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Fragile and conflict-affected situations (FCS) present the most difficult development problem of our era. According to the last OECD States of Fragility report, the 60 countries characterized as FCS are home to 73 percent of those living in extreme poverty, and that number is expected to rise to 86 percent by 2030. More than two-thirds of refugees and displaced people originate in FCS, which also host 95 percent of those in need of humanitarian assistance.
In the context of the international effort to enhance assistance to FCS, multilateral development banks (MDBs) have progressively expanded the breadth and depth of their investments, more than tripling disbursements over the past decade. In 2022, MDBs constituted over 60 percent of all multilateral receipts to FCS and exceeded 30 percent of overall official bilateral and multilateral flows. The World Bank, bolstered by the additional resources from reforms to its concessional lending arm IDA, constituted more than two-thirds of total MDB assistance to FCS.
MDBs total flows to FCS (2012-2022)

The increasing role played by MDBs in FCS can be attributed to the comparative advantages implicit in their business model. Financial muscle, technical competence, and long-term country-based engagement are key to explaining their prominence among bilateral and multilateral actors. MDBs have demonstrated their ability to provide resources and knowledge in challenging environments ranging from post-conflict reconstruction to the prevention of fragility. Nonetheless, FCS pose specific hurdles that limit MDBs’ comparative advantages. Adverse institutional, security, and political conditions constrain the effectiveness of the state-centric, non-political paradigm of MDBs, requiring the adaptation of strategic and operational choices.
A key lesson from past interventions in FCS is the need for robust coordination among all pertinent international and local actors. Economic, social, and political conditions in FCS are interdependent, challenging the traditional division of labor in the international community. To effectively prevent or address fragility and conflict, peacebuilding interventions, coverage of basic human needs, and economic transformation must be meticulously coordinated across national and international stakeholders. These lessons are explicitly endorsed by MDBs’ evaluation reports and are included in MDBs’ strategies and policies for addressing FCS.
In fact, MDBs recognized long ago the necessity for enhanced coordination among themselves in their operations within FCS. In October 2007, the heads of the MDBs and the IMF issued a statement agreeing on a common operational and strategic approach to addressing issues of FCS. The approach covered: (i) a shared approach to identifying fragility; (ii) a shared platform of post-disaster and post-conflict recovery planning and joint monitoring and results frameworks; (iii) where possible, the programming of resources through joint assistance strategies; and (iv) the country division of labor for technical assistance and sharing of expertise. No public evaluation is available regarding the extent of progress made, but it appears to have been uneven. The simpler elements, such as the interchange of information and analysis, have advanced. (An MDB working group on FCS meets on a regular basis.)
There has been some progress: The design and execution of individual projects demonstrate enhanced coordination. The division of labor and coordination among MDBs is evident in project design and execution. Numerous instances exist of joint project design, co-financing arrangements, and the utilization of identical project implementation units to optimize implementation costs. Increasing resources to address needs that surpass the funding capabilities of individual MDBs seems to be the primary factor influencing these decisions.
However, higher-level coordination commitments for shared classification criteria and joint strategy and programming remain unfulfilled.
To support effective MDB collaboration at this level, I propose in a new CGD paper that the following reforms should be implemented:
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First, MDBs should adopt a common FCS classification system. A harmonized list of fragile nations, averaging Country Policy and Institutional Assessments (CPIAs) of the World Bank and regional development banks, was adopted in 2014. This has been replaced by distinct approaches employed by each MDB, although a considerable overlap exists in countries classified as FCS. None of them is consistent with the approach of the OECD methodology.
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Second, FCS eligibility and terms for concessional resources should be harmonized across MDBs. IDA is by far the largest concessional window available, leaving the concessional funds of regional development banks with a much-limited role that can only be complementary. Despite this, regional concessional windows are not designed and managed accordingly. Eligibility for concessional and ordinary capital windows is not fully harmonized among MDBs, leading to varying degrees of concessionality or loan charges for the same country. The emergence of new MDBs in FCS, like the Asian Infrastructure Development Bank, especially in middle-income countries, will intensify the need to coordinate resource availability and allocation criteria.
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Third, MDBs should deploy common analytic tools to assess fragility. All MDBs have strengthened their analytical tools to cope with fragility. They all produce their own political economy and risk assessments and have reinforced their strategy, programming, and portfolio review tools with fragility sensitive components. These assessments show collaboration among MDBs, the IMF and other multilateral and bilateral organizations; nonetheless, the extent of this collaboration is not systematic and varies across countries.
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Fourth, MDBs should work together to support a common country strategy for each FCS. Each MDB formulates its own country assistance strategy and resource program, taking into account the activities of other multilateral and bilateral organizations. Mutual information and consultation exist; however, this coordination level is below joint decision-making. Output and outcome targets, when established, are identified distinctly. Each institution conducts its evaluation work independently. Country platforms have been mentioned as a promising structure to coordinate national and international actors under local ownership in fragile countries but there is still scant evidence of their use and effectiveness
In summary, the coordination efforts of MDBs in FCS have shown progress; however, they remain insufficient relative to needs and expectations and appear to be heavily dependent on the circumstances of each country. MDBs still function as a loosely coupled system in FCS, with lessons learned highlighting the necessity for tighter coordination. Recent efforts by MDBs aimed at enhancing coordination have unfortunately sidelined FCS. The Viewpoint Note adopted in April by ten MDBs addresses various topics relevant to FCS, such as country platforms and the harmonization of rules regarding concessional resources; however, it lacks a dedicated section and commitments specially focused on FCS. The emphasis is on priorities like climate change mitigation and private sector resource mobilization, which appear to be relatively more relevant to middle-income countries, that, unlike FCS, may benefit from a healthy degree of competition among MDBs.
For a more in-depth discussion of these issues, read the new CGD policy paper.
Disclaimer
CGD blog posts reflect the views of the authors, drawing on prior research and experience in their areas of expertise. CGD is a nonpartisan, independent organization and does not take institutional positions.
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