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Selecting projects for their expected impacts
Selecting projects for their impacts
As a development finance institution and for the purpose of accountability, Proparco evaluates and reports on the impact of its action through a process to measure the results and impacts of its financing. This process is part of the project cycle and aims to inform the financing decision by characterizing the expected impacts of financing, in particular with regard to Proparco’s three main strategic objectives: scale up its direct impacts on supporting jobs and improving access to essential goods and services, strengthen the mobilization of private finance towards sustainable development investments (SDIs) and accelerate Proparco’s contribution to the emergence of the tomorrow’s actors and sectors.
Impact measurement in the project cycle, from identification to ex post evaluation
1 2 3 4 5
Identification
Pre-identification of impacts
Appraisal
Analysis of the contribution to the impact objectives and sustainable development
Decision Monitoring Evaluation
Presentation of the results of the analysis to the Project Committee and Investment Advisory Committee
Annual reporting on the main results indicators
Ex post study on the results and impacts of projects
2020: Further strengthening of the results achieved by projects
To measure the real impact of funded projects, identify the most effective ways to support the impact objectives and address the increasingly important issues of accountability, Proparco also collects key indicators at the impact measurement monitoring stage and carries out ex post project evaluations. In 2020, Proparco continued to strengthen the monitoring of its projects (see chapter “Monitoring of our operations”) and, as part of the updating of AFD Group’s evaluation policy, conducted a review of the evaluations carried out from 2014 to 2019. The objective was to inform the work on recommendations for the Group’s future evaluation policy.
A constantly improving impact measuring tool
In 2020, to improve prospective knowledge of the impacts by sector and type of operation, the Impact Measurement unit (IMP) developed sector impact frameworks, working closely with the operational divisions. These frameworks are designed for investment officers and offices and aim to support operational staff during projects’ identification and appraisal. The objective is to help them gain a more rapid and relevant understanding of the potential impact of projects. These frameworks were developed in 2020 for the textile, cement and other building materials, off-grid electricity and fertilizer sectors. Other sectors will follow in 2021.
In addition, to obtain an initial estimate of the potential impacts in terms of the jobs supported and greenhouse gas emissions avoided by a project prior to the identification phase, the IMP Unit has developed a tool based on data from the Joint Impact Model (JIM – see focus opposite), which is itself based on data from the GTAP (Global Trade Analysis Project) and UNIDO (United Nations Industrial Development Organization). Using information about the project, the tool produces an initial estimate of the expected impacts. For the time being, it is deployed by the agribusiness, financial institutions, telecommunications and textiles sectors.
The expected impacts of each project are assessed through the collection of quantitative and qualitative indicators reported from project studies and discussions with the clients. The indicators, gathered in a database, produce an aggregated score which in theory allows the impacts of projects to be compared with each other. The ex ante analysis of impacts, carried out by the Impact Measurement unit in conjunction with the project team, is presented from the broader perspective of project’s contribution to the SDGs.
In addition to estimating expected impacts on these indicators, an analysis is systematically carried out to identify potential inconsistencies between Proparco’s financing and direct investments (excluding intermediation) and the Paris Agreement. The objective is to ensure that climate and sustainability issues are better accounted for in projects supported.
Our key impact indicators
Number of jobs created and/or maintained Number of tons of CO2 eq avoided
Theoretical number of people who will have new or improved access to an essential good or service Gender equality Amounts mobilized from the private sector for SDIs
Standards Our good practices in impact management recognized
As a signatory since 2019 of the Operating Principles for Impact Management, a set of 9 operational principles for impact management, whose formulation was overseen by the International Finance Corporation (IFC), Proparco published its first Disclosure Statement in June 2020 and its second one in June 2021. This note aims to report on the alignment of its processes and procedures with each principle. Independent verifications of the alignement have been conducted by EY.
Enhanced coordination of impact measurement
In 2020 again, Proparco was very active alongside the EDFIs and other key partners in contributing to projects to harmonize approaches to promote the effects of projects on employment, the climate and reducing gender equalities, in particular in relation to the initiatives conducted by the GIIN (Global Impact Investing Network) and HIPSO (Harmonized Indicators for Private Sector Operations). Proparco has also contributed to the development of the Joint Impact Model.
Tool Launch of the Joint Impact Model (JIM)
Following a year of close cooperation with AfDB, BIO, CDC, FinDev Canada, FMO and Steward Redqueen to develop a tool to model the effects of projects in terms of indirect jobs and added value, JIM was launched in November 2020. It takes into account the trickle down effects on economies. The model has been adopted by the six founding institutions, approved by IFC, and is in the test phase at 25 institutions.
