illegal activities or corruption. There are also also finds that partnerships take time and effort to Environmental, Social, and Governance risks such as nurture and involve transaction costs, with time and impacts from pollution or problems with resettlement. resource implications. Hence partnerships need not To mitigate these risks, IFC and MIGA work extensively be pursued at all times with all players or for their prior to any investment to implement strict safeguards own sake—but rather, pursued selectively when and thoroughly review potential sponsors to ensure partnering can generate results greater than the sum that private sector projects do not negatively affect of the contributions of each partner to meet project local communities. Financial risks can be related to objectives and advance common goals. inadequate returns to cover or compensate for the 30. Engaging in FCV settings also means associated FCV-environment risks (such as conflict working differently with data. In these settings, the or regulatory issues, or poorly developed markets) or data environment is often weak. But there are now to higher operating costs related to security issues, innovative ways to collect data or draw on partners’ long project gestation, and, frequently, small project datasets. In recent years, digital solutions have size. There must be a recognition that some risks may emerged to address data challenges, but overall, materialize during the life of a project that cannot be teams need to think differently about monitoring and fully avoided or mitigated. evaluation in FCV settings. It is equally important 33. Increasing support for private sector to support governments over the long term in development —through IFC’s investment and improving their data environment for evidence- advisory services operations as well as MIGA based policy making. guarantees —is a critical element of the WBG’s 31. For the private sector, FCV settings are the approach to FCV. IFC first included FCS as a strategic toughest markets, but the WBG must work to priority in 2010 and started monitoring FCS targets find windows of opportunity for sustainable and soon after. Over this time, IFC continued to evolve conflict-sensitive private sector development. The and scale up engagement in FCV settings, including private sector is an essential source of growth, jobs, through advisory services. The 2018 IFC Capital and resilience. But challenges abound in promoting Increase package placed strong emphasis on IFC’s a healthy private sector in FCV settings, including growth in FCS and IDA countries as a key outcome difficult operating environments, higher costs of reflected in IFC’s Corporate Scorecard. Similarly, doing business, skills shortages, the lack of rule of MIGA has prioritized FCS since 2005. MIGA’s role is law, high levels of informality, and poor infrastructure critical given that the perception of high risk in FCV and supply chains (see box 1). It is essential for the settings often precludes other providers from offering WBG to persevere and find windows of opportunity coverage. MIGA’s portfolio in FCS has increased to support conflict-sensitive and sustainable private continuously since 2013 and stood at a record $2 sector development. Tailored financing that de-risks billion in 2019. investments can also help. WBG support for viable investments in FCV settings also requires a longer time WORLD BANK GROUP STRATEGY FOR FRAGILITY, CONFLICT, AND VIOLENCE 2020–2025 11 34. Over time, these lessons Box 1. have led to substantial changes Challenges to Private Sector Development in FCS in how the WBG operates in fragile situations. For FCS that Experience over the past decade has shown that working with the private sector in are eligible for concessional IDA FCV is far from business as usual, with higher risks and costs because of unique resources, IDA18 represents a challenges on the ground. These include (i) a limited private sector, often largely paradigm shift in terms of the informal, with poor capabilities and lack of access to finance; (ii) underdeveloped volume of resources allocated: market structures characterized by a prevalence of state-owned enterprises or the $14 billion available for FCS is otherwise imperfect or incomplete markets; (iii) poor infrastructure and supply double the level for the previous chains; and (iv) a weak legal and regulatory environment, low government three-year replenishment period. capacity, and weak institutions. IDA18 also introduced a more Supporting viable private sector investments in FCV countries often requires long- tailored engagement in situations term, extensive, upfront work related to project development and client capacity of fragility, including investing in building. For example, developing infrastructure projects in FCV settings may conflict prevention, supporting take 3-6 years or longer, including work on the regulatory regime, sector policies, refugees and host communities, feasibility studies, and government capacity. preventing and responding to Similarly, after commitment, projects in FCS countries require significant gender-based violence, engaging assistance to realize their potential. Supply chains need to be developed, local in situations of active conflict, and community interactions supported, and land and other environmental and social supporting transitions from conflict issues addressed. to peace. 35. IFC and MIGA efforts have been further populations. IFC has increased its use of technical boosted by the introduction of the $2.5 billion IDA- assistance and blended finance, and established IFC-MIGA Private Sector Window (PSW) in IDA18. the Conflict-Affected States in Africa (CASA) initiative This allows IFC and MIGA to access IDA resources in 2008 and the FCS Africa Program in 2014 to to de-risk investments and guarantees, enabling a deploy dedicated funding for advisory services and substantial scale-up of their activities in FCS. The PSW staff on the ground. IFC has also partnered with is an important complement to IDA’s ongoing support the World Bank on upstream reforms and advisory for policy reforms aimed at stimulating private sector- work and developed the Cascade/Maximizing led growth. Finance for Development approach. Additional IFC advisory funding for FCS became available with 36. IFC and MIGA have also strengthened their the establishment of the Creating Markets Advisory attention to enabling environments, regulatory Window (CMAW) in 2017. In 2013, MIGA established reforms, upstream project development, and the Conflict-Affected and Fragile Economies Facility capacity building; and they are increasing locally (CAFEF), with the objective of catalyzing additional based staff and developing risk mitigation private capital flows to FCS by expanding political tools. Delivering impact at the market and sector risk insurance. These efforts all reflect growing levels requires an integrated WBG approach, in awareness that engagement in FCV settings requires which the World Bank, IFC, and MIGA operate a fundamentally different approach to development in a complementary manner, both upstream and and that significant resources must be harnessed downstream. This facilitates the creation of private to maximize impact on the ground. They provide a sector markets at scale to deliver significant numbers solid foundation on which to build a framework for of inclusive jobs and services that benefit local expanding engagement in FCV. 12  SECTION I: FRAGILITY, CONFLICT, AND VIOLENCE IN THE WORLD Box 2. IFC’s Conflict Affected States in Africa (CASA) Initiative Taking on Challenges in FCS Recognizing the unique challenges fragile countries face, clients and stakeholders. Strategies need to be flexible and IFC launched the Conflict-Affected States in Africa (CASA) resilient in times of crisis and based on the country context. initiative in 2008 to help Africa’s FCS countries rebuild The legal, financial, cultural, and historical contexts must their private sectors, create jobs, and attract investment. all be considered. FCS require mitigation of fragility risks Supported by Ireland, the Netherlands, and Norway, CASA but also broadening of the impact of investments through initially rolled out in four countries and today supports IFC’s advisory services to help clients and operators improve their advisory engagements in 13 African countries. governance; enhance their compliance with environmental, social, and governance standards; and integrate with local CASA’s experience shows that three factors are critical value chains and regulatory frameworks to generate broader, for bringing sustainable private sector development to stronger, systematic development effects. CASA now focuses fragile markets: long-term engagement, market intelligence, on the Sahel, Lake Chad, and Horn of Africa and is helping and flexible funding. Having the team on the ground helps address evolving regional and subregional conflict dynamics. gather the right market intelligence, speeds up project implementation, and provides clearer communication with WORLD BANK GROUP STRATEGY FOR FRAGILITY, CONFLICT, AND VIOLENCE 2020–2025 13 Section II: Framework for WBG Engagement in FCV WORLD BANK GROUP STRATEGY FOR FRAGILITY, CONFLICT, AND VIOLENCE 2020–2025  15 37. The framework to deliver on the FCV Strategy violence; (2) Remaining engaged during crisis comprises four Guiding Principles and four situations and active conflicts; (3) Helping countries Pillars of Engagement. The Guiding Principles transition out of fragility; and (4) Mitigating the are (i) Differentiation; (ii) Inclusion; (iii) Legitimacy spillovers of FCV. Critically, FCV risks are interrelated and accountability; and (iv) Growing private sector and mutually reinforcing and cut across each of the solutions for impact. The Pillars of Engagement are four pillars of engagement. (1) Preventing violent conflict and interpersonal Figure 5: The Four Pillars of Engagement Preventing violent Remaining engaged Helping countries Mitigating the conflict and during conflicts & transition out of spillovers of FCV interpersonal violence crisis situations fragility What does this mean in practice? Tackling risks and Building resilience, Strengthening Addressing spillovers grievances early on, protecting essential the capacity and such as forced and strengthening institutions, and legitimacy of core displacement, sources of resilience, delivering critical institutions, renewing as well as shocks before tensions turn services like health or the social contract, resulting from climate into crises education and supporting private and environmental sector development challenges A. Guiding Principles 39. The WBG’s comparative advantage in FCV settings is based on its long-term experience and sustained engagement in countries, as well as 38. The WBG engages in FCV settings to address its capacity to leverage analytics, financing, and the drivers of fragility and strengthen the sources convening power at scale. As a development actor, of resilience and peace, in line with its mandate the WBG complements the engagement of other and comparative advantage, and in cooperation stakeholders by helping to build systems and develop with a broad set of stakeholders. The WBG’s capacity; strengthen institutions and core state efforts are most effective when they are designed functions; support shared economic growth; improve and implemented to foster synergies with local and service delivery and protect human capital; and national actors and international partners in the peace, manage risks and enhance preparedness. In acting security, development, and humanitarian arenas, on its comparative advantage, the WBG strives to based on the mandate and comparative advantage of promote efficient and equitable economic and social each institution.24 policies, and ultimately to increase social capital and build more resilient societies. 16  SECTION II: FRAMEWORK FOR WBG ENGAGEMENT IN FCV 40. With the FCV Strategy, the WBG does not a selective approach with a focus on the long-term seek to go beyond its core social and economic development of central and local institutions, as well competencies and development mandate under its as of the local private sector. institutions’ Articles of Agreement. In determining 44. Overall, the WBG will put special focus on whether activities or engagements are consistent with the spatial dimensions of its interventions in FCV its mandate, the WBG examines whether they are settings. Scaling up interventions to address fragility grounded in an appropriate and objective economic at the community, subnational, and regional levels is rationale and are structured to avoid interference in the essential. Tackling FCV drivers involves addressing political affairs of a member country. cross-border challenges and, where relevant, 41. In a given setting, the WBG will determine the developing effective regional approaches. While the feasibility, desirability, focus, and modalities of its WBG operates from a country-based model, regional engagement on the basis of the following criteria: programs and initiatives that focus on mitigating its mandate; the complementarity of its potential fragility and security risks are under development activities with those led by other actors; do-no-harm for the Sahel, the Horn of Africa, and the Lake Chad considerations; its ability to engage effectively with key region, as well as in at-risk border regions such as stakeholders, including government authorities; the those between Tajikistan and Afghanistan. Regional likely impact of the programs it can support; and its RRAs will be conducted to focus on the cross-border capacity to ensure staff security and manage risks. dimensions of FCV and the regional drivers of fragility and conflict, with the aim of identifying priorities for regional activities that aim at reducing FCV risks.25 DIFFERENTIATION 45. When a government’s actions or policies are 42. The WBG’s approach and interventions will directly responsible for causing fragility, conflict, be tailored to the specifics of FCV drivers. Some and violence, the WBG would adjust its approach. drivers are rooted in local issues, such as conflicts In such cases, the WBG may maintain a low-key around land, water, or extractive industries; others are engagement and risk-mitigation strategy (including subnational, such as when territories are disconnected policy dialogue and interactions with relevant or lagging in terms of opportunity and access to stakeholders), guided by “do no harm” considerations, resources; and some are national, such as problems in accordance with its development mandate of accountability, elite capture, and corruption within under the Articles of Agreement and its policies.26 the state. Drivers can also have cross-border or According to the “do no harm” principle, activities regional dimensions. In addition, drivers can be financed by donors and development partners should global and linked to such threats as climate change avoid causing or contributing to adverse human or or pandemics. These dynamics require differentiated environmental impacts. In FCV contexts, this calls responses that need to be clearly articulated through for donors and development partners to adopt a analytical products such as Risk and Resilience context-specific, conflict-sensitive approach based on Assessments (RRAs), then translated into the SCD and adequate due diligence, diagnostics, and risk analysis the CPF, and ultimately into WBG operations. and citizen engagement. Such an approach identifies 43. WBG engagement should be guided by the factors that divide societies; provides a clearer capacity of both the government and the private understanding of local contexts to avoid aggravating sector. Government capacities should be reflected in social tensions, reinforcing power imbalances, or the content of WBG operations and implementation exacerbating conflict risks; and may also help promote mechanisms. Where government capacity is strong, accountability, sustainability and local ownership. the WBG can support relatively complex projects In these contexts, it is important for the WBG to that can be implemented through line ministries and engage with civil society organizations (CSOs) and create openings for private sector solutions. But local actors that continue to operate on the ground. when government capacity is weak, the WBG will use Disengagement would be a last resort, as it invariably impacts the most vulnerable and marginalized groups. WORLD BANK GROUP STRATEGY FOR FRAGILITY, CONFLICT, AND VIOLENCE 2020–2025 17 46. When fragility is exacerbated by stresses on 48. Similarly, some groups may perceive private environmental and natural resources, the WBG sector development as connected to elite capture needs to pursue actions and policies to mitigate and corruption, and this is often a source of stresses, manage risks, and strengthen the grievances. Addressing this problem is context- resilience of its country and regional strategies. specific but involves efforts that support new Increasing competition over diminishing renewable investors, including regional and local companies; resources, such as land and water, is further that draw on local value chains; and that promote aggravated by environmental degradation and small- and medium-sized enterprises (SMEs) and depletion, population growth, and climate change. entrepreneurship to extend opportunities for local Successful management of natural resources can revenue-generating activities. Critically, private sector prevent them from becoming a powerful driver of FCV development should also be guided by a “do no harm” that can both spur and finance conflicts. Overall, 65 approach to avoid exacerbating tensions. percent of today’s conflicts have a significant land dimension, while conflicts around water are increasing. 49. The WBG will scale up its activities in areas In parts of Africa, tensions between pastoralists and where discrimination and exclusion are particularly agriculturists over access to land and water have strong and where sentiments of exclusion risk escalated to violence. The WBG has recently adopted turning violent because of a range of issues. frameworks, including the Action Plan on Climate Such issues include access to land and water; land Change Adaptation and Resilience,27 to boost finance tenure rights; the sharing of benefits from extractive and long-term policy change for the most climate industries; subregional marginalization and inequality vulnerable countries. between groups; and the rule of law, corruption, and poor state legitimacy, with special attention to security and justice. Impunity, corruption, and human rights INCLUSION violations undermine the confidence between states and citizens and increase the risks of violence and 47. The WBG will pursue a people-centric approach potential conflict. Reducing exclusion from access to in line with the principle to leave no one behind. services is essential, as it has a clear, direct impact on It will focus on the most vulnerable and excluded the building of trust in institutions. groups.28 Exclusion, inequalities, and perceptions of injustice can drive fragility.29 Evidence also shows 50. Youth should be mobilized as key agents of that relative deprivation (for example, the absence of change who can contribute to less fragile and opportunities relative to expectations) is an important more peaceful societies.31 The direct and indirect driver of support for violent extremism, notably when impacts of FCV on children and youth can result in labor market outcomes do not reflect educational generations suffering from life-long mental trauma, attainment.30 Inclusion is difficult to achieve because while also affecting the ability of states, economies in polarized environments, the inclusion of some and societies to recover, stabilize, and develop. For groups can be perceived as a threat, sometimes many young women, roles in society continue to be at the expense of other groups. This is a complex restricted by an exclusive focus on their protection; balancing act for policymakers and requires sound and while it is important to acknowledge and communication to avoid frustration with programs that address their experiences of sexual and gender- are perceived as unfair or discriminatory. In these based violence, they should not be seen solely as contexts, the WBG will engage more systematically in victims. Efforts should be scaled up, in partnership policy dialogue with governments and support various with international and local actors, to address these modalities for engagement with citizens, civil society, challenges as well as to help youth play an active and community-based organizations (for example, role in addressing FCV drivers and building local citizen engagement and perception surveys with resilience. WBG operations need to explore how feedback loops). best to provide opportunities for young men and women to play positive roles in their economy and society and for their voices to be heard in decision- 18  SECTION II: FRAMEWORK FOR WBG ENGAGEMENT IN FCV making. Programs for youth inclusion should be 53. Trust is related to an institution’s effectiveness comprehensive, respond to the different needs of as well as to how fair and inclusive it is perceived young men and young women and encompass social to be. Hence, it is essential for WBG programming to engagement, psychosocial development, community invest in strengthening core institutions and inclusive development, and socialization. This is often better governance. Efforts will mainly address the state but done by mainstreaming youth issues across programs will also aim to build the capacity of local authorities, rather than pursuing self-standing youth inclusion communities, markets, customary institutions, projects. Inclusive education entails improving access civil society, and private sector actors, as well as to school as well as equipping young people with citizens’ capacity to hold institutions accountable. critical-thinking tools and a sense of purpose. Citizen Strengthening institutions that provide a direct participation efforts should be accountable and interface between the state and citizens is a priority transparent and include youth from the outset. of WBG engagement on a par with delivering core services, conflict resolution and grievance redress 51. The WBG is increasing its focus on gender mechanisms, justice, and in some cases, security. equality in FCV, in alignment with the WBG Gender The focus will include tax and fiscal institutions as Strategy (2016-2023)32 and the UN’s Women, Peace, well as organizations focused on macroeconomic and Security Agenda, which aims to empower women management. Communication between the state to prevent conflict and build peace, while working and citizens is also fundamental to building trust, to rectify the disproportionate, adverse impacts of and the WBG will put special emphasis on the use of armed conflict on women and girls.33 Societies with communication and new technologies. more gender equality tend to be more resistant to violence and conflict. The WBG must therefore 54. Risks of fraud and corruption are heightened in help close gender gaps in education, economic environments marked by instability, insecurity, and opportunities, and access to labor markets; tailor low capacity. In FCV settings, corruption, lack of rule social protection to households where family structures of law, and fear of violence are pervasive challenges have been disrupted by conflict; increase access and major bottlenecks to private sector development. to finance for women-owned businesses; provide More broadly, the lack of market contestability leads employment opportunities for male and female youth to cronyism and rent-seeking activities, discourages at risk; prevent and respond to GBV; and enhance both domestic and foreign competition, deters women’s participation in all levels of governance, inclusion and integration, and ultimately reverberates including peace- and state-building processes. WBG at the regional level. Macroeconomic policies— interventions will continue to empower women to including efforts to improve taxation and make public become more involved in their society and have a expenditure more efficient and equitable, ensure stronger say in economic, social, and power-sharing access to credit, and avoid price spikes—should be arrangements at the local and national levels. They will systematically assessed to understand how they affect also deal with the issue of young men’s marginalization. inclusion, exclusion, and perceptions of fairness. Macroeconomic advice to governments should focus LEGITIMACY, TRANSPARENCY, AND on promoting equitable and inclusive reforms, not merely on economic efficiency. ACCOUNTABILITY 55. WBG interventions need to be programmed 52. The WBG is adopting a long-term focus on over the long term and focus on institutions that the capacity and integrity of core institutions. can strengthen the rule of law, and those that can Strong institutions—which are recognized as improve the business environment and payment legitimate, transparent, and accountable—are central systems. FCV settings are typically constrained by to addressing FCV. The extent to which people see the absence or poor functioning of formal institutions. institutions as working for or against them can define It can be difficult for WBG programs to support the the degree to which a society is ready and able to informal institutions that play an important role in address potential drivers of FCV.34 addressing FCV. However, the WBG can ensure WORLD BANK GROUP STRATEGY FOR FRAGILITY, CONFLICT, AND VIOLENCE 2020–2025 19 that it understands the ecosystem in which they that can enable a strong private sector to emerge. operate, then design efforts so as not to undermine WBG coordination efforts such as via Country Private these dynamics. Support to market institutions Sector Diagnostics, country strategy processes and to regulators goes hand in hand with support including SCDs and CPFs, and IFC’s upstream efforts to entrepreneurs and investors. In FCV settings, under the Creating Markets strategy will help ensure corruption and lack of rule of law are the main that WBG institutions complement one another, bottlenecks to private sector development. To address going beyond individual projects to pursue overall these issues, the World Bank and IFC are working approaches to sector development. In addition, for jointly through Country Private Sector Diagnostics active engagement across FCV settings, special field- (CPSDs) and assessments of institutional barriers to based platforms such as FCS Africa will be expanded inform programmatic support for the private sector. to help with project development and downstream client support. Strengthened advisory programs for ESG issues, including extended time frames to meet SCALING UP PRIVATE SECTOR SOLUTIONS ESG standards, will also help address company and FOR IMPACT country capacity issues related to ESG program 56. The WBG will strive to leverage both public implementation. In addition, enhanced partnerships, and private finance solutions to support private such as with other development finance institutions sector development in diverse FCV settings. (DFIs), will be crucial to scaling up engagements, The ability and approach of the WBG to support programs, and investments in FCV settings. private sector solutions in FCV settings depends on 58. However, high financial and non-financial risks numerous factors, including the country’s security remain to be addressed. To support its financial situation, income levels, market development, and capacity to scale up activity in FCV settings, IFC the government’s capacity to leverage the private will expand the scope of simplified procedures, sector for its development goals. For countries with including the Credit Delegation Framework for small strong government commitment to private sector-led projects, and program platforms, such as the Small solutions, a broad range of solutions are possible, Loan Guarantee Program, which provides simplified from direct support through local and regional approval for multiple projects better suited for financial institutions, to support for local, regional, FCV settings. In conjunction with special advisory and international companies seeking to engage in facilities such as the CMAW, which provides funding these markets, as well as infrastructure projects. For for upstream project development and capacity countries in conflict or crisis, the opportunities for building, this should help address some of the high private sector engagement are much more limited, costs of project development. In addition, blended but engagement may still be possible by providing finance facilities, including the PSW, will continue financing, advice and technical assistance to SMEs and be expanded for greater coverage of MICs to and local companies, including household enterprises help mitigate financial risks. IFC looks at impact and and self-employed workers. returns on a portfolio basis, an approach that can help 57. The World Bank, IFC, MIGA, and their partners further manage the financial risk of engaging in FCV each have an important role to play in supporting countries, balancing risk and costs of FCV projects the private sector and creating economic with transactions in more stable countries, including in opportunities for people and communities. middle- and upper-middle-income countries. Economic opportunities can pave the way for 59. For non-financial risks, IFC will expand risk growth and contribute to peace and stability. But mitigation approaches prior to project development supporting the private sector and creating markets and investment, expanding comprehensive pre- in FCV contexts is difficult and entails integrated emptive approaches to integrity due diligence to project development efforts, regulatory reforms, and mitigate reputational risks, and systematizing conflict- capacity building on the ground to help identify and sensitive approaches in investment operations to mitigate risks. The World Bank can play a critical address risks such as those related to a lack of role in creating a regulatory and investment climate inclusion, insufficient stakeholder engagement, and 20  SECTION II: FRAMEWORK FOR WBG ENGAGEMENT IN FCV elite capture. However, despite precautions and risk weakens government structures and governance, and mitigation approaches, it is possible that some risks diverts resources from service delivery as governments will materialize with a higher level of activity in the are forced to invest more in security.37 private sector in FCV settings. 63. Preventing conflict requires directly addressing the key drivers of fragility and strengthening the B. Pillars of Engagement factors of resilience. To prevent violent conflict more effectively, the WBG aims to (1) scale up its efforts to 60. The WBG will tailor its approach and adapt to identify risks and engage with partners; (2) mitigate the distinct challenges of FCV settings. Given the risks and strengthen resilience; and (3) adopt a holistic nature of fragility, conflict, and violence situations, approach to prevention that encompasses security, WBG strategies and programming will differ to best peacebuilding, and development. This approach assist countries and people in need, in line with the is aligned with the WBG’s increased focus on crisis “do no harm” principle. The four Pillars of Engagement risk management, including the establishment of the are relevant across the FCV spectrum because Global Crisis Risk Platform (GCRP) to ramp up efforts countries may experience several of these challenges that identify, prevent, and mitigate risks before they at the same time. spiral into full-blown crises. 64. Identifying drivers of fragility and resilience to 1. PREVENTING VIOLENT CONFLICT AND mitigate risks and strengthen coping capacities: INTERPERSONAL VIOLENCE The WBG is strengthening its ability to analyze risks and drivers of fragility, as well as putting special 61. The WBG is scaling up its focus on prevention focus on identifying sources of resilience and peace. as part of a broader institutional shift toward Drivers of fragility will be highly context-specific and proactive crisis risk management. On average, for may include a range of risks related to the distribution every $1 spent on prevention, up to $16 can be saved of power; the political settlement; the human rights in terms of the cost of conflicts. And yet development situation;38 women’s inclusion in peace settlements actors have not acted in this area at the scale required and political processes;39 broader governance issues; by current risks. Prevention is not only about conflict, land and natural resources; access to basic services; but also about tackling interpersonal, gang-related, the health of the labor market and how much economic and drug-related violence and violent extremism growth is benefitting the entire population; and broader that, in many places, threaten to erase hard-won issues of social cohesion, including perceptions of development gains. The correlation between gender fairness and inclusion among groups and regions, as inequality and a society’s propensity for civil or inter- well as between the state and its citizens. state conflict is now well established.35 Addressing the root causes of gender inequality and closing gender 65. Sources of resilience and peace will also be gaps in human capital, access to jobs and assets, and context-specific and are important to highlight voice and agency must be a priority.36 and support through programming. For example, issues of power contestation and resource capture 62. Preventing violent extremism is critical to a can be addressed through more transparency in concerted international effort. Over the last two government operations, devolution, and various forms decades, extremism has played a significant role in of subnational autonomy, as well as improving the the upsurge of deaths from violent conflict around distribution of public investments across a country’s the world. The threat it poses has become more territory. Tensions around natural resources such as geographically dispersed and has intensified in land and water require better policies and conflict conflict-affected regions. Hence, it merits a proactive, resolution systems. Lack of trust in the state, human prevention-based approach to address its structural rights violations, poor governance, lack of rule of drivers. In addition to lives lost, violent extremism law, and corruption can be addressed through more displaces people from their homes and livelihoods, accountability, transparency, and citizen engagement. destroys infrastructure, exacerbates tensions in society, To respond more effectively to the drivers of fragility as WORLD BANK GROUP STRATEGY FOR FRAGILITY, CONFLICT, AND VIOLENCE 2020–2025  21 well as strengthen the WBG’s ability to directly support data and analysis, and to exchange knowledge resilience, the methodology of RRAs is being improved on approaches and methodologies for conflict risk to gain a better understanding of country specificities, monitoring. In parallel, the GCRP is supporting including political economy, incentive structures, and the development of multisectoral country crisis multidimensional risk factors that may compound the preparedness metrics with an intersectoral working risk of FCV, as well as coping capacities that can group of WBG experts. This work is expected to further mitigate this risk. highlight the linkages between crises and FCV risks. 66. Through the GCRP, the World Bank is 67. The WBG’s diagnostic tools must contribute to strengthening its capacity to identify and monitor collective prevention efforts. As the WBG undertakes multidimensional crisis risks in both low- and joint risk analyses with partners, it should also be middle-income countries, even beyond those in the more able to share key findings with governments and FCS classification. The GCRP supports identification stakeholders. This will facilitate common approaches and continuous monitoring of interconnected risks and lay the foundation for renewed dialogue with such as food insecurity, disease outbreaks, conflict, governments. These analyses will be discussed and economic shocks by bringing together expertise in country or regional platforms and can also be and innovations from across the institution and from the basis for designing country and regional FCV external partners. To ensure a systematic focus on monitoring systems, which are essential for ensuring a incentivizing prevention and preparedness in FCV coordinated and sustained focus on prevention. contexts and beyond, the platform also delivers analytical and convening services to support 68. Adopting a holistic approach to conflict consistent integration of short- and medium- to prevention. The WBG will work to embed prevention long-term risks into sector-level and country-level into country programs where there is a high risk programming, and to enable timely and multisectoral of conflict. When a country is at risk of sliding into interventions for crisis response and resilient recovery. wide-scale violence, mitigating risks is the top Through the GCRP, the World Bank is also developing development priority. As conflict is fundamentally a mechanisms to monitor FCV early warning signals. political tool, development interventions have to be This includes partnering with relevant organizations, part of a broader effort that includes political, security, including the UN and the EU, to share monitoring and diplomatic actors. In implementing a conflict Box 3. The Global Crisis Risk Platform: A Multisectoral Approach to Crisis Prevention and Preparedness The World Bank has been ramping up efforts to identify, (ii) Crisis risk assessment and analytics to support prevent, and mitigate risks before they spiral into full-blown prioritization and risk-informed programming at the country crises. The GCRP was established in 2018 to promote and regional level. coherence in crisis risk management approaches across the institution, including through consistent integration of risks Promoting innovation in crisis risk financing, (iii) into sector- and country-level programming, and a systematic including supporting reforms of the IDA crisis risk focus on incentivizing prevention and preparedness in country toolkit, such as proposed enhancements to the Crisis and regional programming. Through the GCRP, the WBG is Response Window (CRW), to enable early response to strengthening its focus on food insecurity and health emergencies. (i) Multidimensional risk monitoring to identify early Strengthening partnerships, including across the (iv) signs of crises and enable investments in preparedness humanitarian-development nexus, to support shared and early action interventions. Monitoring of the risk approaches, collaborative planning, and the development factors of natural hazards, health pandemics outbreaks, of joint tools for risk identification, crisis preparedness, and food insecurity, conflict, and shocks will help inform early response. multisectoral institutional responses. 22  SECTION II: FRAMEWORK FOR WBG ENGAGEMENT IN FCV prevention agenda, the WBG should (i) refocus the active engagement at the community level, as it country dialogue around prevention and resilience; aims to mainstream violence prevention across (ii) review portfolios and pipelines to ensure strong relevant WBG sectors. The WBG also aims to scale alignment with prevention and risk mitigation efforts, up engagement on the issue of citizen security as including the nature of activities, their geographical well as on security and justice sector reform and scope and focus, and the details of implementation; institutional improvement. (iii) strengthen partnerships with other international actors that are critical to reducing risks, including 71. The WBG will continue to develop an integrated security actors as appropriate, while leveraging the approach at the local level and a mainstreaming WBG’s convening power; and (iv) monitor conflict approach at the sector level. Integrated approaches dynamics and WBG programming to make needed seek to address the multidimensional and multicausal adjustments in real time. aspects of violence in a geographic space, usually a city or a community, through a combination of social 69. The private sector has an instrumental role and infrastructure interventions that seek to strengthen to play in addressing the risk of violent conflicts. social resilience and build trust. Mainstreaming Prevention can include expanding inclusive economic approaches seek to apply a violence prevention lens opportunities by engaging across ethnic and social across all sectors.41 groups, supporting lagging regions, diversifying the economy and broadening the investor base, 72. The WBG will continue to scale up engagement improving basic service provision such as in health to prevent gender-based violence, learning and education, and providing resilience products especially from its work on the issue over the last such as weather insurance. The private sector can five years. GBV is lowered by reducing violence also be an important contributor to climate mitigation overall but, in some cases, it also requires specific and resilience, for example, through the support approaches. The WBG includes an assessment of of resilient and renewable infrastructure and the GBV risks in its safeguard policies, in line with the UN’s development of drought-resistant crops. IFC has recommendation to undertake effective measures to engaged with excluded groups in rural settings prevent and respond to violence against women and through MSME finance and agricultural supply chains girls. In this context, enhancing girls’ education and (for example, in Cambodia, Nepal, and West Africa) promoting sexual and reproductive health and rights and has attempted to broaden the investor base in also contribute to violence prevention. Foundational countries through programs such as SME Ventures, investments are needed to improve human which focuses on high-growth SMEs. IFC has also development outcomes, including maternal and infant worked to enhance investment projects’ engagements mortality rates, mental health challenges, access to with women and youth (for example, in Guinea services for people with disabilities, and inclusive and Côte d’Ivoire) and has helped clients improve quality education.42 institutional trust and transparency in the context of community-driven development programs related to 2. REMAINING ENGAGED DURING CRISES AND private sector investments. ACTIVE CONFLICTS 70. Preventing interpersonal violence: The WBG 73. The WBG increasingly remains engaged during engages in countries where interpersonal violence situations of crisis and active violent conflict. constitutes a major challenge. Over the last decade, Recent examples of this include interventions in South the WBG has initiated a two-pronged violence Sudan and Yemen. The Bank has also supported prevention agenda mainly in Latin America40 and specific areas and local populations during violent Sub-Saharan Africa, with (i) stand-alone integrated conflict within countries such as Colombia, Iraq, and operations at the local level and (ii) a mainstreaming the Philippines. These experiences have demonstrated strategy focusing on urban development and that the WBG can play a role during conflicts and youth employment projects, which now needs to crises by pursuing conflict-sensitive and inclusive be consolidated and stepped up. This requires approaches to development interventions that can WORLD BANK GROUP STRATEGY FOR FRAGILITY, CONFLICT, AND VIOLENCE 2020–2025  23 help mitigate conflict and lay the foundations for 76. Well-targeted development interventions in peace, working together with partners. In such cases, such situations—especially when aid is limited— the WBG needs to clearly articulate why, when, and can convey important support to the most how it should focus its interventions. Staying engaged vulnerable groups. Efforts can have positive benefits in the immediate aftermath of conflicts is equally by promoting education, health, and productive critical, and the World Bank has been significantly activities; encouraging stakeholders to adopt medium- engaged in such programs as Disarmament, term strategies that benefit the local economy; and Demobilization, and Reintegration (DDR) to contribute reducing the influence of armed groups and other to security, stability, and poverty reduction. This is actors that engage in conflict. Appropriate outreach supporting combatants’ demobilization from fighting and inclusiveness can help mitigate people’s forces and their social and economic integration into incentives to flee across borders or for youth to join society, while also supporting community reintegration, armed groups, and instead support these groups’ reconciliation, and recovery.43 valuable roles as peacebuilders. WBG interventions should aim to restore social capital and collaboration 74. Principles to consider for engagement: The among social groups, support private sector activities, WBG will conduct the necessary assessments and and maintain trust in local institutions. due diligence to determine which situations warrant engagement during crises and open conflicts. 77. In these settings, development programming Engagement is also to be informed by clear analysis of should be careful to follow “do no harm” the unique benefits and value that the WBG program principles, without bias toward specific groups can add to what is provided by organizations that are or entities. This entails active monitoring and already involved. It is also key to consider how active engagement with partners and heightened attention engagement could prepare for post-crisis recovery as to communication and transparency. Risk mitigation well as the possibility and practicality of maintaining strategies are anchored in a development focus in specific sectors and geographies. This assessment should help identify • In-depth understanding of social and conflict possible partnerships with on-the-ground entities that dynamics as well as the political economy in areas can be trusted to implement projects inclusively and where programming will be implemented. effectively in a non-partisan way, conduct high-quality • A solid monitoring system to follow project supervision, and help monitor activities. implementation and understand how the situation is evolving on the ground. 75. In these situations, the WBG should focus on protecting the human capital of vulnerable groups, • Regular and open dialogue with civil society and empowering women and girls, and strengthening communities, including conducting short, regular selected institutions to preserve development perception surveys among project beneficiaries. gains and build capacity for future recovery. The • Robust oversight and training of local units and WBG’s justification for being engaged during crises staff working on such issues as GBV and VAC; and violent armed conflict is premised on maintaining communication skills to engage beneficiaries; risks a development approach in areas where security is of petty corruption and trafficking; minority groups’ sufficient to implement efforts that build resilience, potential exclusion and discrimination; and other support service delivery, and promote livelihoods and context-specific issues. job creation. Protecting core institutions—for example, service-oriented ministries, community-based • Flexible program design to adjust project organizations, SMEs, central banks, social funds, and implementation when issues arise. project implementation structures—is essential to support recovery. 