Evaluation of FMO’s Capacity Development Fund ‘B-CD’

Background
The Ministry of Foreign Affairs (MFA) of the Netherlands commissioned SEO Amsterdam Economics to carry out the evaluation of the B-CD Capacity Development Fund, which was managed by the Dutch Development Bank (FMO) during 2015-2020. In July 2015, the MFA provided FMO with a grant for Capacity Development (CD) aimed at supporting ‘Green’ and ‘Gender’ CD projects. In addition to a general portfolio review of the B-CD fund, SEO conducted an in-depth assessment of 10 representative case study CD projects in order to assess the efficiency, additionality, and effectiveness of the B-CD fund. This evaluation was conducted simultaneously with SEO’s evaluation of the FMO-MASSIF fund.

Results

• General portfolio review:
  • The B-CD grant was used successfully for identifying and financing Green and Gender CD projects.
  • The B-CD grant was underutilised: about 80 percent of the grant had been committed after the grant period ended.
  • The B-CD portfolio remained within the portfolio limits regarding geographic targets.
• Efficiency:
  • The procurement rules for B-CD projects were (initially) not always clear and therefore not consistently applied. As a result, the selection of consultants for B-CD projects was not always transparent.
  • Nevertheless, the cost of international consultants recruited for B-CD projects appeared reasonable and in line with international market rates, even when a competitive tender did not take place.
• Additionality of MFA’s B-CD grant for FMO:
  • The financial additionality of the B-CD fund appeared somewhat low relative to other available CD funding from FMO.
  • However, the B-CD fund had high non-financial additionality for FMO itself, in that it encouraged FMO to pursue more Gender and Green projects.
  • There are indications that B-CD had ‘catalytic effects’ on both FMO and its clients.
• Additionality of B-CD projects for FMO clients:
  • Financial additionality relative to clients’ own funding was mixed.
  • Financial additionality compared to other DFIs was moderate.
  • The non-financial additionality of B-CD-projects was moderate to high, and was highest when FMO itself selected the consultant or was able to influence the specific consultant deliverables or design of the project.
• Effectiveness:
  • The B-CD grant was an effective MFA instrument in that it encouraged FMO to focus more (or earlier) on ‘gender’ and ‘green’ projects than FMO otherwise likely would have done.
  • Most deliverables of B-CD projects were met, but these usually referred to ‘outputs’ (e.g. training provided, reports delivered) or short-term outcomes (e.g., implementation of new systems).
  • FMO did not systematically monitor or report on the longer-term outcomes of CD projects, which SEO identified as an area for further improvement (with concrete recommendations).

Methods
SEO used a range of qualitative and quantitative methods for this evaluation. Using multiple methods and triangulating multiple information sources helped to minimise bias. Furthermore, careful and transparent sample selection procedures helped to ensure that the conclusions depended as little as possible on a particular selection of case studies or interviewees.

The most important methods and sources included:

• Review of programme and project documents, and other relevant literature.
• Statistical analysis of B-CD portfolio data.
• Semi-structured interviews with relevant FMO staff about the procurement, management and monitoring of CD projects.
• Case studies for 10 representative B-CD projects, involving desk research, data analysis and semi-structured interviews with a variety of stakeholders.