to clients to lower the cost o these interventions and developthe local consulting market. The study also recommendedthat the projects provide direct assistance to ewer clients, butpursue more intensive promotion o success stories to mini-mize costs and deepen impact. To date, dierent approachesto delivery have been used in dierent regions. In EECA, IFChas hired and trained local sta to deliver corporate gover-nance AS directly to clients. In SE, the projects have takenmore o a acilitator’s approach by attempting to provide ASthrough local consultancies.It is important to note that the appropriate deploymento dierent approaches will depend upon the stage o devel-opment o corporate governance policies and practices in themarket in question. Only airly mature equity and debt mar-kets spur real demand or commercial CG services. This isnot to say that improving corporate governance is not key in these early stages, just that it takes a back seat to acquir-ing more basic business skills and may well be poorly under-stood as a actor o longer term business success and marketdevelopment. I IFC were to only support local commercialconsulting providers, it would be necessary to delay any in-terventions until airly late in the spectrum o market devel-opment, even to the point where it would not be clear whatIFC’s value-added would entail.In mature markets, such as Latin America, where localconsultancies exist, a market acilitator role might be easible,but would not make sense as the market clearly grasps thevalue o improving corporate governance. In EECA, whereno one knew what corporate governance was, let alone wasable to provide consultations on even basic business topics, amarket acilitator approach would likely be met with ailure.Although a market acilitator approach has been selectedin SE, the market there is still developing – local businessconsultancies exist, but with no expertise or delivery capac-ity in corporate governance. As a result, project managementhas been unable to nd local consultants able to deliver CGservices and has been orced to turn to expensive oreign con-sultancies which, in turn, requires the project to subsidizea substantial percentage o the costs o assessments, not tomention any ollow-on assistance to the project’s clients. Inturning to oreign consultants, IFC has escalated its cost perclient (ranging rom $45,000-90,000) and eectively elimi-nated the possibility o leaving behind trained corporate gov-ernance expertise upon project completion.
“All welcomed the proessionalism o the IFC advisory services and seminars. Tus, the strength o the IFC brand is perceived as being a very important actor in participating in the [AS] and IFC’s stamp o approval was perceived as a key means o attract-ing investors.”
Further supporting the case or direct intervention is that thestudy recognizes the quality o assistance delivered by dedi-cated IFC corporate governance sta as a key strength o theprojects. Local IFC sta, experts in local laws and traditionsas well as international best practice, are ideally suited to per-suade and guide companies wanting to pursue improved gov-ernance as a path to economic development and investmentattractiveness. A key benet is that working with local sta,providing them with targeted training and access to knowl-edge, adds to the sustainability o the AS eort, as many proj-ect sta go on to become true corporate governance expertsand leaders o change or their market. In PEP MENA, IFC istraining the sta o the Egyptian Institute o Directors. Thisapproach o training sta members o new and existing insti-tutions and even consultancies may be a good way orward,allowing experts to join the project or a period o time andgain in-depth expertise, and then returning to their previouspost at the end o the AS project.In assessing the motives o Russian banks or working with IFC AS, an important consideration was the chanceto improve their image by association with the IFC brand– something one would not see when using the market a-cilitator approach. The report also indicates that banks them-selves cited the valuable practical advice (as IFC has practicalexperience as compared to advisory rms who have pickedup on the corporate governance trend) provided by the in-house proessionals as the rst key reason or working withthe project. A acilitator approach would, as the study notes,only be appropriate in more developed markets where thereis reasonable market demand and sucient local consultingcapacity available. While there are cost savings rom adopt-ing this approach , there is a risk o possibly limiting IFC’sinstitutional capacity and its ability to work across regions. Incontrast, the direct stang approach allows or better quality and a more comprehensive approach to AS delivery as thesame proessional sta advising clients can use their skills andlessons learned rom the private sector to advise governmentson policy reorm, develop case studies and curricula or edu-cational institutions and provide success stories to the mediato increase public awareness. In the longer term, this may prove to be more cost-eective. Again, more developed mar-kets will call or a mixed approach, with the most developedmarkets being ertile ground or an outsourcing approach.
PROGRAMS WOULD BENEFIT FROM GAINING GREATERGOVERNMENT SUPPORT AND ACCEPTANCE
“It is more eective to ocus on the advocacy or change in legisla-tion and institutional strengthening rather than on direct sup- port to Government and the legislature.”
IFC has experienced both success and ailure in directly drat-ing legislation and has learned a great deal about advocatingor change at the legislative and regulatory level. The success-ul development o corporate governance codes is a case inpoint. Where IFC has ocused on a broad-based consulta-tive process towards the development o a country code, bothgovernment and business have readily accepted the code. InMENA IFC has taken just such an approach and in a 2 yearperiod has helped to launch our national CG codes and is working in eight other countries in the region to develop sim-ilar CG codes or guidelines or the domestic market. Where
MONITOR: Measuring development results in IFC Issue No.12, March 2007