24  SECTION II: FRAMEWORK FOR WBG ENGAGEMENT IN FCV Box 4. Yemen: The Humanitarian-Development-Peace Nexus in Practice The WBG has remained engaged in Yemen since conflict portfolio includes sectors not covered by humanitarian actors broke out in 2015, and early lessons demonstrate the (e.g., energy, urban development, and agriculture). Projects value of applying a humanitarian-development nexus being implemented in tandem with UN agencies include approach. In a complex humanitarian crisis, the WBG’s the Emergency Crisis Response Project ($840 million, in development funding supports a system-oriented approach partnership with UNDP and UNICEF); the Yemen Emergency that complements the emergency response of humanitarian Health and Nutrition Project ($683 million, with WHO); agencies, which is generally predicated on a substitution the Smallholder Agricultural Production Restoration and approach. The WBG’s predictable multi-year funding adds Enhancement Project ($36 million financed from the Global value and helps preserve institutional capacity, protect human Agriculture and Food Security Program, with FAO); and the capital, and bolster national preparedness for shock response. Yemen Integrated Urban Services Emergency Project ($150 Working in close partnership with local institutions and the million) and the Emergency Electricity Access Project ($50 UN actors who pursue life-saving emergency response, IDA’s million) with UNOPS. multi-year development funding makes a significant difference in scale/outreach and flexibility/speed, both of which are WBG support to the private sector has fostered resilience critical in crisis contexts. in ways not covered by traditional humanitarian response. During conflict, it is vital to invest in the private sector to Coordination across the HDP nexus is critical but entails sustain jobs and livelihoods and to preserve basic private defining shared or collective outcomes. This should take sector capacity for post-conflict recovery, including by into consideration the different actors’ comparative advantages promoting the resilience of micro-level and informal sector and capacity to deliver in a given context. The coordination activity. The solar energy Yemen Emergency Electricity Access between development and humanitarian efforts enhances the Project is a key example of finding ways to support value overall impact of respective programs.44 The Yemen WBG- chains that had been developed by Yemenis themselves funded operations have demonstrated that it is possible out of necessity, rather than launching a more conventional to combine both short- and medium-term objectives while intervention. maintaining national systems—and even strengthening them through innovation. Such institution-focused investments WBG knowledge products also provide a convening can result in considerable savings in the medium and longer platform for strategic dialogue on development, term.45 Since July 2016, IDA grants have reached $1.76 billion resilience, and recovery that complements the work of to finance emergency operations that benefit people across humanitarian partners. The WBG’s Advisory Services and the country. Analytics portfolio serves three purposes in Yemen: (a) to inform operations and strategic engagement; (b) to remain WBG operations are anchored in a selective and engaged in sectors not currently supported by a lending integrated programmatic approach that leverages the portfolio; and (c) to facilitate strategic dialogue with external WBG’s comparative advantage in basic service delivery, and internal partners on long-term sustainable reconstruction. institutional preservation, and resilience-building. The 78. Working across the humanitarian-development- girls, and ensuring that “do no harm” approaches are peace nexus: The WBG will continue to engage implemented; (ii) exchanging knowledge on how best in partnerships with humanitarian, development, to support in-country institutions and how to engage and peacebuilding actors while remaining focused populations/beneficiaries to strengthen resilience and on its development mandate. The WBG seeks to build trust; (iii) carrying out joint data collection and integrate long-term development considerations of analysis; (iv) collaborating on design and implementation institutional support and sustainability and to work of monitoring in the field; (v) identifying and preparing with humanitarian and peacebuilding actors to development responses to tackle the consequences establish strong synergies and coordination across of armed conflict, such as massive flows of internally various interventions. This includes (i) deploying displaced people, or disasters caused or exacerbated by joint mechanisms for assisting vulnerable groups, conflict, including famines or pandemics; (vi) facilitating closing gender gaps and empowering women and engagement between humanitarian organizations and WORLD BANK GROUP STRATEGY FOR FRAGILITY, CONFLICT, AND VIOLENCE 2020–2025  25 the private sector; and (vii) contracting on-the-ground through regulated remittance service providers partner organizations when needed (especially because and may have to resort to informal methods. At the of access and security constraints).46 same time, recipient families desperately depend on remittances and are therefore often unable to 79. The WBG should support drivers of peace convert the receipts into longer-term, productive, and resilience whenever possible as this is entrepreneurial uses because of limited access to critical for sustainable development outcomes in finance or an underdeveloped private sector. In conflict-affected environments. Creating trust and FCV settings, these challenges are amplified by consensus in societies and communities fractured such factors as the relative lack of competition and by violent conflict takes time and substantial local the higher transaction costs arising from a lack of knowledge. Partnering with international and local foreign exchange markets and less frequently used peacebuilding actors that have extensive on-the- currencies. The WBG can support the establishment ground presence, including nongovernmental and civil of “safe corridors” for remittances as well as help society organizations (NGOs and CSOs), is needed for governments implement legislative and financial effective operations in conflict-affected contexts where infrastructure reforms to ensure greater account development is not possible without also fostering access, which in turn would promote the sending of cohesion and reconciliation. remittances via regulated channels and the use of 80. In FCV settings, the WBG will continue to further financial services by the recipients. monitor the macro-financial situation and provide 82. Engaging with international humanitarian advice to governments on how to reduce negative organizations, NGOs, civil society, and local actors impacts on the population and on the private operating in insecure settings is often critical. sector. During active conflict, monetary and exchange These organizations and groups often have substantial flows require special attention. In such contexts, presence on the ground in hard-to-reach areas foreign inflows can be large and volatile relative to the and offer contextual expertise as well as technical scale of the conflict-affected economy—for example, know-how for working effectively in FCV settings. natural resource revenues, aid, and remittances— For example, collaboration between the World Bank, while domestic payment systems remain vital to the ICRC, and UNICEF in South Sudan through the 2019 continuation of services. Sanctions may also be in Provision of Essential Health Services Project was place against individuals, firms, or whole sectors; crucial to providing health services to vulnerable and challenges may be posed by the high transaction marginalized communities in conflict-affected areas. In costs of cross-border money transfers; and there this spirit, engaging with the UN Resident Coordinator, may be suspensions of correspondent banking the Office for the Coordination of Humanitarian relationships arising from de-risking. In some recent Affairs (OCHA), or the European Commission (DG situations, despite the government’s fragmentation ECHO) across the humanitarian-development nexus into competing institutions, the central bank was able is important to maximize impact on the ground. To to keep functioning and play its role facilitating in ensure access to and acceptance by all parties to a domestic and international payment systems. In these conflict, organizations seek to follow the humanitarian circumstances, the WBG can advise the authorities, principles of neutrality, independence, and impartiality. with the engagement of neighboring countries and major financial centers, on interventions such as 83. In cases of high-intensity subnational stepped-up surveillance on anti-money laundering conflict, private sector engagement will focus activities and combating the financing of terrorism. on more stable areas of a country. For example, in Afghanistan, the Democratic Republic of Congo, 81. Remittances may be the main source of and Iraq, IFC has had significant investments in household buffers for countries in conflict, so agribusiness, MSME finance, and power generation keeping these channels open has important social in areas that remain stable. IFC has also been able welfare benefits. Migrants and their families in to reach into some areas of subnational conflict, for sending countries do not always possess the financial instance, through investments in financial institutions and digital skills necessary to channel remittances that remain active near areas of conflict (for example, 26  SECTION II: FRAMEWORK FOR WBG ENGAGEMENT IN FCV in Nigeria). IFC and MIGA will continue to engage in 3. HELPING COUNTRIES TRANSITION countries with subnational conflicts, focusing on areas OUT OF FRAGILITY of relative stability where investments and guarantees can be made. In areas of widespread conflict, 86. The WBG aims to build on its experience of opportunities for engagement with the private sector working in complex situations to help countries are limited, but there may be potential to support exit fragility. Several countries are currently in existing clients and MSMEs with advisory services situations of deep, protracted fragility, while others and finance. have started to emerge from it. Overall, 80 percent of countries that were on the FCS list in 2012 remain on 84. Mitigating the risk of regional spillovers and it today. These countries tend to relapse into violence preparing for post-crisis recovery: The WBG plays and present major risks for their neighbors; they an important role in applying a regional perspective constitute hubs for extremist groups and trafficking to a conflict’s wider social and economic impact and organizations and contribute to forced migration to in helping countries that border a conflict area to neighboring countries. Deep and protracted fragility address risks of spillover. The WBG will engage with also exists at the subnational level in countries that neighboring countries and regional organizations to have limited state capacity. In these situations, help governments respond to refugee flows and other it is critical to focus on sustained engagement, conflict impacts. Efforts should consist of multisectoral adaptability, flexibility, and presence on the ground. and targeted interventions to support development and create economic opportunities in border zones— 87. The WBG will continue to support countries for example, the large-scale investments in northern that are recovering from violent conflict. Recovery Kenya); engagement with authorities to combat and reconstruction do not necessarily take place with illicit trafficking; and assistance to neighboring a formal peace agreement. After a conflict’s violent governments as they manage the economic impact of phase, in countries that have functional institutions and the crisis on their own countries.47 Doing this requires high levels of human capital, reconstruction should early engagement and active policy dialogue with follow a different path than in those that remain in deep neighboring countries, such as carrying out RRA-type fragility. Recovery efforts must place a premium on assessments of the potential impact of the crisis on rebuilding social cohesion and addressing the long- these countries, including its macroeconomic impact. term drivers of violence, including grievances. They must also be careful to do no harm, as reconstruction 85. The WBG can leverage its analytical depth in most cases takes place in highly polarized to stay prepared to engage in post-crisis environments. interventions. Early preparedness is essential for successful recovery, and the WBG has an important 88. Understanding fragility and implementing role to play. Early political economy analysis of some context-specific strategies: Building on more critical sectors, such as energy and extractives, targeted and systematic analytics, the WBG will should be carried out with an eye to re-engagement. enhance its understanding of fragility, examine Additionally, private sector reviews or Recovery and countries’ political economy, and engage with Peace-Building Assessments (RPBAs) should be governments and partners on related operational leveraged to create platforms for dialogue and to lay implications. Once a country experiences high levels the groundwork for recovery efforts. of violence and low government capacity, the pact between elites becomes fragile or absent, and the state can be captured by specific vested interests that are disconnected from the population’s needs and rights. At this point, it can be said that a “fragile system” is taking hold. In these contexts, people’s trust in the state erodes quickly, as does trust between social groups, and violence becomes more frequent. Through analytical instruments such as RRAs, the WORLD BANK GROUP STRATEGY FOR FRAGILITY, CONFLICT, AND VIOLENCE 2020–2025  27 Box 5. Improving Financial Governance to Help Somalia Transition out of Fragility Since re-engaging in Somalia, the World Bank has worked in financial management lens to security sector expenditures, close partnership with the EU, the United Kingdom, Norway, natural resource revenue management, public property the UNDP, the IMF, the African Development Bank, and protection, improvement of mechanisms to support fiscal others to strengthen the country’s financial governance. federalism, and currency reform. It was also directly linked to The program’s success has been linked to (i) sustained EU budget support and IMF staff monitoring, creating strong engagement despite recurring crises; (ii) a holistic approach incentives for reform. that looked at many aspects of financial governance, from central bank management to asset recovery and public Related programs and analytics have supported flexibility financial management reform; (iii) a flexible approach that in financing for the long term. Supported by IDA pre-arrears supported experimentation and trial-and-error approaches; clearance grants and trust fund resources, Somalia has (iv) intense policy dialogue; and (v) hands-on support to the been able to develop a track record of improved economic Somali government that created an effective partnership with governance. Somalia has recently been approved for an an ongoing platform for dialogue. Upper Credit Tranche Staff Monitored Program with the IMF, putting it on a path toward HIPC Decision Point and IFI In full alignment with WBG’s development mandate, the normalization. program has engaged in key areas such as applying a public WBG will pay more attention to analyzing such 90. When helping countries transition out of situations and discussing findings with partners and fragility, the WBG will engage with a broad range relevant local actors. of actors and consider the government’s capacity and the strength of its social contract with citizens 89. Fragility is not limited to the drivers as it designs its engagement. Experience shows of conflict but encompasses multiple and that exiting such situations requires strong leadership intersectional risks that weaken systems and at the national level, a population mobilized against threaten lives. Climate change, natural disasters, the existing fragility system, and the backing of at and natural resource degradation put stress on least part of the private sector and civil society. Such economic, social, and political systems. Where an alliance is delicate to achieve because of the institutions and governments are unable to manage incentives that push actors toward fragility.49 the stress or absorb the shocks of a changing climate, the risks to the stability of states and 91. Fostering trust, shifting incentives, and societies may increase. Natural disasters (for laying the foundations for growth: The WBG has example, floods, droughts, and sea level rise) a clear comparative advantage in strengthening cause greater forced displacement than conflict, core government functions, notably through and managing them is central to prevention and resource mobilization, transparency, and improved preparedness.48 The nexus between climate effectiveness in expenditures. Reforms must be change, geographic isolation, and fragility is most initiated to restore resource mobilization capacity pronounced in the Pacific, where half of the 12 WBG through taxation schemes that are perceived as fair member states are impacted: Kiribati, the Marshall and can be easily implemented. This is essential to Islands, the Federated States of Micronesia, Papua finance core state functions, but also because taxation New Guinea, the Solomon Islands, and Tuvalu. can help increase people’s trust in the state. Revenue These countries already suffer from severe fragility generated by extractive industries requires priority because of their small size, weak infrastructure and attention because it can be easily channeled toward capacity, limited economic opportunities, and high illicit or corrupt activities. youth unemployment—notably in Papua New Guinea and the Solomon Islands—as well as repeated natural disasters. 28  SECTION II: FRAMEWORK FOR WBG ENGAGEMENT IN FCV 92. In most cases, it is critical to support adequate functions. This can help reduce corruption, set up funding to frontline service delivery and reinforce grievance mechanisms for entrepreneurs, and improve local governments to ensure positive and inclusive access to land titles and property rights. These interface with people. The World Bank is increasingly projects will be prepared with strong involvement from supporting interventions that pay civil servants based IFC, and with MIGA where appropriate. on an initial identification of their posts, cleaned- 95. As countries emerge from deep fragility, the up payrolls, and more secure ways to process potential for private sector engagement expands. payments (for example, using digital methods or Countries where fragility is declining, and where the mobile phone payments)50. Incremental and trial- government and other stakeholders are committed and-error approaches are helpful to identify the most to growing the private sector, present an important appropriate systems. transformational opportunity for engagement. Despite 93. Macroeconomic support should be adapted challenges, WBG programming for the private to the conditions that characterize fragility, sector in these fragile settings has been quite broad, while helping governments manage trade-offs covering investments in job-intensive industries such in improving their fiscal space, managing debt, as agribusiness, MSMEs, and manufacturing and and providing credit to the economy. This requires service industries, as well as infrastructure investment, dialogue with the IMF as well as sensitivity to the particularly in power. Extensive upfront work is political economy and to managing the incentives of required to develop markets, projects, and sponsors, various actors, especially spoilers. Efforts must be and to provide necessary support in areas such as incremental, as pushing for overly ambitious reforms ESG capacity, sponsor identification, and conflict can be counterproductive. Debt management and assessments. IFC and MIGA can promote investment debt sustainability require clear monitoring and careful by helping identify sponsors and by mitigating risks attention to the recurrent cost obligations created by and dispelling perceptions about the non-viability development programs. The health of the banking of FCV settings for investors. Developing local and sector and ability to access foreign currency are also regional clients and strengthening value chains is essential for countries trying to transition out of fragility. key to helping generate good jobs. Special attention will be placed on promoting gender inclusion and 94. The WBG will scale up support for private mobilizing new investors. sector development through partnerships and joint operations across IFC, MIGA, and the World Bank. 96. The dual challenges of capacity and legitimacy In this context, early engagement can concentrate are especially relevant when trying to build resilient on such areas as agribusiness value chains, SMEs, economies and societies. The WBG needs to support trade finance, restoring banking services, as well delivery systems for projects that do not overwhelm as some investments in communication and urban the capacity of line ministries, so that they can stay services. IFC and the Bank are increasingly working focused on formulating and implementing policies. jointly on advisory services, public-private dialogues, It has proven effective to design unified delivery strengthening of basic legal frameworks, and cutting mechanisms that can help different projects deliver red tape for business interactions with government (for benefits, be quickly executed and adaptable, and example, in Afghanistan, Chad, the Central African be used in the event of crisis. The Yemen Social Republic, and Somalia). Enclave investments, such as Development Fund and the AGETIP in the Central mining, ports, or special economic zones, may also African Republic (CAR) and Mali are examples of be possible. The World Bank plays an important role delivery structures that have successfully reached in restoring the value chain, including in banking and people in need. They reduced the burden of dealing communication, and in improving the rule of law by with multiple systems of donor procedures and facilitating the interface between the formal private complex rules. sector and the state. The Bank will, whenever possible, include private sector facilitation and the regulatory framework in programming to strengthen core state WORLD BANK GROUP STRATEGY FOR FRAGILITY, CONFLICT, AND VIOLENCE 2020–2025  29 97. Post-conflict reconstruction, recovery, and to change patterns of discrimination and address resilience: The WBG will continue to engage in deep grievances. The war economy is often resilient, reconstruction, recovery, and resilience. This includes and illicit networks often continue to operate even countries where conflict is mostly subnational or where after conflicts end. In many cases, the situations conflicts exist at the national level, but government warrant more decentralized systems or some capacity and the social fabric remain strong. In most levels of subnational autonomy, areas in which the cases, special attention should be given to addressing WBG possesses recognized expertise and where grievances and strengthening preventive measures. peacebuilding requires drilling down into specific technical issues such as transferring resources, 98. When engaged in recovery and reconstruction, managing services, and building the capacity of local the WBG will continue to cooperate through government. Similarly, building resilience is a long- platforms with security, development, term effort in which the WBG is increasingly engaged. peacebuilding, and humanitarian actors. It is the WBG’s comparative advantage to help governments design recovery plans and mechanisms, including 4. MITIGATING THE SPILLOVERS OF FCV around DDR; to provide technical advice and 100. The WBG focuses on the negative impacts financing; and to leverage its convening power.51 The that FCV has on people, especially the most RPBA methodology and existing platforms between vulnerable and marginalized. However, a the EU, UN, and World Bank offer such an approach differentiated approach requires understanding and can help governments identify their priority needs the distinct effects that FCV has on people living for recovery, reconstruction and peacebuilding, in these contexts. The definition of vulnerability will prioritize relevant investments, and prepare sound vary depending on the context, whether it is people financing strategies in collaboration with donor in remote areas of a country who lack access to partners—for example, in the Central African Republic, basic services, those living in daily fear because Iraq, and northern Mali. their city experiences high levels of interpersonal 99. The WBG will increase its engagement with violence, or those who are forcibly displaced. governments to ensure that grievances around Vulnerability will also vary depending on how different exclusion are integrated into reconstruction parts of a society experience FCV—with minorities, programs52 and that the incentives of spoilers persons with disabilities, older persons, and other are addressed. Reconstruction is an opportunity marginalized groups often facing challenges related to discrimination and exclusion. Box 6. Addressing Subnational FCV in Middle-Income Countries (MICs): WBG Support in Mindanao Many subnational conflicts occur in middle-income countries In 2005, the Bank-administered $29 million Mindanao Trust not on the FCS List. However, the WBG has been engaged in Fund was established, and over a period of 12 years, it these situations for over a decade through a range of programs. provided access to basic services for more than 650,000 National-level projects have built-in subcomponents to directly beneficiaries in conflict-affected communities. It delivered benefit communities in FCV-affected areas, while standalone community infrastructure as well as livelihood and functional sectoral projects have addressed FCV-induced problems. literacy programs in 25 base camps and six acknowledged camps of the Moro Islamic Liberation Front, reaching over In the Philippines, an estimated 62 percent of people in 50,000 combatants and community members. When the Mindanao, the country’s poorest region, have been impacted trust fund closed in 2017, the Bank Group agreed with the by conflict. The World Bank has been engaged there since government and development partners to carry out a follow- 2005, working to promote peace, social cohesion, and up project for two years (FY18-19), with $3-4 million in grant livelihood development. This is a good example of how Bank financing from donor partners. support has been holistic, both in using multiple financing options and in the range of projects implemented. 30  SECTION II: FRAMEWORK FOR WBG ENGAGEMENT IN FCV Figure 6: Economies in FCS Are Lagging Behind in All Aspects of Human Capital Survival rate from Age 15−60 Fraction of Children Under 5 Not Stunted Probability of Survival to Age 5 Learning−Adjusted Years of School Harmonized Test Scores Expected Years of School Worst Median Best rank rank rank Average of economies in high−intensity conflict Economy in high−intensity conflict Source: World Bank (2018b). Average of other economies in FCS Other economy in FCS Note: The figure excludes Average of economies not in FCS Economy not in FCS high-income countries. 101. It is therefore critical that, whenever possible, 103. Improving human and social capital for interventions to address FCV and increase FCV-impacted people: The WBG’s Human resilience be paired with interventions that foster Capital Project (HCP) provides the framework and protect human capital. The delivery of social for addressing the impact of FCV on the highly services is also more complicated in fragile settings, vulnerable. The Human Capital Index shows that where institutions are more limited in their ability to FCS countries significantly lag non-FCS countries in function and where conflict and violence can impede every measure of human capital (see figure 6). Half project implementation and equity. Fragile settings of the bottom 20 percent of countries in the index are also tend to have fewer resources, which makes FCS countries. Protecting and building human capital investments in human capital even harder. is arguably one of the most important sources of resilience.53 This means addressing FCV and human 102. The WBG has gradually entered several development work in tandem. On the one hand, areas traditionally considered to be the purview many individual and relationship risk factors related of humanitarian actors, such as natural disaster to violence and fragility are closely linked to human response and risk management, food crises and development, which makes education, health, and health epidemics, and forced displacement. In social protection key entry points for addressing the each case, the WBG has focused on contributing impact of violence. On the other hand, experiencing or a development approach that is complementary to witnessing violence, particularly at a young age, has humanitarian relief. New thinking and practices have negative multiplier effects on education, health, and further developed this approach, as evidenced by employment, jeopardizing the achievement of each the rollout of adaptive social protection systems to sector’s core objectives as this negatively impacts respond to famine risks in Ethiopia and Somalia, social the next generation.54 Similarly, child marriage puts safety nets to channel post-cyclone humanitarian cash present and future generations at risk.55 The HCP also transfers in the Philippines, and the WBG’s efforts to promotes a multi-sector approach that takes the life develop private sector programs that address the cycle into account.56 needs of displaced populations. WORLD BANK GROUP STRATEGY FOR FRAGILITY, CONFLICT, AND VIOLENCE 2020–2025 31 104. WBG programs should adapt to the needs of for displaced populations and host communities at-risk groups that suffer disproportionately from and has worked to engage the private sector, the violence and economic disruption of war. This for example, building on the 2018 Kakuma as a includes (i) children, who need improved nutrition, Marketplace report61 and the 2019 Private Sector education, and basic health care, including mental Refugees: Pathways to Scale report. IFC has created health; (ii) women at risk of GBV who are suffering blended and risk-sharing facilities for financial from trauma and who need equal access to productive institutions that lend to SMEs and is exploring the assets, revenue-generating opportunities, education, creation of more programs, in collaboration with the and representation and authority in decision-making World Bank, to provide economic opportunities for at the household, community, and higher levels; and refugees and host communities. Another example is (iii) young men and women, who need employment the Partnership for Improved Prospects, established opportunities and skills as well as opportunities to by the Netherlands, IFC, the International Labour play a constructive role in society, particularly those Organization, UNICEF, the World Bank, and UNHCR, traumatized by warfare who need to find new roles which aims to help transform the way governments in their communities. The inclusion of sociocultural and other stakeholders, including the private sector, minority groups particularly targeted by violence respond to forced displacement crises. The WBG’s and abuse is key. Intersectional approaches may be engagement is grounded in a solid partnership with needed to address multiple forms of vulnerability (for UNHCR, structured around the complementarity of example, minority group members with disabilities). their mandates and capacities. 105. Addressing the needs of the forcibly displaced 107. Looking ahead, the WBG has three goals and their host communities: The WBG will further to support forcibly displaced communities: (i) to support transforming the global response to forced mitigate the shocks caused by in-flows of refugees displacement, in line with the Global Compact on and internally displaced persons (IDPs), as well Refugees.57 There is a broad consensus to promote as to create social and economic development synergies between humanitarian assistance and long- opportunities for the forcibly displaced and their host term development interventions. The WBG brings a communities; (ii) to facilitate sustainable solutions to development perspective to the forced displacement protracted displacement situations, including through agenda, as endorsed by the Development Committee the sustainable socioeconomic inclusion of refugees in in April 201658 and further articulated in the Forcibly the host country and/or their return to their country of Displaced report.59 This is distinct from, but origin; and (iii) to strengthen countries’ preparedness complementary to, the emergency responses and the for forced displacement crises. The WBG will continue rights-based agenda of humanitarian actors. It includes to focus on helping the forcibly displaced offset (i) enhancing ownership and leadership of the response their vulnerabilities and on helping host communities to displacement by host governments and regional absorb the shock. organizations, as appropriate; (ii) strengthening the 108. Internal displacement is also a development focus on the socioeconomic dimension of the crisis, for challenge, and effective support will require both the displaced and their hosts; (iii) focusing on key collaborating with partners and guiding areas for medium-term success, especially jobs and development funds to prevent escalation or a education, and closing gender gaps by empowering relapse of conflict. A fundamental challenge in women and girls; (iv) underlining the importance addressing situations of internal displacement through of policies and institutions to provide an adequate a government-led approach is that the same country response; and (v) increasing the use of data and is both the cause and the host of the displaced evidence to inform results-driven strategies. population. Conflict- and violence-induced internal 106. The WBG can build on a solid foundation, displacement is in most cases caused by endogenous with active programs financed by IBRD and IDA drivers and cannot be addressed in isolation from the across all regions and sectors.60 IFC has also dynamics that caused it. developed MSME and vocational training programs 32  SECTION II: FRAMEWORK FOR WBG ENGAGEMENT IN FCV Box 7. Responding to Forced Displacement in Ethiopia In Ethiopia, the World Bank is helping the government shift of the world’s most progressive. It provides enhanced rights its policies from encampment to sustainable management for refugees seeking to access services and employment. The of protracted refugee situations.62 Over time, this strategy Bank’s support to the Jobs Compact contributed to the timely will provide out-of-camp opportunities and facilitate the adoption of the Proclamation. The Bank, in partnership with socioeconomic integration of refugees; improve living UNHCR, is also providing the government with policy advice, standards for host communities; build human capital among analytics, capacity-building, and financing. In addition, Ethiopia refugees; and help transition away from humanitarian aid is receiving substantial support from IDA to support refugees where possible. Ethiopia passed a new Refugee Proclamation and host communities. in January 2019, making its legal framework on this issue one 109. Addressing global and regional crises, 111. The WBG is also reinforcing its capacity to including spillover effects: FCV conditions address pandemic risks and health crises in FCV exacerbate already dire existing vulnerabilities and settings. Recent pandemics—such as the cholera can lead to extreme, multi-hazard crises such as epidemic in Haiti and the Ebola crises in the Mano severe food insecurity or famine. Today’s famines River region of West Africa, the Democratic Republic are primarily the result of political events,63 and of Congo, and neighboring countries—have affected nearly every famine since the 1980s has occurred in countries wrestling with FCV. Many countries that countries affected by FCV.64FCV conditions threaten are in active conflict or face periodic violent flare- food supplies by limiting production and trade, ups have weak health systems, doubly burdened by and livelihoods may be intentionally interrupted supply disruptions and acute surges in trauma and or destroyed. At the same time, access to aid is injuries. The World Bank will strengthen its capacity to often deliberately hindered by warring parties.65 identify risks and intervene rapidly through the GCRP Combined, these FCV dynamics can push people mechanism, as well as engage early through tailored into destitution and eventually famine.66 If history multisectoral interventions to help restore health is a guide to future trends, the rising number of systems and support communities, especially during conflicts will inevitably lead to a greater risk of and after episodes of violence. In the Democratic multidimensional crises such as famine.67 Republic of Congo, for example, the Bank is deploying a multisectoral program to respond to the ongoing 110. Food security is a priority for the WBG. The Ebola crisis, strengthening public health systems, linkages between sustainable agriculture, climate, and supporting cash-for-work interventions to bolster natural resources, food security, and peace and community engagement. stability cannot be overemphasized. WBG is scaling up efforts to address famine risk with a broad crisis 112. Climate-related change can influence management approach that encompasses prevention, factors that cause or exacerbate conflict. Climate preparedness, and early-warning measures while change is a driver of FCV, and its impacts fall more relying on country systems. Through the Famine disproportionately on the poorest and most vulnerable Action Mechanism (FAM)68 and other initiatives and living in FCV situations. Ultimately, the nexus of FCV programs, the WBG is (i) supporting more quantitative and climate change can undermine human security and and timely data and analytics to better detect and peace. Adverse climatic events and natural disasters69 forecast emerging food security threats; (ii) filling can increase the risk of violence and conflict, at both gaps in financing to bolster long-term investments the interpersonal level and between groups.70 that tackle root causes, while developing instruments that can respond more quickly and flexibly to warning 113. Climate change is also emerging as a potent signs; and (iii) working with existing, country-based driver of internal migration. The 2018 World Bank systems to better integrate short-, medium- and long- report Groundswell: Preparing for Internal Climate term goals—in short, a “whole-of-aid” approach. Migration71 predicts that slow-onset climate change WORLD BANK GROUP STRATEGY FOR FRAGILITY, CONFLICT, AND VIOLENCE 2020–2025 33 Box 8. Dealing with Trauma Caused by War and Crisis Living with poor mental health and lingering trauma is a impacts entire generations. This increases when violence and harsh daily reality for a large swath of the global population. sexual violence are weaponized during warfare, as is often Estimates from the World Health Organization (WHO, 2019) the case in conflict and post-conflict situations. Mental health reveal that among people who have experienced war or programs are important but not sufficient, and trauma requires other conflicts in the previous 10 years, almost 1 in 10 have strong support from communities, restoration for assets lost, a moderate or severe mental disorder. In areas affected by jobs and social engagement activities whenever possible, as conflict, 1 in 5 people are living with some form of mental well as some form of action and accountability that recognizes disorder, ranging from mild depression and anxiety to the suffering of victims. In post-conflict situations, it is psychosis. Given the sizeable proportion of people living in important to factor it in that many beneficiaries will be suffering countries affected by fragility, conflict, violence, and human from trauma. rights violations, the burden of trauma and poor mental health on people, communities, and institutions is staggering and affecting crop productivity, water stress, and sea 115. It is urgent to shift from reactive to proactive level rise, compounded by storm surges, will result and anticipatory responses. Crises in hotspots in the emergence of hotspots of climate induced in- require immediate attention, yet responses must migration and out-migration. Without concrete climate go beyond the proximate causes to address the and development action, by 2050 some 143 million underlying drivers, including environmental and people—about 3 percent of the population across climate-related factors, that jeopardize livelihoods Sub-Saharan Africa, Latin America and South Asia— and fuel conflicts. It is also essential to step up could be forced to move within their own countries preventative approaches to enable holistic and as part of climate-induced migration. This trend will integrated solutions across spatial and temporal increase across the three regions, the study says. It scales. For example, the Bank-funded Regional Sahel is therefore vital to pursue more climate-friendly and Pastoralism Support Project supports transboundary inclusive development scenarios to reduce the number migration as an adaptation strategy for pastoralists of climate migrants. who are threatened by drought and conflict. It uses a range of interventions, including migration corridors, 114. The WBG recognizes the importance of shared water points, surveillance for major diseases addressing FCV’s environmental impacts as and other veterinary services, more robust early- well as environment-related drivers of FCV. The warning systems, and enhanced crises response. combination of climate change, poor state capacity, mismanagement, and insecurity can seriously impact natural resources and the environment, exacerbating tensions between groups, compounding C. Areas of Special Emphasis vulnerabilities, and increasing hardship on the 116. The WBG will be selective and promote areas poorest. Building up a community’s resilience and of special emphasis, as engaging in FCV settings protecting natural resources such as arable land, fresh is fundamentally different from engaging in non- water, and biodiversity are important components FCV settings. Emphases will include (i) investing of the World Bank’s engagements in fragile areas in people and their human capital; (ii) supporting such as the Sahel, Central Africa, and the Pacific macroeconomic stability and debt sustainability; Island countries,72 where multidimensional fragility is (iii) creating jobs and economic opportunities; (iv) prevalent. Interventions need to be highly contextual, building community preparedness and resilience to community-driven, and tailored to how various impacts such as climate change and environmental populations actually use natural resources. degradation; (v) engaging on justice and the rule of law; and (vi) and engaging with the security sector. 