Compounding crises — from climate change, disasters, conflicts, and pandemics, to food and energy shocks — have put the Sustainable Development Goals in peril, with shocking reversals of many goals back to pre-2015 baseline levels.
Given the urgent need to address these spiraling crises at both the global and country levels, in 2022 United States Treasury Secretary Janet Yellen called for the multilateral development banks to evolve their missions and visions, incentive structures, operational approaches, and financial capacity so that they could better help their borrowing countries build resilience to global challenges. Critically, a focus on resilience is vital for sustained progress on inclusive growth, tackling poverty, and the best means of preventing conflicts.
MDBs have heeded the call. In only two years, the World Bank and other MDBs have made significant progress in incorporating a greater focus on resilience into their mandates, strategies, and operations. The U.S. has led a broad coalition of borrowing and donor shareholders, knitting together a system-wide response for resilience through mechanisms such as the MDB co-financing platform, the World Bank’s financial incentives framework, country platforms, capital adequacy measures, and global taskforces and fora on pandemic preparation, resilient food systems, and health finance.
Collectively, these will mobilize billions in domestic, private sector, and concessional financing, building on the $27.7 billion committed by MDBs in 2023 for climate change adaptation.
The U.S. is further doing its part, including with its recent pledges of $4 billion for the World Bank’s International Development Association, the largest source of concessional finance for low-income countries, and $667 million for the Pandemic Fund, announced by Secretary Yellen in July.
But there is still more to do. Building on these resilience gains, we propose the following areas of focus in the next phase of MDB Evolution:
1. Developing clarity and consensus on resilience capacities
MDBs have made significant strides in innovative financing; what is needed is consensus on the forms of resilience that these resources should build. The World Bank is already working to evolve its own risk and resilience assessment, which can be strengthened by better identifying major risks and crises in partner countries and the types of resilient capacities needed to address them.
A shared resilience framework has begun to emerge within the Organisation for Economic Co-operation and Development, the United Nations, USAID, and parts of the World Bank that can be applied across the MDB system. This framework emphasizes:
• Absorptive capacities — to prevent, mitigate, and withstand shocks and stress.
• Adaptive capacities — to establish multiple pathways to reach development outcomes in case one pathway is disrupted by crisis.
• Transformative capacities — to create formal, scalable solutions for resilience, to convert risks into opportunities, and to address the root causes of fragility that drive risks and vulnerabilities.
MDBs would benefit from a more strategic guiding framework to help teams, for example, to not overemphasize certain types of resilience — e.g., shock absorption — at the expense of others — e.g., adaptation.
Achieving clarity and consensus on the types of diverse capacities needed for resilience will allow MDBs to channel their energies and resources for more impactful outcomes.
2. Adopting resilience rating systems
The World Bank’s climate practice uses a resilience rating system to determine whether a project is itself resilient to disruptions and whether the project creates resilience for markets, institutions, or communities. This is vitally important to promote resilience as a built-in feature of countries’ economies, institutions, and societies. MDBs should apply this type of rating system across all practices and portfolios to fully mainstream resilience. The rating system could use the resilience capacities highlighted above for its rating criteria.
3. Applying shared resilience assessments
The World Bank’s post-conflict needs assessment, or PCNA, and post-disaster needs assessment, or PDNA, are the hallmarks of shared assessments in fragile, conflict- and disaster-affected countries. Yet, as their names imply, both methodologies are focused on needs, not risks.
Most MDBs currently have some form of internal risk and resilience assessment. However, there needs to be a shared resilience assessment that can help governments, MDBs, and the broader development and humanitarian communities understand risk and crises dynamically and determine which resilience capacities to collectively strengthen for the greatest impact.
MDBs want to cooperate more closely. What progress have they made?
Ilan Godlfajn, president of the Inter-American Development Bank, has been a passionate champion of cooperation among MDBs. He talks about what that cooperation has yielded so far.
The MDB’s internal diagnostics can inform shared assessments to promote collective action without disclosing more sensitive information contained in them. The Asian Development Bank’s approach to fragility and resilience, for example, is focused on holistically understanding and addressing complex risks, crises, and their root causes through resilience solutions. This could serve as a model for shared assessments.
4. Harnessing the potential of country platforms, especially in fragile contexts
A range of development partners have undertaken important work to establish country platforms for climate action. A complement to thematic platforms, particularly for countries affected by fragility, could be comprehensive country platforms aimed at a wide mobilization of development partners and transformational impact. Implemented well, they can increase country ownership and agency, reduce transaction costs for the country, mitigate duplication of donor efforts, and help align priorities and resources to achieve more impactful results.
Approaching partnerships with greater intentionality is important as MDBs explore the wider use of third-party implementation to support governments and communities in fragile contexts.
There has been growing support for platforms from the G20, G7+, OECD, U.N., and MDBs. Despite this broadening support, evidence of impact, and current use of platforms in countries including Somalia, Haiti, Mozambique, and Rwanda, the development community has been too slow to invest in them for greater resilience outcomes and development effectiveness. The World Bank has a critical role to play in advancing this agenda.
Next steps
During the recent Annual Meetings of the International Monetary Fund and World Bank, Secretary Yellen highlighted the significant work that has been done in this first phase of MDB Evolution to mainstream resilience into the MDBs’ mandates, strategies, and operations, improve efficiencies, standards and protocols, foster a more system-wide approach, and innovate on blended financing. The next phase must deepen the collective understanding of resilience and how it can be applied to a range of countries through resilience ratings systems, shared assessments, and country platforms that can rally the MDB system to help partner countries better meet challenges and respond to global crises.
About the authors
Alexia Latortue
Alexia Latortue is the Assistant Secretary of International Trade and Development for the United States Department of the Treasury. In this role, she oversees Treasury’s Offices of Climate Environment and Sustainable Infrastructure, International Development Finance and Policy, International Trade and Investment, and Technical Assistance. Previously she served as the Millennium Challenge Corporation’s Deputy Chief Executive Officer overseeing the agency’s operations to deliver on strategic and programmatic priorities and leading the MCC team.
Jonathan Papoulidis@jpapoulidis
Jonathan Papoulidis is vice president at Food for the Hungry. He previously served with the United Nations, including in Indonesia as U.N. coordinator for Aceh, in Liberia with U.N. peacekeeping, and with UNOCHA at headquarters and in Africa and Asia. He has held appointments as a fellow and visiting scholar at Stanford University, Columbia University, and York University’s Center for Refugee Studies. He has a master’s degree in international relations from the University of Cambridge.
