The urgency to address the root causes of conflict and fragility underscores the imperative for reform within Multilateral Development Banks (MDBs). This paper advocates for a comprehensive approach to reform, emphasising the need for innovative strategies tailored to the unique challenges faced by fragile and conflict-affected states (FCAS).
Central to this reform agenda is the call for increased Official Development Assistance (ODA) for the International Development Association (IDA), which has stagnated at $24 billion for two decades, rendering its impact significantly diminished over time. However, mere financial augmentation is insufficient; a paradigm shift towards better financing mechanisms, aligned with the priorities of borrowing countries and tailored to their specific needs, is imperative.
Three key areas of innovation emerge as pivotal to this reform agenda:
- Institutional Priority: Fragility must be elevated to an institution-wide priority within MDBs, akin to the World Bank Group's Global Challenge Programme on Fragility, Conflict, and Violence (FCV). This necessitates adjustments in operating policies to foster greater risk-taking, investment in prevention, and insulation from political considerations. By reconceptualising FCV as global public challenges and financially accounting for them as such, MDBs can catalyse transformative change.
- Partnership Enhancement: Flexibility and simplicity are paramount to fostering diverse partnerships, particularly in de facto contexts. MDBs must embrace grants and concessional finance with varied structures, placing a heightened emphasis on local banks, financial service providers, and partnerships with International Non-Governmental Organizations (INGOs). Such collaborations are essential for addressing the multifaceted challenges prevalent in FCAS.
- Operational Adaptation: MDBs must overhaul their approaches to FCV, prioritising capacity-building for inclusive prevention over conventional governance modalities. Robust joint analysis, informed by regular country diagnostics, should drive decision-making processes. Monitoring, evaluation, and learning mechanisms must be agile, leveraging partnerships with local organisations and international NGOs to address knowledge gaps and navigate political economy challenges, particularly in de facto and displacement scenarios.
By embracing these innovations, MDBs can catalyse transformative change in FCAS, contributing to sustainable peace and development on a global scale.