34  SECTION II: FRAMEWORK FOR WBG ENGAGEMENT IN FCV 117. Throughout its engagement in FCV settings, 120. (ii) Supporting macroeconomic stability the WBG will emphasize closing gender gaps and and debt sustainability: Countries at high risk addressing the needs of women and girls. The Bank of violence also typically experience challenges will increase operationally relevant analytical work that with their macroeconomic policy. Depending on identifies gender-based discrimination and harmful context, these can include limited fiscal space and gender norms (including those that drive GBV), as well debt intolerance, a tax system perceived as unfair, as gender gaps in access to economic opportunities, poorly targeted subsidies, limited control over public assets, and human capital in FCV settings. Evidence- expenditures, weak management and low transparency based operations across sectors will aim to close of revenues, difficult access to credit, high inflation, these gaps as well as prevent and respond to GBV, and capital flight. These situations tend to undermine delivering better outcomes for women and girls as economic growth, reinforce corruption, worsen well as men and boys. The Bank recognizes that service delivery, reduce trust in public institutions, and achieving gender equality outcomes creates resilience create disincentives for private sector investment and at the individual and community level, and that it is growth. Analytical work that incorporates differential instrumental in promoting prevention and providing a impacts across households and firms (for example, foundation for building and preserving human capital. Policy Social Impact Assessments) and that mobilizes economic expertise specific to FCV countries is the 118. (i) Investing in people and their human first step toward ensuring that macroeconomic policies capital: The WBG is heavily engaged in efforts to are conflict-sensitive. In contexts marked by fiscal improve the delivery of health, education, and nutrition pressures and urgent financing needs, it is all the more services and the availability of drinking water. Together critical to support governments in designing a feasible with safety nets’ support to disadvantaged families, adjustment and to convene partner support. This these services help build and protect human capital, includes preserving budget cash flow through large especially for the most vulnerable communities. The cuts to the capital budget or by accumulating arrears— WBG will address gender gaps, disability, and other both of which are undesirable measures in “normal” socioeconomic gaps in human capital, both for their times but are potentially capable of buying time while intrinsic benefits and for their links to social inclusion conflict factors are being addressed.75 Advice on and cohesion. WBG operations will focus not only macroeconomic adjustment and debt sustainability on the quantity of services but also on how they are should also take into account the proposed reform delivered, recognizing that inclusive and effective package’s impact on the poor and middle class, as social sector service delivery is central to improving perceptions of unfairness often trigger violence. state legitimacy and trust in institutions.73 121. (iii) Creating jobs and economic 119. When supporting systems, the WBG is opportunities: Job creation is among the most cognizant of capacity constraints, the recurrent cost pressing challenges in FCV. The social externalities of maintaining service delivery, communities’ level linked to jobs—beyond the benefits that workers of commitment and engagement, and the need themselves enjoy—are especially high in FCV settings. to mitigate major context-specific issues such as Job creation and improvements in earnings can distance to facilities, security, corruption, exclusion, contribute to peacebuilding through their impact and discrimination risks. Special focus will be placed on social cohesion and dignity. Better jobs can on supporting the agency of the most vulnerable help break cycles of violence, restore confidence in and marginalized groups, including women and institutions, and give people an increased stake in children,74 minorities, and people with disabilities. peaceful society. But job creation in FCV settings is The WBG also acknowledges the importance of complicated by the impact of conflict and fragility deepening partnerships with local institutions to deliver on infrastructure, on the ability of workers and firms services and increase the agency of women and (whether formal or informal) to plan and to bear risks, girls. Regardless of the type of institution that delivers and on the business environment. In addition, about services, governments should maintain a strong policy two-thirds of existing employment in FCS countries is and monitoring role and ensure that service delivery is classified as vulnerable.76 inclusive and equitable. WORLD BANK GROUP STRATEGY FOR FRAGILITY, CONFLICT, AND VIOLENCE 2020–2025  35 122. Real job creation can be sustained only through a renewal of conflict. Recent randomized trials in improved governance and security, and it must be the Central African Republic, Côte d’Ivoire, Egypt, driven by the private sector, which accounts for about Liberia, and Uganda have yielded encouraging 80 percent of employment in FCS countries. Jobs in results, in terms of both livelihoods and conflict. The FCV settings involve diverse actors, including formal impact of cash transfers may be even stronger when and informal firms, MSMEs, household enterprises, combined with ancillary services such as mentoring and self-employed workers. Job outcomes can be or counselling. Evidence from cash transfer programs improved by a range of measures, including improving demonstrates that alleviating income constraints the functioning of markets through better information can reduce the incidence of violence and gender- and connectivity; facilitating company registration; based violence. But challenges remain, such as fiscal de-risking tools; support for MSME development; and sustainability and evidence gaps in the long-term skills upgrading and support to the self-employed to effects, especially on child learning and nutrition, as increase their productivity. WBG support to jobs in well as on adult employment. FCV will continue to be guided by Jobs Diagnostics 125. Increasing efforts to address the that analyze the obstacles to improving livelihoods and environmental impacts of FCV and disasters. The to increasing earnings and job quality. combination of climate change, poor state capacity, 123. (iv) Scaling up community approaches to and insecurity can seriously impact natural resources addressing drivers of fragility and supporting and the environment, exacerbating tensions between the dynamics of resilience, including efforts to groups and increasing hardship on the most vulnerable. address environmental challenges. Community- Building a community’s resilience and protecting its driven operations empower communities.77 These natural resources, such as access to land and water, approaches help reorient service delivery systems and is an important component of Bank engagements make people partners in the design and delivery of in fragile areas, such as the Sahel or the Pacific public services. In fragile situations, engaging citizens Islands, where multidimensional fragility is high. Such to oversee service delivery and creating mechanisms interventions need to be contextual and tailored to how to reinforce their participation is critical to improving local populations use land. WBG operations encompass services and social cohesion. These efforts can be how to manage pasture, protect and restore forests, designed to support prevention and resilience in better use water supplies, protect and prevent the polarized situations and to help local governments contamination of water and land, and develop small deliver infrastructure and services in remote and irrigation schemes. Similarly, disasters hit people living insecure regions, foster inclusion of marginalized in FCV-affected countries hardest and can further erode populations, remove perceptions of injustice, improve citizen trust where governments are unable or unwilling fairness, and generate acceptance on the distribution to respond. Disasters set back economic and social of public resources.78 progress. Most notably, water-related disasters can act as risk multipliers in fragile contexts, contributing to 124. Prioritizing social protection systems to conflict, violence, and/or migration.79 enhance human capital and productivity, fight poverty, reduce inequalities and contribute to 126. (v) Engaging on justice and the rule of law: A social peace. Building social protection programs robust justice system creates incentives for peaceful in line with state capacities, including social safety behavior. It can settle disputes in a peaceful manner, nets and cash transfers, are essential to promoting ensure accountability through limits on the exercise of equity and to building resilience and opportunity. power, and combat corruption. But calls for justice and After a conflict, they ensure welfare in the short term, the rule of law from a country’s citizens can contrast and they provide resources to local economies and starkly with the capacity of governments to actually people in the medium term. This allows households meet these demands. Both formal and informal to invest in health, education, and nutrition, thus justice systems play an important role in resolving protecting human capital and reducing the incidence grievances that might otherwise lead to conflict, crime, of poverty. Such programs can also discourage and violence. Building resilient institutions capable 36  SECTION II: FRAMEWORK FOR WBG ENGAGEMENT IN FCV of addressing grievances and delivering services is the institution may engage with security actors while critical to transforming the dynamics of FCV settings. remaining consistent with its mandate, comparative advantage, and technical competence. The WBG’s 127. Since the early 1990s, the Bank has worked engagement with security and military actors ranges with justice institutions of member countries, from national military units providing non-military particularly courts, ministries of justice, legal functions such as disaster relief;80 to financing of aid providers, CSOs, and bar associations. It road construction in an active conflict zone in, for has provided financing from its own resources and example, Cameroon using the country’s Army Corps of trust funds, technical assistance, and advisory Engineers because there were no private contractors services through projects whose objectives and willing and able to undertake the work;81 to partnering activities focused, in whole or in part, on improving with the UN peacekeeping mission and UNDP in the administration of justice and the rule of law. The Liberia to support the newly elected government’s Bank has also worked to improve case-management efforts to improve infrastructure, with employment- systems, train judges, enhance legal aid and outreach. intensive road repairs as part of recovery in war- Similarly, the Bank has worked on designing and affected areas. implementing projects across its FCV portfolio to be more effective, equitable, and responsive to grievances 130. In response to client demand, the WBG and disputes, particularly those of affected persons. has partnered with the UN in carrying out public expenditure reviews and public financial 128. Going forward, the Bank will explore ways to management. This has provided governments with strengthen the justice and rule-of-law dimensions inputs about the economic and budget tradeoffs of of operational and analytical work to help countries ensuring security and promoting peacebuilding. To better address grievances; enforce rights; reduce and date, the WBG has undertaken more than 20 such manage crime; equitably resolve disputes over land reviews in the security sector. These have led to key and natural resources; promote legal aid and access strategic and operational outcomes, ranging from a to legal services; and strengthen contract enforcement dialogue on pensions and aging personnel in Guinea- and commercial dispute resolution. Of special concern Bissau, to procurement reform in Afghanistan. To is that all GBV survivors—including survivors of sexual provide greater clarity, the Bank is reviewing its legal violence—need access to legal and judicial services and policy framework for security engagements and for prevention, protection and prosecution. has adopted a case-by-case approach that identifies, 129. (vi) Engaging with the security sector: Security manages, and mitigates risks while ensuring that all is vitally important to addressing the development Bank engagements and activities with security actors challenges posed by FCV. Although the WBG’s are designed to be consistent with its development involvement with member countries’ security sector mandate under the Articles of Agreement. has been limited, there is growing recognition that WORLD BANK GROUP STRATEGY FOR FRAGILITY, CONFLICT, AND VIOLENCE 2020–2025 37 Section III: Operationalizing the WBG’s Strategy for FCV WORLD BANK GROUP STRATEGY FOR FRAGILITY, CONFLICT, AND VIOLENCE 2020–2025 39 131. To operationalize the FCV Strategy, this • Response to humanitarian crises. The policy section sets out an implementation model. It will clarify that the Bank may provide development articulates 23 measures82 to strengthen the WBG’s assistance in response to humanitarian crises effectiveness in FCV settings. under certain limited parameters. 132. Implementation is structured around “4 • Forced displacement. The update will mainstream Ps”: policies, programming, partnerships, and key principles of the IDA18 Refugee Sub-Window personnel. These are underpinned by financing (IDA and reflect emerging practice derived from and IBRD financing, trust funds, IFC investments, and displacement operations in different developing MIGA guarantees), with the strategy offering a tailored regions. financing architecture for FCV settings aligned with the • Security and related issues. The update will four Pillars of Engagement. provide clarified parameters for the Bank’s engagements with military and security actors 133. Flexibility and adaptation to individual though ASA activities (such as security-sector country contexts will be key for effective public expenditure reviews) and, where appropriate operationalization of the FCV strategy on the and warranted, for project implementation. It may ground. The operationalization of the 23 measures also clarify parameters and the scope of the World proposed will thus be conducted at both the global Bank’s support for peacebuilding activities and level—as part of WBG’s corporate commitments and engagements with non-state actors. applicable across the institution—and at the country level. This will ensure that the measures can be To support the rollout of the new FCV strategy translated into WBG programming in a manner that is and updated OP 2.30, the Bank will update and tailored to each specific situation. prepare new guidance to staff on key FCV-relevant topics, including support for the implementation and supervision of Bank projects in insecure areas. A. Policies, Processes, and Practices: 136. The updated policy will be finalized and Ensuring the WBG is Fit-for-purpose submitted to the Bank’s Board of Directors for approval following a discussion with the 134. Clarifying and articulating the WBG’s Committee on Development Effectiveness. The engagement in FCV settings: The policy framework updated OP 2.30 will be accompanied by guidance to of the WBG provides the backbone of its engagement staff on key FCV-relevant topics, including support for around the world. In settings that require special the implementation and supervision of Bank projects in flexibility to respond to FCV challenges and rapidly insecure areas. changing dynamics, it is especially important to ensure that these policies, and related processes and 137. In recent years, the Bank has enhanced its practices, are fit-for-purpose and allow the WBG to operational flexibilities in FCV settings in an effort maximize its impact on FCV. to increase operational effectiveness. The Bank will enhance the practice of systematically using 135. World Bank Operational Policy (OP) 2.30 on operational flexibilities introduced for FCV settings in Development Cooperation and Conflict, which full consistency with existing guidelines. This includes includes provisions that apply to FCV and other providing staff trainings and fostering communities contexts, is being updated, drawing on inputs of practice to raise awareness of flexibilities in and guidance from the Bank’s Board of Executive procurement, the Environmental and Social Framework Directors.83 Among other things, the updated policy (ESF), or financial management in FCV settings. will clarify the application of provisions of the policy in several key areas, including 40  SECTION III: OPERATIONALIZING THE WBG’S STRATEGY FOR FCV 138. Overall, the WBG has enhanced its to contract portfolio-wide TPM can help reduce operational flexibilities in FCV settings. Several costs and increase economies of scale. Additional flexibilities have been successfully introduced for options include using project proceeds to pay for FCV contexts to increase operational effectiveness technical and social audits to monitor technical while maintaining adherence to standards, such as quality, performance, social risks, and safeguards. paragraphs 11 and 12 of the Policy on Investment • Making programs FCV-sensitive reduces Project Financing that address situations of urgent fragmentation. Lessons gathered highlight the need or assistance and capacity constraints. importance of concentrating programs on the most However, many of these flexibilities are not being important sectors and themes that can curtail FCV used systematically in FCV contexts. To increase drivers. Portfolio reviews and deep dives have been awareness of flexibilities, staff learning should include conducted in the Democratic Republic of Congo formal training and other relevant approaches (e.g., and Haiti to assess performance and identify Communities of Practice). improvements in supervision. In the Democratic 139. The Initiative for Improving Impact and Republic of Congo, this means reducing the Effectiveness in Fragile and Conflict-Affected geographical coverage of the portfolio in order to Situations (the FCV Pilots) was implemented focus on conflict-affected areas where the needs of and conducted between September 2018 and the poor are most acute. June 2019. The objectives were to (i) strengthen • Special focus on the political economy helps project supervision and implementation support, staff understand the drivers of fragility. In MICs including through a Bank-wide review of third-party with subnational conflict, such as the Philippines, monitoring (TPM) arrangements (including data on staff report that systematic FCV awareness and delivery models, risks, costs, duty of care, terms of training are necessary to ensure that conflict and reference, etc.); (ii) enhance program effectiveness; fragility issues do not become overshadowed by and (iii) improve portfolio selectivity. The focus was on standard development interventions. This entails Afghanistan, the Democratic Republic of Congo, Haiti, customized FCV trainings. In Haiti, the Philippines, Iraq, Kosovo, the Philippines, and the Sahel countries. and the Sahel, the FCV pilot programs supported Among key lessons learned on operational challenges, customized trainings that covered project design, the pilots highlighted: partnerships with the UN and NGOs, working with the private sector, and safety and security. • Geospatial analysis and portfolio mapping are important to enhance operational effectiveness: 140. Operating in FCV settings calls for specifically, deploying low-cost, high-impact enhanced implementation support. In low- geospatial technology (specifically, the GEMS capacity environments especially, it is critical to initiative) to map the project sites. provide support and build capacity to address deep • Supervision and implementation support are institutional fragility, and to develop smart country- subject to access constraints because of wide approaches to compliance. The World Bank persistent insecurity. Limited access to project is developing new approaches to support teams sites in high-risk locations can be mitigated by (i) throughout implementation and to ensure that projects strategically contracting TPM agents to help fulfill can adjust to changing circumstances. For instance, the Bank’s supervision obligations; and (ii) building in Afghanistan, under the Anti-Corruption and Results the M&E capacity of governments to deploy low- Monitoring Action Plan (ACReMAP), the objective cost ICT solutions such as GEMS to better capture is to enhance the value for money of Bank-financed granular data on project implementation. operations by reducing their vulnerability to corruption, while strengthening monitoring of implementation • Insecurity makes supervision more expensive, progress and results. especially TPM. Yet as has been shown in Iraq, technology and the joining of supervision budgets WORLD BANK GROUP STRATEGY FOR FRAGILITY, CONFLICT, AND VIOLENCE 2020–2025 41 social standards set forth in the ESF. The principles Box 9. of inclusion, social development, participation, and ACReMAP in Afghanistan non-discrimination are among those that underlie the ESF, which puts special emphasis on those that are In Afghanistan, the WBG is working with the government to enhance implementation support, with emphasis on more disadvantaged or vulnerable. The Environmental fiduciary aspects through a unified compliance package. and Social Policy, which is part of the ESF, explicitly The ACReMAP project includes (i) strengthening vigilance calls for the World Bank’s due diligence process to and rigor in results monitoring, including through risk-based take into account threats to human security through smart implementation support and by ramping up TPM to the escalation of personal, communal, or inter-state cover all projects; (ii) helping the government implement conflict, crime, or violence. its anticorruption strategy, notably through demand-driven capacity building in selected government agencies; (iii) 143. The ESF requires a higher level of increasing transparency and citizen engagement, including environmental and social risk management from by rolling out a portfolio footprint (district-level visualization borrowers than the previous safeguards regime. of the Afghanistan Reconstruction Trust Fund portfolio), The ESF includes more explicit requirements in some TPM dashboard, and ultimately a compliance management areas (e.g., labor, non-discrimination, stakeholder system, built iteratively across the WBG (starting with engagement) and new project documents (e.g., audits dashboards); and (iv) strengthening the safeguards Environmental and Social Commitment Plan, Labor system by addressing gaps between the Environmental and Management Plan, Stakeholder Engagement Plan). Social Framework (ESF) and country systems, supporting Issues relating to ESF implementation that will require capacity development, and proactively managing risks and increased efforts on the part of borrowers include bottlenecks in the pipeline and portfolio. labor and working conditions, non-discrimination, biodiversity, GBV, and occupational health and safety. Client capacity to manage environmental and social 141. Building on the WB Procurement Framework issues is limited in some countries and is expected Policy implemented in 2016, the World Bank is to strengthen only gradually. The ESF does not have ramping up its Hands-On Expanded Implementation a separate procedure for FCV situations, and the Support (HEIS) in FCV settings. HEIS is currently application of the ESF in the context of FCV situations being provided in 16 projects, and preliminary can be challenging, given low capacity and often evidence shows that it speeds up procurement and volatile conditions. mitigates project implementation delays. For instance, in Myanmar, a consultant selection process that would Box 10. have normally taken 18 months was completed within Flexible Procurement in FCV: Somalia seven months. Similarly, alternative procurement arrangements (APAs) are supporting borrowers’ In 2017, the Somali government requested the Bank’s capacity to implement projects in countries with financial support for emergency drought assistance. particularly difficult environments, including FCV, and Although there was no active IDA program in the country, can increase the Bank’s operational flexibility. Projects the Bank used APAs under the Somalia Emergency Drought in Somalia, South Sudan, Yemen, and Zimbabwe are Responses and Recovery Project to channel a single good examples of how the Procurement Framework’s multisector program through the FAO ($30 million) and the APAs have helped the Bank exercise greater flexibility ICRC ($20 million). In addition, the program allowed 100 in responding to FCV needs on the ground. percent retroactive financing for the ICRC component, with the proper risk mitigation measures in place. Through this 142. Environmental and Social Aspects: The World program, 500,000 people gained access to food, 700,000 Bank’s new Environmental and Social Framework to clean water, and 50,000 households benefited from (ESF) has introduced a comprehensive set of livestock vaccinations or animal treatment support. 10 Environmental and Social Standards (ESSs), with multiple entry points to address risks in FCV settings. In these as in other settings, the World Bank remains committed to the strong environmental and 42  SECTION III: OPERATIONALIZING THE WBG’S STRATEGY FOR FCV 144. The ESF offers a range of flexibilities for management policy allows for innovative ways to FCV settings. The ESF is supported by notions of contextualize appropriate interventions in FCV settings. proportionality, adaptive management, and judgment- Key examples include based decision making, which enables operational • Risk assessment and mitigation. The WB IPF flexibility when agreeing with borrowers on the Policy requires the FMS to assess the risks to environmental, social, health and safety (ESHS) project implementation and suggest mitigation risk management measures that are reflected in the measures depending on the level of risk and the Environmental and Social Commitment Plan (ESCP). operating environment. For example, in cases of The flexibility built into the ESF can be combined low or no capacity, FM policy allows the borrower to with strengthened Bank support to governments transfer its fiduciary responsibilities to a third party and thus help make the process more manageable with adequate capacity (for example, the South in FCV contexts. The World Bank and the borrower Sudan Safety Net program, and the Timor-Leste can agree to the preparation of the ESF instruments Community Driven Nutrition Improvement project). during project implementation, provided that there is a detailed timetable for delivery to ensure that measures • Flexibility in retroactive financing and PPF that are in place prior to the start of any activities that can be used to support project implementation. could result in negative environmental and social risks In the Comoros’s Comprehensive Approach to and impacts. These elements of policy flexibility are Health System Strengthening project, for example, especially true in emergency conditions. retroactive financing has prevented delays in project preparation. 145. To support the ESF, the World Bank issued a Directive to address risks and impacts Box 11. on disadvantaged or vulnerable groups and Standards and Policy Application in FCV Operations individuals. The Directive provides staff with clear instructions to conduct the due diligence process on The Somalia Urban Resilience Project Phase II illustrates identification and mitigation of risks to those who may how the Environmental and Social Framework enables be disadvantaged or vulnerable, whose presence projects to take a more proactive and systematic approach may be more prevalent in FCV contexts. The World to issues that are particularly relevant for FCV settings. Bank is developing guidelines to operationalize the With Al-Shabaab still in control of parts of the country ESF that may be particularly useful in FCV settings, and attacks frequently targeting government, strategic including already published good practice notes infrastructure, and people in urban areas, the clear on GBV, gender, use of security personnel, non- provisions provided under the ESF—including ESS2 discrimination and disability, non-discrimination and (Labor and Working Conditions), ESS4 (Community Health sexual orientation and gender identity, and third- and Safety), and ESS10 (Stakeholder Engagement and party monitoring. Information Disclosure)—have helped the project identify relevant risks and design feasible mitigation measures. 146. Financial management. Although the financial This has helped address security risks for (i) project management specialist (FMS) of each World Bank workers (such as putting in place restrictions on work project is required to undertake periodic financial hours and access control to construction sites), (ii) the host management supervision of project activities, community (such as management of risks from the use of depending on the level of risk, this is hampered by public security forces), and (iii) public stakeholders (such as the use of low-profile focus group meetings and individual insecurity in FCV settings. In Yemen, for instance, interviews rather than high-profile public consultations). the Bank currently has no access, and in South The government has committed to implementing these Sudan, Bank staff are not allowed to travel outside measures in the Environmental and Social Commitment the capital, Juba. To provide fiduciary oversight in Plan (ESCP), which enables the Bank to systematically these environments, the Bank relies on alternative monitor and strengthen the effectiveness of these arrangements such as TPM, remote supervision measures throughout the project’s life. through GPS-enabled technology, reliance on UN agencies with a presence in the country, and independent verification agents. Current financial WORLD BANK GROUP STRATEGY FOR FRAGILITY, CONFLICT, AND VIOLENCE 2020–2025 43 • Disbursement methods that can provide Engagement84 requires all investment project financing increased flexibility for FCV operations. Since 2017, operations to integrate into the project results the entire South Sudan portfolio has migrated to framework at least one mechanism to engage with the transaction-based SOE system, with direct the project’s ultimate beneficiaries, and one or more payments used for almost all payments. indicators of beneficiary feedback. Furthermore, the ESF’s Environmental and Social Standard 10: • Flexibility in financial reporting frequency, Stakeholder Engagement and Information Disclosure format, and content that have also been used emphasizes the importance of engaging stakeholders to support operations. For high-risk projects, it is throughout the project life cycle, especially those normally agreed with the implementing entity to who may be disadvantaged or vulnerable. All project- submit more frequent IFRs with additional details affected parties and other interested parties will be to provide accountability. Whenever feasible and identified through stakeholder identification and appropriate, projects are also encouraged to use analysis at the beginning of project preparation. the government’s own IFMIS for project accounting Projects with heavy security constraints have rather than parallel accounting systems. benefitted from modified or alternative processes • Audit and assurance services. The flexibility for stakeholder engagement and consultation on allowed in the Investment Project Financing policy in environmental and social (E&S) risks and impacts terms of the borrower’s responsibility for assurance (for example, Iraq and Yemen). Given the difficulty of the proper use of funds allows for alternative to carry out consultations in accordance with regular assurance arrangements, including adjustments procedures and modalities in such cases, the Bank in the periodicity and types of audits, third-party has explored undertaking independent consultations monitoring, and independent verification as an or contracting third parties. E&S risks and impacts will additional or alternative means of assurance. require close monitoring, frequent consultation, and For high-risk projects, third-party monitoring has strong feedback mechanisms throughout the project. leveraged the presence of other development and relief agencies, such as the UN and international 148. All projects supported by the Bank through non-governmental organizations (INGOs), that are IPF require stakeholder consultations, information on the ground in FCV settings, to provide assurance disclosure, and the establishment of grievance on the use of Bank financing—for example, in South mechanisms. Project stakeholder engagement Sudan, the West Bank and Gaza, and Yemen. plans will elaborate on these processes. These accountability and feedback mechanisms are • Capacity building. The Financial Management especially key in high-risk FCV situations where (FM) Directive requires each project to ensure regular supervision by the Bank may be curtailed. that the implementing entity maintains adequate More specifically, in FCV settings, stakeholders can FM capacity. However, in FCV countries, capacity be engaged more effectively through various methods constraints are significant, so knowledge-sharing such as using social and conflict analyses to inform and hands-on support are critical. Several the stakeholder engagement design; involving local approaches have been implemented to promote networks to identify stakeholders and those at risk; compliance through capacity-strengthening negotiating access via local communities; targeting measures. In the Solomon Islands, for example, engagement techniques to specific excluded groups; FM workshops to discuss cross-cutting portfolio strengthening communications with local communities issues enable project accountants to raise issues about the project’s impacts on community safety and both in relation to their specific project and about security; regular dialogues with security personnel their communications within the Bank. These have if warranted; awareness-raising concerning become a regular part of the financial management workers’ Codes of Conduct and project grievance mission agenda. mechanisms; and using third-party monitors and/or 147. Consultations. Accountability to affected local facilitators because often they have local trust populations in FCV settings is key. The Bank’s and better access to contested areas. Strategic Framework for Mainstreaming Citizen 44  SECTION III: OPERATIONALIZING THE WBG’S STRATEGY FOR FCV 149. IFC processes are being simplified to that are context-specific; and guidance to define address FCV challenges more nimbly. IFC has approaches to project-level conflict analysis. MIGA is already streamlined some processes for implementing leveraging this work by IFC. projects in FCS. For instance, many FCS projects 152. IFC and MIGA’s existing approach to ESG use a simplified term sheet and simplified legal (since the development of the 2006 Performance documentation. Several other efforts are under way: Standards) requires clients to progressively • Streamlining the processing of small loans. achieve the Performance Standards within a Loan size is often smaller in FCS, so efforts to “reasonable period of time.”85 The time agreed streamline the processing of small loans will between IFC and MIGA and their clients may be longer benefit most projects in FCS. IFC has rolled out in FCV settings, and progress may be phased. Hence, the Credit Delegation Framework for these loans it may take longer for client operations to be consistent in some sectors where credit decisions will be with the Performance Standards than in other contexts, delegated to operations. Other programs and and there is a higher risk that some clients may be approaches allowing for delegation both from unable to fully achieve their commitments. IFC and senior management and from IFC’s Board will also MIGA will seek to work with their clients through be considered. capacity-building or additional resources to enable them to address their specific challenges and meet • Standardizing programmatic approaches for the Standards over time. In cases where a client’s or investments, which has been established for small project’s challenges appear particularly significant, investments. IFC and MIGA will identify the circumstances and • Aligning processes between IFC and other any proposed responses in the Board paper and development actors in project development, disclosure documents so that they may inform the particularly in relation to ESG and integrity due Board’s decision to approve those investments. This diligence (IDD) work. approach will better enable IFC and MIGA to assist clients to develop their ESG capacity over time to meet 150. MIGA will continue to make use of its international standards and to facilitate projects with streamlined Small Investment Program in FCS high developmental impact in FCV situations. and will look for further opportunities to enhance that program. 153. IFC and MIGA cannot guarantee outcomes but can advise their clients on how to mitigate negative 151. Strong ESG performance correlates with impacts. Because this work is resource-intensive, IFC positive development outcomes. The IFC and MIGA and MIGA must continue to be selective in their choice Performance Standards reflect good international of clients to support, as they scale up in FCV settings. industry practice and offer an effective framework The selection process will require a candid and robust for environmentally and socially sustainable private debate at entry to determine client commitment to sector outcomes in FCV settings. However, ESG risks IFC and MIGA’s standards throughout the course of are heightened in these settings because many of the their investments. Monitoring clients’ progress in the contextual risks are systemic—for example, security, portfolio will be costly and challenging: for instance, gender-based violence, and land rights—while others conflict and fragility may impact timely client reporting are outside the control of private sector actors. Private and even prevent staff from visiting client operations. sector investment can also unintentionally exacerbate conflict and violence if the allocation of benefits and 154. Even with these enhanced efforts, there will jobs sparks tensions among conflicting groups. IFC likely be a higher frequency of investment and continues to develop new tools and guidance to client failure. Social and environmental sustainability assist teams working in FCV settings. Pilot programs in the private sector are preconditioned on financial incorporating conflict-sensitivity approaches are sustainability, and business failure is a natural part of under way such as a Contextual Risk Screening market operations that is even more likely in FCV. IFC Framework for systematically identifying high risks and MIGA’s responsibility to perform due diligence and monitoring of clients ends on exit, and their ability WORLD BANK GROUP STRATEGY FOR FRAGILITY, CONFLICT, AND VIOLENCE 2020–2025  45 to mitigate post-exit impacts is limited. Although IFC adapt implementation when needed and to verify the and MIGA cannot guarantee outcomes or ensure effectiveness of these adaptations. A rapid-evaluation a client’s performance during the investment or tool to assess the strength of monitoring systems is subsequently, they will give due consideration to any under development. potential adverse impacts on the community that are likely to subsist (from the project) at the time of exit. 158. New tools, methodologies, and technologies can generate data, track both quantitative and 155. To help firms implement the IFC Performance qualitative indicators, and empower beneficiaries Standards in FCV settings and improve their and recipients to take a stronger role in monitoring corporate governance, IFC is developing a new ESG the services they receive.86 For instance, integrating advisory program. The program will focus on upstream perception surveys into M&E frameworks will help interventions to ease ESG constraints and address gather beneficiary feedback so that the WBG can issues in key IFC pipeline projects early in the project learn, adapt, and correct course as needed to help cycle to help prepare them for investment. The program improve service delivery and strengthen trust in will include additional ESG staff in the field and targeted institutions. Similarly, approaches such as iterative internal and external funding to support advice for beneficiary monitoring (IBM) or participatory tracking clients. In addition, IFC will seek donor-funded advisory can facilitate early identification of problems, resources and combine this with blended finance, as inform course corrections, and improve the design, relevant, to help clients address the additional costs collection, and use of survey data. The IBM approach and capacity needed to meet the expectations of the collects data directly from beneficiaries but keeps data Performance Standards. MIGA, for its part, is exploring collection efforts to a minimum, thus lowering costs, an ESG technical assistance program. increasing speed, and ultimately giving feedback that is directly relevant to resolving key implementation 156. Developing stronger monitoring and evaluation questions. Developed in northern Mali to support an systems and fostering client capacity to better education project, IBM is now being used in other understand the drivers of FCV: Monitoring and fragile settings such as the Central African Republic, evaluation (M&E) plays a central role in tracking the Chad, Niger, and northern Nigeria. While these impact of development interventions on beneficiaries, tools and approaches are promising, they are a notably the most vulnerable. For governments, partners, complement and not an alternative to well-designed and the WBG alike, strong M&E systems help enhance and executed M&E systems. operational effectiveness and improve the design and programming of WBG operations. Tackling drivers of 159. The WBG will help improve project M&E fragility and sources of resilience, as well as assessing systems; it will also support operations aimed the effects of programs and policies on risk mitigation at strengthening national systems to obtain and prevention, require adapted M&E frameworks. more reliable data and promote evidence-based Monitoring systems need to be able to measure real public policymaking. To strengthen M&E and impact on the ground, including on beneficiaries impact evaluation, the WBG will continue to rely on and those who might experience unintended project results frameworks and theories of change (TOCs) impacts. This is difficult in insecure and/or low-capacity but integrate more FCV indicators into the results environments, where data collection is an even greater frameworks of projects to monitor FCV risks. The challenge. Systems must be designed to facilitate WBG will also intensify oversight over the design and adaptation when evidence suggests a need for this. implementation of monitoring systems at the project appraisal and the implementation stages. 157. Stronger monitoring systems require adapted results frameworks and greater institutional 160. In FCV settings, elaboration of programs oversight on the design and implementation and projects can be informed and sequenced in of project monitoring. High-quality monitoring five phases: (i) first, understand the FCV drivers systems are participatory and provide feedback and sources of resilience through RRAs87 and other loops that give project management insight into analyses; (ii) then, establish an intervention logic to implementation realities. They provide the evidence to focus on the FCV challenges where the Bank has a well- 46  SECTION III: OPERATIONALIZING THE WBG’S STRATEGY FOR FCV identified comparative advantage and integrate it into environments, leveraging ICT and local capacity- strategies and programming; (iii) now, identify indicators building tools has proven successful in generating that will measure achievement of the intervention logic structured, real-time data and closing information and establish a baseline; (iv) next, design a real-time gaps on the ground. To foster local ownership monitoring system that allows for the adaptation of and sustainability, the Bank will build capacity the strategy and program as information becomes among clients, beneficiaries, local staff, and available; (v) and finally, carry out impact analysis on partners to harness field-appropriate and cost- how WBG efforts contribute to addressing FCV drivers. effective open-source ICT to enhance supervision, M&E, citizen engagement, and coordination. 161. The WBG will also leverage impact evaluation The GEMS initiative88 was launched as a public for learning and decision-making. Impact evaluation good to support project implementation in FCV (IE) applies scientific research methods to test for settings by systematically building client capacity the existence and magnitude of causal relationships in these areas. To date, it has supported about between project activities and target outcomes. 550 projects in more than 30 countries, with more IE should be used strategically to generate data, than 2,000 clients, partners, and local staff having experimentation, and evidence to meet learning received access to the tools and to capacity- objectives and ultimately enhance the effectiveness building training. In cases where beneficiary input and efficiency of program and policy design. is collected by WBG teams and feedback loops 162. Using technology to enable supervision in are created, GEMS will be offered in combination insecure environments: In insecure environments, with the IBM approach. remaining engaged during conflicts and crises iii. Third-party monitoring (TPM) to help track requires enhanced monitoring. The major challenge is project results. When environments are so insecure to develop smart, cost-effective tools and supervision that task teams cannot regularly visit site locations, mechanisms such as: the Bank can hire specialized firms or engage UN agencies to help with monitoring, compliance i. Innovative tools to support operations at the verification, and implementation support. This project and portfolio levels. Faced with higher approach is being used in Afghanistan, Cameroon, risks and the need for flexibility, simple yet Iraq, Pakistan, Somalia, South Sudan, and Yemen.89 effective tools should be used to help operational The WBG will be selective in its use of TPM, given its project teams contextualize project design within cost implications. the FCV environment and to monitor results. The rapid development of innovative and less iv. Rapid-response data. In environments at risk of expensive data collection technologies, including fragility, rapid-response systems provide critical mobile phones, as well as remote-sensing data information about the nature of the risk, collect has made it feasible to monitor and learn even information about the characteristics of the most from extremely fragile settings. Also, monitoring vulnerable, and provide interventions with the at the portfolio level will enable further insight data needed for targeting and monitoring. Rapid- into where Bank financing is directed spatially, response centers typically use mobile phone and what types of projects are supported. For interviews and, at times, resident enumerators instance, the Portfolio Footprint tool can be to collect their information. They operate at low used to map and compare World Bank project cost and are designed around registries of phone expenditures by geographic location to a range numbers of households and key informants who of FCV, socioeconomic, and subjective indicators, can be contacted during times of crisis. The including incidences of violence or areas of typical rapid-response statistical center collects influence by armed groups. perception and early-warning data on a regular basis, then intensifies its data gathering once an ii. Geo-Enabling for Monitoring and Supervision event is triggered. This approach has been tested (GEMS) allows access to more regular, in Mali and South Sudan. real-time, actionable data in challenging environments. In remote and insecure WORLD BANK GROUP STRATEGY FOR FRAGILITY, CONFLICT, AND VIOLENCE 2020–2025 47 B. Programming: key project risks—for example, those relating to the choice of geographic areas, how benefits are divided, Maximizing Impact on the Ground or how consultation processes are organized—and 163. Drivers of fragility should guide the WBG’s then identify mitigating measures. They can also guide CPFs and programming: The WBG is committed teams to think through and adjust projects during to ensuring that Country Partnership Frameworks implementation, including during supervision missions, (CPFs) and operations in FCV-impacted countries mid-term reviews, and restructurings. In Myanmar, systematically address the key drivers of fragility for example, an Inclusion and Peace Lens has been and sources of resilience.90 As the WBG continues to developed to strengthen the conflict sensitivity of strengthen the analytical tools used in FCV settings, operations. An Inclusion and Peace Lens note will be ensure they are fit-for-purpose, and scale up the prepared for each project in the country and annexed practice of conducting joint assessments with partners, to the Project Appraisal Document.92 analytics and operations will mutually reinforce each 166. IFC and MIGA will explore systematic other and set the stage for better programs. approaches to conflict sensitivity in projects 164. The WBG will revise the methodology of and develop new analytical-strategic tools and RRAs to frame key drivers of fragility more clearly. training, including detailed conflict assessments and Underpinned by the analytical framework introduced preemptive IDD screening of potential lead investors in Pathways for Peace, this revised approach aims to (sponsors). These processes will help identify how increase multidimensional understanding of the political potential projects and sponsors interact with drivers economy of FCV and the grievances and risk factors of fragility to ensure that projects do not contribute that exacerbate FCV; to systematically apply a gender to instability and make as positive a contribution lens in their analysis; and to better identify entry points to stability as possible, such as via the creation of to promote prevention and strengthen resilience. The inclusive employment opportunities and fair use methodology will also prioritize a multi-sectoral approach of resources. The programs should increase the and external consultations as part of the RRA process positive impact of private sector investments while to provide clear, comprehensive, and operationally also reducing risks to project success. Pilot programs relevant recommendations for country programming, are under way using conflict analysis approaches, and to identify FCV entry points for projects in the including country-level contextual analysis and more pipeline. Teams working on RRAs will also collaborate detailed project-level conflict analysis. After testing closely with teams leading on SCD and CPF preparation and analyzing the pilots, a systematic conflict- to ensure that FCV issues are appropriately represented. sensitivity approach will be developed that retains the The WBG is additionally committed to increasing the flexibility necessary to operate effectively across FCV number of FCV analyses, such as RRAs, that are settings. CPSDs will also apply an FCV lens in their conducted in partnership and shared with relevant assessment of priorities for private sector development partners.91 This more robust approach—linking and policy dialogue, and these priorities will be diagnostics to operational impact across the chain of reflected in country strategies. MIGA will leverage IFC different WBG products and programs for FCV-affected CPSDs and conflict assessments for its operations in contexts—is already being rolled out. FCV. In addition, the Anticipated Impact Measurement and Monitoring (AIMM) system93 will incorporate 165. The Bank will promote the use of portfolio an FCV lens. For FCV situations, project impact reviews, conflict filters, and peace lenses to ensure measurement and monitoring will, where relevant, that portfolios and operations identify and address reflect key fragility drivers identified in CPSDs, country fragility drivers and conflict risks, particularly in strategies and WBG research. The information countries with pockets of fragility. These tools can identified through the FCV lens will assist IFC be used to design conflict- and fragility-sensitive integrate the FCV context into its development impact operations and take national, macro-level analyses assessments by informing the gap assessment in such as RRAs to a more granular portfolio or project AIMM ratings. MIGA plans to leverage this work for its level. In some cases, they can be developed for IMPACT system.94 IFC is also committed to screening specific sectors. These filters, or lenses, aim to identify 48  SECTION III: OPERATIONALIZING THE WBG’S STRATEGY FOR FCV investment projects specifically for risks associated • In limited cases, where there is not enough with GBV, as is MIGA, and to implementing targets for knowledge or where the country situation prevents projects that address gender in FCV settings. development of a medium-term program, teams have the option of preparing a CEN. A CEN is 167. Tackling FCV drivers involves addressing normally prepared for a period of 12 to 24 months. cross-border challenges and, where relevant, It may be followed by another CEN in exceptional developing effective regional approaches. While the cases where the WBG still remains unable to WBG operates primarily from a country-based model, define detailed objectives, develop a program, it is sometimes critical to develop regional and cross- or engage at significant scale in the medium border programs and approaches. Regional programs term. A CEN includes the description of a basis and initiatives that focus on mitigating key fragility and for assessing progress but not a detailed results security risks are under development for the Sahel, the framework, given the fluidity of the situation and Horn of Africa, and the Lake Chad region. Regional the need for flexibility. RRAs will be conducted, with the goal of identifying priority regional activities aimed at reducing FCV risks.95 170. Project documents in FCV settings will reflect security considerations in project design and 168. The World Bank will revise and update the institutional arrangements. They will also reflect the Results Framework and M&E guidance to ensure approach to supervision (e.g., TPM, ICT, social media that FCV factors are reflected in project design and monitoring, and partnerships). The use of “contingency M&E frameworks, with room for adjustment during scenarios” in project design will be broadened to project implementation, and work to enhance practical adapt implementation by identifying potential changes M&E systems for better assessment of results and or mitigation measures and by facilitating mid-course learning from projects in FCV countries. corrections, with or without project restructuring. The 169. It is equally important to reflect FCV dynamics guidance on preparation of the Project Appraisal in country engagement deliverables themselves: Document for IPF will be updated to ensure that Country Partnership Frameworks (CPFs), Country operations in FCV environments more systematically Engagement Notes (CENs), and Performance and take security considerations into account in project Learning Reviews (PLRs). As such, the following design, institutional arrangements, and risks (including flexibilities are already available: mitigation measures). • Teams can undertake more than one PLR during 171. Selectivity, simplicity, and flexibility at the the life of a CPF, allowing them flexibility to adjust core of the implementation model. The complexity of the nature and scope of the WBG program and its FCV settings paradoxically calls for simple responses expected results based on country conditions. The but greater selectivity in the way projects and policies results framework of the last PLR would then form are identified, designed, and implemented. In these the basis for assessments in the Completion and settings, linear development responses are unlikely to Learning Review (CLR) and by IEG. These PLRs produce tangible, sustainable results. Because FCV would elaborate on any changes in country context is both multidimensional and multi-causal, responses that have led to revisions in the program and the must be multisectoral and flexible, with longer-term results framework. project timelines that allow for capacity building and adaptation. To achieve successful outcomes, it is • In countries where enough information and key to be agile and to adjust the ways that the WBG engagement exist to warrant a CPF, teams can opt approaches project design, implementation, and for a four-year program and flesh out plans only impact assessment. for the first 1-2 years to reflect uncertainty in the engagement. The PLR conducted during the mid-life 172. Start with institutions and build programmatic of the CPF would allow adjustments to the program approaches for sustained engagement. It is and the results framework as needed, or even critical for Bank support to focus directly on core extension of the CPF if circumstances warrant this. governance in ways that address FCV drivers.96 WORLD BANK GROUP STRATEGY FOR FRAGILITY, CONFLICT, AND VIOLENCE 2020–2025 49 Strengthening institutions that set the stage for risk analyses for such operations in FCV settings transparency, accountability, and participation is a to focus not only on economic risk but also on the difficult and long-term process, but it should guide risk of increasing tensions between social groups WBG interventions in FCV settings. As demonstrated and with the state. It is also important to ensure that in the 2017 WDR, governance institutions that reform packages are simple and well aligned with the balance, divide, and share power play a crucial role government’s capacity to implement. in addressing grievances and reducing incentives to engage in violence. Hence, the WBG should promote 176. Tailor private sector development responses problem-solving and evidence-based approaches to specific FCV challenges and contexts. The many that seek to improve results by identifying sustainable challenges to private sector development in FCV improvements in governance processes. settings include a limited private sector, often with poor capabilities; underdeveloped market structures; 173. Institution-building projects that have a poor infrastructure and supply chains; weak legal longer-term horizon enable a strategic approach, and regulatory environments; and low government support sequencing, and promote ownership capacity. Yet mobilizing the private sector is essential of reforms. While reforms are driven by country to help countries grow and create jobs. Beyond leadership, the WBG’s comparative advantage is individual projects, the overarching objective is to to support systems and sustain their engagement. create functioning markets, support international and This entails aligning the operational model (in terms local investors, and grow regional and local private of simplicity and flexibility) to government capacity sector champions. Ultimately, generating income and and allowing for corrections and adjustments. It also opportunities helps mitigate FCV risks. involves continually incorporating feedback, both from institutional stakeholders and from beneficiaries. 