ga_th1_pb2_prinsloo_20170901-2482509aef5e3fa9.pdf

This policy briefing by Cyril Prinsloo of the South African Institute of International Affairs examines the challenges and opportunities associated with Multilateral Development Banks (MDBs) increasing their Use of Country Systems (UCS)—specifically domestic public financial management (PFM) and environmental and social frameworks (ESFs)—in infrastructure financing for developing countries.

• Greater Use of Country Systems (UCS) allows developing countries to have a larger stake in their development trajectory and enhances their capacity to manage the process through strengthened institutions, legislation, and regulations. It respects national sovereignty by removing external conditionalities and increases project sustainability by involving domestic actors.
• MDBs face significant financial, reputational, and development risks when adopting UCS, as domestic systems may be more susceptible to abuse or mismanagement than MDB safeguards. Consequently, MDBs often impose additional safeguards that are criticized as being inflexible, excessively stringent, and following a 'one-size-fits-all' approach that increases project costs and bureaucracy.
• Procurement is a highly contentious area of UCS. MDB guidelines often mandate international competitive bidding to ensure companies from non-borrowing member countries (typically developed nations with high voting power) benefit from contracts. This frequently conflicts with the development policies of borrowing governments, which may wish to use procurement to promote local industrialization or support marginalized groups, such as women or small and medium-sized enterprises.
• The level of commitment to UCS varies by country: South Africa considers it non-negotiable; Morocco is pragmatic, using MDB systems for specific functions where its own are weak; and Kenya utilizes a 'hybrid' system, acknowledging that its domestic processes may not meet international best practices.
• To improve UCS, MDBs should transition to tailored country-specific approaches and maintain physical country offices staffed by local experts who understand the domestic environment. Risk mitigation can be achieved through technology (e.g., e-services in procurement), innovative mechanisms like the World Bank's Programme for Results (PfR), and a simplified 'yes/no' approach to financing based on domestic systems.
• Capacity building is essential for UCS and should be holistic, strengthening entire systems rather than just individuals. This should include the capacity of MDBs, governments, and civil society (including media and academia) to ensure accountability. The author suggests MDBs could fund these activities by levying a special fee on loans.

APA

South African Institute of International Affairs (n.d.). ga_th1_pb2_prinsloo_20170901-2482509aef5e3fa9.pdf. https://saiia.org.za/wp-content/uploads/2017/09/GA_Th1_PB2_prinsloo_20170901.pdf

Chicago

South African Institute of International Affairs. ga_th1_pb2_prinsloo_20170901-2482509aef5e3fa9.pdf. n.d. https://saiia.org.za/wp-content/uploads/2017/09/GA_Th1_PB2_prinsloo_20170901.pdf.

Wikipedia

{{cite report |author=South African Institute of International Affairs |title=ga_th1_pb2_prinsloo_20170901-2482509aef5e3fa9.pdf |url=https://saiia.org.za/wp-content/uploads/2017/09/GA_Th1_PB2_prinsloo_20170901.pdf |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{southafricaninstituteofinternationalaffairsndgath1pb2prinsloo201709012482509aef5e3fa9pdf, author = {{South African Institute of International Affairs}}, title = {{ga\_th1\_pb2\_prinsloo\_20170901-2482509aef5e3fa9.pdf}}, institution = {South African Institute of International Affairs}, url = {https://saiia.org.za/wp-content/uploads/2017/09/GA_Th1_PB2_prinsloo_20170901.pdf}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }