Drawing from research into the delivery of five bank-financed projects covering infrastructure and other sectors, this study highlights a range of insights and opportunities to enhance how the World Bank and the Asian Development Bank (ADB) approach project financing in fragile and conflict-affected situations.
The study documents how conflict-sensitive approaches are and are not used by the banks to minimise risks and support local peace and development outcomes, as well as some of the consequences for bank investments and project-affected communities. The study argues that bank strategic commitments create the space for conflict-sensitivity to a degree; and that pockets of technical expertise for conflict-sensitive project financing exist within the banks, but that these capacities are insufficient as the banks prepare to scale up lending in fragile and conflict-affected situations. Specifically, the paper argues that improved capacity for conflict-sensitivity is constrained by political dynamics. In effect, a conflict-sensitive approach to project financing is not automatically adopted in fragile and conflict-affected situations. In instances where conflict-sensitivity is adopted, it can be restricted to project design and may not be applied throughout project cycles.