177. To define the nature and level of their private These processes should run in tandem with efforts to sector work in FCV settings, the World Bank, IFC, improve accountability. In operational terms, projects and MIGA are strengthening their joint approach on will increasingly be designed to feature more organic, several fronts. participatory, trial-and-error approaches, monitor trust • Coordination. Strong cooperation to assist in (qualitative indicators to capture perceptions and creating private sector markets in FCV settings— values), roll out citizen engagement programs, and including through CPSDs, Country Strategies, place special focus on subnational levels. Sector Deep Dives, new IFC upstream units, and 174. Leverage public spending management tools new WBG sector teams—is vital. Private sector to optimize policy reforms. Macroeconomic stability policy issues need to be further systematized. is key to building resilient economies. Through its • Upstream project development. Facilitating Development Policy Financing (DPF) instrument, the increased investment in FCV settings requires more WBG plays an important role, along with the IMF, in flexibility and a focus on upstream and advisory stabilizing economies and influencing the allocation work. Approaches include: of resources and management of public spending. In  FCV regional initiatives: Similar to the FCV settings, macroeconomic stability is often among current IFC FCS Africa, these initiatives will the first casualties of war and political crisis, resulting be strengthened and expanded to increase in rapid accumulation of public debt, capital flight, high the flexible application of early-stage and rising inflation, and/or exchange rate volatility. upstream market, client, and project pipeline 175. Rebuilding the state’s capacity to drive development, with a focus on proximity to fiscal and monetary policy is a precondition for markets and to public and private stakeholders. achieving effective service delivery, developing  Upstream coordination work in FCV under the private sector, and ensuring resilience to IFC’s new upstream units, which will have shocks. Development policy operations should be appropriate plans and targets to reflect the conflict-sensitive, and engagement with the IMF in unique needs of FCS countries. such contexts is essential. It is important to strengthen 50  SECTION III: OPERATIONALIZING THE WBG’S STRATEGY FOR FCV  Implementation of systematic approaches to Box 12. conflict sensitivity analysis, pre-emptive Implementing the Cascade Approach in FCV settings integrity due diligence, and ESG advisory work. The Maximizing Finance for Development Approach (MFD), also known as the Cascade Approach, is the WBG’s • Programming and training. In FCV settings it is systematic method of helping client countries broaden all vital, though challenging, to bring in new investors, sources of finance, expertise, and solutions to support scale up local companies, and expand value sustainable growth, with a focus on more engagement with chains. Key approaches include SME support/ the private sector. In working to meet the SDGs, countries’ investments and de-risking tools and programs to resource needs frequently surpass their own budgets and spur ecosystems in which SMEs can thrive. This available donor funding. The WBG’s approach encourages also requires consolidating and expanding in- the use of scarce public/ODA funds to help attract private country vocational training and skills enhancement capital by removing obstacles, bottlenecks, cumbersome programs. regulations, and risks. The approach follows this algorithm: • Financing. Developing blended finance, including Commercial financing: Can commercial financing be cost- the IDA-IFC-MIGA Private Sector Window, helps effectively mobilized for sustainable investment? If not… lower the risks to investors in FCV- and IDA- country markets and helps launch pioneering Upstream reforms and market failures: Can upstream firms. There is also a need to scale up the use of reforms—for example, country and sector policies, special advisory funding, including the CMAW, regulations and pricing, institutions and capacity, and so to facilitate upstream and downstream project on—be put in place to address market failures? If not… preparation and implementation. Efforts will be made to expand these resources for FCV settings Public and concessional resources for risk instruments in MICs. In exceptional cases, this may require and credit enhancements: Can risk instruments and credit additional capital to increase investments in enhancements cost-effectively cover remaining risks? If not… higher-risk countries. To this end, MIGA will also continue to use its Conflict-Affected and Fragile Public and concessional financing, including sub- Economies Facility (CAFEF) and explore options for sovereign financing: Can development objectives be replenishing it. resolved with scarce public financing—for example, development banks, sovereign wealth funds, MDBs and DFIs? WORLD BANK GROUP STRATEGY FOR FRAGILITY, CONFLICT, AND VIOLENCE 2020–2025  51 C. Partnerships 180. Operationalizing effective partnerships to maximize impact on the ground. To be effective, 178. Partnerships are essential and must be the partnerships must be mission-driven and encompass “new normal” to effectively prevent conflict, build a diverse range of stakeholders to optimize outreach resilience, and sustain peace.97 No single organization and impact on the ground.98 Importantly, partnerships can act alone to help countries reduce their FCV need to be driven by the respective mandate challenges. In FCV settings, a coordinated approach and comparative advantages of each partner that brings together humanitarian, development, organization—whether local, national, regional or security, peacebuilding, and private sector entities— international. leveraging these actors’ respective comparative advantages—is key to combining short- to medium-term 181. The UN and the WBG are increasingly objectives and strengthening national systems. collaborating in FCV settings through cooperation at both strategic and operational levels. The 179. As a development actor, the WBG’s structured partnership between the UN and the WBG comparative advantage is to work with governments is institutionalized in more than 40 crisis-affected to influence critical policy reforms that address the situations. Partnerships across the humanitarian- drivers of FCV, leveraging financing to incentivize development-peace (HDP) nexus are necessary, investments in prevention and to tackle the root causes given the highly protracted nature of fragile situations, of fragility, and remaining engaged over the long term as well as the spillover impacts caused by conflict. to strengthen core institutions and build capacity. The In these situations, the WBG aims to complement the WBG’s value added also includes its ability to combine essential short-term relief provided by humanitarian private sector solutions and public sector support actors with longer-term development support. to help create more and better jobs, foster social cohesion, and promote inclusive economic growth. Box 13. UN–WB Partnership Framework for Crisis-Affected Situations In April 2017, the UN and WBG launched a joint platform 3. Develop joint analyses/tools where the complementarity of that enables the two organizations to work better together to mandates may enable more effective solutions. build up the resilience of the world’s most vulnerable people, reduce poverty, enhance food security, promote shared 4. Scale up impact by leveraging existing financing and prosperity, and sustain peace. This Partnership Framework comparative advantages, and continuously seek to ensure for Crisis-Affected Situations, signed by the UN that operational policies and tools facilitate cooperation and secretary-general and the WBG president, laid out practical increase effectiveness. commitments to enhance strategic collaboration. Under each 5. Address upcoming issues that need the WBG’s collective of the framework’s operational commitments, UN and WBG engagement. country teams have made substantial progress, leveraging their comparative advantages across the spectrum of fragility, There are many real-life examples of the partnership’s conflict, and crisis situations. impact at the country level, including The commitments are: • In the Central African Republic and Mali, where the WBG is working with UN peacekeeping forces to offer critical 1. Identify and reduce the critical multi-dimensional risk of development support that addresses the drivers of insecurity. crisis and prevent violent conflict in relevant countries. • In Tunisia, where findings from an RRA have informed 2. Coordinate support to situations of protracted crisis engagement in programs to prevent civil unrest in at-risk by aligning—where possible—strategies, objectives, areas. This has led the UN to expand work on youth in and collective outcomes, based on joint analyses and border communities. assessments. 52  SECTION III: OPERATIONALIZING THE WBG’S STRATEGY FOR FCV Box 14. Cameroon, the Central African Republic, and Chad: Delivering Development Results in Highly Insecure Situations The Central African Economic and Monetary Community entails other risks, including the lack of safeguards, and (CEMAC) Transport-Transit Facilitation Project is fiduciary, operational, and reputational risks. Specific designed to mitigate conflict risks in Central Africa. In implementation arrangements and social risk mitigation northern Cameroon, in two and a half years, Boko Haram measures have been established to enable the proposed has killed at least 1,300 civilians and 120 soldiers as well as execution of the arrangement and mitigate the associated abducted an estimated 1,000 people. The Far North region, risks. Key project innovations include (i) execution of civil among the poorest areas of Cameroon, has been an active works by the ACE with protection by a specific military military conflict zone since early 2015. detachment; robust risk management, including careful selection of military personnel, training, and a zero-tolerance CEMAC is rehabilitating 205 kilometers of road that are policy for proven allegations of misconduct; (ii) adoption of a of critical regional importance in an active military conflict culturally appropriate grievance redress mechanism; and (iii) area, under an Output Based Disbursement Force Account adoption of a regional approach to transport-FCV linkages. arrangement with the Army Corps of Engineers (ACE). In addition to the high security and social risks, this approach 182. Increasingly, partnerships with security organizations, which have an important role to play in actors have been key to providing development taking preventive action against security challenges support in the most insecure environments. By that go beyond national borders.99 A key example is working closely with security actors—for instance, the continent-wide initiatives spurred by the African with UN peacekeeping missions in the Central African Union, which has created specialized institutions Republic, the Democratic Republic of Congo, and and capacities to support political mediation, crisis Mali—the WBG can provide rapid development management, post-conflict reconstruction, and support as soon as insecure areas are stabilized. peacekeeping, including under its African Peace and Security Architecture. Other examples include 183. In exceptional circumstances, the Bank the conflict prevention and resolution mechanisms of may be able to provide third parties—such as UN the Regional Economic Communities—for example, agencies and other international organizations, ECOWAS, IGAD, EAC, and ECCAS—other regional or entities with a proven record and capacity to fora and platforms—for example, the Sahel Alliance— implement projects and deliver results— with direct and key regional organizations like the African financing from its own resources or trust funds. Development Bank. The circumstances may include situations where (i) there is no government in power; (ii) the government 185. The WBG is also strengthening partnerships is not in control of project sites; (iii) the government’s with other multilateral development banks on technical capacity is severely limited; or (iv) Bank shared areas of focus in the FCV agenda. The staff are unable to access project sites because of MDB Platform on Economic Migration and Forced insecurity. Development interventions financed in this Displacement is an example of collaboration100 to way will focus on rebuilding national or local systems, foster strategic alignment and strengthen operational institutional strengthening and capacity building, and coordination on the ground. Moving forward, efforts will sustainability. include more regular joint trainings and diagnostics— including through country platforms—that can be 184. Engaging with bilateral, regional, and scaled up to develop a shared understanding of multilateral organizations. The WBG will continue FCV drivers, as well as coordinated approaches to to consolidate partnerships with these actors, collectively address these challenges. At the 2019 who play a central geopolitical role and often drive WBG/IMF Annual Meetings, a forum of MDBs was the political, diplomatic, and security agenda. launched to strengthen cooperation and develop joint The WBG aims to support international efforts for analytical and operational approaches in FCV settings. peace and stability and will partner with regional WORLD BANK GROUP STRATEGY FOR FRAGILITY, CONFLICT, AND VIOLENCE 2020–2025  53 Box 15. Partnering with UN Organizations and NGOs in Practice Partnerships are a key element of the World Bank’s Since FY17, the WB’s Board has approved, on an exceptional engagement in FCV settings. One aspect of this is when a basis, direct IDA grants to UN agencies and the ICRC to country’s implementation capacity needs to be strengthened implement project-related activities in emergency operations. by engaging third parties. These engagements can be For direct grants from the Bank, engagement with UN financed by the Bank (directly from IDA or trust funds) or agencies is guided by the WB–UN Financial Management by the government (via IDA, IBRD, or trust fund financing). Framework Agreement, Investment Project Finance policy, UN agencies are long-standing partners, and the Bank and the fraud and corruption protocol of the WB–UN Fiduciary has standardized the way it contracts UN agencies during Principles Accord. For direct contracting of UN agencies for implementation to address various business ​ models, policy Bank-related work—for example, contracting with the UN for requirements, and WB–UN internal processes. The Bank has third-party monitoring—the usual Bank corporate procurement standard template agreements (for goods, services, outputs) procedures are followed. to ease client countries’ contracting of UN agencies; these are in place with 12 UN agencies. From FY06 to FY16, about Based on implementation experience and lessons, the $4 billion of World Bank financing was provided through UN Bank regularly reviews its instruments for engaging third agencies for the implementation of projects, with about 26 parties—such as UN agencies, NGOs, and international percent of this financing being provided in FCV settings. The organizations—to ensure alignment with the evolving nature Bank’s partnership with the UN is growing rapidly in FCV of partnerships and the needs in FCV settings. The Bank also countries, with the volume of WB financing provided through coordinates an operational partnership network with key UN UN agencies there reaching approximately $2 billion between agencies for prompt resolution of any bottlenecks that may FY17 and FY20. arise in specific operations. 186. Coordination in FCV settings will also be 187. WBG cooperation with the IMF is key, as strengthened through the newly established macroeconomic stability and macro-adjustment are country platforms. These platforms are a essential in conflict and post-conflict situations. government-led approach to enhancing development Collaborations on development policy operations, impact by improving coordination on reforms and debt sustainability, and macro reforms need to be well investments aimed at addressing key drivers of sequenced and FCV-sensitive. The IMF and the WBG fragility. They provide a forum for development will cooperate more systematically on management partners, including the private sector, to discuss, of public investment, such as pro-poor spending, coordinate and align support for country priorities. strengthening institutions, reducing corruption, and Country platforms can develop at the national, fostering inclusive growth. subnational, or sectoral level, depending on the issues being addressed or the level at which coordination 188. Broadening engagement with civil society. would be most effective. The WBG expects to Based on specific country needs, the WBG will support selected FCV countries in this exercise. scale up engagement with civil society organizations Sharing diagnostics and analytical work among (CSOs) operating at the country level in FCV platform participants is important, as is identifying settings, particularly with peacebuilding actors in high-potential reforms and investments, then working insecure areas.101 These groups can complement together to implement them. The coordination, WBG programming through their on-the-ground prioritization, and coherence that the platforms enable experience, as well as to support efforts on social can play an important role in scaling up private sector accountability and citizen engagement, with a focus investments. on service provision to the most disadvantaged and marginalized populations. CSO engagement with World Bank financing includes direct and indirect 54  SECTION III: OPERATIONALIZING THE WBG’S STRATEGY FOR FCV financing modalities. In direct financing, CSO may successful private sector development, particularly receive grants from trust funds (as allowed in the on upstream work and market creation. The WBG trust fund establishment) or, exceptionally, from IDA also recognizes the need to leverage partnerships (following procedures for Board approval). Standard with other DFIs to catalyze private investment at the procurement documents are available to facilitate levels needed for FCV countries to meet the SDGs.103 the borrower’s contracting with CSOs. Country Efforts also under way through pilots in select circumstances and needs are the primary driver of countries focus on unlocking investment bottlenecks, decisions about CSO engagement, including the facilitating dialogue with governments and the private modalities of engagement. sector, helping build robust project pipelines through upstream activities, and developing opportunities 189. CSOs can play a critical role in addressing for co-investments. Beyond the DFIs, the WBG is the root causes of fragility, ensuring service increasingly engaging with the investment community delivery and inclusion, peacebuilding, monitoring at large—networks, impact investors, outcome and evaluation, and building greater accountability. funders—to leverage new financing and tackle new By engaging with civil society through participatory development frontiers such as digital technologies. approaches at all stages of project design and implementation, WBG teams will ensure greater 191. Partnering on analytics, learning, and ownership, effectiveness, and accountability. The training. Effective collaboration is underpinned by WBG will regularly convene CSOs and faith-based a shared understanding of the context, the drivers organizations (FBOs) at the country level to share of fragility, and the assessment of needs. The WBG information about opportunities for engagement promotes joint analysis through mechanisms such and, where possible, help build their capacity to be as Recovery and Peace-Building Assessments more effective. At the institutional level, the WBG will (RPBAs),104 a trilateral instrument used by the build on the country platforms to promote innovative EU, UN, and WBG. To deepen partnerships, approaches and disseminate lessons learned and synergies can also be accelerated through joint good practices. It will also support the participation data analysis and training. On forced displacement, of CSOs in global and regional platforms, including strategic and operational alignment between the at the Annual and Spring Meetings. The WBG will WBG and UNHCR has led to concrete outcomes develop training modules for staff and clients on CSO and is largely generated by complementarity in stakeholder mapping and relationship building. programming and coordinated policy dialogue with client governments, as well as joint assessments, 190. Leveraging the private sector. The WBG is data analysis, and evidence-building. An example also partnering with other development finance of this is the establishment of the Joint Data Center institutions (DFIs) and the investment community on Forced Displacement. Joint training is equally to support private sector development in FCV important, and the WBG is rolling out FCV regional settings. This initiative will build on the collaboration trainings and extending these to multilateral and between the World Bank, IFC and MIGA102 on priority bilateral partners.105 setting, sequencing, and joint activities necessary for WORLD BANK GROUP STRATEGY FOR FRAGILITY, CONFLICT, AND VIOLENCE 2020–2025  55 D. Personnel specific measures that support two key objectives: (i) continue to deploy more staff on the ground in 192. As engagement in FCV settings increases, it FCS while complementing them with staff in nearby is essential for the WBG’s effectiveness to deploy locations; and (ii) strengthen staff skills and capacity more staff with the right skills and motivation while enhancing the incentives and rewards for staff to closer to clients. Scaling up and managing the work in and pursue careers in FCS. WBG’s presence in FCV settings presents unique challenges because these situations are volatile, 195. Footprint, recruitment, and skills mix: The dynamic, and often insecure. The fact that some FCS WBG has been ambitious in scaling up staffing to duty stations are non-family posts can exacerbate the FCS. Already the World Bank has about 900 staff challenges and has implications for staff diversity and based in FCS, in addition to about 1,000 staff with FCS family-related issues such as education, health, and experience. Over the past five years, the Bank has spouse employment, which in turn may require more seen an increase of 183 staff based in FCS locations flexible arrangements and some use of nearby duty (figure 7), from 705 to 888 staff. Much of the increase stations. With a high level of management attention, took place during the IDA18 cycle: the number of staff the staffing footprint in FCS has increased significantly in IDA FCS has increased by more than 130 and is in recent years, and this will continue as WBG on track to meet the target of net 150 additional staff engagement in FCS keeps growing. by June 30, 2020. Staffing has increased most in FCS locations where the Bank has scaled up its financing 193. Training and capacity building for FCV staff and engagement significantly, for instance, in have also improved but must be enhanced further Afghanistan (with a 26 percent increase in the number to build strong professional communities that of staff), Mali (33 percent), the Democratic Republic of are able to adapt global knowledge to the needs Congo (76 percent), and Lebanon (58 percent). Of the and circumstances of FCV settings. Moreover, new staff deployed to FCS over the past five years, 90 WBG management must recognize and value the percent are grade level GE or higher, over 50 percent efforts of staff working in or on FCS. In particular, the are female, and 66 percent are local appointments. WBG needs to do more to enhance the employment value proposition for these staff through mentoring, 196. The trend of deploying additional staff in the next-assignment planning, career development, and most challenging settings will continue, with FCS other means. Staff must also feel reassured that their on-the-ground presence being a priority during security will always remain a primary concern. implementation of the FCV Strategy. Under IDA19, the Bank will deploy at least 150 additional GE+ 194. The FCV Strategy aims to ensure that the staff, including extended-term consultants, to IDA overall skills mix, and on-the-ground presence in FCS and nearby locations by June 2023. This will be FCS, are in place when needed, and that staff are complemented by increased face time and mission motivated and incentivized to work in and on FCV. travel to FCS countries. For its part, IFC plans to These efforts are supported both by the new World increase its support to FCS by increasing the number Bank’s FY20-22 Human Resources Strategy, which of skilled staff on the ground while simultaneously features a focus on delivering in FCV settings, and by pursuing a hub model. IFC will ensure it has a well- the WBG’s broader push to expand its global footprint resourced global function to help drive and coordinate so that approximately 55 percent of Bank staff and 65 strategy implementation. MIGA has already dedicated percent of IFC staff are in the field by the mid-2020s. operational staff to the challenge of IDA/FCS and may Expanding the WBG’s field presence is expected expand its use of such dedicated resources. to especially benefit FCS, because one of the key operational priorities is to place half of all Practice 197. Where staff cannot be based permanently Managers in the field by FY22—one-third of them in on the ground because of security and family Africa—and to provide a greater staff presence in constraints, the Bank will leverage nearby locations or near FCS. The growing proportion of field-based to better support FCS countries. These nearby duty task team leaders (TTLs) in FCS is also expected stations can act as extensions of Country Management to continue increasing. The FCV Strategy sets out Units (CMUs), with staff primarily dedicated to working 56  SECTION III: OPERATIONALIZING THE WBG’S STRATEGY FOR FCV Figure 7: Increase in WBG Staffing in FCS (2014-2019) Figures in absolute numbers, with countries with greater staff increases in darker shades FCS Country Staff # Staff # 2014 2019 Afghanistan 77 97 Lebanon Burundi 16 22 +24 Central African 10 20 STAFF Republic Chad 15 23 Comoros 0 5 Afghanistan Congo Democratic 38 67 +20 Republic STAFF Congo Republic 17 15 Cote d’Ivoire 47 65 Djibouti 2 8 Gambia 2 5 Guinea-Bissau 1 6 Haiti 29 38 Iraq 14 18 Kiribati 0 2 Kosovo 15 19 Lebanon 41 65 Liberia 32 34 Libya 4 2 36 48 Myanmar Mali Micronesia 0 1 Mali +45 Mozambique 55 73 +12 STAFF STAFF Myanmar 29 74 Papua New 21 22 Guinea Solomon Islands 11 10 DRC Somalia 0 1 +29 South Sudan 30 16 STAFF Sudan 28 29 Timor-Leste 21 18 45 Change in Number Togo 16 19 of Staff, 2014–2019 West Bank & 41 48 -38 Gaza Yemen 39 1 Zimbabwe 18 17 Grand Total 705 888 Note: The boundaries, colors, denominations and any other information shown on this map do not imply, on the part of the WBG, any judgment on the legal status of any territory, or any endorsement or acceptance of such boundaries. WORLD BANK GROUP STRATEGY FOR FRAGILITY, CONFLICT, AND VIOLENCE 2020–2025  57 on neighboring FCS and able to operate in a similar 201. IFC and MIGA will pursue opportunities to time zone, travel with relative ease, and be deployed leverage the presence of World Bank staff in FCS flexibly based on business needs. countries to help meet ambitious growth targets. IFC will train a select group of Bank country staff on 198. To maximize impact on the ground, the WBG IFC criteria and methods for developing new projects. will mainstream the necessary skills for operational staff to work in and on FCV, through recruitment 202. Career development: The Bank will strengthen efforts, next-assignment planning, and training, as the link between FCS experience and career well as develop a specialized cadre of FCV-focused development. It will ensure that FCS experience staff.106 This includes developing FCV-relevant skill is systematically recognized and taken into sets for the following four groups: (i) core operational account during performance and talent reviews staff such as task team leaders who design and lead and next-assignment planning, and that it is highly projects; (ii) operational support functions such as recommended as part of managerial selection procurement, financial management, and safeguards processes. The Bank will introduce an FCV mentoring specialists; (iii) dedicated FCV specialists who support and sponsoring program to support staff working Country Management Units (CMUs) to address the in and on FCS and to ensure that they receive the key drivers of fragility through CPFs, policy dialogue, necessary career guidance and support before, and programming; and (iv) non-operational staff from during, and after their FCS assignments. institutional, governance, and administration Vice Presidential Units (VPUs)—for example, corporate 203. Working in and on FCS is fundamentally security, health services, BPS (Budget, Performance different from non-FCS assignments, and Review and Strategic Planning) who support staff performance in these contexts should be operational delivery. recognized accordingly. While the WBG will continue to evaluate staff based on individual performance and 199. In all categories, it is important for the WBG deliverables, it will also be important for management to leverage national and international both staff to factor in the specific challenges staff face in FCV and third-country nationals, including those settings when evaluating staff performance. The Bank who work across countries and regions. Local will introduce guaranteed next assignment for staff staff bring significant country knowledge, a deep with good performance standing108 who are currently understanding of local and regional political economy on FCS assignments. IFC is also considering the issues, language skills, and operational experience. option of giving next-assignment priority to staff who Management will increase the number of FCV are currently on FCS assignments through its new specialists based in the field to strengthen hands-on centralized talent brokerage function, which is in its support to FCV-impacted CMUs.107 In addition, the pilot phase. The World Bank, IFC, and MIGA will also WBG will continue to build the talent pipeline and continue to leverage rewards programs to recognize mainstream FCV skills, with a focus on recruitment, the contributions made by staff working in/on FCV. building the FCV-relevant skills of junior staff, and leveraging the experience of mid-career professionals. 204. Capacity building and learning: To ensure that staff working in and on FCV can acquire the skills 200. Having FCV experience is important also for necessary for engaging in FCV contexts, learning the institution’s leadership. The Young Professionals offerings and knowledge-sharing initiatives will be Program (YPP), the World Bank’s flagship recruitment expanded, diversified, and streamlined through program, is an important pipeline through which staff the introduction of the FCV Learning Curriculum. often develop into key leadership roles. The WBG Management will require all staff based in FCS to is revamping the YPP to place a high emphasis on participate in the full analytical and operational working in the field, particularly in FCS countries. curriculum. The program will also be recommended to This will help signal the central importance of FCV all other staff working on FCV issues. The curriculum experience to WBG effectiveness. will help recognize FCS experience for next- assignment planning, performance management, and 58  SECTION III: OPERATIONALIZING THE WBG’S STRATEGY FOR FCV career development. It will harmonize existing training 206. Benefits: Eligibility for benefits provided to programs offered throughout the WBG109 and combine staff living and working in the most difficult situations face-to-face and virtual learning to help ensure that will be informed by FCS classification and related staff have the analytical, operational, and personal considerations such as hardship and security tools to design and implement projects in FCV conditions. This will be complemented by an internal contexts. The aim will be to develop governance system to provide the final determination for benefits provided in FCS countries and non-family • Analytical competencies to better understand posts, in alignment with the WBG’s risk tolerance and and diagnose FCV risks, challenges, and sources operational needs. This will help ensure that eligibility of resilience—for example, understanding for benefits reflects security, health, and other the political economy of FCV and patterns of conditions worldwide and provides a nimble way to marginalization and exclusion, diagnostic tools, manage risk exposure in FCV. The WBG will continue financing mechanisms in FCV, and macroeconomic to support staff and their diverse family structures to development in FCV. undertake field assignments in FCS, in line with current • Operational competencies to have the necessary benefits and policies, including by considering the tools to design and implement programs and issues faced by same-sex spouses and single parents, projects in FCV settings—for example, operational with emphasis on systemic fairness, equal opportunity, flexibilities in designing projects in FCV and how and consistency of application. to use them; partnering effectively across the humanitarian-development-peace nexus; how to 207. Corporate support. To ensure staff health, leverage ICT solutions or third-party monitoring safety, and well-being before, during, and after for supervision; leveraging the private sector; and assignments in FCV settings, corporate support how to design strategies, programs, and projects will be stepped up in two key areas: differently for FCV settings. a) Staff health, safety, and well-being: The WBG • Leadership and personal effectiveness will continue to improve health and psychosocial competencies to understand and respond to support, with a focus on: the personal health and security challenges that  Deployment of multi-disciplinary health and staff may face, and to develop the leadership, safety (H&S) teams: The Health and Safety teamwork, business, language, and relational skills Directorate (HSD) will expand its field presence to work effectively in FCV settings. through a phased deployment over FY20-23, 205. Leadership: To better reflect the complexity with teams providing medical, counseling, and of managing WBG engagements in FCV settings, occupational health and safety expertise. This the selection criteria for Country Managers (CMs) will bring enhanced support closer to staff and and Country Directors (CDs) in FCS countries will their families in key FCV locations. The teams will be reviewed and bolstered, and will include both provide in-country support covering environmental operational and behavioral dimensions—for example, and workplace H&S risk management, individual managing programs in high-risk settings, stakeholder and group consultations for medical and engagements in complex environments, managing the psychosocial support, travel health, identification duty of care, and taking decisions in times of crises. of local high-quality health facilities and The tailored training program delivered to CMs and practitioners, and assistance in accessing care Resident Representatives, Mastering the Role of Heads when needed. of Country Offices, is being redesigned for those  Enhancement of mental health support: While working in FCS countries or those in other locations the newly mandated WBG Mental Health Strategy who are managing staff in FCS countries. It will include is relevant for all staff, their dependents, and peer-coaching circles, in addition to dedicated duty stations, it is particularly important for FCS managerial onboarding. Participation in FCV-specific locations where mental health risks and stressors capacity building will be required for FCS assignments. are especially significant. Action areas of special WORLD BANK GROUP STRATEGY FOR FRAGILITY, CONFLICT, AND VIOLENCE 2020–2025  59 relevance include mandatory, confidential pre- (ii) the need to have at least one security specialist and post-deployment resiliency briefings, with in each relevant CMU to provide country teams embedding of mental health aspects into FCV with security risk management advice and carry pre-assignment training; more frequent outreach out the responsibilities under the Framework of from mental health support staff to FCS locations Accountability. for individual and group consultation as needed, - Security risk management: Corporate Security including tailored support to locally recruited staff; will continue to supply Country Offices with security dedicated support for managers to guide their equipment to manage security risk—including staff, with more systematic and regular check- communications equipment, personal protective ins and resources for staff and their families; an equipment, and armored vehicles. Deployment institution-wide mental health awareness/anti- of this equipment will be based on the prevailing stigma campaign; and a comprehensive review of security threat and the availability of resources. support resources available to staff and families in FCS locations, including medical insurance - Traveler tracking: Corporate Security is benefits coverage. cooperating with Information Technology Solutions (ITS) to improve the Country Clearance System to  Rollout of health and safety training: HSD has ensure greater granularity in visiting mission travel developed a suite of new online training courses plans within a given country. The improved country available through the WBG Online Learning clearance system will complement other resources Campus. Titles include AED, CPR, and Bleeding for personnel being deployed to Country Offices Control: Learn to Save Lives; Connecting with with significant security risk. Staff tracking and Your Health, Safety, and Well-being; What to accounting coordinators will be added in countries Know Before You Go; and Leading Health, Safety with high mission tempo and volume, and will and Well-being: Roles and Responsibilities of be primarily responsible for guiding the Country Managers, Supervisors, and TTLs. Selected Office’s mission clearance process, ensuring that trainings will become mandatory for staff deployed all required details about internal mission travel, to FCV locations from FY20. hotel, and contact information are provided by the  Enhanced health and safety software platform traveler before clearance is granted. support: Key software platform enhancements - Field mission protocols: Corporate Security will are under way, including on the electronic medical more systematically implement a framework for records110 system for staff and on the Environmental assessing and mitigating the risk to field missions Health and Safety Management System—a outside of capitals, so that missions encounter new platform that will provide a comprehensive the same process in each country they visit, even environmental risk management system. if the resulting level of mitigation is different. This b) Staff security: As engagement in FCV settings includes deployment of expands, the WBG is revising its approach to staff a Watchkeepers: In countries where the security security. It has invested in a robust security risk environment warrants it, the watchkeeper function management system under the coordination of will be added to the guard force vendor contract WBG Corporate Security. Most notably: to track real-time mission travel in the country, - Staffing: Corporate Security is continuing to with a focus on field missions outside the capital. deploy security specialists to countries facing Geospatial monitoring: This will enable the b security threats, with a focus on FCV locations Security Operations Center (SOC) to monitor over the next three fiscal years. These personnel events in relative proximity to WBG assets, will be in addition to the 63 current security including offices and Corporate Security- specialists deployed to the field based on a dual- managed armored vehicles, through their on- pronged strategy: (i) security threat exposure, board GPS tracking devices. This capability with personnel prioritized in countries where the will allow the SOC to be more responsive when sustained threat environment is most severe; and security threats occur. 