“We Need to Focus on Development Impacts at Least as Much as Financial Risks”

OPEC Fund Quarterly: Why should “we” focus on improving development effectiveness? 

Ulrike Haarsager: The ultimate goal of any development institution is to deliver impact – our strategic objective calls on us to maximize it. Everything that the OPEC Fund does, including its mandates to strengthen financial sustainability, enhance operations and deliver growth, has to be viewed through that lens. Development effectiveness is there to refocus the conversation toward that lens and help provide the information and data needed to make that conversation meaningful. 

OFQ: To justify what we’re doing?

UH: To tell a convincing story about what we are doing, and why, but also to be able to adjust if something is not working or having the desired effect. Or to tweak an approach to focus on certain areas over others because of impact – which, as a development institution, is our most important return on investment. Development effectiveness helps to sharpen those considerations by creating a more robust information-base for decisions. That is the learning part, which to me is even more important than the accountability aspect. 

OFQ: What do you mean by the accountability aspect of development effectiveness? 

UH: We’re accountable to our member countries, but also to external stakeholders and the general public. We’re based on the capital that our member countries contributed and we’re funded by investors through the SDG bond, so we’re accountable to them. They give us money to generate development results, and if we do not deliver they will direct their money elsewhere. 

OFQ: Where are we now in terms of progress? 

UH: With the OPEC Fund Results Framework, we have created a framework to start gathering more consistently the information that we need. The OPEC Fund has done a lot of amazing development work for decades. However, a review that we did for our first Development Effectiveness Report shows that about a third of our completed projects lack the required data to confirm that the results have actually been delivered. That has nothing to do with the success or failure of the project; it is about standards and quality of information covering our operations. We have to improve that. 

OFQ: That’s a common story. It’s clear that many countries don’t have the capacity or even the will to accurately track their progress.

UH: It’s usually not a question of will – it’s often a question of resources. Traditionally, collecting data has often been very resource intensive. You need the institutions, the personnel, the systems, the financial resources to track all this data and update it constantly. That’s a huge effort. 

Understandably, many poor countries have more pressing development needs than investing in data collection. The problem with not doing it, though, is then that they have less information to present their case – and show progress – when they need to attract funding to their pressing development needs. 

Getting relevant data amid still-existing constraints requires working with clients, be they private sector clients or governments, to see what data they can collect to show whether our project has had the intended results. Thankfully, improved data collection is an area that is supported by many international finance institutions. The good thing is that with newer technologies, data collection can be less resource intensive and more straightforward, even in the developing world. 

Collecting data on what our projects have actually delivered in terms of assets and actions is just the first step. 

We then need to go a step further and see who has this actually benefited? How has this improved their lives? That’s harder to measure, so often it’s still not available in our projects. This is really what interests us though, because if the asset is funded and then not used it is worse than not building the asset in the first place – because you’ve invested all that money that could have gone to another cause. 

OFQ: How do some projects go off track? 

UH: There are many different ways. For assets to deliver their development benefits, there sometimes have to be accompanying investments or actions. For example, you build a power plant but then the government is in charge of building a transmission line and does not do it for lack of funding, rights-of-way issues or other reasons. Or you over-plan your needed capacity, you don’t use your asset for years and by the time you get around to using it, it needs renovations or upgrading. Or you build a road which is then not used by the populations we would like to benefit because tolls are not affordable. Development effectiveness is not just about building things, but about those things having the desired – and sustainable – effect. 

OFQ: We’re halfway to the 2030 SDG deadline. How quickly will we see the results of the work being put in now? 

UH: We’re now laying the groundwork, which we expect to pay off over the medium and long term as far as getting better results data and insights for the feedback loop of learning and accountability. 

But already in the short term, I see different discussions happening at the loan and credit committees and with the project teams. Putting this on the map results in people thinking differently about what type of projects we’re looking for and what questions to ask. And that’s ultimately the goal in maximizing development impact. 

OFQ: So, it’s nudging or even shifting the institutional mindset, which is an incredibly powerful thing. 

UH: Yes, that’s one reason why we’re prioritizing these aspects. In the same way that we talk about financial risks it’s also important to talk about development impacts. You just need someone to put these things on the table and provide the information for a serious discussion based on sound reasoning. All that shifts the conversation to where it should be – must be – for a development institution. 

Profile: Ulrike Haarsager 

Ulrike Haarsager heads the Development Effectiveness Function at the OPEC Fund, and is in charge of enhancing impact by measuring, monitoring and evaluating business activities with the help of the best practice Results Framework introduced in 2022. Before joining the OPEC Fund, she worked most recently at the Inter-American Development Bank in Washington, DC.