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State Your Business!

Management Response

Management of the World Bank Group institutions would like to thank the Independent Evaluation Group (IEG) for its report, State Your Business! An Evaluation of World Bank Group Support to the Reform of State-Owned Enterprises, FY08–18. Management is pleased to note that IEG’s findings suggest that, on average, the evaluated portfolio met World Bank and International Finance Corporation (IFC) targets for project success, and welcomes the suggestion that efforts continue to be made to improve development effectiveness.

World Bank Management Response

Management notes with satisfaction that World Bank lending, which accounts for more than 90 percent of the evaluated state-owned enterprise (SOE) reform portfolio volume, achieved a success rate of 78 percent, surpassing the target of 75 percent. Factors explaining the success of SOE reform, including both internal variables and external variables beyond World Bank control, resonate well with management. This is particularly true for the conclusion that “design quality and client commitment are frequently identified as success factors across all five types of SOE reform support, although the frequency of other factors varies by area” (see page 37). Over the years, successive management self-assessments have recognized the influence of these variables in project success, independent of country type and sector.

Management agrees with the report’s recommendation to enhance selectivity by more systematically addressing corruption and competition and is already working in that direction. The report shows that only 26 percent of activities are implemented in environments with low control of corruption, suggesting already strong selectivity. Enhanced selectivity should therefore help prioritize the type of support to SOE reform that is better tailored to a particular intervention in the country context rather than excluding countries. Such support should be accompanied, as suggested by the report, by management’s sustained attention to all factors that mitigate corruption’s negative influence on SOE, particularly those within the World Bank’s immediate influence, such as putting a premium on client commitment, stronger supervision, good project design, and sequencing of activities. These considerations are already part of the Systematic Country Diagnostic and the prioritization that takes place during Country Partnership Framework design. This is proven by the fact that the World Bank has achieved, as stated in the report, a success rate of 67 percent even in countries with low control of corruption.