60  SECTION III: OPERATIONALIZING THE WBG’S STRATEGY FOR FCV E. The Financing Toolkit for addition, IDA19 introduces an innovation—the FCV Envelope—which will complement country allocations FCV Settings and provide additional support to countries facing a 208. The World Bank Group has continuously sought range of FCV challenges. Its design draws heavily to adapt and expand its financing capacities to on lessons learned during IDA18 and offers both a the needs of FCV settings, with much of this work rules-based approach and a strong incentive and evident in the financial architecture of both the accountability structure to ensure that programming IDA replenishments and the IBRD and IFC Capital focuses on addressing FCV risks. Under IDA19, Package, as well as the WBG’s growing trust fund $18.7 billion will be available to support countries portfolio. Addressing the significant and multi-faceted impacted by FCV—an increase from $14.4 billion challenges of FCV requires a tailored financing toolkit in IDA18 and $7.2 billion in IDA17. The financing to address varying dynamics of FCV across the includes investments for prevention, for development fragility spectrum. assistance during conflict, and to help transitions out of fragility. IDA19’s resources for FCV represent a 209. IDA-eligible countries. IDA19 will provide 23 percent increase from IDA18, which had already additional and more tailored financial support to doubled financing to FCV from the previous IDA cycle. IDA fragile and conflict-affected situations (FCS). Also, under IDA19, $2.2 billion will be available to IDA country allocations continue to be the bedrock support refugees and host communities, and $2.5 of IDA’s financing and will be used to address FCV billion to catalyze private sector investments, including drivers and sources of resilience in all IDA FCS. In in fragile and conflict-affected situations. Figure 8: Financing Toolkit Key Pillars of Preventing violent Remaining Helping countries Mitigating the Engagement conflict and engaged during transition out of spillovers of FCV interpersonal conflicts & crisis fragility violence situations Prevention Remaining Turnaround Window for Host & Resilience Engaged Conflict Allocation Communities & Support to Allocation Allocation Refugees IDA Eligible Countries IDA Regional Window and Crisis Response Window IDA Country Allocations Support to IBRD Eligible IBRD Financing Global Concessional Global Good Fund Countries Complemented by Financing Facility Trust Funds (e.g. ARTF, MDTFs, SPF, KTF, etc.) & IFC and MIGA Support (PSW, Investments, Guarantees, etc.) WORLD BANK GROUP STRATEGY FOR FRAGILITY, CONFLICT, AND VIOLENCE 2020–2025 61 Figure 9: IDA17-19 Scale-up for FCV $18.7 billion $14.4 billion $7.2 billion IDA17 IDA18 IDA19 2014–2017 2017–2020 2020–2023 210. The IDA19 FCV Envelope comprises three 211. As a complement to the FCV Envelope, the FCV-related country allocations, each one mirroring Window for Host Communities and Refugees a pillar of engagement within the FCV Strategy. (WHR) will support the fourth pillar of engagement, which focuses on mitigating the spillover impacts of (a) The Prevention and Resilience Allocation (PRA) FCV. Through $2.2 billion in financing under IDA19, the will provide enhanced support for countries at WHR (formerly the Refugee Sub-Window) will continue highest risk of descending into high-intensity to support operations that promote medium- to long- conflict or large-scale violence, based on the term development opportunities for refugee and host government’s commitment and agreed milestones. communities in IDA countries. By the IDA19 Mid-Term PRA countries will receive a 75 percent boost to Review (MTR), IDA plans to conduct a systematic their country allocation, up to a national top-up cap review of policy and institutional environments in of $700 million, during IDA19. countries eligible for the window in order to inform (b) A new Remaining Engaged during Conflict further support for the creation of socio-economic Allocation (RECA) will enable IDA to maintain a development opportunities for both refugee and host base level of engagement in a small number of communities in these countries. countries that experience high-intensity conflict 212. The IDA Private Sector Window (PSW) allows and have extremely limited government capacity. IDA to help mobilize private investments in the The RECA also codifies the ability of the Bank to poorest and most fragile IDA markets through risk- partner with UN agencies or international NGOs sharing in the context of IFC investments and MIGA in certain limited circumstances for development guarantees. So far, approximately 30 PSW-supported projects that benefit RECA countries. projects, totaling $662 million, have been approved— (c) The Turn Around Allocation (TAA) will support half of them in FCS. The PSW has demonstrated countries emerging from a period of conflict, very effective leverage: allocations are supporting social/political crisis, or disengagement, where more than $1.6 billion in IFC investments and MIGA there is a window of opportunity to pursue reforms guarantees, while mobilizing more than $1.7 billion of that can accelerate a transition out of fragility investments from other financing sources, including and build resilience, based on the government’s the private sector. The PSW will continue in IDA19, commitment and agreed milestones. TAA with a resource allocation of $2.5 billion to further countries will receive a 125 percent top-up with a scale up and mobilize private sector investments in cap of $1.25 billion per country during IDA19. eligible countries, including FCS. Enhancements to its framework include (i) support from PSW resources for programmatic interventions, where up to a maximum of 20 percent of total investments may be located 62  SECTION III: OPERATIONALIZING THE WBG’S STRATEGY FOR FCV outside of PSW-eligible countries, and (ii) exploration in IDA16, it is a key feature of the WBG’s crisis of new instruments to enhance local currency lending management toolkit. In IDA19, it will be extended in PSW-eligible countries, including FCS, through the to support slower-onset crises such as disease Local Currency Facility and Blended Finance Facility. outbreaks and food insecurity. IDA FCS are expected to be among the main beneficiaries. 213. The IDA Regional Window provides concessional finance to help IDA countries scale up 215. IDA will also a adopt a Sustainable Debt regional investments that generate positive spillovers. Financing Policy (SDFP) to incentivize IDA In IDA19, it will be scaled up by at least 50 percent countries to pursue a sustainable debt path. It will to enhance reach and impact. Informed by Regional be complemented by efforts to improve debt reporting RRAs and related diagnostics, IDA will invest in at to increase transparency and public accountability, as least three regional programs during IDA19—including well as strengthen debt management. the Sahel, the Lake Chad region, and the Horn of Africa—to mitigate fragility and security risks and 216. IBRD countries. The few IBRD countries that promote engagement at the security-development are classified as FCS are exempt from the price nexus. The Regional Window will also finance single- increases in the 2018 IBRD and IFC Capital Increase country operations that have positive cross-border package. The package recognized that FCV spans spillovers for pandemics, natural disasters, and the both LICs and MICs and that financing tools should adoption of innovative technologies. The Window can be developed to address the specific needs of MICs also be accessed for operations that support regional facing external shocks. economic integration. IDA FCS will particularly benefit 217. The Global Concessional Financing Facility from this scale-up. (GCFF) provides concessional financing to middle- 214. The Crisis Response Window (CRW) provides income countries that host massive inflows of additional resources to IDA countries when they refugees, thus delivering a global public good. encounter major natural disasters, public health The GCFF offers lessons for other international efforts emergencies, and severe economic crises. It aims to to catalyze global public goods. As crises emerge, help countries return to their long-term development providing these countries with concessional resources paths. Piloted in IDA15 and officially established on an exceptional basis can promote resilience and stability and create economic opportunities for all. Box 16. The Global Concessional Financing Facility The GCFF was established in 2016 to provide concessional Created in response to the Syrian refugee crisis, the GCFF financing for eligible middle-income countries that has expanded to help eligible MICs address refugee crises deliver a global public good by hosting large numbers wherever they occur. To date, the benefitting countries are of refugees. It is a partnership launched by the World Bank, Jordan, Lebanon, Colombia, and Ecuador. The GCFF aims the UN, and the Islamic Development Bank Group to support to bridge the gap between humanitarian and development lending at concessional rates for Multilateral Development assistance and to enhance coordination among the UN, Bank (MDB) projects—including those of EBRD, EIB, IBRD donors, MDBs, and hosting countries. It is currently supported and IsDB—that benefit both refugees and host communities. It by Canada, Denmark, the European Commission, Germany, uses donor contributions to bring down the cost of MDB loans Japan, the Netherlands, Norway, Sweden, the United to concessional (or IDA-like) levels for these development Kingdom, and the United States. projects. In its first three years, the facility approved more than $600 million in grants and unlocked more than $3 billion in concessional financing for development projects. WORLD BANK GROUP STRATEGY FOR FRAGILITY, CONFLICT, AND VIOLENCE 2020–2025 63 Box 17. The Compelling Case for Disaster Financing FCV settings are often the most vulnerable to disasters, larger financing for reconstruction and rehabilitation efforts with very limited capacity to prepare and respond. The that may be financed through different instruments. Under Bank has developed several contingent emergency financing IDA18, Cat-DDOs were extended from IBRD to IDA clients. mechanisms. They include • Regional insurance programs, through which the WBG • Contingent Emergency Response Components supports countries as they set up regional catastrophe risk (CERCs). Embedded in Investment Project Financing, pools such as the Caribbean Catastrophe Risk Insurance CERCs allow uncommitted funds from Bank-financed Facility (CCRIF). Such initiatives offer sustainable, country- projects to be rapidly reallocated toward urgent needs to owned, regional solutions and are supported by multiple finance physical, economic, and social recovery in a crisis donors. So far, more than 10 Small Island Developing or emergency. The Bank supports the use of CERCs with a States have received payouts from the risk pools. The guidance note, a support desk, and a CERC Just-in-Time CCRIF payout to Haiti was the first external liquidity that Facility that provides on-demand grants of up to $50,000 for the country received following the large 2010 earthquake. technical support in designing, developing, and/or activating Haiti also has received the largest CCRIF payout to date, contingency plans once CERCs are established. following Hurricane Matthew in 2016. • Catastrophe Deferred Drawdown Options (Cat-DDOs). Going forward, the WBG can accelerate implementation Embedded in development policy loans (DPLs), Cat- of these instruments in FCV settings. This entails close DDOs are intended to strengthen a country’s disaster risk monitoring and thorough understanding of local contexts. The management capability by promoting policy and institutional Global Risk Financing Facility (GRiF) provides grants to test, reforms and providing rapid-response financing after a pilot, and scale up financing instruments that help developing natural disaster or health-related event. The funding can countries better manage the financial impact of shocks and provide a buffer to support immediate needs in advance of other crises. 218. In another innovation prompted by the IBRD 220. While many of the funds available for advisory and IFC Capital Package, the Bank has established work and blending for private sector projects the IBRD Fund for Innovative Global Public Goods are restricted to IDA or FCS, many emerging Solutions (the GPG Fund).111 The objective is to FCV settings—such as subnational conflicts or incentivize innovative solutions for delivering global countries with a large influx of refugees—are in public goods by using concessional financing to MICs. To respond to this challenge, IFC and MIGA will support IBRD operations that generate global or be exploring ways to increase funds available through regional benefits.112 Spillover effects of FCV are the new blended finance resources for MICs that do not initial focus area for support. This represents an have access to the IDA Private Sector Window. important approach to addressing FCV issues in MICs and has the potential to be scaled up depending on Trust Funds: an Integral Role in FCV Settings the initial experience and lessons learned. The first 221. Trust funds play an integral role in the WBG’s allocations will be made in FY20. engagement in FCV settings. These resources have 219. Building on experience from the GCFF and enabled the WBG to increase collaboration with partners the GPG Fund, the WBG will continue to explore across the HDP nexus, pilot innovative approaches, and financing mechanisms and tools dedicated to respond rapidly to emergency situations. Trust funds middle-income countries. Special focus will be on operating in post-conflict and other crisis situations can activities that promote prevention and preparedness, improve resource efficiency by reducing transaction that mitigate FCV risks at the national and subnational costs and managing the high levels of risk inherent in levels, that tackle cross-border challenges, or these environments. Pooled trust funds may also reduce that address gaps in the development finance administrative costs for development partners. architecture for IBRD borrowers. 64  SECTION III: OPERATIONALIZING THE WBG’S STRATEGY FOR FCV 222. Trust funds complement IBRD and IDA provide support in situations where IDA cannot financing to offer flexible and timely financing in be used, such as in non-member economies—the challenging situations in low- and middle-income West Bank and Gaza, for example—and countries countries. Trust funds have proven critical for the in arrears such as Zimbabwe. Bank’s engagement in conflict- and disaster-related • Stability in pockets of fragility in MICs. The first crises, and have helped leverage the valued added MDTF in Mindanao, the conflict-stricken region of various stakeholders to provide joint responses of the Philippines, was set up in 2006 to promote in countries impacted by FCV. During the period peace and security in the area. In Pakistan, FY14-FY18, $7.3 billion was disbursed to fragile the World Bank-administered MDTF for Khyber situations from recipient-executed trust funds Pakhtunkhwa, the Federally Administered Tribal (RETFs), accounting for 46 percent of overall RETF Areas, and Balochistan was established in 2010 to disbursements. Trust funds have been established for: operationalize the Post-Conflict Needs Assessment. • Sustained and long-term support for The Colombia Peace and Post-Conflict MDTF was reconstruction. The Afghanistan Reconstruction launched in 2014 to support the preparatory phase Trust Fund, established in 2002 to address of the country’s post-conflict agenda. reconstruction efforts, is currently the WBG’s • Innovative approaches to FCV: The State and largest multi-donor trust fund (MDTF). With 34 Peacebuilding Trust Fund (SPF)115 facilitates donors administered through the WBG, it was set innovative approaches to FCV challenges, up to provide a coordinated financing mechanism while the Korea Trust Fund for Economic and for the budget and national priority projects of the Peacebuilding Transitions (KTF) supports Afghan government. It finances nearly 40 percent peacebuilding initiatives and interventions to of the civilian budget and half of all development facilitate recovery and economic transitions, expenditures, delivering results in education, especially in Asia and the Pacific, that could be health, urban and rural development, infrastructure, scaled up under IBRD and IDA operations. Moving agriculture, and governance. Its structure helps forward, it will be a key priority for such trust funds, ensure predictability of aid within a robust fiduciary in combination with IDA and IBRD financing, to and monitoring framework. In the 17 years since help operationalize the FCV Strategy. inception, it has directly benefited 19 million people • Analytical products that directly address across all sectors and supported 6,000 projects. the intersection of different risks. The newly • Rapid response in emergencies such as natural established DRM-FCV Nexus Program exemplifies disasters113 and in post-conflict reconstruction. how to structure a thematic initiative that serves The multi-donor trust fund for the Transitional the core mandate of the GFDRR, which is to help Demobilization and Reintegration Program was countries better understand and reduce their established in 2015 to support the return of vulnerability to natural hazards and climate change. African ex-combatants to civilian life and promote peace and security on the continent. The Ebola Blending and Advisory Funds for Recovery and Reconstruction Trust Fund was also Private Sector Projects established in 2015—following the outbreak in West Africa—to support economic, health, and social 223. Reaching IFC’s ambitious targets to expand recovery in affected countries.114 its work in FCV settings will require continued donor support for advisory services. To overcome • Crisis prevention and preparedness. The the challenges of creating private sector markets in Indonesia Disaster Management Fund and the FCV settings, extensive efforts will be needed to bolster Nepal Earthquake Reconstruction MDTF further upstream project development, conflict assessments illustrate Bank engagement on this agenda. and IDD, and downstream company capacity building • Support to non-member countries, or countries and project implementation. In many cases, these in arrears. Trust funds have allowed the WBG to efforts will require the use of advisory funds. Those that WORLD BANK GROUP STRATEGY FOR FRAGILITY, CONFLICT, AND VIOLENCE 2020–2025  65 Box 18. IFC and MIGA’s Support to MSMEs in Fragile and Conflict-affected Situations IFC’s investments in FCS target MSMEs and smallholder IFC also has set up SME Ventures, a program to support funds farmers primarily though financial sector and agribusiness that provide critical equity finance to smaller businesses. IFC investments. Between 2014 and 2018, about a third of IFC has used the program to expand its work in fragile markets, volume and half of IFC projects in FCS were in the financial including the Central African Republic, the Democratic Republic sector, many of these targeting SMEs or microenterprises. IFC of Congo, Liberia, Nepal, and Sierra Leone. also has a growing program in agribusiness in FCS, and many projects target farmers.  In 2018, IFC financial sector clients IFC’s investments reached more than 132,000 farmers in in FCS countries had loans outstanding to about 69,000 small FCS countries in 2018, more than doubling the number five businesses valued at $5.7 billion, along with 957,000 micro years earlier. In Afghanistan, an IFC investment and a MIGA loans outstanding worth $599 million. guarantee helped create a state-of-the-art raisin-processing plant that will improve the livelihoods of about 3,000 farmers. An example: In March 2010 Rawbank, the second-largest bank IFC also has two blended finance facilities that address in the Democratic Republic of Congo and an IFC client, launched MSMEs and farmers—the Global SME Finance Facility and its “Lady’s First” WIN program to become the only bank in the the Global Agriculture and Food Security Program. country with a program dedicated to women in business. In Lebanon, IFC’s partnership with Bank Audi provided detailed Between 2014 and 2018, nearly half of IFC investments in advice on how to launch a pioneering SME banking program the financial and agribusiness sectors of FCS countries were that included collateral-free small business loans. To date, it has supported by blended finance. In addition, the IDA PSW served approximately 5,000 small businesses. has allocated $120 million to IFC’s Small Loan Guarantee Program, which helps financial institutions to take on greater Another IFC client, the First Microfinance Bank Afghanistan, has risks to finance SMEs in difficult markets. disbursed more than $760 million in loans to more than 540,000 Afghan businesses since its inception. It is the country’s leading In recent years MIGA has supported investments in BRAC microfinance institution, lending to about half of the country’s Afghanistan Bank with the help of a blended finance facility, active borrowers, of whom 20 percent are women. in Raiffeisen Bank’s operations in Kosovo, and in ProCredit’s operations in several Eastern European FCS countries. currently cover FCS countries include the CMAW, the concessional support from donors with IFC and FCS Africa Program (including the CASA Initiative), and MIGA’s own account funds or guarantees. To meet many other donor funds that support activities in such the FCV Strategy targets, blended finance facilities areas as investment climate work and client capacity will need to be maintained and eventually expanded building, including ESG support. as commitment levels increase. IFC has developed robust governance, transparency, and accountability 224. Blended finance programs will also processes covering the use of its blended finance need to be reinforced. Helping to launch highly facilities. This includes public disclosure of the developmental pioneering private sector projects in rationale for the use of blended finance, as well as FCV settings will, in some cases, require temporary disclosure of the concessional amounts involved. assistance through blended finance, which combines 66  SECTION III: OPERATIONALIZING THE WBG’S STRATEGY FOR FCV F. Risk Management in FCV Settings way. In both FCS and non-FCS situations, the Bank has consistently sought to eliminate exposure to residual 225. Development outcome risks are higher risk, including in the areas of staff safety and security, in FCV than in other settings. Operating in FCV fraud and corruption, forced labor and child labor, countries inherently comes with higher risks for gender-based violence, threats to species extinction, achieving development outcomes: they often have and the use of deadly force by security personnel.117 fragile and volatile political situations, macroeconomic instability, and weaker implementation capacity. 229. Although operating in FCV settings is About one-tenth of the active Bank portfolio in non- challenging, the risk and cost of inaction is even FCS countries is classified with the highest risk rating higher. Heightened risks for projects in FCV countries overall, compared to more than one-third in FCS include (i) reputational risks; (ii) high physical-security countries—a threefold difference. risk for WBG staff, for the government and partners’ project implementation staff, and for beneficiaries; (iii) 226. The World Bank has been undertaking a the risk of not reaching vulnerable and marginalized formal exercise to assess and compare its risk groups, or of project capture; (iv) implementation appetite and risk tolerance in non-FCS and FCS risks caused by weak or nonexistent institutional operations. Risk appetite is defined as the type and capacity that negatively affect development impact; level of risk that the Bank is prepared to accept or and (v) safeguards and fiduciary risks, including tolerate at a specific point in time, and risk tolerance the risk of fraud and corruption. Despite mitigation as the deviation from that level of risk that the Bank measures, residual risks and the likelihood of projects is willing to accept without additional action. The failing to meet their development objectives are risk levels embedded in the Bank’s current portfolio, higher in FCV settings. as revealed in SORT,116 suggest that the Bank tolerates higher exposure to residual risk to achieve 230. New tools and technologies can help manage development outcomes in FCV and emergency some risks through more effective supervision, situations than in non-FCV situations. The implication while generating economies of scale and reducing is that the Bank recognizes that risks are harder to costs. GBV risk management, TPMs, grievance assess and mitigate in FCV and emergency situations redress mechanisms, and other types of monitoring and therefore more likely to materialize, yet also that and supervision arrangements can be regrouped for the objectives are strategically important enough to a portfolio of development activities that have similar justify tolerating these residual risks. characteristics—for example, same geographic area, same beneficiaries, similar risk profile. GIS-based 227. More specifically, the SORT data suggest that in and other mapping technologies, and other types certain areas—country, macroeconomic, operational of remote monitoring (such as drones) are evolving design, and client implementation capacity risk—the rapidly and can generate considerable new data and Bank’s risk appetite is higher in FCS than in non- information to help supervise projects, even in places FCS operations. In each of these areas, the Bank’s with low internet penetration. project approvals have demonstrated its acceptance that even well-developed and systematically applied 231. Still, scaled-up efforts in FCV settings control frameworks intended to mitigate identified risks requires a higher tolerance of the likelihood may fail because of unforeseeable circumstances, that some risks will materialize during program enabling identified risks to materialize. implementation. Operations in FCV face more dynamic situations, with substantial country and 228. By contrast, in other areas—failing to achieve macroeconomic risks and weaker implementation expected standards for procurement, financial capacity. Doing business in FCV points to the need management, and environmental and social to raise the Bank’s risk tolerance, but with full due safeguards— the Bank’s risk appetite is lower in diligence and full compliance with WBG standards. both FCS and non-FCS situations, although there are And yet to achieve development outcomes in the additional policy flexibilities that sometimes enable FCS context of the challenges encountered in FCV client-countries to achieve those standards in a different environments, Bank teams must have the space WORLD BANK GROUP STRATEGY FOR FRAGILITY, CONFLICT, AND VIOLENCE 2020–2025 67 to innovate, take risks, and try out unconventional innovative risk-sharing facility structure, providing development approaches, when needed. Many of risk mitigation to help financial institutions build the risks encountered in FCV settings must be seen their SME portfolios. as long-term development challenges; they call for • Strengthening the IFC FCS Risk Envelope, which building systems and policies in an iterative way rather provides for increased risk tolerance for a limited than ring-fencing individual development activities. number of IFC FCV investments. For the Bank to continually adapt and successfully adjust to the complex and rapidly evolving challenges • At MIGA, opportunities for blending will be of operating in FCV situations, projects that fail to reinforced. The IDA PSW is central to continued meet their development objectives should be handled expansion of MIGA’s guarantees in FCS. MIGA will as much with a learning perspective as with an also explore expansion and innovation of both the accountability lens. West Bank and Gaza Trust Fund and the Conflict Affected and Fragile Economies Facility (CAFEF), 232. IFC and MIGA can leverage tools to help which supports the provision of political risk mitigate the financial/credit risk for private sector insurance in FCS countries. investments in FCV settings, such as the IDA PSW and other blended finance facilities. Yet many IFC 233. To increase investments in FCV, it will be investment prospects with high development potential equally critical to manage the high non-financial are still unable to meet IFC’s credit standards.118 To risks associated with sponsor integrity, ESG significantly increase investments in FCV settings, issues, conflict potential, and development impact additional mechanisms will be needed. Efforts under risk. While these risks can partly be addressed way include through programming, not all risks can be mitigated in FCV settings—they will materialize at times during • Risks across IFC and MIGA’s portfolios. To implementation and threaten development impact pursue projects in FCV countries that have outcomes. Both IFC and MIGA, along with their increased political and conflict risks, market Boards, therefore need a deepened understanding of uncertainty and high operational costs, IFC and projects’ risks and an enhanced willingness to accept MIGA will appropriately balance the increased risks them, with the aim of achieving greater impact in FCV and costs with diversification of programs across settings. Despite the substantial costs of engagement, sectors and countries of operation. the costs of not engaging are even higher. Hence, when risks materialize, a proactive solutions orientation • Reducing financial risk through new de-risking and approach will be followed. tools. The Small Loan Guarantee Program, for example, provides financial institutions with an 68  SECTION III: OPERATIONALIZING THE WBG’S STRATEGY FOR FCV G. Expected Impact that often characterize FCV settings. This will allow country programs to be reoriented as needed to at the Country Level emerging priorities within a fluid country context. 234. The FCV Strategy sets forth strategic directions and an operating framework for how the WBG 237. By focusing on key drivers of FCV, will operate in diverse FCV settings. Through 23 programming will be more tailored and operational measures, the strategy also provides geographically targeted to the areas most concrete guidance and support to help country and affected by FCV challenges, and where the WBG’s project teams enhance their impact in FCV settings and development support can have the greatest impact. to help countries respond to the specific FCV challenges WBG operations will more flexibly adapt to a country’s they face. Because of rapidly changing on-the-ground security constraints by systematically embedding circumstances, high levels of conflict and insecurity, the security considerations into project design. Through capacity constraints of counterparts, and the higher risks enhanced quantitative and qualitative indicators, and costs of engaging in FCV settings, these measures WBG staff will have the ability to better measure aim to ensure more tailored on-the-ground support, on-the-ground progress in operations, make course swifter responses, and greater flexibility. corrections as required, and improve the design of future operations to better respond to the beneficiaries’ 235. By updating the World Bank’s operational needs. For the private sector, the WBG will strengthen policy framework in OP 2.30, the Bank’s evolving its assessment of key issues through CPSDs, improve role in FCV will be more firmly embedded in its upstream project development, and enhance the use operational policies. This in turn will give staff a clearer of risk mitigation tools—including blended finance—to authorizing environment for the types of engagements increase investments and impacts. that are permitted in these challenging settings. Country and project teams will therefore have in place an 238. The WBG’s implementation support will authorizing framework to partner with humanitarian and be enhanced in FCV situations by leveraging security actors, work on security and justice issues, operational flexibilities, enhancing staff capacity, and operate in situations across the humanitarian- and promoting the use of new technologies and development nexus, such as forced displacement tools. By stepping up hands-on implementation crises. Ultimately, this will help ensure more systematic support in FCV countries and accelerating efforts to risk identification and mitigation and greater operational develop more flexible and alternative arrangements consistency and coherence, while balancing the need when needed—yet without compromising on its for flexibility and avoiding a one-size-fits-all approach. environmental and social standards—the effectiveness of WBG programs is expected to increase. Efforts 236. By tailoring analytical products to better to enhance implementation support will also place understand FCV challenges and inform country special emphasis on engaging with local communities strategies and programming, the WBG will more and stakeholders throughout the project life cycle. systematically address the core drivers of fragility in FCV-impacted countries. Country strategies will 239. The WBG will augment its on-the-ground include context-specific approaches to how WBG presence in FCS by increasing the footprint of its programming should address the root causes of fragility staff and strengthening their skills and incentives. through more robust analytical products such as RRAs. This is critical to provide the ongoing operational The RRAs will undergo methodological changes to support needed in the most challenging strengthen operational recommendations and to take environments. Increasing the number of staff in into account both short- and long-term drivers of FCV, FCS and nearby locations, as well as increasing the in collaboration with partners, as appropriate. The number of Practice Managers and task teams in the proposed measures will also facilitate the adaptation of field, will be essential to providing close continuous CPFs to the rapidly changing on-the-ground dynamics support to government and private sector clients. Strengthening career development support and WORLD BANK GROUP STRATEGY FOR FRAGILITY, CONFLICT, AND VIOLENCE 2020–2025 69 mentoring for staff working in FCS will further bolster example, the importance of partnerships, of different the incentives and support that staff need in order supervision and implementation approaches, more to deliver. Finally, by upgrading the FCV learning able to develop the skills needed to work in FCV curriculum, staff will be better equipped to understand settings, and better equipped to provide tailored the distinct nature of operating in FCV settings—for support to clients on the ground. Figure 10. Expected Operational Impact: Key Measures to Support Strategy Implementation The Strategy will be implemented through an FCV-specific approach to : Policies Programming Partnerships Personnel CPFs in FCV Settings Systematically Selectivity, Simplicity, and Flexibility Mission-driven Partnerships with Address the Key Drivers of Fragility in Program Design Humanitarian, Development, Security & Peace Actors at the Country Level Enhanced Project Supervision and Updated Policy Framework for FCV Implementation Support (e.g. GEMS, Operations and the Bank’s Response Greater Adaptability of CPFs and TPM, HEIS) in Crisis Settings Operations to Rapidly Evolving on the Ground Dynamics Greater Visibility & Recognition of Comprehensive FCV-specific FCV Experience (e.g. Mentoring, Next Learning & Training for all Staff Additional Staff On-the-ground to Assignment Planning, Talent Reviews) Working in/on FCV Settings Support Client Capacity, Project Design and Implementation Scaled-up Advisory Funding and Enhanced WBG Upstream Implementation Facilities (e.g. FCS Coordination and Capacity Building Recognition of the Importance of Africa, CASA, CMAW) to Create Markets Higher Risk Tolerance 70  SECTION III: OPERATIONALIZING THE WBG’S STRATEGY FOR FCV H. Monitoring and Reporting Progress iv. Through analytics and operations in FCV- impacted countries that are designed and 240. The WBG will operationalize the FCV Strategy implemented differently from work in other countries. at four levels: For example, the WBG will monitor the number of operations in FCV-impacted countries that integrate i. Through each of the 23 specific measures security considerations into their program design, the described below, which are aimed at tailoring the number of programs that utilize ICT approaches such WBG’s approach and strengthening its effectiveness as GEMS for supervision and implementation, and the in FCV settings (table 2). The operational measures number of private sector investments that integrate include specific targets and timelines that serve as conflict-sensitive approaches. an action plan to help track progress and measure implementation. 241. Progress on implementation of the FCV Strategy will be monitored and reported to the ii. Through corporate strategies, initiatives, and WBG’s Board of Executive Directors on a regular commitments where FCV is prioritized, such basis. Stocktaking and progress made on the as the IDA19 Replenishment, the IBRD and IFC FCV Strategy will be included as part of the annual Capital Increase package, the FY20-22 HR Strategy, updates to the Board on FCV. In addition, a mid- and MIGA’s FY21-23 Strategy. For example, the term review specifically focused on operationalizing IDA19 replenishment includes six specific policy the FCV Strategy will take place at the end of 2022. commitments for FCV, and the IBRD and IFC Capital The WBG’s Independent Evaluation Group will also Increase package includes specific targets for IFC conduct an independent review of the progress of the investments in FCS, which will be monitored and Strategy by 2024. reported on.119 Additionally, existing agreements— such as the UN-WB Partnership Framework for Crisis- 242. Given the close linkage with the IDA19 FCV Affected Situations—report annually on the status of Special Theme, progress on several operational this partnership in FCV settings at the country level. measures of the FCV Strategy will be monitored and reported through the IDA process, including iii. Through country and regional programs. Moving at its own mid-term review. At the IDA19 mid- forward, the CPFs of FCV-impacted countries will term review, progress will be reported on the systematically address the key drivers of fragility operationalization of the FCV Envelope and any and sources of resilience. This will be monitored and emerging lessons, in terms of both allocations and reported back through the IDA process as well, as efforts by countries to design or recalibrate their policy commitment #1 states that “all CPFs, CENs, and portfolios. In addition to the comprehensive reporting PLRs in IDA FCS will outline how the WBG program, at that stage, there will be annual progress reports on in collaboration with relevant partners, addresses IDA19 policy commitments. FCV drivers and sources of resilience, based on diagnostics such as RRAs or other FCV assessments.” WORLD BANK GROUP STRATEGY FOR FRAGILITY, CONFLICT, AND VIOLENCE 2020–2025 71 Table 2: Detailed Measures to Operationalize the WBG FCV Strategy Policies, Processes & Practices Description Timeline 1. Articulate how the WBG will operate in humanitarian The updated policy will be submitted to the World Bank CODE crises, in refugee and forced displacement situations, Board of Directors for approval following discussion discussion by and when dealing with security and military actors, with the Committee on Development Effectiveness June 2020 particularly in insecure environments; and update (CODE). The updated OP 2.30 will ultimately be OP 2.30 on Development Cooperation and Conflict accompanied by guidance to staff, inter alia on FCV- accordingly. relevant topics, including support for implementation and supervision of Bank projects in insecure areas. 2. Systematize the use of digital solutions in FCV Support building client capacity in 50 percent of By June 2023 settings—including Geo-enabling for Monitoring and FCS countries to use field-appropriate open source Supervision (GEMS) and remote-sensing technologies— digital tools for collection and analysis of geotagged to enhance supervision and implementation. [See also data; and apply this technology to enhance project IDA19 FCV policy commitment #5]. implementation and coordination. 3. Enhance the use of operational flexibilities as needed Develop and implement a continuous program of On an in FCV settings. This includes providing training to support for CMUs and task teams, which will include ongoing basis staff and fostering communities of practice to increase communication around current flexibility, outreach to awareness among teams of the operational flexibilities teams, and training. that exist in FCV settings, particularly for procurement, environmental and social safeguards, and financial management. 4. Enhance monitoring and evaluation (M&E) Update guidance to teams on the Results Frameworks/ By June 2021 frameworks to build access to more reliable data, M&E guidance to better reflect FCV drivers in project design context-specific solutions, and measure impact design and M&E frameworks, with room for adjustment on the ground in FCV settings—including through the during project implementation. use of ICT tools and more fit-for-purpose survey designs to fully capture beneficiary feedback. 5. Enhance the WBG evaluation framework that Enhance WB/IEG harmonized guidance for preparation By June 2021 assesses country programs and operations in of Implementation Completion and Results Report FCV settings, including encouraging more realism in (ICR) and the guidance for CLRs to clarify and improve objective-setting and project design and implementation, how best to capture and assess results, given the as well as adaptability to dynamic circumstances and challenging dynamics present in FCV environments. situations of low institutional capacity and high levels of uncertainty and risk. 6. Simplify and streamline IFC and MIGA processes IFC and MIGA will implement initiatives to streamline On an to more nimbly address FCV challenges, including internal processes to facilitate the rapid processing of ongoing basis streamlining the processing of small loans. small projects. Further align environmental and social (E&S) and Integrity Due Diligence (IDD) engagements between IFC and MIGA and encourage efforts toward By June 2023 greater alignment among development partners. 72  SECTION III: OPERATIONALIZING THE WBG’S STRATEGY FOR FCV Programming Description Timeline 7. Revise the methodology for Risk and Resilience The new generation of RRAs and other FCV By June 2020 Assessments (RRAs) and ensure that they are assessments will frame key drivers of fragility more conducted systematically for countries impacted clearly to increase the multidimensional understanding by fragility, conflict, and violence. Each RRA/fragility of grievances and risk factors that exacerbate FCV, assessment will analyze FCV drivers and sources of ensure due attention to gender, and better identify resilience and include operational recommendations that strategic and operational entry points to promote can be integrated into country programming. [See also prevention and strengthen resilience. IDA19 FCV policy commitment #1]. 8. Ensure that country partnership frameworks and All CPFs, Country Engagement Notes (CENs), and By June 2023 operations in FCV settings systematically address PLRs in IDA FCS will outline how the WBG program, the key drivers of fragility and sources of resilience. in collaboration with relevant partners, addresses FCV [See also IDA19 FCV policy commitment #1]. drivers and sources of resilience, based on diagnostics such as RRAs or other FCV assessments. 9. Ensure that operations in FCV settings take security Guidance for IPF will be updated to ensure that By December considerations into account throughout the project operations in FCV environments factor security 2020 cycle, including factoring security issues into project considerations into project design, institutional design and documentation, implementation, supervision, arrangements, and risks (including mitigation and monitoring and evaluation. measures). 10. Promote the use of portfolio reviews, conflict Incorporate relevant lessons from Portfolio Reviews On an filters, and peace lenses in FCV settings to support (PRs) into RRAs. ongoing basis Bank teams in ensuring that portfolios and operations Increase staff learning on inclusion and peace lenses, identify and address fragility drivers and conflict risks, including modules on peace lenses and conflict filters particularly in countries with pockets of fragility. in learning programs. 11. Scale up regional and cross-border programs, Develop and implement at least three regional 2020-2023 focusing on key fragility risks. Conduct Regional initiatives (to complement national programs) in the RRAs, which can inform both regional and country Sahel, the Horn of Africa, and the Lake Chad region programming to address the regional dimensions of to be informed by regional RRAs, other analyses and fragility. [See also IDA19 FCV policy commitment #2]. stakeholder consultations. Focus on mitigating key fragility, development, and security risks to promote engagement at the security-development nexus. 12. Systematize conflict-sensitive approaches for private Mainstream existing tools, and develop new ones, On an sector investments in FCV, building on country-level to address contextual risk and conflict analysis in ongoing basis contextual analysis and pilot project-level conflict diagnostics, M&E, and operations, and engage with analysis. [See also IDA19 JET policy commitment #6]. other DFIs to develop common frameworks in this space. 13. Engage across the WBG to develop the private SCDs/CPFs and WBG Lending Programs to incorporate On an sector and help create markets in FCV settings; this key private sector policy issues. ongoing basis includes upstream project development, SCDs, Country IFC commitments in FCS originating from upstream Private Sector Diagnostics (CPSDs), and implementation activities. of the Cascade Approach / Maximizing Finance for Development. 14. Scale up IFC’s special advisory funding and Expand advisory funding and implementation facilities On an implementation facilities, including the IFC Creating aimed at scaling up IFC’s operations in FCV. ongoing basis Markets Advisory Window, FCS Africa, and an expanded Environmental, Social and Governance (ESG) advisory program, to increase support for market development and capacity building; and address FCV needs in MICs not covered by current facilities. WORLD BANK GROUP STRATEGY FOR FRAGILITY, CONFLICT, AND VIOLENCE 2020–2025 73 Partnerships Description Timeline 15. Systematize partnerships with humanitarian, Report back annually through the UN-World Bank On an annual development, security, and peacebuilding actors at Partnership Monitoring Report, which takes stock of basis the country level, drawing on the WBG’s comparative all the progress to improve strategic collaboration advantage as a development actor, enhancing the between the organizations at the country level across impact of operations on the ground, and ensuring the spectrum of FCV and crisis situations. effective implementation arrangements with third parties as needed. This includes conducting joint assessments such as Recovery and Peace-Building Assessments (RPBAs) more systematically, and deepening coordination at the country level with actors operating in insecure environments. 16. Operationalize and deepen partnerships with Regular interaction at the country level to exchange On an multilateral development banks (MDBs) at the knowledge on key analytical products, training ongoing basis country level on areas of focus in the FCV agenda, modules, and joint diagnostics. including more regular joint trainings and joint diagnostics. Expand IFC/DFI Country Pilot Programs, aimed at increasing private investment in FCV countries. 17. Continue to consolidate partnerships with regional Engage in regional hotspots (Sahel, Lake Chad, On an organizations that have the authority and capacity to and Horn of Africa) with regional organizations and ongoing basis address cross-border FCV challenges. initiatives, including the G5 Sahel group, CILSS, ECOWAS, IGAD, and Lake Chad Basin Commission. Step up engagement with the African Union Commission (AUC) in such areas as digital transformation, epidemics, data collection and analysis, and trade facilitation. Enhance partnerships with dedicated regional institutions to bolster regional markets, including on specific sectors such as energy. 18. Scale up engagement with civil society organizations Deepen institutional knowledge of CSOs: Starting July (CSOs) at the country level in FCV settings, particularly (i) invest in mapping CSOs that have a special focus on 2020 those operating in insecure areas and in proximity to youth or women’s organizations, and in local/national vulnerable and marginalized communities, and those CSOs; that are women-led and promote women and girls’ (ii) develop FCV-sensitive criteria for selecting CSOs empowerment. for consultation, partnerships, contracting, and other collaborations. Support CSOs for collaborative social accountability to On an improve transparency and accountability of state actors ongoing basis to citizens, inclusion of citizens in service delivery, social mobilization, and collaboration between civil society and state actors. 74  SECTION III: OPERATIONALIZING THE WBG’S STRATEGY FOR FCV Personnel Description Timeline 19. Increase on-the-ground presence by deploying more Increase Bank staffing footprint by 150 GE+ in IDA FCS. By June 2023 professional staff to fragile and conflict-affected Introduce a revamped Young Professionals Program situations, as well as nearby locations. [See also IDA19 that will place strong emphasis on working in the field, policy commitment #6]. particularly in FCS countries. IFC will promote its staffing strategy in FCS locations On an through a mix of expanded in-country presence and a ongoing basis strengthened regional hub model. 20. Strengthen the link between FCS experience and Take into account FCS experience and the specific On an career development by creating further incentives challenges of working in FCS countries when evaluating ongoing basis for WBG staff to work in FCV contexts and ensuring staff performance. that FCS experience is systematically recognized and FCS experience to be strongly recognized in talent On an considered as part of performance, talent reviews, and reviews and next-assignment planning. In WB, FCS ongoing basis next-assignment planning. experience to be highly recommended as part of managerial selection processes. At IFC, HR guidelines issued to ensure that FCS By June 2022 experience is recognized for select positions. Reinforce assignment benefits to further promote mobility of staff in FCV locations. Mentoring Program created and delivered for staff By June 2021 taking an assignment in FCS. Continue to recognize contributions in FCS through On an IFC’s Corporate Awards program and MIGA’s EVP ongoing basis Awards program. 