We measure development outcome
The monitoring and evaluation team at DEG regularly reviews the development effectiveness of its investments and highlights options for making further improvement for DEG and its customers. DEG builds its reviews on a "Theory of Change", starting from the activities of a DEG client (Client activity), the resulting outputs (Client output) to desired development effects (Societal outcome) and impacts (Societal impact). In a further step DEG’s role is incorporated into the model (DEG input).
From financing to impact – Theory of Change
Systematic project assessment using the Development Effectiveness Rating (DERa)
DEG has been using the newly created Development Effectiveness Rating (DERa) for monitoring purposes since the beginning of 2017. The rating tool builds on international best practice by using predominantly quantitative and harmonised indicators; it is applied to the entire portfolio and all new commitments since January 2017. Guided by the SDGs, the DERa uses five outcome categories to assess the development contributions of each customer.The development effects of investments made by DEG’s customers and their contribution to the SDGs are presented along these five categories. The first three categories assess what was achieved and the other two, how these effects were achieved:
- Decent jobs
- Local income
- Market and sector development
- Environmental stewardship
- Community benefits
The DERa forms the basis for DEG’s impact reporting and allows DEG to steer the overall development quality of its portfolio and provide impetus for improvements.
The broad range of structures, mandates and shareholders of International Finance Institutions (IFIs) working with the private sector means that there are many different systems used to track development results. The shared clients of these IFIs therefore often endure an unintended burden deriving from the IFIs’ different reporting requirements, including similar indicators (with different definitions) meant to capture the same data.
Efforts to mitigate this burden began in 2008, and progress accelerated 4 years later when over 20 IFIs formed a Working Group on Indicator Harmonization that agreed to benchmark indicators for private sector investment operations and seek examples of best practice for shared adoption.
The harmonized indicators initiative yielded a memorandum of understanding (MoU), signed in October 2013 in Washington, D.C., during the Private Sector Round table that takes place annually at the IMF-World Bank Annual Meetings, and an Addendum to the MoU, signed in the fall 2015. The MoU, as amended by the Addendum, harmonizes the definitions of 38 indicators for private sector operations.
Reports about the role of development finance institutions for the development of the private sector in development countries: