Why development effectiveness matters

Abdulhamid Alkhalifa has been Director-General of the OPEC Fund since November 2018 and was recently reappointed for a second term. He previously served at the World Bank and held senior positions in his native Saudi Arabia. 

OPEC Fund Quarterly: The development effectiveness tool was introduced under your leadership of the OPEC Fund. Why is it more important than ever? 

Abdulhamid Alkhalifa: We have ambitious goals as a development finance institution: We want to expand our activities and step up our delivery of development support. The global environment is volatile, and the challenges are huge. While demand is high, financial means are scarce. In this situation, it is of paramount importance to deploy our funds in the most cost-effective and efficient way. Looking at all our investments through a development effectiveness lens allows us to take informed decisions on how to use our resources to maximize development impact. Tracking development results enables us to be accountable to our stakeholders and to learn from our activities. This is crucial to safeguard the responsible use of the money our shareholders and bond investors have trusted us with, maximize the impact of our projects and share relevant information with co-investors and other stakeholders for strengthening existing and building new relationships on the basis of mutual trust. 

OFQ: Is this the first time the OPEC Fund has looked at its development effectiveness? 

AA: Since inception, our work has always aimed to improve the livelihoods of our beneficiaries. Our institution has been around for nearly half a century. In that time, the world has, in a way, gotten smaller while the problems it faces have gotten bigger. Issues are no longer just regional, but global. But so too are opportunities for cooperation and collaboration. The OPEC Fund sees itself as part of the global coalition to deliver the United Nations 2030 Agenda for Sustainability. As part of our more recent efforts, we took the Sustainable Development Goals (SDGs) as our starting point and lens to view how we had been working for so many decades. 

OFQ: What are the foundations of the refined approach to development effectiveness? 

AA: Our anchor is the OPEC Fund Results Framework (OFRF), based on the guidance set out in the Strategic Framework 2030 and approved by our member countries in September 2022. This results framework tracks key corporate performance, strategic alignment and results indicators across four levels (global/regional development progress, operations’ results, operational effectiveness, organizational efficiency). An accompanying project-level toolkit ensures that our operations are prepared in a way that ensures the consistent assessment, monitoring and evaluation of their development effectiveness. 

OFQ: What are the main benefits of the program? 

AA: Think about that old business question, “How do you measure success?” For the OPEC Fund, success is having an even more comprehensive picture of our reach and benefits of our projects. The improved development results tracking and monitoring practices introduced under OFRF are not only expected to gradually increase the share of projects for which results data is available, but will also put particular emphasis on measuring project deliverables, as well as the extent and benefits of their use. By seeing firsthand what works today, we can refine our focus for the best results tomorrow. 

OFQ: Is the framework already being implemented? 

AA: Yes, but we are phasing it in gradually in case we still need to make final adjustments and fine-tuning. We have fully rolled out the OFRF’s project-level toolkit and are currently in a two-year trial period of the OFRF’s aggregate indicators, the launch of which we expect in 2025. 

OFQ: To what extent is the framework a consequence of the OPEC Fund’s successful market debut at the beginning of the year? 

AA: I would not go as far as saying the development effectiveness framework is a result of our bond framework. Going to the markets is embedded in our Strategic Framework 2030 and serves the goal of making the OPEC Fund an even more helpful and financially-sustainable multilateral development bank that is relevant to the needs of partner countries. Since the launch of the Strategic Framework in 2019 we have introduced far-reaching and intertwining reforms at all levels. The development effectiveness framework is one of the main pillars of this new structure we are introducing by providing full accountability to our shareholders, the market and the beneficiaries of our projects. 

OFQ: The most public-facing aspect of this undertaking seems to be the inaugural Development Effectiveness Report, which was published in June 2023. 

AA: That’s right. It is a flagship report, of which we are very proud. It takes stock of progress made and knowledge generated on the development effectiveness of the OPEC Fund’s activities to date. At the same time, it establishes a firm foundation to build upon. 

OFQ: What was one of the key findings? 

AA: The review found that all approved projects contribute to at least one SDG, with a majority contributing to two or more. Our top two SDGs were aligned to SDG 8 – Decent Work and Economic Growth and SDG 9 – Industry, Innovation and Infrastructure. This is in line with the OPEC Fund’s strong support for economic growth and development through infrastructure (including transport, energy, water & sanitation), as well as through the financial sector, rural development and multisector projects. 

OFQ: The report also looks closely at the concrete results our projects delivered to improve people’s lives in our development partner countries. 

AA: That’s right and although we look at only a comparatively narrow period from 2018-2022 the results are impressive. For instance, in that time OPEC Fund-supported projects helped provide 240,409 households with new or improved water connections, 2.86 million households with new or improved access to electricity and supported 1.76 million farmers, among many other notable metrics.  

OFQ: Does the report also provide a breakdown by sector? 

AA: Yes, it does. Most of the impact in the agriculture, health, transport, education and water & sanitation sectors was delivered via sovereign operations. Meanwhile, non-sovereign operations projects contributed heavily to the achievement of results in the energy sector and in support to micro, small and medium-sized enterprises. Reflecting the regional and sectoral distribution of the evaluated projects, Africa accounted for most of the results measuring improved access to water & sanitation, healthcare and energy. Meanwhile, the majority of our support for micro and small enterprises took place in Asia, followed by Latin America and the Caribbean. 

OFQ: What are the next steps in the development effectiveness approach? 

AA: We will continue to strengthen our efforts by enhancing project evaluation, while also refining the database and systems capabilities for tracking results and alignment. We expect to reflect the results of our gradual enhancements in each year’s Development Effectiveness Report. 

OFQ: What does this mean for the OPEC Fund more generally? 

AA: Strengthened development effectiveness will provide a strong foundation for the OPEC Fund to grow the scale, scope and impact of its operations by informing the way the institution deepens its development footprint, and by establishing a culture of accountability and continuous learning. By showing how efficiently we spend the money we are entrusted with we attract new partnerships, while demonstrating to our shareholders and development partners that we are creating value with tangible impact on people’s lives. 

OPEC Fund project results 2018-2022 

Reviewing the period 2018-2022, the first OPEC Fund Development Effectiveness Report finds significant development impacts. Key results include:

• 3.77 gigawatts in new or refurbished energy capacity (of which 334 megawatts renewable)
• 2.86 million households with new or improved access to electricity
• 1.76 million farmers supported, including 400,000 female smallholders
• 342,096 MSMEs financed • 240,409 households with new or improved water connections
• 15,723 kilometers of transmission lines built or rehabilitated
• 10,853 kilometers of roads built or rehabilitated
• 167 educational facilities built or upgraded
• 117 healthcare facilities upgraded