21. Introduce an enhanced FCV learning curriculum for Enhanced FCV learning curriculum effective and ready Starting July staff working in FCV settings, with learning focusing for rollout for all staff working in or on FCV settings. 2020 on increasing operational competencies, analytic Management will require all staff based in FCS to competencies, and personal effectiveness. Staff and participate in the full analytical and operational managers working in or on FCV will be expected to curriculum. The program will be recommended for all participate in all relevant training. other staff working on FCV issues. 22. Provide enhanced support for staff well-being, safety, Enhanced e-learning course on security By June 2020 and security before, during, and after assignments in responsiveness, and Safe and Secure Approaches in FCV settings, including health and psychosocial support, Field Environments (SSAFE) training. as well as security awareness and management training. Field Security Protocols to be in place at all Country By June 2021 Offices; mandatory security briefings for all CDs and CMs working in FCS; enhanced Country Clearance System. Deployment of multi-disciplinary Health and Safety 2020-2023 (H&S) teams; enhancement of mental health support; rollout of H&S training; enhanced H&S software platform On an support. ongoing basis 23. Leverage World Bank staff in countries where IFC Train a cohort of World Bank staff in IFC strategies and By June 2021 lacks on-the-ground presence by providing training processes in FCS. and support to World Bank managers and staff who fulfill IFC functions in these contexts. Pilot WB representation of IFC in FCS countries. On an ongoing basis WORLD BANK GROUP STRATEGY FOR FRAGILITY, CONFLICT, AND VIOLENCE 2020–2025  75 Conclusion WORLD BANK GROUP STRATEGY FOR FRAGILITY, CONFLICT, AND VIOLENCE 2020–2025 77 243. This FCV strategy builds on the WBG’s strategy also articulates new approaches to tackle experience and evolution working in FCV the challenges posed by FCV—including focusing on settings, lessons learned from international best prevention, building human capital, closing gender practices, and the achievements of countries that gaps and empowering women and girls, engaging on have successfully transitioned out of fragility. security and justice issues, and promoting regional The WBG is focused on providing more tailored approaches to cross-border crises. It highlights the development support to FCV-impacted countries and WBG’s ability to support public and private sector communities, enhancing effectiveness on the ground, approaches to FCV issues, as these can help create and deepening partnerships with a diverse set of jobs, deliver services, foster social cohesion, and actors, in line with respective complementarities and promote inclusive economic growth. comparative advantages. It approaches this task with 246. To operationalize the framework for a sense of humility, recognizing the importance of full engagement, this strategy sets out 23 specific commitment by local, national, and international actors measures aimed at supporting clients impacted to achieve progress. by FCV more effectively. The measures are 244. The strategy recognizes that operating in organized along the 4 P’s: policies, programming, FCV settings entails inherent and intractable risks personnel, and partnerships. They are complemented and challenges, though the risks and costs of by a tailored financing toolkit to support countries inaction are higher still. Experience in FCV confirms impacted by FCV. Over the next five years, the full higher risks, including reputational and fiduciary, operationalization of the strategy and achievement environmental, social, and corporate governance of the 23 measures, will be the shared mission of risks, as well as risks related to heightened political staff and management across the World Bank, IFC, and market uncertainties and to staff security. Doing and MIGA. Progress in implementing the strategy business in FCV settings points to the need to raise the will be monitored and reported back to the WBG’s WBG’s risk tolerance and accept that project failures shareholders. FCV will be mainstreamed throughout may happen. analytic, operational, and technical assistance activities, including WBG regional and sectoral 245. The purpose of the FCV Strategy is to strategies, country programs, and projects and enhance the WBG’s effectiveness to support investments. The success of the strategy will be countries in addressing the drivers and impacts measured by how the WBG adapts its approach to the of FCV and in strengthening their resilience, distinct nature of FCV settings, and by its improved especially for their most vulnerable and effectiveness and impact on the ground by 2025. marginalized populations. Building on operational and analytic experience in FCV settings, the 247. Ultimately, addressing the challenges posed strategy articulates a differentiated approach to FCV by FCV is critical to achieving the WBG’s twin structured around a set of guiding principles and goals of ending extreme poverty and boosting four pillars of engagement that aim to strengthen shared prosperity. Given the deteriorating FCV the WBG’s approach and to address challenges landscape, a concerted international effort—bringing across the full spectrum of FCV. This framework together humanitarian, development, peacebuilding, will help inform regional and country strategies and security, and private sector actors—is essential. This programming, and ultimately provide more effective strategy therefore represents a critical milestone in the and tailored support to governments, the private WBG’s contributions to addressing one of the central sector, and the most vulnerable populations. The issues of our time. 78  CONCLUSION World Bank Group Strategy for Fragility, Conflict, and Violence 2020–2025 Annexes Annex 1: Proposal for a Revised Classification of Fragility and Conflict Situations for World Bank Group Engagement Annex 2: Key Lessons Learned about FCV Annex 3: Key Characteristics of the World Bank Group’s FCS Portfolio Annex 4: Select Examples from WBG Engagement in FCV Settings Annex 5: Budget Context for FCV Annex 6: Strengthening the WBG Approach to Staff Health, Safety, and Security Annex 7: Global Consultation Process to develop the WBG Strategy for FCV WORLD BANK GROUP STRATEGY FOR FRAGILITY, CONFLICT, AND VIOLENCE 2020–2025 81 Annex 1: engagement to difficult and complex situations in a manner that is tailored to relevant contexts. It aims to Proposal for a Revised Classification ensure sound prioritization, selectivity, consistency, of Fragility and Conflict Situations for and fitness for purpose. World Bank Group Engagement 4. The classification is fully in line with the new WBG Fragility, Conflict, and Violence INTRODUCTION (FCV) Strategy, which aims to develop a differentiated approach to defining and operating 1. This note aims to inform strategic and in FCV-affected countries so that the WBG operational decision-making within the World can strengthen its impact and operational Bank Group (WBG) by providing a disaggregated effectiveness in these contexts. The proposed classification of low- and middle-income countries classification would inform, and be reflected in, the that are affected by fragility and conflict—also known FCV Strategy that will be presented to the Board of as Fragility and Conflict Situations (FCS). It aims to Executive Directors in early 2020. allow for effective and context-appropriate WBG engagement by providing a simple and practical 5. In addition, the new classification is expected operational framework (and associated metrics) that to inform several areas of WBG operational can both help identify countries most affected by policy and instruments and their applications, fragility- and conflict-related issues and differentiate based on the situation faced in each group of across such situations. It is part of WBG commitments countries. This includes made in the context of the 18th replenishment of the International Development Association (IDA) and the • Linkages with IDA and IBRD resources. For IDA, Global Capital Increase for the International Bank for the FCS list will be used for the monitoring of IDA Reconstruction and Development (IBRD). country allocations. In addition, the IDA19 package creates an FCV Envelope that offers enhanced 2. The revised FCS classification evolves from allocations, and its criteria are aligned with the FCS the Harmonized List of Fragile Situations and list. The list is also relevant for eligibility to some related work by partners, and it aims to address windows (for example, the Private Sector Window). some of the limitations in the current systems. The On the IBRD side, the list is relevant for the outgoing Harmonized List was based on two criteria: exemptions from IBRD’s pricing changes as part of a harmonized CPIA score below 3.2,120 and the the 2018 IBRD and IFC Capital Package. It is also presence of a UN mission or a regional peacekeeping/ relevant for the concessional financing for the GPG peacebuilding mission. As such, it aggregates all Fund, one of the policy commitments of the IBRD dimensions of fragility and conflict into one broad Capital Package: the fund offers enhanced support category and does not sufficiently differentiate for GPG-related projects such as operations that between various types of situations. address FCV spillovers. • Human resources, potentially including PURPOSE AND USE OF THE CLASSIFICATION incentive systems, career management, and compensation arrangements—in combination with 3. The primary purpose of the proposed new other employment benefits such as Hazard and classification is to ensure that the WBG’s strategic Fragility Pay, Priority Placement Premium, or Rest and programmatic focus in countries affected by and Recuperation—the “tagging” of staff FCV FCS-related issues is adapted and tailored to the experience, and waivers for short-term consultants diverse challenges faced by these countries. It (STCs) and short-term temporaries (STTs) up to distinguishes across countries based on the nature 190 days. and severity of the FCS-related issues they are facing to allow for a differentiation of approaches, policies, and instruments and to help adapt the WBG’s 82  ANNEXES • Operational policies, potentially including the management attention to allow for early action. The application of OP 2.30 and OP 10 para. 12, as well Global Crisis Risk Platform (GCRP) may provide a as other applicable policies across various groups forum to identify such countries, based on a mix of of countries. qualitative and quantitative criteria, and to discuss the possible WBG responses. • Bank budget allocations, including providing the resources necessary for effective engagement in various types of complex operational environments. METHODOLOGY • Corporate monitoring and reporting, including 9. Countries with high institutional and social replacing the current Harmonized List for corporate fragility include a range of countries that are reporting—for example, portfolio monitoring and facing deep institutional crises, that have very poor corporate scorecards—and tracking selected IDA/ transparency and government accountability, or that IBRD policy commitments that are tied to this list. have weak institutional capacity. These issues are sometimes compounded by threats posed by climate TYPOLOGY OF FCS change (for example, for some small Pacific Islands states). To more sharply focus on the countries 6. To capture the differentiated nature of fragility where deep institutional fragility poses the greatest and conflict, the classification will be based on development challenges, the threshold related to CPIA methodologies that will distinguish countries in the has been lowered from 3.2 to 3.0. following categories: • Fragile countries are defined as • Countries with high levels of institutional and social fragility, identified based on public indicators  (i) those with one or more of the following: that measure the quality of policy and institutions as (a) the weakest institutional and policy well as specific manifestations of fragility. environment, based on a revised, harmonized CPIA score121 for IDA countries (for which • Countries affected by violent conflict, identified CPIA scores are disclosed)122 that is below based on a threshold number of conflict-related 3.0; or (b) the presence of a UN peacekeeping deaths relative to the population. This category will operation because this reflects a decision by distinguish two further subcategories based on the the international community that a significant intensity of violence: (i) countries in high-intensity investment is needed to maintain peace and conflict and (ii) countries in medium-intensity stability there; or (c) flight across borders of conflict. 2,000 or more per 100,000 population, who are 7. The focus will also include countries affected internationally regarded as refugees in need by FCV spillovers, especially those hosting large of international protection,123 as this signals a numbers of refugees. These countries may also major political or security crisis; and appear in the main FCS classification as either fragile  (ii) those that are not in medium- or high- or conflict-affected. intensity conflict (see methodology below), as such countries have gone beyond fragility. 8. The proposed classification is expected to be complemented by ongoing work to support other Sources of data for the CPIA are the World Bank, countries that are less severely affected by FCV, the African Development Bank, and the Asian as well as to identify situations with increasing Development Bank;124 the UN Department of Peace risks of fragility and conflict escalation. This Operations for the presence of peacekeeping would be part of wider WBG efforts to adopt a missions;125 and the UN High Commissioner for more risk-based approach to development and to Refugees (UNHCR) for numbers of refugees.126 support efforts aimed at mitigating FCV risks. These situations may not warrant additional allocations or specific policies or instruments, but instead WORLD BANK GROUP STRATEGY FOR FRAGILITY, CONFLICT, AND VIOLENCE 2020–2025 83 10. Countries in conflict are identified based on The sources of data for conflict deaths are the Armed the number of conflict deaths in absolute terms and Conflict Location & Event Data Project (ACLED) relative to their population. and the Uppsala Conflict Data Project (UCDP).127 To maximize the robustness of the classification, a • Countries in high-intensity conflict are defined country will be included in a certain category only if it as those with (i) an absolute number of conflict meets threshold criteria in both databases. deaths above 250 according to ACLED and 150 according to UCDP; and (ii) a number of conflict deaths relative to the population above 10 per GOVERNANCE 100,000 according to both ACLED and UCDP, 11. The FCS classification and associated list of reflecting widespread and intense violence across countries is to be updated annually by the WBG’s many parts of the country. FCV Group, in consultation with key World Bank • Countries in medium-intensity conflict are business units: Operations Policy & Country Services defined as (i) countries with lower intensity conflict, (OPCS), Development Finance (DFI), and Regions. as measured by (a) an absolute number of conflict The update is to be circulated by July 1 each year deaths above 250 according to ACLED and 150 (after CPIAs are finalized). according to UCDP; and (b) between 2 and 10 12. The classification is publicly disclosed and the per 100,000 population according to ACLED and list is available here: https://www.worldbank.org/en/ between 1 and 10 according to UCDP; or (ii) topic/fragilityconflictviolence/brief/harmonized-list-of- countries with a rapid deterioration of the security fragile-situations situation, as measured by (a) a lower number of conflict deaths relative to the population between 1 and 2 (ACLED) and 0.5 and 1 (UCDP) and (b) more than a doubling of the number of casualties in the last year. Indicative Strategic and Operational Implications of Country Groupings Country Indicative strategic focus Illustrative / possible operational and financial grouping implications128 Countries in Engage as part of an international stabilization Financing: high-intensity effort, which is a prerequisite for poverty • These countries may be eligible to access the IDA conflict reduction and sustainable development: Remaining Engaged in Conflict Allocation or Turn Around (1) Support the peace process as needed, Allocation, if they meet the respective criteria. within limits of WBG’s mandate (including • Possible access to the IDA Private Sector Window. through analytics, convening power, and so on) and build partnerships with political and refugee-hosting countries, possible access to IDA • For security actors as appropriate. Window for Host Communities and Refugees (low-income) and GCFF (middle-income). (2) Complement humanitarian relief with development activities that can help mitigate • Possible access to IBRD GPG Fund. the impact on the crisis (based on the WBG’s • Possibleexemptions from IBRD’s pricing changes as part comparative advantage). of 2018 Capital Package. (3) Help maintain key institutions and human Other: capital that will be critical for the country’s eventual recovery and stability. • Operations systematically “high risk.” (4) Prepare for and support economic • Enhanced operational flexibility, with close fiduciary and and social recovery efforts, including safeguards oversight. institutional strengthening, jobs and economic Possible use of third-party execution and/or third-party opportunities, and service delivery. monitoring and/or geo-mapping. 84  ANNEXES Countries in Engage in support of a government-led Financing: medium- stabilization or peacebuilding effort, which • These countries may be eligible to access the IDA intensity is a prerequisite for poverty reduction and Prevention and Resilience Allocation or Turn Around conflict sustainable development: Allocation, if they meet the respective criteria. (1) Engage in dialogue with the government • Possible access to the IDA Private Sector Window. on the priority steps to take as part of peacebuilding and conflict mitigation. refugee-hosting countries, possible access to IDA • For Window for Host Communities and Refugees (low-income) (2) Focus the country program on addressing and GCFF (middle-income). drivers of fragility and strengthening factors of resilience—with a focus on social inclusion • Possibleexemptions from IBRD’s pricing changes as part and medium-term support to institutional of 2018 Capital Package. development; economic opportunities, private sector-led growth, and jobs; and service Other: delivery. • Operations likely “high risk,” especially in “high-risk (3) Provide specific area-based support to areas.” at-risk areas; to at-risk groups (for example, • Enhanced operational flexibility, with close fiduciary and youth); and/or in sectors that are critical for safeguards oversight, especially in “high-risk areas.” governance (for example, extractive industries). • Possibleuse of third-party execution and/or third-party (4) Support peace processes as needed, monitoring, and/or geomapping, especially in “high-risk within limits of WBG’s mandate (including areas.” through analytics, convening, etc.) and build partnerships with political and security actors as appropriate. (5) Prepare for and support economic and social recovery efforts, when the opportunity arises. (6) Active monitoring of conflict and risk trends. Countries Support a broad effort to enhance governance Financing: with high and address key drivers of fragility, which • Thesecountries may be eligible to access the Turn institutional is a prerequisite for poverty reduction and Around Allocation, if they meet its criteria. and social sustainable development: fragility • Possible access to the IDA Private Sector Window. (1) Focus the country program on addressing drivers of fragility and strengthening factors refugee-hosting countries, possible access to IDA • For of resilience, as well as dynamics that keep Window for Host Communities and Refugees (low-income) countries in fragility traps—with a focus on and GCFF (middle-income). government accountability and performance • Possibleexemptions from IBRD’s pricing changes as part as well as social inclusion. of the 2018 Capital Package. (2) Provide specific area-based support to Other: at-risk areas; to at-risk groups (for example, youth); and/or in sectors that are critical for likely “high risk,” especially in sensitive sectors • Operations governance (for example, extractive industries). or geographic areas. (3) Prepare for and support economic and social • Close fiduciary and safeguards oversight, especially in recovery efforts, when the opportunity arises. sensitive sectors / geographic areas. use of third-party monitoring, and/or • Possible geomapping, especially in sensitive sectors / geographic areas. Other FCV- Support a government-led poverty reduction Financing: affected / sustainable development agenda, with refugee-hosting countries, possible access to IDA • For countries particular attention to issues of fragility, Window for Host Communities and Refugees (low-income) (not on the conflict, and violence: and GCFF (middle-income). list) (1) Focus the country program on addressing • Countries with high levels of interpersonal violence may development challenges the country is facing. be eligible to access the IDA Prevention and Resilience (2) Explore opportunities to address drivers Allocation or Turn Around Allocation, if they meet the of FCV, such as social inclusion or specific respective criteria. area-based support to at-risk areas; and/or to Other: at-risk groups (for example, youth). likely “high risk,” especially in sensitive sectors • Operations (3) Provide additional support, as needed and and geographic areas. as possible, in regions affected by subnational conflict; or on issues related to interpersonal • Non-disclosure of relevant countries. violence or to institutional and social risks; or in support of refugees and host communities. WORLD BANK GROUP STRATEGY FOR FRAGILITY, CONFLICT, AND VIOLENCE 2020–2025  85 Annex 2: • The magnitude of the global FCV challenge requires working across the humanitarian- Key Lessons Learned about FCV development-peace nexus. The countries that Three major reports—the 2011 World Development have successfully exited fragility and violent conflict Report on conflict, security, and development; worked concurrently on numerous issues. They the 2017 WDR on justice and the law; and the followed a trial-and-error approach, experimenting Pathways for Peace report—provide examples of iteratively with various reforms spanning security, countries that have successfully exited a state of justice, the rule of law, macroeconomic adjustment, fragility, conflict, and violence. Each country must and political inclusiveness, then adjusting as forge its own path to peace, but some shared lessons they moved ahead. The common thread among have begun to emerge from countries that have made their varied approaches is the need to sustain significant progress. Above all, it is necessary to service delivery, avoid having lost generations, accept the long-term nature of entering and exiting and incentivize and implement more simultaneous, fragility and the critical importance of sustaining collaborative, comprehensive, and complementary efforts well beyond just restoring growth or securing humanitarian, development, and peace actions. functional governments. • Macroeconomic stability is key to strengthening • Countries and subregions typically fall into resilience and managing FCV risks. It is impacted FCV over a long period, hence patience and by conflict and crisis, often resulting in a rapid steadfast commitment are required to help them accumulation of public debt, capital flight, high exit. In this process, countries often follow a path- and rising inflation, exchange rate volatility, and dependent trajectory strongly influenced by their other dislocations. Macroeconomic shocks tend history or geography, or their social, economic, to weaken the factors of resilience for entire and power structures—all elements that are difficult economies and societies. Building sufficient to change. Grievances about marginalization fiscal space and managing monetary policy is and exclusion, and perceived inequalities among a precondition for effective government service groups, are factors that can lead to violent delivery, private sector development, and ensuring conflict, but they can also manifest as significant resilience to shocks. In Ethiopia, for instance, after subregional inequalities.129 Addressing deep-seated authorities implemented an ambitious development grievances, improving institutions’ inclusiveness program—with measures ranging from price and and accountability, and building trust among social trade liberalization and tax reforms, to reforms to groups is a delicate process that usually takes the interest rate structure and investment and labor decades. Declaring prematurely that nation a has codes—growth per capita accelerated to slightly succeeded in exiting FCV and returning to business more than 6 percent annually from 2000 to 2017.132 as usual is a major reason why FCV country However, in polarized environments, it is especially relapse. critical to implement reform programs with the right sequencing, so that these measures are not seen • The international community too often sees crisis as unfairly affecting some socioeconomic groups as a failure from which to withdraw, when in most while shielding others. cases it is not only a normal occurrence along the road out of fragility, but a learning opportunity. • Efforts to include and empower broad Indeed, some crises create opportunities. For segments of society can help address and instance, in Aceh, Indonesia, the 2004 tsunami prevent FCV. Recent evidence has shown the provided a window of opportunity to reach an importance of addressing specific vulnerabilities agreement: the humanitarian crisis incentivized faced by different groups, as well as undertaking rebels to come to the negotiating table.130 Likewise, development responses that take into account the 2015 earthquake in Nepal expedited the the relationship between gender, fragility, and adoption of a new constitution, which had been resilience.133 Similarly, young people are not stalled for years.131 homogenous; an appreciation of their diversity must inform all efforts that seek to address their 86  ANNEXES exclusion.134 Development responses should and devolution—all of them measures that create aim to systematically address the barriers to winners and losers in the short term. Constructive empowerment and equality. Investments in leadership is critical because tensions tend to gender equality must strive to enhance women’s build in specific arenas where risks are high; the participation at all levels of governance, including appetite of leaders to proactively acknowledge in peace- and state-building processes. It is and address these tensions is pivotal. One essential to give youth hope by signaling to them example of how leaders can use their power to that they have an important role to play in society, shift trajectories is Burundi’s former president, and that their country is on a positive trajectory. who, by demonstrating his willingness to build an inclusive government, helped bring about the • Leaders play a decisive role in this process, Arusha Accords in 2000.136 Development actors either negatively—by mobilizing groups toward are most effective in preventing or addressing violence—or positively, by managing short- fragility when they are part of a coalition that can term incentives while pursuing a long-term strongly support these national efforts. vision of peaceful transformation. Destructive leadership can further politicize grievances that • Private sector development is critical to are, at the outset, usually social or economic and addressing FCV challenges. Private companies that tend to push groups toward violent behaviors, are central to generating income opportunities that including those that serve the interest of ruling help provide stability. Inclusive job opportunities elites. Once violence starts, a variety of interests and services that enlist women and youth and are typically mobilized to increase its intensity or support a broad range of local and regional prolong its duration, including the emergence of companies—including SMEs that know how to war economies, which become deeply embedded engage in difficult investment environments—can within societies. Experiences of humiliation and increase the range of participants in the economy. human rights violations are among the strongest Private sector support and market creation in FCV motivating factors for engaging in violence.135 situations requires extensive project development, Conversely, successful leaders have often pursued regulatory reform, and capacity building, as well as difficult or unpopular measures on such issues efforts to address environmental and social issues as security sector reform, land reform and other and support pioneering firms. reallocations of investments across the territory, WORLD BANK GROUP STRATEGY FOR FRAGILITY, CONFLICT, AND VIOLENCE 2020–2025 87 Annex 3: Total World Bank Commitments to FCS Key Characteristics of the World Bank Group’s FCS Portfolio 11% Based on standard reports and IEG data, the Operational Policy and Country Services (OPCS) 28% unit conducted an FCS portfolio review in 2018.137 This, coupled with additional DFI and BWI138 data, allowed the FCV group to analyze the WBG’s FCS 61% portfolio as compared to its non-FCS portfolio since inception of the FCS Harmonized List in 2006. This analysis identified the characteristics, project performance, opportunities for leverage, and specific challenges to tackle within the portfolio.139 The portfolio IBRD IRA TF has a unique structure, including both IDA and IBRD FY2006–FY2019 countries; it cuts across all regions and can change rapidly as individual country portfolios fall on and off The top-five countries by share of FCS the FCS Harmonized List. Trends have been uneven commitments are Afghanistan, with a total of $13.2 and sporadic over time, with major variations across billion145 (of which 74 percent is financed through trust countries, practice groups, and lending instruments— funds and 26 percent through IDA);146 the Democratic creating operational fragmentation. Republic of Congo, $5.8 billion; Iraq, $5.8 billion; Côte d’Ivoire, $4.3 billion; and Yemen, $3 billion.147 Since the inception of the FCS list in FY2006, IDA provides the majority share of commitments to all the World Bank portfolio140 has committed a of these except Iraq, for which funding is from IBRD. total of $583 billion,141 of which $58 billion142 was Over this period, the Compounded Annual Growth committed to FCS countries (about 10 percent of the Rate (CAGR) for IDA in commitments to FCS is 11.59 overall portfolio). The largest contributor to FCS has percent, and 19.87 percent for projects financed by been IDA, with $35 billion (61 percent), followed by trust funds.148 trust funds,143 with $16 billion (28 percent), and IBRD, with $6.6 billion (11 percent). During this period— Active portfolio project makeup: The current, active FY2006 to FY2019—the Africa and South Asia regions FCS portfolio consists of 361 projects in 33 countries have received the highest share of Bank commitments that total $26 billion; with 69 new projects approved in to FCS—42 and 26 percent, respectively.144 Net Commitment Amount (US$M, by country) 4,000 70% of the 3,000 portfolio 2,000 1,000 Micronesia,... Central African... Congo, Democratic... Sudan Kiribati Comoros Zimbabwe Tuvalu Marchall Islands Timor-Leste Guinea-Bissau Solomon Islands Djibouti South Sudan Gambia, The Kosovo West Bank and Gaza Togo Somalia Chad Haiti Mali Congo, Republic of Burunidi Liberia Papua New Guinea Yemen, Republic of Lebanon Myanmar Mozambique Afghanistan Cote d’Ivoire Iraq 88  ANNEXES Average Project Size Size of Projects in FCS 180 200M< 156.5 6% 160 140 120 100 0-20M $ million 50-200M 34% 80 70.8 32% 60 40 20-50M 20 28% 159 0 FCS Non-FCS FY19. For comparison, the non-FCS portfolio contains projects.157 Of the countries with FCS projects, 39 1,325 projects in 97 countries, totaling $210 billion, percent have a portfolio of $200 million or less, and 18 with 224 new projects approved in FY19.149 percent have fewer than five projects. These projects need more supervision through third-party monitoring Between FY06 and FY19, the number of countries and are under implementation over a shorter time on the Harmonized List ranged between 32 and period—implying greater project turnover.158 This 36,150 with 19 countries on it continuously since can partly be explained by the high proportion of its inception.151 Since FY06, the Africa region smaller countries on the FCS country list; however, the has consistently held the largest number of FCS make-up of the FCS portfolio subsequently results in projects;152 it continues to hold the largest share of operational fragmentation. FCS lending in the current, active portfolio.153 However, 70 percent of this portfolio (by volume) is dominated Sectoral distribution: At the end of FY19, the World by eight countries,154 making the overall FCV portfolio Bank’s Transport (TRAN) Global Practice (GP) had heavily contingent on the performance of this small set the largest portfolio by volume in FCS countries. of countries.155 Combined with four other GPs—Health, Urban Development, Energy & Extractives, and Water—the Portfolio characteristics: The FCS portfolio top five GPs accounted for more than half of the amounts to $26 billion. More than 60 percent of portfolio in FCS. Some sectors have significantly less projects in this portfolio are smaller than $50 million;156 investment in FCS compared to non-FCS countries. For the average size is 55 percent below non-FCS example, the Macroeconomic, Trade, and Investment By Commitment Size Distribution across WB Global Practices 3,500 3,000 2,500 2,000 1,500 1,000 500 - V D R TI V L I U AG J ER E M P AN FC SP IA PO O EN N D EN ED R M AT H TR G C D SO an W rb U WORLD BANK GROUP STRATEGY FOR FRAGILITY, CONFLICT, AND VIOLENCE 2020–2025 89 (MTI) GP has the largest percentage difference in a marginal increase in ratings for the remaining IDA volume, as budget support is comparatively small FCS countries.167 and uncommon in fragility and conflict-affected countries.160 FCS projects predominantly use investment project financing (IPF)—currently at 94 percent (by volume), Project performance: FCS operations have which is 17 percent higher than non-FCS usage.168 demonstrated steady improvement on project Development policy loan (DPL) operations in FCS outcome ratings in recent years. Increased support contexts disburse the fastest, significantly faster on administrative budgets, and staffing in FCS than DPLs in non-FCS contexts. However, their use country offices, have contributed to the trend. in FCS has been declining rapidly—from 34 to just However, while lending to FCS has more than 6 percent over the FY17-18 period.169 While overall tripled over this period,161 the performance of FCS performance ratings lag at project closure, the active operations has lagged that of non-FCS countries,162 FCS projects are performing marginally higher than coupled with higher risk ratings.163 Weaker non-FCS projects on Implementation Progress (IP) and capacity, higher uncertainty, and greater security on Development Objective (DO) ratings.170 Notably, risks pose challenges to effective engagement countries with the largest portfolios perform better and supervision.164 Additionally, although WBG than average on DO and slightly worse on IP. The country strategy outcomes are above their historic Democratic Republic of Congo—the largest portfolio average across all regions,165 FCS country strategy among the FCS—and Côte d’Ivoire are consistently performance and development outcome ratings have below average. FCS projects typically make extensive fallen short compared to those in non-FCS countries use of the flexibility provided by additional financing.171 by 20-30 percent over the last decade.166 Opportunities to leverage: On average, FCS With eight countries dominating the active portfolio, projects have a significantly shorter preparation overall FCS portfolio performance is heavily contingent time than non-FCS projects. They start disbursing on the performance of this small set of countries. earlier, are implemented faster, exhibit a lower Both Afghanistan and Yemen are in this group and share of problem projects, and introduce proactive provide a good illustration of how strongly overall FCS measures more quickly. Preparation time for FCS portfolio performance can become skewed: the recent projects is about two months shorter than for non-FCS, overall downward trend is largely due to negative and the first disbursement happens more than one project performance in these two countries, which month earlier.173 The average number of months in were in active conflict during the period. Excluding problem status is also slightly shorter for FCS projects, Afghanistan and Yemen from the analysis would show with 5 percent more actions taken proactively. Teams IEG Outcome Rating with MS+ 90% Share of Projects with MS+ 86% 85% 82% 80% 80% 77% 75% 73% 71% 72% 70% 67% 67% 66% 65% 60% 2014 2015 2016 2017 2018 Closed FY FCS at Approval Non-FCS at Approval 172 90  ANNEXES IFC Long Term Commitments in FCV FY06–19* 4,000 3,500 3,000 2,500 2,000 1,500 1,000 500 0 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Own Account Mobilization *FY06 mobilization data is not available, as IFC started systematically tracking mobilization starting from FY07 IFC Own Account Long Term IFC Own Account Long Term Commitments in FCV by Region Commitments in FCV by Industry Group FY06–19 FY06–19 1% 3% 5% 6% 21% 19% 44% 52% 26% 23% Sub-Saharan Africa Middle East and North Africa Infra Industry Group FM Industry Group East Asia and the Pacific Europe and Central Asia MAS Industry Group CDF Industry Group South Asia Latin America and the Caribbean working on FCS projects have a faster reaction time accelerated project approval and implementation to complications when they occur, with projects can come with risks and tradeoffs, particularly in FCV maintaining a “problem” status for a substantially settings, TTLs’ understanding of these is critical to shorter time,174 indicating that operational flexibility has FCV project performance. Tools such as retroactive paid off to an extent. financing, deferral of safeguard instruments, and fiduciary arrangements exist but remain underutilized. Challenges to address: Despite several efficiencies of the FCS portfolio, work still needs to be done to reduce variations within it and improve overall IFC FCS PORTFOLIO performance. The performance and distribution of Increasing support for private sector development the portfolio underscore the need to adopt a holistic through IFC’s investment and advisory services approach to consolidating projects, having fewer but operations, as well as MIGA guarantees, has been more effective and larger multisectoral programs. a critical element of the WBG’s approach to FCV. This approach allows a focus on key drivers of FCV IFC builds on a long history of working in FCV markets, and can enhance project supervision, implementation including early engagements in Indonesia in the 1960s support, and risk management.175 Because and Bosnia and Herzegovina in the 1990s. IFC’s WORLD BANK GROUP STRATEGY FOR FRAGILITY, CONFLICT, AND VIOLENCE 2020–2025 91 focus has continued to evolve by ensuring dedicated Many problems were at least partly related to the funding for advisory services and staff in FCS via the FCV environment—for example, conflict dynamics, Conflict-Affected States in Africa (CASA) initiative— regulatory uncertainty, sponsor and government launched in 2008—and FCS Africa, established in capacity and resilience, and infrastructure issues. 2014; by adding FCS to strategic priorities in 2010; IFC’s profitability in FCS countries during this time, and by introducing FCS and LIC-IDA targets as part of as measured by Risk-Adjusted Return on Capital the 2018 Capital Increase. Additional advisory funding (RAROC), was mostly low or negative. A detailed for FCS has recently become available through the review of IFC’s FCS portfolio shows generally sound Creating Markets Advisory Window (CMAW), while project and loan performance, as measured by the investment growth in FCS is supported by recent level of nonperforming loans and write-offs. However, growth in blended finance funds that target IDA overall IFC profitability is affected by high expenses and FCS countries, including the IDA Private Sector per dollar invested, primarily because of smaller Window (PSW). project size. IFC’s long-term financing commitments176 in FCS have constituted roughly 4-5 percent of its total MIGA FCS PORTFOLIO commitments, growing in line with corporate MIGA has provided guarantees in many sectors commitments. While FCS investments make up a and in many FCS. MIGA’s portfolio in FCS has grown small share of IFC’s overall portfolio, IFC Advisory steadily over the last 10 years and now stands at $2 Services have been heavily weighted toward FCS billion, which is 9 percent of the total portfolio. This is countries, representing about 20 percent of total despite an overall decline of foreign direct investment advisory spending. FCS countries in Sub-Saharan into FCS over the period. MIGA’s market share of Africa, MENA, and the East Asia and Pacific region foreign investment covered by political risk insurance have received the largest commitments from IFC, is heavily tilted toward IDA and FCS countries, with a mix of investments in infrastructure, financial reflecting the important role that MIGA plays in the markets, and the manufacturing, agribusiness, and most challenging environments. FCS countries in Sub- service sectors. IFC has also had significant short-term Saharan Africa, MENA, and the East Asia and Pacific trade finance in FCS. region have received the largest share, with a mix of Over the last 10 years, IFC’s development results guarantees in infrastructure, financial markets, and the and profitability in FCS have lagged those in non- manufacturing, agribusiness and service sectors. FCS countries. Development outcomes in IFC’s FCS Development results for MIGA’s portfolio in portfolio have been lower than in its non-FCS portfolio FCS have mirrored those of its total portfolio. by about 15 percentage points.177 The FCS results have Development outcome in the FCS portfolio has been somewhat lower in Africa and MENA compared been similar to that of the total portfolio of evaluated to other regions, but there has been relatively more projects: 64 percent vs. 63 percent over 2010-2017 success in the financial sector and infrastructure. respectively.178 MIGA’s ex-ante development impact Evaluations of IFC’s FCS investments found that many system (‘IMPACT’), which was piloted in FY19, shows a of the underperforming projects suffered from external similar pattern. The mean score for projects presented shocks such as declines in commodity prices and to the Board in FCS during FY19 was 65, versus 67 currencies, the global financial crisis, health crises, and for all projects. Claims and pre-claims are higher in impacts from regional conflicts. FCS. Of the 12 claims that MIGA has thus far paid out, Other factors that affect project success included seven have been in countries on the FCS Harmonized regulatory issues such as changes or delays List of Fragile Situations, all of them for War and Civil in banking regulations and delays in opening Disturbance risk. This risk is of particular concern markets, higher operating costs, limited in-country to MIGA because the Agency can do little to avert infrastructure, and inadequate sponsor capacity it through early intervention, and no recoveries are related to project operations, risk management, or assumed. Internal analysis also shows that pre-claims environmental and social programs. are significantly higher in FCS—as might be expected. 92  ANNEXES MIGA Guarantee Portfolio MIGA Guarantee Portfolio in FCS MIGA Guarantee Portfolio in FCS by Industry Group FY19 ($bn) FY15–FY19 0.7% 2 1.9 7.3% 8.1% 1.7 17.2% 1.5 1.5 66.7% 2015 2016 2017 2018 2019 Agri-Bus/Manuf. Financial Infrastructure Oil and Gas Evidence over recent years shows that MIGA projects projects in FCS countries require significant assistance in FCS are more expensive to underwrite and monitor to realize their potential. Supply chains need to be than other projects, and also take significantly longer developed, local community interactions initiated, and to process. land and other environmental and social issues need to be addressed. IFC and MIGA Lessons on Reputational and Financial Risk in FCV For IFC and MIGA, working in FCV contexts means encountering significant reputational and financial Experience over the past decade has shown that risks. Reputational risks include (i) issues related to working with the private sector in FCV is far from sponsor (lead investor) integrity, such as previous business as usual, with heightened risks and costs illegal activities or corruption; (ii) conflict-related risks; because of unique challenges on the ground. and (iii) environmental, social, and governance (ESG) These include (i) a limited existing private sector— risks such as impacts from pollution or problems with often largely informal and with poor capabilities—and resettlement. Financial risks can be related to returns a lack of access to finance; (ii) underdeveloped that are inadequate to cover or compensate for the market structures characterized by a prevalence associated FCV-environment risks—such as conflict of state-owned enterprises or otherwise imperfect or regulatory issues or poorly developed markets—or or incomplete markets; (iii) poor infrastructure and for the higher operating costs associated with security supply chains; and (iv) a weak legal and regulatory issues, longer project gestation, and the frequently environment, with low government capacity and weak smaller size of projects. Meeting ambitious goals for institutions. Supporting viable private investments private sector growth in FCS countries will require in FCV countries often requires long-term, extensive significant changes in IFC’s approaches, including work related to project development and client strengthening upstream project development, capacity building. For example, developing private developing ways to address conflict risks, improving infrastructure projects in FCV contexts may take 3-6 the incentives for staff to work in FCV environments, years or longer, including work on the regulatory finding ways to mitigate and tolerate risk, and regime, sector policies, feasibility studies, and collaborating more with partners. government capacity. Similarly, after commitment, WORLD BANK GROUP STRATEGY FOR FRAGILITY, CONFLICT, AND VIOLENCE 2020–2025 93 Annex 4: The examples are presented here with the aim of systematizing good practice and enhancing Select Examples from WBG effectiveness on the ground. They range from Engagement in FCV Settings mainstreaming gender to tailored regional engagements and include innovative financing Throughout the strategy development process, or dedicated tools and mechanisms under examples of select WBG engagement under each implementation. These illustrations cut across the of the four pillars of engagement were captured. World Bank, IFC, and MIGA. Disarmament, Demobilization, and Reintegration Disarmament, demobilization, and reintegration (DDR) (since 2018) for continued support to ex-combatants and DDR activities have been a significant area of the World Bank’s activities amid a changing global landscape.180 engagement on FCV. Over the last 30 years, the Bank has provided financial and technical assistance to more than 27 These efforts, as well as analytical work on the social and such projects in 23 countries. economic re-integration of adults and children after conflict, yield valuable lessons. Chief among them is the Bank’s This involvement with DDR programs began in 1992 with the invaluable role in mobilizing resources and facilitating Uganda Veterans Assistance Program and focused primarily partnerships in affected regions. For example, through MDRP, on demobilization and reintegration, given mandate limits on the Bank coordinated financing with 14 donor organizations engaging in disarmament issues. During the first decade of and partnered on implementation with 21 regional bodies, programming, the Bank focused on statutory and insurgent NGOs, and UN agencies. The Bank has also been crucial armies who were signatories to the peace accords and financed in shaping global policy and building technical capacity 10 reintegration projects (totaling $287 million). The next across regions. It not only is a member of the UN-chaired decade witnessed the largest DDR program in Bank history— Inter Agency Working Group on DDR to revise and validate the Multi-Country Demobilization and Reintegration Program the Integrated DDR Standards first issued in 2006, but has (MDRP). This program aimed to support demobilization and also provided support for strengthening the African Union’s reintegration of ex-combatants in the Great Lakes Region of early-warning methodologies through a human rights-based Africa179 and provided $450 million in donor and IDA financing approach.181 The Bank’s DDR experience highlights the to assist more than 300,000 ex-combatants, including child importance of national ownership, together with a clear soldiers and children affected by conflict. It was followed by the understanding of local conflict dynamics and the capacities of Transitional Demobilization and Reintegration Program (TDRP, local institutions to generate and sustain impact. 