Turning Portfolio Around

Quality of Projects

The World Bank’s Active Portfolio of Projects under Implementation at June 30, 2001

EVOLVING PRIORITIES

• The World Bank’s project portfolio of $105 billion at the end of fiscal 2001 comprised 1,553 ongoing projects, nearly a quarter of them in Africa.

• Measured in dollars as well as number of projects, the distribution of the portfolio highlights the Bank’s sustained emphasis on investments in people, rural development with an environmental focus, and infrastructure and institution building needed to help countries attract private investment and reduce poverty.

• The share of the portfolio in the energy as well as the oil and gas sectors has fallen sharply over the past five years, reflecting countries’ success in attracting private and other lenders into those sectors and the Bank’s focus on policy and institutional reform.

• Countries with good policy and institutional environments account for a markedly higher share of the portfolio today relative to fiscal 1996.

• Support for countries’ efforts to combat corruption and HIV/AIDS has been mainstreamed and is today more than double what it was in fiscal 1996.

• The Bank continues to be a leader in providing reconstruction assistance following natural disasters, with growing attention to disaster prevention. In the last five years, lending for reconstruction totaled nearly $5 billion, and while difficult to quantify precisely, disaster prevention lending is approaching similar levels.

• Portfolio management by decentralized country office staff has increased significantly, strengthening the Bank’s responsiveness to client needs and improving portfolio health.

Turning the Portfolio Around: Two Examples

Water and Sanitation Sector. Five years ago, about half the Water and Sanitation portfolio was at risk, and problem projects accounted for nearly a quarter of the portfolio. At the end of fiscal 2001, only 15 percent of projects were at risk. The radical improvement has resulted from:

• A shift in lending away from public sector utilities that promise reforms and toward utilities that have reformed prior to Bank funding and brought private sector talent into their operations; and

• The Bank’s adoption of a proactive approach toward problem projects, including quantitative performance targets and regular review and monitoring.

Africa Region. Operations in the Africa Region have historically faced above-average risk because of conflict-related crises, political instability, and weak governance. Despite these risks, the quality of the region’s portfolio has improved markedly, as a result of:

• Linking new lending to resolution of outstanding problems;

• Providing staff with real-time data on portfolio quality;

• Tackling cross-cutting problems in risky projects through country-portfolio reviews;

• Using local staff in country offices to strengthen oversight; and

• Facilitating public involvement, awareness, and oversight of the Bank’s portfolio.