Why Harmonized Indicators are Important
The broad range of structures, mandates and shareholders of IFIs working with the private sector means that there are many different systems used to track development results. The shared clients of these IFIs therefore often have an unintended burden placed on them because they are required to collect data on key issues based on a variety of indicators (with different definitions) to satisfy the different requirements of IFIs.
Some IFIs have been working to reduce and simplify, by harmonizing definitions, the number of indicators private sector clients are asked to report on.
The effort began in 2008 and progress accelerated 4 years later when over 20 IFIs agreed to a proposal to benchmark indicators for private sector investment operations and to seek examples of best practice. Over 400 indicators—which are used by the IFIs involved in the effort–were reviewed.
The MoU signed in October 2013 sets out the harmonization of a set of 27 indicators among 25 IFIs. It paves the way to reduce the reporting burden imposed on shared clients by standardizing the information requested; and facilitating the learning process among DFIs.
The MoU mandates that (I) if an IFI tracks development results, it will use the harmonized definitions and units of measurement; and (ii) if it has a results tracking system in place that already features indicators that are the same as the harmonized ones, it will replace them accordingly. There will be no obligation, however, to start tracking and using the harmonized indicators if an IFI does not wish to track the development outcomes they capture.
A high-level forum for senior executives from both multilateral and bilateral development institutions was formed in 2008 to foster collaboration among IFIs in a number of areas to better serve clients and enhance development impact. A focus area is improving how development results are tracked and measured.