2009-17) and the Global Program on Reintegration Support 94  ANNEXES World Bank Engagement in the Sahel As the security situation worsens in the Sahel, the World To complement financing, the Bank is aiming to (i) Bank’s engagement is following a multi-prong approach aimed enhance collective understanding of drivers of fragility in the at addressing both short- and long-term drivers of instability in Sahel, notably through a subregional Risk and Resilience the region. Assessment (RRA) that identifies commonalities and cross- border factors; (ii) strengthen its collaboration with Sahel In the shorter term, the Bank is committed to applying Alliance partners, the G5-Sahel, the MINUSMA, local and a spatial approach to target hotspots of fragility international NGOs, and other key stakeholders; and (iii) through integrated multi-sectoral interventions, in close deploy new monitoring and implementation mechanisms coordination with other donors. The objective is to quickly that feature new technologies, actors, and modalities and restore basic services such as health, education, energy, and allow greater agility and flexibility, lower cost, and remote state administration, especially in conflict areas, thus helping capability—all to better fit the difficult region’s operating to rebuild the populations’ confidence in the state and recover environment. These measures include Geo-Enabling for some minimum standard of living. In close partnership with Monitoring and Supervision (GEMS), Iterative Beneficiary Sahel Alliance members, flagship operations have been Monitoring (IBM), and delegated third-party monitoring. launched in several areas where the G5 Sahel joint forces are operating. These include the Hodhs zone in Mauritania, the The Bank is the largest project financier in the Sahel. IDA’s Konna and central region in Mali, the North Tillabery in Niger, total financing capacity to support the G5-Sahel countries—a and the Lake Chad region. total of the IDA18 financing envelopes of all five countries— amounts to $9 billion. With close to $7 billion, the Bank is In the medium to longer term, the Bank seeks to increase also contributing the largest share of the Sahel Alliance access to economic opportunities, particularly through program, representing well over 60 percent of the total agriculture and basic education, while ensuring greater financing commitments, which amount to $11 billion (or 570 resilience and inclusion for the most vulnerable populations. projects). By helping to diversify the rural economy, broaden access to markets, promote women’s empowerment and youth inclusion, further expand and strengthen critical infrastructure, and provide basic school education and professional training, the Bank has also been seeking to unleash untapped potential for jobs and additional incomes. WORLD BANK GROUP STRATEGY FOR FRAGILITY, CONFLICT, AND VIOLENCE 2020–2025  95 Sustained Reconstruction Support: Afghanistan Reconstruction Trust Fund After decades of conflict, Afghanistan’s reconstruction efforts budget financing for Afghanistan’s development, delivering pose a unique set of challenges that have provoked an results in education, health, urban and rural development, unprecedented response from the international community, infrastructure, agriculture, and governance. All funds are both in terms of funding and donor coordination. channeled through government systems, with ministries and government agencies responsible for implementing all The Afghanistan Reconstruction Trust Fund (ARTF), projects. The fund’s structure helps ensure predictability established in 2002 to address reconstruction efforts, is of aid within a robust fiduciary and monitoring framework. now the WBG’s largest multi-donor trust fund. With 34 ARTF partners, the government, and the World Bank jointly donors administered through the WBG, it was set up to provide decide on a financing program (recurrent budget support a coordinated financing mechanism for the budget and national and investment projects) that is aligned with government priority projects of the government, allowing it to continuously priorities, both at strategic and programmatic levels. This provide key public services throughout the country. also strengthens coordination and provides a platform for policy dialogue on key reforms. Historically, Afghanistan has received the largest proportion of the Bank’s FCS commitments: During FY2006-2019, it In the 17 years since its inception, the ARTF has directly amounted to 23 percent of all WB commitments to FCS benefitted 19 million people across all sectors.183 To ($13.2 billion), 74 percent of it from trust funds ($9.8 date, about $96 million in grants have been disbursed to billion).182 Most of this financing has been channeled through various communities for nearly 6,000 projects.184 The ARTF the ARTF. demonstrates the capacity to adapt to an evolving context and offer the government a predictable source of funding. The ARTF finances nearly 40 percent of the civilian budget and half of all development expenditures, and is the vehicle of choice for pooled funding. It is the largest source of non- 96  ANNEXES Implementing Private Sector Projects in FCV Contexts: Mali Shi and Sierra Rutile Mali Shi: In June 2019, IFC and the Global Agriculture and has helped fill the gaps, reduce operational risks, and support Food Security Program (GAFSP) committed a loan for a a project that has needed time to materialize. greenfield company called Mali Shi, which will help Mali develop an industry capable of producing and exporting Sierra Rutile 2: Sierra Leone’s mining sector is crucial to its shea butter. The project will support a key sector and involve economy, accounting for 90 percent of exports, 20 percent of about 1 million women in rural areas. GAFSP’s concessional GDP, and over 400,000 direct and indirect jobs. If developed funding support helped mitigate the high risks associated in a responsible way, it could be a key driver of sustainable with investing in the country’s first shea nut processing economic growth. In 2016, Iluka, an Australian mining company, plant in more than 35 years. An IFC advisory program is purchased Sierra Rutile Limited (SRL), a mining firm with a 50- helping i) create an efficient supply chain; ii) comply with year operating history that holds the world’s largest deposit of international standards; and iii) provide an efficient energy natural rutile, and is the largest taxpayer, private employer, and plan. This includes i) providing support to obtain the required foreign exchange earner in Sierra Leone. Iluka plans to expand HACCP and ISO 22000 certifications; ii) implementing a existing operations and develop a new nearby mine. solid Environmental and Social Management System; iii) With the purchase, Iluka inherited project risks linked to improving the financial capacities of women shea collectors; the FCV context, including E&S issues. Given the scale, and iv) establishing renewable self-supply energy options that complexity, and urgency of the issues faced by SRL, Iluka maximize efficiency, reduce waste, and minimize the plant’s was keen for IFC’s investment and early engagement as a exposure to the national grid. partner, leveraging IFC’s global E&S expertise and sustainable Given Mali’s FCV context, it is challenging to attract infrastructure advisory services for its first venture outside international investors, especially in agribusiness. With more OECD countries. The project could lead to an 8.4 percent than 10 years’ success in the sector, Mali Shi’s sponsors increase in Sierra Leone’s GDP, $575 million in royalties have identified market opportunities but lack experience and corporate taxes over 2019-2034, and about 15,000 new meeting international standards for food safety, complying with indirect and induced jobs in its conflict-affected economy. environmental and safety (E&S) standards, and working with smallholder farmers. IFC’s comprehensive advisory package WORLD BANK GROUP STRATEGY FOR FRAGILITY, CONFLICT, AND VIOLENCE 2020–2025 97 BoViMa: Implementing the Cascade/MFD Approach in Madagascar Madagascar’s BoViMa project illustrates the successful IFC is complementing Bank activities with support for a use of the Cascade approach in an FCV setting. With the local agribusiness company, Bonne Viande de Madagascar country emerging from a period of fragility, three-quarters (BoViMa), which is developing the country’s first modern of its people live in extreme poverty and 80 percent are feedlot and abattoir. With support from the Global Agriculture dependent on agriculture. Agricultural development is key and Food Security Program (GAFSP), IFC advisory to the economic revitalization needed for inclusive growth. services are helping BoViMa improve animal husbandry and Although Madagascar has excellent conditions for cattle and strengthen its supply chain for breeders and local farmers goat production, it needs long-term help to develop significant producing animal feed. IFC and GAFSP are also providing a foreign exchange earnings from livestock exports. $7 million subordinated debt investment to make the project viable and crowd in other investors. The project is expected With World Bank support, the government is helping rural to create a $300 million meat export market and support the herders and farmers improve their incomes by expanding livelihoods of more than 20,000 local herders and farmers, veterinary services, raising sanitary standards, developing potentially making BoViMa the largest employer in the new road infrastructure, addressing agriculture value chain impoverished southern region, and providing many citizens policy and governance, and building related technical with their first formal jobs. capacity. At the sector level, the Bank provided two IDA loans to address these constraints. In 2014, the first technical This project illustrates how a comprehensive and sequenced assistance project used a $50 million IDA credit to help the approach involving advice to government and suppliers, government promote sustainable agribusiness development. development institution financing, private sector sponsorship, A subsequent $53 million project, which began in 2017, is and donor-funded concessional co-investment can help helping further address the agriculture value chain, build create markets. BoViMa needed extensive effort to develop technical capacity, and improve land tenure, food safety, and but it has the potential to be transformational. Not only could farmers’ access to veterinary services and transportation. it revive the country’s beef and goat meat export market, This project is also bolstering quality assurance by training it may also transform Madagascar’s agricultural sector, veterinary staff and funding the purchase of laboratory creating the kind of growth that is indispensable for a vibrant equipment for certification processes. and inclusive economy. IFC: Kakuma as a Marketplace Study In remote northwest Kenya, a sprawl of tents and shelters for the private sector. The study identified three types of made of mud bricks and cement blocks forms the Kakuma players that might benefit from its findings: commercial refugee camp. It was established in 1992 for refugees fleeing firms (banks, microfinance institutions, telecommunications the conflict in Sudan and is one of the largest and longest- companies, and SMEs from other sectors); social enterprises standing refugee camps in the world. Set on the border of the (companies that look to achieve and maximize financial, town of Kakuma, home to Kenya’s Turkana people, the camp social, and environmental impacts); and local entrepreneurs is a melting pot of more than 160,000 refugees and displaced (from the refugee and host communities). By collecting people from Burundi, Ethiopia, the Democratic Republic of empirical data on revenues, consumption patterns, consumer Congo, Somalia, South Sudan, and Sudan. preferences, and financial transactions within the camp and neighboring areas, the study provides market information that IFC, in collaboration with UNHCR, undertook a first-of-a- private sector players will need in order to start or scale up kind study of the Kakuma camp to better understand it as a operations in the Kakuma area. potential market with business opportunities and challenges 98  ANNEXES Recovery Through Private Sector Support in Afghanistan The Rikweda Raisin project is an example of WBG Horticulture and Livestock Project. IFC and MIGA collaborated engagement to promote recovery and build markets. The with $3 million in financing and $7.5 million in guarantees, WBG is supporting transformation in Afghanistan’s raisin respectively, to catalyze private sector investments in the sector to recapture its former status as a world-class producer Rikweda Fruit Process Company that support a modern, and exporter. The project was made possible through greenfield raisin-processing operation. The investments, extensive client and upstream engagement, leveraging the advisory interventions, and guarantees aim to double the WBG to catalyze private sector participation in challenging country’s raisin-processing capacity and improve its quality sectors and to facilitate long-term market sustainability. Using by implementing modern processing technology and food the Cascade approach, efforts began by providing support safety practices. Local farmers will gain access to global to farmers to establish modern raisin-drying houses, along export markets, which will support sustainable livelihoods for with technical assistance under a $190 million IDA National thousands of rural smallholder farmers. Stabilization Through a Country-specific Project: LONDO The Central African Republic faces a tremendous challenge works programs. LONDO is now the largest cash-for-work to stabilize itself while investing in early recovery and lasting program in the country, with more than a million person-days peacebuilding efforts. To help, the World Bank is supporting of work across all parts of the country (including 59 of 71 this stabilization effort to break the cycle of violence and subprefectures). To date, 29,500 beneficiaries—36 percent maintain confidence in the fragile transition. The support of them women—have repaired more than 1,850 kilometers focuses on addressing primary conflict drivers and building of roads to reconnect their communities to essential markets confidence in public sector institutions. Through the LONDO and services. The project has been able to deploy in rebel- project, the World Bank is providing temporary employment controlled areas, thereby setting an example for how to partner to vulnerable people through national labor-intensive public with peacekeeping forces and the humanitarian community. GBV Prevention in the Transport Sector To address gender-based violence, the WBG has recently Project. In Pakistan, the Khyber Pass Economic Corridor scaled up its engagement with the transport sector. Globally, Project seeks to mitigate risk factors for violence185 and women feel more vulnerable to violence and harassment promote gender equality through strategic measures including on public transportation, and the sector needs to innovate. gender-sensitive transportation, workplace infrastructure— The Quito Metro Line One Project in Ecuador, for instance, such as separate prayer rooms, toilet facilities, and child care employs a participatory approach to identifying critical centers—and harassment-free work environments. Given the interventions that enhance women’s security. These include widespread phenomenon of harassment of women and girls in well-lit platforms, stations, and surrounding areas, along with public transportation, these projects should serve as reference gangways that link cars to enhance visibility and redistribute operations to better mainstream GBV prevention into the passengers. Similar approaches are being followed in sector. Colombia’s Support to the Bogota Metro Line 1 Section 1 WORLD BANK GROUP STRATEGY FOR FRAGILITY, CONFLICT, AND VIOLENCE 2020–2025 99 The Jobs Challenge and Economic Migration The total number of migrants worldwide was estimated at 266 In parallel, the WBG will continue to support the strengthening million in 2018, with 240 million of them considered economic of safe, legal migration channels that protect migrants from migrants. Accelerating the growth of better jobs for an exploitation and that direct migratory flows toward areas that expanding and young global workforce is a central goal of the are mutually beneficial to both the sending and the receiving WBG, and a focus of IDA19. The WBG will continue to support economies. The WBG will also work to leverage the financial the growth of markets and work to connect firms to them flows produced by migrants to accelerate job growth in their to help raise the demand for labor. It also supports building countries of origin. Migrant remittances already outstrip either workforce capabilities through human capital investments and FDI or ODA. The WBG will continue to support efforts to training that prepare workers for better jobs. This will improve reduce the cost of remittance transfers and promote diaspora job opportunities for millions of youth whose human capital bonds, in addition to efforts that reduce the recruitment costs potential is not being fully utilized and who lack access to the paid by migrant workers. capital or technology they need to become more productive. Community-Driven Development in FCV Contexts In the Horn of Africa region, the Development Response From 2003 to 2015, despite intense civil conflict, the to Displacement Impacts Project (DRDIP) is taking a government of Afghanistan succeeded in using its National community-driven development (CDD) approach to the Solidarity Program (NSP) to deliver services to 33,000 remote challenge of forced displacement. Launched in 2016 and communities and provide small-scale infrastructure. It was implemented in four countries—Djibouti, Ethiopia, Kenya, and the only government program to reach all 34 provinces, Uganda—DRDIP helps both refugees and host communities and the democratically-elected Community Development improve access to basic social services, expand economic Councils (CDCs) established as part of it became an effective opportunities, and enhance environmental management. In platform for representing the multiple interests of communities Ethiopia, an intensive community mobilization and consultation and important avenues for community participation. By the process included the preparation of village development program’s end, 96 percent of sampled communities reported plans and their integration with Woreda (district), regional, recognizing their CDCs as the legitimate representative of and federal plans. This was followed by the funding of priority decision making and development of their communities. interventions. Led by local government and centered on CDCs also enabled female community members to participate communities, the regional program aims to reach 2.5 million in decision making, including selecting subprojects in an host community beneficiaries and 110,000 refugees, create estimated 79 percent of sampled communities. The program 11 million labor workdays, and provide livelihoods support financed 81,000 rural infrastructure subprojects that helped to 75,000 households. Across the country, the project has raise school attendance, improved the quality of education reached over 218,000 beneficiaries, half of whom are women. for girls, and supported a 15 percent increase in the use of About 12,100 children have benefited from better access to protected water sources, as well as a 26 percent increase primary schools, 20,200 people from better access to health in electricity usage. The NSP was followed by the Citizen’s centers, and 76,000 people from better access to safe water. Charter program, which supported the re-election of 12,000 Similar approaches have been used in Cameroon, Sudan, and councils in rural and urban areas, reaching over 8 million other countries to foster a “whole of community” response to people with average participation rates of 77 percent, including displacement. women, internally displaced persons (IDPs), returnees, and persons with disabilities. Currently, approximately 7,000 small- scale infrastructure subprojects are under way, with citizen engagement and cross-sectoral initiatives supported through health and education scorecards. 100  ANNEXES Famine Action Mechanism: Partnering to Address Complex Crises Multi-hazard crises like severe food insecurity remain funding and subsequent programming are not scaled up a persistent global challenge. Today, 113 million people until after the crisis has fully materialized. This tendency to experience crisis levels of food insecurity, driven by complex “wait and see” can miss the opportunity to apply the well- intersections of conflict, poverty, extreme weather, a documented benefits of preventive approaches, which can changing climate, and food price shocks.186 There are also save more lives and significantly reduce the costs of response. intergenerational impacts resulting from elevated rates of child mortality, stunting, and other factors. These long-lasting The FAM has catalyzed extensive collaboration between impacts, some of them irreparable, reduce human capital and the Bank, donors, UN agencies, international NGOs, keep affected countries from breaking the vicious cycle of academics, and private sector firms at the global and recurring crises and chronic suffering.187 country levels. In Somalia, the Bank is collaborating with the UN Office for the Coordination of Humanitarian Affairs In early 2017, there were famine or near-famine conditions (UN OCHA), the government, and other partners to identify in four countries. The WBG mobilized more than $2 billion elements of an anticipatory approach to food insecurity. This to scale up immediate responses and medium-term resilience effort complements the Bank’s $65 million Somalia Shock efforts. The resources supported several critical interventions, Response Safety Net for Human Capital Project, which including the use of productive safety nets to avert widespread was approved by the Board in August 2019. The project increases in malnutrition rates, support for health facilities leverages partnerships with the World Food Program and to mitigate the spread of life-threatening diseases, and the UN Children’s Fund (UNICEF) to reach about 200,000 agricultural interventions to protect productive assets such as impoverished and vulnerable households across Somalia— crops and livestock. New partnerships were also formed— about 1.2 million people—with nutrition-linked cash transfers. including with the International Committee of the Red Cross and Red Crescent (ICRC)—to reach areas not accessible to The importance of early response to food insecurity is other international partners. also evident in reforms to the Crisis Response Window under IDA19. The CRW will provide early support in response The World Bank is building on these efforts, partnering to slow-onset crises related to food insecurity and disease closely with humanitarian and development actors as outbreaks. This complements efforts to develop a common part of the Famine Action Mechanism (FAM).188 The framework for financing anticipatory action on food insecurity FAM provides a framework for sharing information on food across the humanitarian-development nexus. Pilots are insecurity situations and mobilizing anticipatory action before planned in Afghanistan, Chad, Somalia, South Sudan, and major food security crises develop. History shows that reliable Yemen. early warnings often precede such devastating crises, yet WORLD BANK GROUP STRATEGY FOR FRAGILITY, CONFLICT, AND VIOLENCE 2020–2025 101 Pacific Islands: How Climate Change and Geography Affect Fragility Climate change, weather variability, and a steady rise in Climate change impacts are wreaking havoc in this region, natural disasters are significantly affecting the world’s FCV causing rising sea levels and more frequent cyclones, countries: 80 percent of people who are affected by natural typhoons, and tsunamis that have led to massive economic disasters already live in fragile and conflict-affected situations. loss. To lay the strategic basis for the IDA18 scale-up, the Between 2004 and 2014, 58 percent of deaths from disasters WBG in 2017 issued a flagship report, Pacific Possible, which occurred in the 30 most fragile states; and over the last helped identify the best opportunities to generate sustainable decade, countries on the FCS List accounted for more than economic growth and shared prosperity in the region.189 The 420,000 disaster-related fatalities. Almost 500 disaster events WBG is working with partners to translate these priorities in these countries affected more than 71 million people and into operational engagements, including support for policy caused damage worth over $16 billion. The rising frequency and institutional reforms to improve economic management and seriousness of natural disasters is linked in large part to in the Pacific Island countries. The Bank’s engagement in the effects of climate change. climate change and disaster risk reduction includes $130 million invested in improving early-warning systems and The nexus between climate change, geographic isolation, and preparedness for natural disasters, community resilience, fragility is most pronounced in the Pacific, where half of the 12 coastal protection, and the upgrading of key public facilities member states—Kiribati, the Marshall Islands, the Federated such as schools and hospitals. An additional $300 million States of Micronesia, Papua New Guinea (PNG), the Solomon is supporting disaster and climate resilience in the aviation, Islands, and Tuvalu—are classified as fragile situations. These shipping, and ICT sectors in Fiji, Kiribati, the Marshall Islands, states already suffer from severe fragility because of their Micronesia, Tonga, and Tuvalu. The Bank is also providing small size, weak infrastructure and capacity, limited economic support for fisheries in the Marshall Islands, Micronesia, opportunities and high youth unemployment (notably in PNG Samoa, the Solomon Islands, Tonga, and Tuvalu. and the Solomon Islands), as well as repeated natural disasters. All time economic loss due to natural hazards Source: WBG Acting on Climate Change & Disaster Risk for the Pacific: 2013 10 Average annual impact from disasters/GDP (%) 9 Based on reported disaster impacts 8 Based on modeled disaster impacts 7 from cyclones, earthquakes, and tsunami 6 5 4 3 2 1 0 ch n, iji G ucia Va ada u itt To e a ar s M gua So ia, ng s lo Fe olia Is ts. s sl . C om s Vi k Is ica Is s Bu Gu nds a a M B so ag lize Pa r Ja lau ha lva a Ba as, r la e m sh Bo e Sa via au a N s al lI p ca m do F ic vi es Mo ve nd D and in nd iu at iu s ng in n Ba l Sa aic ng Th bw M mo ep al Re on S Fa Zi de rk ya N Ne oo in li rit N nu as ad e di la rg la la n a .L E m ba m d. re al St & ar e M m Ye .K St on ic M Country 102  ANNEXES Somalia: Using Digital Transformation to Tackle Drivers of Fragility Experience in Somalia demonstrates how the Bank can • Analyzing the scope for leveraging mobile money and add value in FCV contexts through the ICT sector. Activities communications in service delivery in mobile money have helped bridge the humanitarian- Dedicated research has informed operations to provide development divide by enhancing emergency response, cash-based emergency assistance after a prolonged while building local capacity and supporting government- drought left half of Somalia’s population in need. Research owned systems. This work highlights how technology can has also helped inform an operational program that is be leveraged in fragile and challenging operational contexts. piloting direct government-to-person mobile payments via Areas include the Central Bank. This will deliver cash payments to food- insecure households, as identified in collaboration with • Supporting state-building through ICT sector regulation humanitarian agencies. The pilot will support government- and connectivity administered e-payment solutions as a means of expanding Regulatory support has laid the groundwork for formalizing service delivery. the telecommunications sector and helped set a precedent for governance in Somalia. This will help the government • Supporting a foundational digital ID system to expand raise critical revenue, for example, through licensing and opportunities and access to services spectrum fees, and significantly contribute to the national The ICT project has also laid the groundwork for a treasury. By spurring more competition, regulation also foundational identification (ID) system. An estimated 8 aims to bring down the price of ICT services for the most to 12 million Somalis lack a proof of identity. Without a vulnerable. And by interconnecting key government robust, comprehensive, and widely recognized ID system, agencies in Mogadishu through a dedicated fiber backbone many government-related functions—from elections to network, the Bank has helped bring government online to the provision of social services—cannot be administered enhance service delivery. effectively. It is also essential for the delivery of humanitarian assistance and for efforts to restore peace and security. Geo-Enabling for Monitoring and Supervision (GEMS) GEMS can be useful at any stage of the project cycle. For instance, in Niger GEMS informed a baseline study on host communities in the planning of a displacement project. In Nigeria and Uganda, it is the backbone of project M&E systems. In Mali and South Sudan, it is used to remotely supervise the implementation of health, education, and social protection projects in insecure areas. A growing number of FCS country teams— including in Burundi, the Central African Republic, the Democratic Republic of Congo, the Republic of Congo, Mali, and Niger—are using GEMS to remotely supervise and map their project portfolios. More than 10,000 subprojects have been mapped in less than a year (see the The GEMS initiative was launched to support project excerpt of the Burundi portfolio, above). WBG teams, the implementation in FCS: it helps the WBG have eyes on the Board, and clients alike have highlighted the importance of ground when it cannot always have boots on the ground. GEMS to building capacity and supporting local ownership of GEMS aims to create a public good by systematically building projects for sustainable impact. Clients too have found GEMS client capacity in the use of ICT for digital data collection, useful in a variety of ways. For instance, in the Democratic M&E, supervision, and portfolio mapping. As of April 2019, Republic of Congo, it was instrumental in enabling the Ministry more than 500 client staff have been trained, and about 115 of Education to collect detailed data and map all secondary projects in 11 IDA FCS have access to field-ready ICT tools to schools in the country in a few months. This has given it enhance their operational effectiveness. structured, real-time insights into the status of the country’s schools, for the first time ever. WORLD BANK GROUP STRATEGY FOR FRAGILITY, CONFLICT, AND VIOLENCE 2020–2025 103 Third-Party Monitoring: Key Lessons Learned To date, the World Bank has entered into 16 third-party • Systematic coordination between the Bank, the monitoring (TPM) contracts for a total of nearly $55 million government, TPM agents, and other donors is critical in seven FCV-impacted countries: Afghanistan, Cameroon, to success. Internally, Bank teams can organize into a Iraq, Pakistan, Somalia, South Sudan, and Yemen. Among the cross-practice of working groups with clear administrative lessons learned: responsibilities, a division of labor among task team leaders, and explicit reporting lines. The government and the Bank • TPM is taking place in environments where extra due should set up regular meetings to discuss the findings of diligence is warranted. The use of TPM does not fully TPM and ensure that problems are quickly addressed. mitigate project risks, and continued attention is needed, including due diligence about TPM itself. While TPM • TPM is most effective when combined with ICT involves a transfer of physical risk to a contracted party, solutions. Cost-effective geospatial technology and the Bank retains the ultimate responsibility for project remote-sensing tools now allow Bank teams to obtain a supervision findings. more complete geographic representation of project and subproject sites. • Effective TPM requires a well-defined verification strategy. This should cover (i) a plan for site visits with • TPM is expensive, hence resources should be mobilized well-defined priorities and impact; (ii) emergency procedures early. Given the high risks of operating in insecure for reporting deviations from project standards—social, environments, TPM can cost as much as $2 million for fiduciary, procurement, and so on; (iii) incident reporting, a three-year contract. Pooling resources from multiple especially when related to security forces deployed in projects, and combining them with trust funds for portfolio- project areas; and (iv) detailed data and reporting formats. wide monitoring, could help lower costs. TPM should devote special attention to fraud and corruption. The Bank is exploring options for further scale-up, especially • TPM providers should possess a diverse mix of skills. portfolio-wide approaches—for example, in Afghanistan and Depending on the results they are hired to track, monitors Iraq—through which TPM agents can extend their coverage of should possess qualifications ranging from engineering Bank-financed projects. knowledge to cultural and gender sensitivities that may be necessary in interacting with beneficiaries. This is especially relevant when interacting with vulnerable groups that may be targeted for gender-based violence. GPG Fund: IBRD Fund for Innovative Global Public Goods Solutions The IBRD-IFC Capital Package provides financial Fund submitted to Board of Governors for approval). The resources for the WBG to enhance its leadership on GPG Fund, which is to be directed toward proposals that can global issues, such as crisis management and FCV, climate credibly show that they are promoting innovation in addressing change, gender, knowledge and convening, and regional GPG challenges, will complement the existing financing integration, as highlighted in the WBG’s “Forward Look” architecture on concessional financing for GPG provision in document, Forward Look: A Vision for the World Bank Group IBRD countries. The GPG Fund is being launched with an in 2030.190 Notably, the Capital Increase Package in 2018 initial three-year pilot, starting in FY20. This phase will be proposed that a portion of IBRD surplus resources be used used to test the design principles, governance arrangements, to provide concessional support to finance operations that and financial structure, as well as the criteria for selecting the support global public goods (GPGs). Responding to this operations the fund will support. Initially, selected operations commitment, a paper outlining a proposal for an IBRD Fund will focus on two GPG areas: (i) climate change mitigation and for Innovative Global Public Goods Solutions was approved adaptation and (ii) spillover effects of FCV situations. by the Board in June 2019 (with a recommendation for authorizing the transfer of $45 million from surplus to the GPG 104  ANNEXES Recovery and Peacebuilding Assessments (RPBAs) Recovery and Peacebuilding Assessments are a joint crisis; an evidence-based assessment of recovery and approach to identifying and addressing immediate and peacebuilding needs; the prioritization, costing, sequencing, medium-term prevention, recovery, and peacebuilding and validation of these needs; the development of specific requirements, while laying the foundations for a longer-term mechanisms to improve coordination across the humanitarian- strategy in countries facing conflict or transitioning out of development-peace (HDP) nexus and align the respective a conflict-related crisis. RPBAs are conducted under the instruments and plans; the identification of implementation and Joint Declaration on Post-Crisis Assessments and Recovery financing mechanisms and strategies for operationalization; Planning that was signed by the WBG, the UN, and the EU in and the design of institutional responses to improve 2008. RPBAs are nationally-led exercises, with the support of implementation and promote peace. the three multilateral institutions and other partners. RPBAs are increasingly used to support an incremental The main objectives of RPBAs are to support governments process of multilateral support to governments. This approach in identifying, prioritizing, and sequencing their needs in ensures that joint support does not stop when the assessment responding to a crisis; to help ensure that this response is completed but is maintained into the implementation phase has been consulted on in a way that helps build trust and to ensure continued support and alignment, as well as address prevent future conflict; and to build international coordination implementation bottlenecks. RPBAs are the only multilateral mechanisms that can align support to identified priorities and strategic planning tool across the HDP nexus, and they enable ensure coherence in the response. RPBAs have been used the WBG to play a key role in a broader international effort diversely—for instance, to support post-conflict transition in the to achieve peace and stability, where the WBG’s convening Central African Republic, and political transition in Zimbabwe; power and analytical expertise complement the comparative in the context of a subnational conflict in Ukraine, and a peace advantages of other partners. RPBAs can be used to identify agreement in Mali; and for prevention efforts in Cameroon. and build preventive measures and to break cycles of violence through the creation of a strong development track While the RPBA methodology is modular and can be adapted that ensures sustained engagement and the identification of to the context of each country, its core components include priorities at different stages. shared analysis of the impact, context, and causes of the State and Peacebuilding Trust Fund Established in 2008, the State and Peacebuilding Trust In Iraq, the SPF supported a Conflict Damage & Needs Fund (SPF) is the WBG’s largest global multi-donor trust Assessment to evaluate the impact of crises on the country. fund, providing flexible, innovative, and rapid engagement in It also supported the preparation of a $400 million additional countries affected by a wide range of FCV issues. The SPF financing (IBRD) to the Iraq Emergency Operation for operates in 57 IDA and IBRD countries, across regions, and Development Project (approved in FY15). globally, and can address multiple forms of FCV. Since its establishment, it has grown into a fund of over $342 million In Jordan, the SPF supported the Emergency Services and in net value, and has supported more than 200 interventions Social Resilience Program in FY14 to provide basic services in FCV contexts worldwide. It is the Bank’s key emergency to municipalities and host communities, benefitting more than vehicle to deliver on a broad range of country services— 2 million people, of whom at least 45 percent were women and including technical assistance, cutting-edge analytics, 250,000 were Syrian refugees. In Ukraine, in collaboration with data and evidence collection, advisory services, piloting of the UN and the EU, the SPF supports the Bank’s development innovative operations, and seed funding to multi-donor trust of an RPBA framework to coordinate reengagement in funds that focus on an individual country. countries or regions emerging from conflict or political crisis. WORLD BANK GROUP STRATEGY FOR FRAGILITY, CONFLICT, AND VIOLENCE 2020–2025  105 Annex 5: focus.191 Actual spend with respect to the broader categories of spending has increased by 20 percent Budget Context for FCV since FY17 (or 23 percent for Bank funds ).192 To Budget allocations for FCV-affected countries support the FCV footprint, other expenditure has have increased, confirming the sustained focus also seen an increase—for example, on security—at on advancing the World Bank’s engagement and an average of 18 percent over the last two years. In impact in these countries. Overall spending in the addition, the FCV Country Engagement (CE) budget FCV thematic areas has also been increasing year- allocation has been on an upward trend, with FY20 on-year, with a Bank Budget/External Funds ratio of FCV CE allocations increasing by 50 percent since approximately 66/34, reflecting the Bank’s priority FY16.193 Country Engagement Bank Budget Allocations for FCV & FCV at Risk Countries FY16–20 (US$ million) FCV Thematic Spend* (US$ millions) +50% 508 523 $173m 435 $156m 169 $142m 21 174 $123m 19 +58% 149 $115m 19 FCV-Risk 15 14 152 123 136 334 353 101 108 286 FCV FY17 FY18 FY19 FY16 FY17 FY18 FY19 FY20 Bank Budget External Funds 106  ANNEXES As the World Bank expands its footprint into FCS security environment and the Bank’s expanding countries, where operations are riskier and more footprint in higher -threat locations result in additional complex, increased resource pressures arise, budget pressures for security spending worldwide. mainly because of related assignment benefits for Security costs in fragile locations are particularly high. staff decentralized to the field, as well as rising The tilt toward FCS will continue as scaled-up IDA facilities and security needs. The average cost of 18 lending in low-income countries flows into the IDA putting one staff member in a fragile country is almost portfolio, and as the Bank continues to increase its $350,000 annually, almost 40 percent higher than focus and engagement in these countries. in non-FCV settings. Also, the deteriorating global FCV Footprint and Security Costs ($ thousands) +39% $ 348 k +$58k $ 348 k Average cost per person $ 250 k +$40k $ 250 k Non-FCV FCV Non-FCV +Staff & +Office & FCV GMA Security Costs Costs WORLD BANK GROUP STRATEGY FOR FRAGILITY, CONFLICT, AND VIOLENCE 2020–2025 107 Annex 6: Strengthening the WBG Approach to Staff Health, Safety, and Security Because the WBG’s core mission is focusing increasingly (iii) Occupational health and safety (OHS). An OHS risk on the FCV agenda, it is essential to further strengthen its management framework is now required and mandated approach to health, safety, and security. To operate with across the UN system, as specified in the UN Common the flexibility and appropriate risk tolerance required in FCV System Occupational Safety and Health Framework environments—including for local staff and STCs—the WBG is (CEB/2015/HLCM/7/Rev2 31 March 2015) and the aligned focusing on the following: WBG Directive for Occupational Health and Safety. (i) Duty of care for borrower/borrower-engaged (iv) Training and awareness. The WBG will deliver Mandatory implementation agents. The WBG needs to draw a Health, Safety, and Security Awareness and Management clear line between, on the one hand, its life safety duty of to CD/CMs, Practice Managers, and TTLs/Investment care for its staff (including consultants) and, on the other Officers. Corporate Security is engaged in training CD/ hand, that of borrower personnel or borrower-engaged CMs and TTLs/Investment Officers for work in FCV implementation entities, for whom security and safety through pre-assignment briefings and FCV on-boarding management is an employer obligation. courses. But it is vital that health, safety, and security training components become mandatory to ensure that (ii) Staff travel. The WBG is working to improve travel those in accountable positions are systematically reached; tracking and feedback on security events. WBG travelers this would include Regional and GP management. In are tracked through their itineraries, directly accessed parallel, Corporate Security personnel will undertake through the World Bank’s internal travel portal. While this training on WBG Operations to become more familiar with captures the vast majority of cross-border travel, tracking the project cycle, understand the priorities and imperatives travel within countries is done inconsistently across facing TTLs and investment officers, and be ready to Country Offices and needs to be improved. An improved facilitate the delivery of development outcomes. Going Travel Clearance System will be established to capture forward, upstream collaboration between HSD, Corporate travel within countries. The Staff Tracking and Accounting Security, and project planning teams will be critical as staff Coordinator program will strengthen mission tracking in face greater exposure to these risks. Early collaboration high-volume destinations, focusing on providing data- in the planning cycle, especially when teams consider the driven security advice to the Head of Office. Reporting of scope of implementation support that projects will need, security incidents when staff conclude their SOE will also will build a shared perspective on the modalities and extent allow for more systematic reporting and analysis of such of staff access to project sites. events so that the institution can better respond. 108  ANNEXES Annex 7: The external consultations took place in two phases: Global Consultation Process to Phase 1 (April to July 2019): Feedback was solicited Develop the WBG Strategy for FCV very early in the process, using as a starting point the FCV Strategy concept note, which laid out the The World Bank Group Strategy for Fragility, Conflict broad proposed directions of the strategy. Inputs and Violence (FCV) was informed by a global were received from 1,721 individual stakeholders in 88 consultations process that took place over two countries and territories. phases and engaged 2,144 external stakeholders from 95 countries and territories between April Building upon this, face-to face meetings were 2019 and January 2020. The stakeholders included then held in 37 client and donor countries with representatives of client and donor country stakeholders representing governments, international governments; key multilateral partners including organizations, local civil society and the private UN agencies, the EU, regional development banks, sector. Representatives from IFC and MIGA joined and other international organizations; civil society the World Bank at many of the consultation meetings, organizations working at the global, national, and local which were organized by WBG country offices. IFC levels; bilateral development partners; private sector also held separate meetings in several countries for representatives; and academic institutions, think tanks more focused discussions about the private sector. and foundations. Each meeting consisted of a presentation on the FCV Strategy concept, after which participants were invited The consultations aimed to ensure a broad and fully to share their views. A summary of each meeting is inclusive process so that the strategy could integrate available on the consultations website. feedback from all key stakeholders, reflecting lessons learned and best practices from partners’ collective Online consultations to complement the in-person experience in addressing FCV. These external inputs meetings were designed to ensure as inclusive a added a dimension of richness to the views and process as possible. A questionnaire posted on the perspectives provided by World Bank Group staff in a consultation website helped structure respondents’ series of internal consultations and working groups. feedback around the framework provided in the concept note, and inputs could also be directly A dedicated website (http://www.worldbank.org/ emailed to a dedicated email account. A social media fcvconsultations) served as a platform for all interested campaign aimed both to raise awareness about the parties to access relevant consultation materials in ongoing consultations and open up the process English, Arabic, French and Spanish, and to provide further. Monthly summaries of the feedback received feedback. All stakeholders were able to engage were posted on the consultations website. This through a range of channels—including face-to- process ultimately resulted in a draft FCV Strategy. face meetings, an online questionnaire, e-mailed submissions, and social media—and many chose to Phase 2 (December 2019 to January 2020): The engage using more than one method. draft FCV Strategy benefited greatly from the early and thorough Phase 1 feedback process, which informed the thinking and language of the draft in both its conceptual and operational dimensions. The full draft strategy was posted on the consultation website in December 2019 for six weeks to solicit detailed written feedback on each section. These were carefully reviewed and incorporated, as appropriate, into the final strategy paper. Summaries of feedback received in each phase of consultation, as well as meeting summaries and written submissions, can be found on the FCV strategy consultations website http://www.worldbank.org/fcvconsultations. WORLD BANK GROUP STRATEGY FOR FRAGILITY, CONFLICT, AND VIOLENCE 2020–2025 109 Endnotes 1 The “FCV” concept groups three issues that are often list and moved in and out of the list at least twice; (iv) related: (i) deep governance issues and state institutional escaped out of the FCS list; (vi) appeared on the FCS at weakness; (ii) situations of active conflict; and (iii) high most twice; or (vi) never been on the FCS list. levels of interpersonal and/or gang violence. 