MDBs Have Yet Delivered on their Promise

Multilateral Development Banks (MDBs) have come under scrutiny over their failure to live up to their promise of ensuring meaningful development impact across some of the world’s poorest regions. This is despite the billions of dollars worth of allocations they receive. Perhaps one reason for this poor performance is the lack of available monitoring mechanisms to measure the performance of these MDGs. For instance, reports have shown that none of the seven major MDBs meet the key criteria for measuring and reporting corporate impact. This discrepancy between intent and execution is not merely a technical issue, it has consequences for development outcomes.

Difficulty Measuring Progress

Interestingly, only four of the seven MDBs publish any output/outcome reports, which are the fundamental indicators of whether their investments are achieving their goals. This lack of reporting severely limits the ability of stakeholders —including governments, citizens, and policymakers— to assess whether MDB-funded projects are making a meaningful difference.

Additionally, only two of these banks disaggregate their impact data by country. Note that it is particularly important to do this because development challenges vary significantly from one country to another. Without this level of detail, it’s impossible to conclude which regions are benefiting most from an MDB’s projects or even to identify and address any inequalities in the distribution of resources.

Most of the MDBs also fail to map impacts to Sustainable Development Goals (SDGs) or set meaningful corporate-level targets.

This lack of standardised performance measurement is deeply problematic, as it undermines the ability to evaluate the effectiveness of development finance in addressing critical development challenges such as poverty reduction, infrastructure deficits, and sustainable growth in vulnerable regions. This ineffective reporting also leads to poor resource allocation, leaving billions of dollars invested in projects with limited transparency and questionable benefits.

More Examples of MDBs’ Failures

Already, the failure to adequately track their performance and impact has given leeway to some of these MDBs to divert their financial resources toward questionable priorities. For instance, the IFC has faced criticism for funding luxury hotels for ultra-wealthy stakeholders rather than focusing on projects that can directly uplift the poorest communities. This kind of investment has little to no benefit for impoverished populations​ which, ideally, should be the target of the MDBs’ investments. Such misaligned priorities could be avoided if robust measurement systems are in place to hold these MDBs accountable.

Also, by failing to disaggregate data by country, MDBs obscure the local impacts of their financing, making it difficult for recipient nations to hold these institutions accountable.

It should also be noted that institutions such as the European Bank for Reconstruction and Development (EBRD) and the Asian Infrastructure Investment Bank (AIIB) rely on qualitative metrics, with limited or no quantitative reporting on development outcomes.

Lack of Transparency Leads to Distrust

The recently published IFC-GEMs Report noted that over half of private sector respondents were unwilling to contribute their credit risk data to a shared database. Of those surveyed, only 25% expressed unconditional willingness, while another 25% agreed to share data under specific conditions. This reluctance underscores a broader problem of reciprocity and trust between MDBs and private sector actors.

If MDBs expect data-sharing from stakeholders, they must set an example by being transparent in their reporting systems. The lack of standardisation undermines this effort, as stakeholders remain unconvinced of the benefits of cooperation when MDBs themselves fall short.

Exceptions That Deserve Recognition

It’s important to note that while most MDBs have struggled with transparency and accountability, the African Development Bank (AfDB) and Asian Development Bank (ADB) stand out for their efforts. The AfDB’s “High 5s” initiative sets clear targets across five priority areas, including energy access and industrialisation, though it too has its flaws in corporate-level tracking.

In the same vein, the ADB includes outcome indicators for nearly 40% of its scorecard, making it a leader in tracking tangible development impacts.

However, even these institutions face challenges in setting ambitious targets or establishing clear baselines​.

A Call for Standardisation Among the MDBs

There has never been a more urgent time for the MDBs to undergo urgent reforms to improve their transparency and impact than now. Some of the key recommendations they should consider incorporating include:

• Adopt a common framework for reporting outputs and outcomes. This should include baselines, country-level disaggregation, and SDG alignment.
• A collective annual report comparing development and climate outcomes across MDBs would promote accountability and foster collaboration.
• Addressing the reciprocity issue highlighted in the GEMs report is vital. MDBs must demonstrate the value of data-sharing to encourage private sector participation.