12 In August 2019, the G7 Declaration highlighted the 2 United Nations and World Bank, Pathways for Peace: importance of aligning the diplomatic, security, and Inclusive Approaches to Preventing Violent Conflict stabilization dimensions of humanitarian, peace, and (Washington, DC: The World Bank Group, 2018), development approaches to tackle the drivers of fragility; xvii and 12, https://openknowledge.worldbank.org/ it provided full support to the WBG in the development of handle/10986/28337. (Based on 2016 data.) this FCV Strategy. The European Union’s Global Strategy recognizes the significance of building resilience and 3 The UN High Commissioner for Refugees, Global ensuring an integrated approach to conflicts and crises. Trends: Forced Displacement in 2018 (Geneva: UNHCR, Bilateral development actors have also made important 2019), 13, https://www.unhcr.org/en-us/statistics/ strides to meet the pledge to “leave no one behind,” unhcrstats/5d08d7ee7/unhcr-global-trends-2018.html. including adopting the OECD’s Development Assistance Committee (DAC) Recommendation on the Humanitarian- 4 Several different indexes are used to classify countries Development-Peace Nexus. that experience FCV. The WBG’s List of Fragile Situations is included in annex 1. It comprises 36 countries, mostly 13 Fragile situations are characterized by “the combination LICs and LMICs, and one territory. of exposure to risks and insufficient coping capacity of the state, system, and/or communities to manage, absorb, 5 The IDA19 cycle begins in July 2020 and concludes in or mitigate those risks.” Organization for Economic Co- June 2023. operation and Development, States of Fragility 2016: 6 World Bank estimate, 2019. Understanding Violence (Paris: OECD, 2016), 20, http:// dx.doi.org/10.1787/9789264267213-en. 7 UN and World Bank, Pathways, xvii and 12. (Based on 2016 data.) 14 ACLED, While Overall Violence Has Declined in 2018, Conflict Is Spreading, online press release (December 8 UNHCR, Global Trends, 13. 21, 2018), accessed February 12, 2020. https://www. acleddata.com/2018/12/21/press-release-while-overall- 9 FCV issues are integrated throughout the 2030 Agenda. violence-has-declined-in-2018-conflict-is-spreading. SDG16 promotes peace, justice, and strong institutions, and recognizes the centrality of security and justice in 15 OECD, States of Fragility 2018 (Paris: OECD, 2018), achieving the SDGs as well as inclusion (with SDG16+) box 1.1, Chronically Fragile Contexts, https://doi. in order to achieve multiple other goals related to gender, org/10.1787/9789264302075-en. education, economic growth, inequality, and sustainable cities. See Pathfinders for Peaceful, Just and Inclusive 16 Claire McEvoy and Gergely Hideg, Global Violent Deaths Societies, The Roadmap for Peaceful, Just, and Inclusive 2017: Time to Decide (Geneva: Small Arms survey, 2017), Societies: A Call to Action to Change our World, (New http://www.smallarmssurvey.org/about-us/highlights/2017/ York: Center on International Cooperation, 2019), http:// highlight-gvd-report.html. www.sdg16.plu. 17 Small Arms Survey Report, 2017: Global Violent Deaths: 10 World Bank estimate based on the FY19 Harmonized List McEvoy and http://www.smallarmssurvey.org/fileadmin/ of Fragile Situations. For details, see World Bank, Fragile docs/U-Reports/SAS-Report-GVD2017.pdf States: On the Frontlines of the Fight Against Poverty 18 UNHCR, Global Trends, 2019. (Washington, DC: The World Bank Group, forthcoming). 19 Kanta K. Rigaud et al., Groundswell: Preparing for Internal 11 Drawing on the new methodology to identify and classify Climate Migration (Vol. 2), main report (Washington, FCS, the WBG has conducted a historical analysis to DC: World Bank Group, 2018), https://openknowledge. identify the poverty patterns of countries if they have been worldbank.org/handle/10986/29461. classified as FCS in the past. In particular, the analysis has looked at countries that have (i) chronically been on 20 Global Initiative, Organized Crime: A Cross-Cutting Threat the FCS list since 2000; (ii) entered FCS during this period to Sustainable Development, research report (Geneva: and remained there; (iii) recurrently appeared on the FCS WORLD BANK GROUP STRATEGY FOR FRAGILITY, CONFLICT, AND VIOLENCE 2020–2025 111 Global Initiative Against Transnational Organized 29 Pablo Fajnzylber, Lederman, Daniel, and Loayza, Crime, 2015), 4, https://globalinitiative.net/wp-content/ Norman, “Inequality and Violent Crime,” The Journal of uploads/2015/01/global-initiative-organized-crime-as-a- Law and Economics 45, no. 1 (April 2002): 1-39 https:// cross-cutting-threat-to-development-january-2015.pdf. doi.org/10.1086/338347. 21 World Bank, Global Investment Competitiveness 30 Labor market outcomes that do not reflect educational Report 2017-2018: Foreign Investor Perspectives attainment create frustration and can lead to violence. and Policy Implications (Washington, DC: World See e.g. Kartika Bhatia and Ghanem, H., How Do Bank Group, 2017) http://documents.worldbank.org/ Education and Unemployment Affect Support for curated/en/169531510741671962/Global-investment- Violent Extremism? Evidence from Eight Arab Countries, competitiveness-report-2017-2018-foreign-investor- Global Economy & Development Working Paper 102 perspectives-and-policy-implications. (Washington, DC: Brookings Institution, March 2017), https://www.brookings.edu/wp-content/uploads/2017/03/ 22 Several of these lessons draw from Independent global_20170322_violent-extremism.pdf. Evaluation Group (IEG) evaluations, including World Bank Group Assistance to Low-Income Fragile and Conflict- 31 UN Security Council Resolution 2250 is the cornerstone of Affected States: An Independent Evaluation (2015); the Youth, Peace, and Security Agenda. World Bank Group Engagement in Situations of Fragility, Conflict, and Violence: An Independent Evaluation (2016); 32 World Bank, World Bank Group Gender Strategy World Bank Group Country Engagement: An Early- (FY16-23): Gender Equality, Poverty Reduction, and Stage Assessment of the Systematic Country Diagnostic Inclusive Growth (Washington, DC: The World Bank and Country Partnership Framework Process and Group, 2015), http://documents.worldbank.org/curated/ Implementation (2017); Recent World Bank Experience en/820851467992505410/World-Bank-Group-gender- with RRAs & Operational Programming in FCV Countries: strategy-FY16-23-gender-equality-poverty-reduction-and- Stocktaking of Implementation of Recommendations from inclusive-growth. IEG Evaluations of Fragility, Conflict and Violence (2018); 33 UN Security Council Resolution 1325—the cornerstone and Learning from IDA Experience: Lessons from IEG of the Women, Peace, and Security Agenda—has since Evaluations, with a Focus on IDA Special Themes and been reinforced with an additional nine resolutions Development Effectiveness (2019). bolstered by a number of related normative frameworks. 23 See annex 5 for an overview of budget allocations in FCV See https://www.unwomen.org/en/what-we-do/peace-and- settings. security. 24 In this context, the World Bank recognizes the relevance 34 “Institutional legitimacy is the key to stability. When of international legal norms pertaining to conflict, such as state institutions do not adequately protect citizens, those derived from international humanitarian law. guard against corruption, or provide access to justice; when markets do not provide job opportunities; or 25 See box on the Regional Risk and Resilience Assessment when communities have lost social cohesion—the under way in the Sahel, covering Burkina Faso, Chad, likelihood of violent conflict is much higher.” World Mali, Mauritania, and Niger, in annex 4. Bank, World Development Report 2011: Conflict, Security, and Development (Washington, DC : World 26 While Bank policies do not explicitly refer to the “do no Bank Group) http://documents.worldbank.org/curated/ harm” principle, the Environmental and Social Framework en/966731468161352341/World-development-report- Vision states (in paragraph 6, p. 2): “The Bank’s vision 2011-conflict-security-and-development. goes beyond ‘do no harm’ to maximizing development gains.” 35 UN and WBG, Pathways for Peace. 27 COP24 is the informal name for the 24th Conference of 36 See the World Bank’s strategic gender objectives in World the Parties to the United Nations Framework Convention Bank Group Gender Strategy (FY16-23): Gender Equality, on Climate Change, held in December 2018. During Poverty Reduction and Inclusive Growth (Washington, COP24, the Action Plan was launched and then fully DC: The World Bank Group, 2015), http://documents. adopted in January 2019, following the WBG’s 2025 worldbank.org/curated/en/820851467992505410/World- Targets to Step Up Climate Action. Bank-Group-gender-strategy-FY16-23-gender-equality- poverty-reduction-and-inclusive-growth. 28 The most vulnerable and excluded groups include persons in vulnerable situations, persons with disabilities, 37 Reported global fatalities from violent extremism climbed and members of excluded and minority groups (notably from just over 5,000 in 1995 to peak at more than 45,000 ethnic, religious, sexual, linguistic, or indigenous in 2014 before dropping by 48 percent to 22,980 in peoples). 2018. In 2018 more than half of all deaths from violent 112  ENDNOTES extremism-related attacks took place in Afghanistan (43 OP 2.30 (or its successor); when there is a de-facto percent) and Nigeria (11 percent) (National Consortium regime that the World Bank is unable to deal with under for the Study of Terrorism and Responses to Terrorism, OP 7.30; or in grave and catastrophic humanitarian crises Global Terrorism Database, 2019), http://www.start.umd. and emergencies where government capacity is crippled edu/gtd). or affected. 38 Countries with recent human rights violations are far more 47 See Section 3 of this document, for financing examples in likely to experience conflict than countries with a strong IDA and IBRD countries. history of respect for human rights (WDR, 2011). 48 Between 2008 and 2018, new forced displacements from 39 Women’s meaningful participation in all aspects of peace disasters have been larger than from conflict and violence and security is critical to effectiveness, including in peace every year by at least 60 percent, and over the full 11 processes, where it has been shown to have a direct years by three times as much (see Internal Displacement impact on the sustainability of agreements reached. See Monitoring Centre (IDMC), Global Report on Internal UN and WBG, Pathways for Peace. Displacement, 2019, https://www.internal-displacement. org/sites/default/files/publications/documents/2019-IDMC- 40 The World Bank’s interpersonal violence prevention GRID.pdf). Between 2004 and 2014, 58 percent of deaths agenda builds on lessons learned from regional from disasters occurred in FCS countries; 500 disaster organizations such as the Inter-American Development events in these countries affected more than 71 million Bank, which is already actively engaged in the sector. people and caused damage worth more than $16 billion. 41 The WBG initiated a mainstreaming process in urban 49 UN and WBG, Pathways for Peace. development in the mid-2000s to take the link between violence and urban planning into account. It first did so in 50 See box on digital payments in Somalia in annex 4. the Honduras Barrio Ciudad and Jamaica Inner City Basic Services for the Poor projects, both of which have been 51 See annex 4 for more details on RPBA. completed and evaluated and offer relevant lessons. 52 See World Bank, Building for Peace (Washington, DC: 42 Inclusive education is one of the WBG’s commitments The World Bank Group, forthcoming). Moving beyond the on disability inclusive development. See https://www. notion of simply rebuilding what was destroyed, the report worldbank.org/en/topic/socialdevelopment/brief/ advocates a people-centered approach when engaging world-bank-group-commitments-on-disabilityinclusion- in crisis or active conflict that highlights the importance of development. understanding actors, their motivations and incentives, and institutions through time. With its more bottom-up approach 43 Taies Nezam, and Marc, Alexandre, Disarmament, aimed at mending the social fabric, addressing grievances, Demobilization, and Reintegration, Social Development and producing greater social cohesion, this report Department Working Paper 119 (Washington, DC: World complements earlier thinking on reconstruction that centered Bank, 2009), http://documents.worldbank.org/curated/ on physical damage and central government institutions. en/776831468324547527/Disarmament-demobilization- and-reintegration. See annex 4 for additional information. 53 Violence impedes the healthy development of infants, children, and young people and generates long-term 44 Coordination between humanitarian, development, trauma, disabilities, and other negative multiplier effects and peace partners would benefit from an overarching for individuals, communities and societies (Buvinic, strategic framework that identifies priorities for Morrison, and Shifter 1999). It also perpetuates the development efforts and their relationship to humanitarian intergenerational transmission of violence (Cunningham and peace efforts. See United Nations, Strengthening et al., 2008; Naudeau et al., 2008; Shouldman and Collaboration Across the Humanitarian, Development and Makisaka, 2010; WHO 2002). Peace Nexus in Yemen, 2019. 54 For example, women who, as young girls, saw their 45 World Bank Operations in Active Conflict, Operational fathers beating their mothers have 2.5 times greater Experiences in Yemen between 2015 to 2019. A risk of experiencing intimate partner violence (IPV) as Preliminary Lessons Learned Study. World Bank Group adults compared with women who did not witness IPV as 2019 (unpublished). children. Rates of child marriage, a form of gender-based violence, are often high in FCV settings (see Lucia C. 46 The WB policy framework already foresees that, in Hanmer et al., Voice and Agency: Empowering Women certain exceptional circumstances, UN agencies and/ and Girls for Shared Prosperity (Washington, DC : World or international non-governmental organizations may Bank Group, 2014) http://documents.worldbank.org/ be funded directly, including when the World Bank curated/en/586221468335982164/Voice-and-agency- determines that there is “no government in power” under empowering-women-and-girls-for-shared-prosperity.) WORLD BANK GROUP STRATEGY FOR FRAGILITY, CONFLICT, AND VIOLENCE 2020–2025 113 55 Girls who marry under the age of 18 may be worldbank.org/curated/en/131461468739459836/1275273 disempowered in ways that deprive them of their basic 22_20041117152101/additional/multi-page.pdf ; De Waal:  rights to health, education, and safety. Lack of access https://www.amazon.com/Mass-Starvation-History-Future- to education often severely limits their employment Famine/dp/1509524673 opportunities later in life. 67 De Waal, Mass Starvation. 56 See World Bank, World Development Report 2007: Development and the Next Generation (Washington, 68 See annex 4. DC: World Bank Group, 2006) http://documents. 69 Between 2004 and 2014, 58 percent of deaths from worldbank.org/curated/en/556251468128407787/World- disasters occurred in the 30 most fragile states (Katie development-report-2007-development-and-the-next- Peters and Marianna Budimir, When Disasters and generation. Conflict Collide: Facts and Figures (London: Overseas 57 UN High Commissioner for Refugees (UNHCR), Report Development Institute, 2016) https://www.odi.org/ of the United Nations High Commissioner for Refugees: sites/odi.org.uk/files/resource-documents/10537.pdf. Global Compact on Refugees, https://www.unhcr.org/gcr/ “From 2005 to 2009 alone, more than 50 percent of GCR_English.pdf. the population affected by natural disasters (including drought, floods, hurricanes, and earthquakes) lived 58 World Bank, Forced Displacement and Development, in fragile contexts” (Harris, Keen, and Mitchell 2013, Development Committee Paper prepared for April K. Harris, D. Keen, and T. Mitchell, When Disasters 2016 Development Committee meeting (Washington, and Conflicts Collide: Improving the Links between DC: March 25, 2016) http://pubdocs.worldbank. Disaster Resilience and Conflict Prevention (London: org/en/749591485963737472/DC2016-0002-FDD- Overseas Development Institute, 2013), quoted in Development-Committee-Paper-Forced-Displacement- World Bank, Turbulent Waters: Pursuing Water Security and-Development.pdf. in Fragile Contexts, (Washington, DC: World Bank Group, 2017) http://documents.worldbank.org/curated/ 59 World Bank, Forcibly Displaced: Toward a Development en/885171489432062054/Turbulent-waters-pursuing- Approach Supporting Refugees, the Internally Displaced, water-security-in-fragile-contexts. and Their Hosts (Washington, DC: World Bank Group, 2017) http://documents.worldbank.org/curated/ 70 Marshall Burke, Solomon M. Hsiang, Edward Miguel, en/104161500277314152/Forcibly-displaced-toward- “Climate and Conflict,” Annual Review of Economics 7, a-development-approach-supporting-refugees-the- (August 2015):577–617 https://doi.org/10.1146/annurev- internally-displaced-and-their-hosts. economics-080614-115430. 60 As of August 2019, 19 projects had been approved in 71 Rigaud et al., Groundswell. 10 countries using IDA18 Sub-Window for Refugees and Host Communities financing ($927 million), and more 72 See annex 4 for additional information. than 20 operations were in the pipeline. The Global 73 This is in full alignment with the IDA19 policy commitment, Concessional Financing Facility approved more than which states: “At least 20 IDA FCS country portfolios will $500 million in grants, unlocking more than $2.5 billion support improvements in social sector service delivery in concessional financing in Jordan, Lebanon, and (i.e., health, education, and social protection), with a Colombia. focus on addressing the differential constraints faced 61 See box on Kakuma, in annex 4. by men and women, boys and girls, and by people with disabilities.” Report from the Executive Directors of the 62 As of December 2018, there were 905,831 refugees and International Development Association to the Board 2,332,936 IDPs in Ethiopia (UNHCR; IOM-DTM). of Governors: Additions to IDA Resources: Nineteenth Replenishment – Ten Years to 2030: Growth, People, 63 Stephen Devereux, ed. The New Famines: Why Famines Resilience. World Bank, 2020. Persist in an Era of Globalization (Abingdon: Routledge, 2006), 23. See also annex 2. 74 In 2017, 420 million children were living near conflict, of whom 142 million lived in high-intensity conflict zones 64 Frederick C. Cuny and Richard B. Hill, Famine, Conflict, (1 in 4 children in the Middle East, 1 in 5 in Africa). and Response: A Basic Guide (Hartford, CT: Kumarian Source: George Graham et al., Stop the War on Children: Press, 1999), 3. Protecting Children in 21st Century Conflict (London: Save the Children, 2019). 65 Cuny and Hill, Famine, 4; Devereux, The New Famines, 8. 75 In emergency situations, specific IMF facilities that Ravallion, Famines and Economics, 5; De Waal, “A Re- 66 provide for rapid disbursements in the event of a shock Assessment of Entitlement Theory.” http://documents. 114  ENDNOTES without the need for a full program are equally helpful in by IDA and IBRD’s executive directors in early 2001. these contexts of severe budgetary constraints (e.g., the It outlines a set of basic policies and principles for the Rapid Credit Facility recently used by Mozambique). Bank’s work in conflict-affected countries. OP 2.30 has served as the basic framework for the Bank’s 76 Vulnerable employment is defined as “contributing family engagements, including notably in Afghanistan, Iraq, workers and own-account workers as a percentage of Somalia, Libya, South Sudan, and Yemen. However, total employment.” World Development Indicators (WDI). World Bank engagement in FCV contexts has evolved in It often refers to lack of formal work arrangements, decent recent years, requiring an update to OP 2.30. working conditions, adequate social security and “voice” through effective representation by trade unions and 84 Astrid Manroth et al., Strategic Framework for similar organizations. Mainstreaming Citizen Engagement in World Bank Group Operations: Engaging with Citizens for 77 Nikolas Myint and Corey Pattison, Operationalizing Improved Results (Washington, DC: World Bank the Pathways for Peace Study in Community-Driven Group, 2014) http://documents.worldbank.org/curated/ Development Operations: Guidance Note (Washington en/266371468124780089/Strategic-framework-for- DC: World Bank, 2018). mainstreaming-citizen-engagement-in-World-Bank-Group- operations-engaging-with-citizens-for-improved-results. 78 For a review of the evidence from the global body of CDD literature, see, for example, Susan Wong and Scott 85 The “reasonable period of time” that is agreed upon Guggenheim, Community-Driven Development: Myths with each client depends on a mix of considerations: and Realities, Policy Research Working Paper No. WPS the size of the gap between their current operations and 8435 (Washington, DC: World Bank Group, 2018) https:// the Performance Standards, the risks associated with openknowledge.worldbank.org/handle/10986/29841. that gap, the difficulty of the context in which they are currently operating, and the degree of their own capacity. 79 The contribution of water-related disasters to fragility is increasing and depends largely on the preparedness, 86 Johannes Hoogeveen and Utz Pape, eds., Data and response, of government institutions following a Collection in Fragile States: Innovations from Africa and disaster. The 2010 and 2011 floods in Pakistan, Cyclone Beyond, (Cham, Switzerland: Palgrave Macmillan, 2020) Nargis in Myanmar in 2008, and the 2012 drought in © World Bank https://openknowledge.worldbank.org/ northern Mali demonstrate how water-related disasters handle/10986/32576. The report discusses a variety of contribute to the vicious cycle of water insecurity and approaches and methodologies that can be deployed in fragility. fragile situations. 80 As an example, in response to a request from the 87 The World Bank will draw from the national-level FCV government of Pakistan for assistance with reconstruction indicators of RRAs and determine whether they can be efforts after record floods in 2010, the World Bank integrated into CPFs to monitor the evolution of FCV restructured an existing project to provide additional dimensions in countries. These indicators would not be funds for the import of fuel oil for rescue operations integrated into the CPF-results matrix because they are carried out by the military. To ensure that the fuel not attributable to WBG projects. acquired was used only for the intended purpose, the government agreed to provide documentary evidence 88 In Azerbaijan, the GEMS method has been used to create that the funds withdrawn were not being employed for an interactive citizen engagement and grievance redress military or paramilitary purposes. tool. A freely accessible project web map showcases the exact locations and intended impacts of development 81 The Cameroon Army Corps of Engineers were contracted activities throughout the country, while allowing the by the implementing ministry through an output-based population to provide structured feedback or to report designated force account contract. This activity required issues directly to the implementing agencies. Similar extensive due diligence and appraisal and is the subject platforms are being established in Niger, Burundi, and of specific legal and operational arrangements to ensure other countries, taking into account local capacity and that any social, safeguard, fiduciary, operational, legal, connectivity constraints. and reputational risks are appropriately mitigated. 89 See annex 2 for lessons learned from a review of TPM 82 Some of these measures are included as policy contracts. commitments under the FCV Special Theme for the IDA19 replenishment. 90 This fully aligns with the proposed IDA19 policy commitment, which states: “All CPFs, Country 83 OP 2.30 is the policy bedrock for engagement in Engagement Notes (CENs), and PLRs in IDA FCS situations of conflict. Based largely on the 1997 post- will outline how the WBG program, in collaboration conflict reconstruction strategy, the policy was adopted with relevant partners, addresses FCV drivers and WORLD BANK GROUP STRATEGY FOR FRAGILITY, CONFLICT, AND VIOLENCE 2020–2025  115 sources of resilience, based on diagnostics such as Replenishment – Ten Years to 2030: Growth, People, Risk and Resilience Assessments (RRAs) or other FCV Resilience. World Bank, 2020. World Bank, 2020. assessments. Each RRA/fragility assessment will analyze FCV drivers and sources of resilience and contain 97 In line with SDG17 on partnerships for the goals— operationally relevant recommendations.” revitalize the global partnership for sustainable development. 91 For instance, the Sahel RRA is under the aegis of the Sahel Alliance, and key contributors include UNDP, 98 In line with the G7+’s New Deal for Engagement in Fragile France’s Agence Française de Développement (the States, as well as the New Way of Working agreed upon French Development Agency or AFD), Germany’s at the 2016 World Humanitarian Summit, the FCV Strategy KfW development bank, and the United Kingdom’s builds on the growing international consensus on the Department for International Development (DFID). importance of collaborative approaches on the ground between humanitarian, peace, development and other 92 The Myanmar Inclusion and Peace Lens consists of (i) an relevant actors to support nationally owned development analytical overview of key exclusion and conflict dynamics plans and contribute to greater aid effectiveness. in Myanmar that task teams should be aware of; and (ii) a list of questions that examine, among other things, 99 Neelam Verjee, Regional Economic Communities in exclusion dynamics, beneficiary targeting, access to Conflict Prevention and Management (Washington, benefits, and the mitigation of risks. DC: World Bank Group, 2017) Background Paper for UN–World Bank, Pathways for Peace (2018), cited 93 The IFC’s Anticipated Impact Measurement and in Cesar Calderon et al., Africa’s Pulse: An Analysis Monitoring (AIMM) System tracks the development impact of Issues Shaping Africa’s Economic Future, No. 19 of IFC projects. Project outcomes are assessed first at (Washington, DC: World Bank Group, April 2019) https:// the project level in terms of impacts on stakeholders openknowledge.worldbank.org/handle/10986/31499. (including employees, customers, and the community), the economy and society overall, and the environment. 100 This Platform brings together the African Development Second, outcomes are assessed at the market level, the Bank, the Asian Development Bank, the European Bank ability of a project to catalyze systemic changes that go for Reconstruction and Development, the European beyond the effects brought about by the project itself. Investment Bank, the Inter-American Development Bank, the Islamic Development Bank, and the World Bank. 94 MIGA’s Impact Measurement and Project Assessment Comparison Tool (IMPACT) provides a systematic 101 For the purposes of this Strategy, the term civil society framework for assessing and articulating the expected organizations (CSOs) includes the full spectrum of civil development impact of proposed MIGA projects. society stakeholders, encompassing international NGOs, national and local civil society organizations, faith-based 95 This fully aligns with the proposed IDA19 policy organizations, community groups, and other entities. commitment, which states: “Develop and implement at least three regional programs (including in the Sahel, 102 In 2018, the G20 Eminent Person Group Report, “Making the Lake Chad region, and the Horn of Africa), which are the Global Finance System Work for All” was released and informed by regional RRAs and focus on mitigating key recommended that “MDBs should, as a system, leverage fragility and security risks to promote engagement at the on MIGA as a global risk insurer in development finance.” security-development nexus.” Report from the Executive 103 In 2019, IFC organized—in collaboration with Oxford Directors of the International Development Association University and the United Kingdom’s CDC Group— to the Board of Governors: Additions to IDA Resources: the first DFI Forum on Private Investment in FCV, Nineteenth Replenishment – Ten Years to 2030: Growth, which attracted 27 DFIs. It is intended as an annual People, Resilience. World Bank, 2020. World Bank, 2020. event focused on sharing experiences, engendering 96 This fully aligns with the proposed IDA19 policy collaboration, and identifying common solutions. commitment, which states: “Support at least 95 percent 104 See box on RPBA in annex 4. of IDA FCSs (with active portfolios) to establish and/or strengthen core government functions to address FCV 105 Joint training is already conducted with bilateral actors drivers.” Under IDA19, core governance functions refer such as Agence Française de Développement or the to (i) public revenue and expenditure management, (ii) Folke Bernadotte Academy, the Swedish government decentralization and service delivery, (iii) government agency for peace, security, and development. employment and public administration, and (iv) the rule of law. Report from the Executive Directors of the 106 These cadres of staff are not exhaustive, nor are they International Development Association to the Board indicative of any official WBG title, grade level, or of Governors: Additions to IDA Resources: Nineteenth qualification/recognition, but rather provide a useful 116  ENDNOTES typology to help conceptualize the various profiles of staff information on development-outcome risks in World Bank working in or on FCV within the WBG. operations. 107 To date, FCV advisors have been deployed to the 117 The SORT ratings will be reviewed and calibrated to Democratic Republic of Congo, Ethiopia, Kenya, inform a formal Board discussion of risk appetite and risk Lebanon, Mali, Myanmar, Niger, and Zimbabwe. tolerance in Bank operations. 108 Staff with a performance rating of 3 and above. 118 The stringency of IFC’s credit standards for evaluating prospective investments is key to maintaining the 109 Current learning offerings include the FCV Core Course, institution’s AAA credit rating and financial sustainability. SSAFE Course (Safe and Secure Approaches in Field Environments), Human Resources/Operations Policy & 119 IFC is committed to increasing the share of investment Country Services offerings, and the IFC Credit Course for commitments in IDA and FCS to 40 percent by FY2030, FCV/LICs. with 15-20 percent in low-income IDA and IDA FCS countries. 110 HSD’s current outdated system is being replaced through a cooperative arrangement with the UN Division 120 The CPIA (Country Policy and Institutional Assessment) of Healthcare Management and Occupational Safety & provides a rating of countries against a set of 16 criteria Health, which will allow access to the UN’s EarthMed grouped into four clusters: economic management, EMR system. This will enable automated travel health risk structural policies, policies for social inclusion and equity, management capabilities and seamless integration with and public sector management and institutions. The the medical records of the UN clinics that provide crucial Harmonized CPIA is calculated as the average of the health services to WBG staff in many FCS locations. The World Bank CPIA and the African Development Bank or system will be active by June 2020. Asian Development Bank CPIA (as may apply to a given country). 111 See World Bank, Sustainable Financing for Sustainable Development: World Bank Group Capital Package 121 The list will use the lowest score (rather than the average) Proposal, paper prepared for the Development of CPIAs from the World Bank, the African Development Committee meeting on April 21, 2018, DC2018-0002/2; Bank, and the Asian Development Bank. and “Proposal for an IBRD Fund for Innovative Global Public Goods Solutions,” May 2019, R2019-0139. 122 See footnote 1. 112 See box on the GPG Fund in annex 4. 123 People internationally regarded as refugees in need of international protection include refugees, people 113 According to the IEG in a report evaluating the World in refugee-like situations, and Venezuelans displaced Bank’s role in natural disasters since 1984, the Bank has abroad. reallocated more than $3 billion under existing projects in response to natural disasters. See Ronald Steven 124 The most recent year for which CPIA score data are Parker, Hazards of Nature, Risks to Development: An available is 2018. IEG Evaluation of World Bank Assistance for Natural 125 This is updated continuously at https://peacekeeping. Disasters (Washington, DC: The World Bank Group, un.org/en/where-we-operate. 2006) http://documents.worldbank.org/curated/ en/396321468161661084/Hazards-of-nature-risks- 126 The latest year for which UNHCR refugee data are to-development-an-IEG-evaluation-of-World-Bank- available is 2018. assistance-for-natural-disasters. 127 Both ACLED and UCDP aim to record, report, and map 114 Since its establishment, the Ebola Recovery and conflict-related fatalities (stemming from state-based, Reconstruction Trust Fund has played a crucial role in non-state, and one-sided violence), and are considered the fight against Ebola, disbursing $50.8 million and by practitioners, researchers, and governments as benefitting 12.5 million people in the West Africa region reliable sources of such data. The use of two sets of data through 19 different projects. Approximately $19 million is necessary to even out discrepancies. Latest year for (9 projects) was dedicated to economic recovery, $19.1 which they are available is 2018. million (4 projects) strengthened the health sector, and $12.7 million (6 projects) helped improve social recovery. 128 Countries on the FCS list will retain their IDA/IBRD status. Middle-income FCS countries can potentially access 115 See box on the SPF, in annex 4. IBRD financing, and low-income FCS countries can potentially access IDA financing. 116 The Systematic Operations Risk-rating Tool (SORT) was introduced in 2014 and is the source of aggregate 129 UN and WBG, Pathways for Peace. WORLD BANK GROUP STRATEGY FOR FRAGILITY, CONFLICT, AND VIOLENCE 2020–2025 117 130 Cesar Calderon et al., Africa’s Pulse No. 19 (April with US$4.3 billion (7%), and Yemen with US$3 billion 2019):59 which is available at https://openknowledge. (5%) (DFI Trust Funds Team analysis, 2019). worldbank.org/handle/10986/31499. 148 DFI Trust Funds Team analysis, 2019. 131 UN and WBG, Pathways for Peace, 185. 149 FCV Group’s analysis with the Standard Report’s active 132 Cesar Calderon et al., Africa’s Pulse No. 19 (April portfolio data as of end-FY19. Operations under review 2019):59. included all IBRD- and IDA-financed operations, as well as specific trust fund financed stand-alone projects 133 UN and WBG, Pathways for Peace. (Montreal Protocol, Recipient-Executed projects, GEF, and Special Financing operations), except that those less 134 Graeme Simpson, The Missing Peace: Independent than $5 million are not included. Progress Study on Youth, Peace and Security, (UNFPA and PBSO, 2018), 60 https://www.youth4peace.info/ 150 The list is revised annually; countries can fall on and off system/files/2018-10/youth-web-english.pdf. the list if country factors influence their ability to fit its criteria. The smallest and largest number of countries ever 135 See, for example, cross-country study by Mercy Corps on the FCS Harmonized list was 32 countries in FY11 and 2015; Hafez 2003. https://books.google.com/books/ FY12, and 36 countries in FY10, FY14, FY18, and FY19. about/Why_Muslims_Rebel.html?id=Ech1t_HBKMIC; https://www.mercycorps.org/sites/default/files/2020-01/ 151 The 19 economies that have been on the list MercyCorps_YouthConsequencesReport_2015.pdf continuously since its inception are Afghanistan, Burundi, the Central African Republic, Chad, Comoros, 136 UN and World Bank, Pathways for Peace, 189. Côte d’Ivoire, the Democratic Republic of Congo, 137 This review examined the FCS portfolio between FY2012- Eritrea, Guinea-Bissau, Haiti, Kosovo, Liberia, Myanmar, 2018. Solomon Islands, Somalia, Sudan, Togo, Zimbabwe, and West Bank and Gaza. 138 Business Warehouse historical data managed by Operations Policy & Country Services (OPCS). 152 With the exception of FY216- FY18, when MNA had the largest share. 139 Using the FY2018 OPCS FCS portfolio review as a basis, the FCV Group conducted a detailed analysis with BWI 153 All information and figures based off the FY19 Active and Standard Report data. Portfolio were generated through FCV Group analysis and included all countries on the FY19 Harmonized List and 140 Comprises IDA, IBRD and IBRD/IDA Trust Funds. data from the WB’s Standard Reports, with the exclusion of small RE projects (those under $5million). 141 FY2006-2019: This US$583 billion includes IDA, IBRD and TF commitments: DFI Trust Funds Team analysis, 2019. 154 By distribution of volume, the eight countries that dominate 70 percent of the portfolio are the Democratic 142 This US$58 billion includes IDA, IBRD and TF Republic of Congo (14%), Côte d’Ivoire (11%), commitments: DFI Trust Funds Team analysis, 2019. Afghanistan (9%), Iraq (8%), Mozambique (8%), Myanmar (7%), Lebanon (7%), and Yemen (7%). On the other hand, 143 Trust Funds refer to IBRD/IDA Trust Funds, in which the by total number of projects, 70 percent of the portfolio World Bank acts as an implementing agency to financial is dominated by wing 15 economies: Afghanistan, the intermediary funds (FIFs). It excludes IFC Trust Funds. Democratic Republic of Congo, Mozambique, Mali, Côte 144 Africa: US$24.4 billion (42%), and South Asia: US$15 d’Ivoire, Haiti, West Bank and Gaza, Central African billion (26%) during FY2006-2019 (DFI Trust Funds Team Republic, Lebanon, Myanmar, Liberia, Chad, Djibouti, analysis, 2019). the Republic of Congo, and Togo. FCV Group analysis: Standard Report Data, FY19. 145 Afghanistan received 23 percent of the total share of FCS commitments during FY2006-2019 (DFI Trust Funds Team 155 These eight countries are the Democratic Republic of analysis, 2019). Congo (14%), Côte d’Ivoire (11%), Afghanistan (9%), Iraq (8%), Mozambique (8%), Myanmar (7%), Lebanon (7%), 146 Afghanistan Commitments FY2006-2019: Trust funds: and Yemen (7%). FCV Group analysis: Standard Report US$9.8 billion and IDA: US$3.4 billion (DFI Trust Funds Data, FY19. Team analysis, 2019). 156 This share remains roughly the same even after excluding 147 FY2006-2019: Democratic Republic of Congo with US$5.8 small states. billion (10%), Iraq with US$4.8 billion (8%), Côte d’Ivoire 118  ENDNOTES 157 FCV Group analysis: Standard Report Data, FY19. 167 IEG RAP 2018, pg. 3: “If project results relating to both of these countries [Afghanistan and Yemen] are excluded, 158 The average duration of projects over the course of ratings for the remaining IDA FCS show a marginal implementation for FCS is roughly 3.1 years, as compared improvement over the period.” to 3.6 years in non-FCV: OPCS FY18 FCV Portfolio Review. 168 A consistently steady increase from 87 percent to 94 percent over a one-year time span. 159 Figures based on the FY19 Active Portfolio were generated through FCV Group analysis. 169 OPCS FY18 FCS Portfolio Review. 160 X-axis abbreviations are the WB’s Global Practices: 170 As per their most recent Implementation Status and POV: Poverty and Equity, DD: Digital Development, Results Report (ISR) ratings. ENR: Environment and Natural Resources, MTI: Macroeconomic, Trade and Investment, GOV: 171 On average, 24 percent of FCS operations have required Governance, Social: Social Development, FCI: Finance, one or more additional financings, as compared to 16 Competitiveness and Innovation, EDU: Education, AG: percent of non-FCS, as per the FCS Group analysis: FY19 Agriculture, SPG: Social Protection, Labor and Jobs, FCS Active Portfolio. Water, ENE: Energy and Extractives, Urban DRM: Urban 172 World Bank Group Open Finances (https://finances. Disaster Risk Management, Resilience and Land, HNP: worldbank.org) summarizes all World Bank project Health, Nutrition and Population, TRAN: Transport. assessments carried out by the Independent Evaluation 161 IBRD and IDA lending to FCV increased 334% over the Group (IEG) as of October 15, 2019. Projects are period FY06- FY19, per World Bank Institute (WBI) data. classified as “FCS projects” if the country was on the FCS Lending across all regions has continued to increase, with Harmonized List during the approval process. the exception of Europe and Central Asia (ECA). This can 173 Figures based off the FY19 Active Portfolio were be explained by the fact that there are only a few ECA generated through FCV Group analysis. countries in the FCV portfolio (Tajikistan, Uzbekistan, and Georgia fell on and off the list up until FY11, and Bosnia 174 FCV, on average, has projects in problem status for 1 and Herzegovina exited in FY16, leaving Kosovo as the month, as compared to 1.8 months in non-FCV projects only ECA country in the portfolio). (FCV Group Analysis, FY19 FCV Active Portfolio). 162 This is true for ratings across the board. The following is a 175 See Section 3. snapshot of the FY12-FY17 period by number of projects rated MS+ (moderately satisfactory and above): (i) Lower 176 Long-term finance excludes trade finance and is WB Project Outcome ratings: FCV FY12- FY14: 68%, generally more than a year in maturity. FY15- FY17: 65% versus non-FCV: FCV FY12- FY14: 69%, FY15- FY17 79%; (ii) Lower WB Quality at Entry ratings: 177 Based on IFC’s Development Outcome Tracking System FCV FY12- FY14: 57%, FY15- FY17: 56% versus non-FCV: (DOTS) results. FCV FY12- FY14: 60%, FY15- FY17: 67%; (iii) Lower WB 178 Based on IEG Ratings of Excellent or Satisfactory for Performance ratings: FCV FY12- FY14: 70%, FY15- Development Outcome. FY17: 65% versus non FCV: FCV FY12- FY14: 70%, FY15- FY17: 79%, and (iv) Lower IEG ratings. Source: IEG RAP 179 MDRP covered Angola, Burundi, Central African 2019 and OPCS FY18 FCV Portfolio Review. Republic, Democratic Republic of Congo, Republic of Congo, Rwanda, and Uganda. 163 The FCS portfolio has a higher share of projects rated “High” and “Substantial” on SORT, as of FY18 Active 180 Africa Social Development Knowledge Brief Disarmament, Portfolio (the active portfolio is determined based on Demobilization and Reintegration Programs (DDR); the current FY’s harmonized list of FCS, here FY18 was Economic and Social Reintegration of Ex-combatants. utilized). 181 The AU Continental Early Warning System (CEWS) is 164 IEG RAP 2018. supported by the WB Nordic Trust Fund (NTF) and UN Office of the High Commissioner for Human Rights 165 IEG RAP 2019. (OHCHR); Africa Social Development Knowledge 166 Snapshot of FY07- FY18 time-period, as per Completion Brief DDR; Economic and Social Reintegration of Ex- and Learning Review (CLR) Review: Country Strategy combatants. WBG Performance Ratings: (FCV: 44) (non-FCV: 64). 182 DFI: Trust Funds Team Analysis: 2019. Country Strategy Development Outcome Ratings: (FCV: 52) (non-FCV: 71): (Source: IEG RAP 2019.) 183 As of December 2018. WORLD BANK GROUP STRATEGY FOR FRAGILITY, CONFLICT, AND VIOLENCE 2020–2025 119 184 As outlined in the 2018 Trust Fund Annual Report 190 World Bank, Forward Look: A Vision for the World Bank (TFAR)’s review of the Afghanistan Reconstruction Trust Group in 2030 (Washington, DC: World Bank Group, Fund. 2017). 185 Referred to in the Program Appraisal Document (PAD)as 191 Excerpt from World Bank, Strategy and Business Outlook “drivers of fragility” as identified in the Pakistan Post-Crisis Update FY20-FY22 (Washington, DC: World Bank Group, Needs Assessment (PCNA) 2010. These drivers include 2019) 35, fig. 3.1: Expenditures in Selected Corporate high unemployment rates among young men, inadequate Priorities. FCV spending identified through costs livelihoods, and absence of sufficient employment attributable to the country, and thematic unit for all budget opportunities. classes (Country Engagement, CE; Global Engagement, GE; Program and Practice Management, PPM); also 186 The Food Security Information Network (FSIN), 2019 includes indirect costs of Institutional, Governance and Global Report on Food Crises: Joint Analysis for Better Administrative (IG&A) units. http://documents.worldbank. Decisions (Rome, Italy and Washington, DC: Food and org/curated/en/793471537214192071/pdf/FY19-World- Agriculture Organization (FAO), World Food Programme Bank-Budget-for-Public-Disclosure-FINAL-vF-09112018. (WFP), and International Food Policy Research Institute pdf; http://documents.worldbank.org/curated/ (IFPRI), 2019) http://fsinplatform.org. en/703751569031298844/FY20-World-Bank-Budget 187 It is estimated that IDA has provided about $22 billion in 192 This analysis comprises costs from all budget classes financing for food insecurity interventions over the last (CE, GE, PPM) using FCV country codes. It includes decade. It is also estimated that the WBG has provided project costs, GTFDR unit costs, third-party monitoring more than $60 billion in financing for food security costs, FCV-related corporate and office security/security since the 1980s, making it one of the largest sources of allowances, field benefits in FCV, and associated indirect development assistance in this space. costs for IG&A units. http://documents.worldbank.org/ curated/en/793471537214192071/pdf/FY19-World- 188 The FAM initiative was made possible by generous Bank-Budget-for-Public-Disclosure-FINAL-vF-09112018. support from the State and Peacebuilding Fund (SPF), pdf; http://documents.worldbank.org/curated/ the InsuResilience Multi Donor Trust Fund, and the Global en/703751569031298844/FY20-World-Bank-Budget Risk Financing Facility (GRiF). 193 FY19 World Bank Budget report, p. 38, figure 4.8 (R2018- 189 World Bank, Pacific Possible: Long-Term Economic 0111), and FY20 World Bank Budget document (R2019- Opportunities and Challenges for Pacific Island 0132), p. 44, figure 4.7; FCV-risk countries include Countries (Washington, DC: World Bank Group, Guinea, Nepal, Niger, and Tajikistan. http://documents. 2017) http://documents.worldbank.org/curated/ worldbank.org/curated/en/793471537214192071/pdf/ en/168951503668157320/Pacific-Possible-long-term- FY19-World-Bank-Budget-for-Public-Disclosure-FINAL- economic-opportunities-and-challenges-for-Pacific- vF-09112018.pdf; http://documents.worldbank.org/ Island-Countries. curated/en/703751569031298844/FY20-World-Bank- Budget 120  ENDNOTES worldbank.org/peoplepeaceprosperity