When Evaluation Governs Development Finance
Development finance has built a vocabulary for mobilising capital. It has not yet built one for the institutions that increasingly govern the conditions under which that capital moves.
Official development assistance from advanced economies contracted by twenty-three per cent in a single year, falling as a share of donor income to levels last seen in the mid-2010s (Bisca, 2026). The causes are various: fiscal pressure from higher debt service, competing claims from defence and social spending, a broader retreat from multilateral commitment. Whatever the mix, the direction is unmistakable. Multilateral development banks are repositioning their portfolios around job creation and private capital mobilisation, treating aid not as the primary instrument of development finance but as one input among several designed to attract commercial money at scale. The shift reshapes who finances development and, less visibly, who governs it.
Governments do not simply liberalise their economies and watch investment arrive. Capital moves toward jurisdictions that institutions have already judged creditworthy, stable, and governed with sufficient predictability to justify the risk. Even in the poorest and most fragile states, where only eleven per cent of globally mobilised private development finance currently lands, the binding constraint is the absence of legible judgement about the opportunity rather than the absence of the opportunity itself (Bisca, 2026). Fragility functions, in part, as an information problem, and capital withdraws less from environments it has assessed and found wanting than from environments it cannot read at all.
This dependence on judgement is structural rather than incidental to how private capital operates. As official aid recedes, development finance increasingly relies upon institutions whose principal function is evaluation, and whose judgements go a long way to determining allocation nonetheless. The concept does not imply that evaluation is new to development finance; institutions have assessed sovereign risk for as long as sovereigns have borrowed. What has changed is evaluation’s governing significance, which has expanded in direct proportion to development finance’s dependence on private capital rather than official transfers. Call this, provisionally, evaluative governance: a mode of ordering development finance in which the capacity to be recognised as creditworthy, well governed, or investable becomes as consequential as the capital itself. The term is offered here as a way of noticing something the current vocabulary of development finance tends to obscure, and not as a finished theory.
Sovereign credit ratings are the clearest instance. A sovereign credit rating condenses years of fiscal, economic, and political information into a single forward-looking judgement about a government’s ability and willingness to repay its debt (Afonso, Gomes and Rother, 2007). Ability is comparatively tractable, built from reserves, revenue ratios, debt service records. Willingness cannot be observed directly, so credit rating agencies approximate it through governance indicators, treating institutional quality as a proxy for a disposition no balance sheet reveals (Ozturk, 2016). The ratings that result become authoritative judgements upon which international capital markets subsequently organise their decisions.
That authority sits on thinner ground than the confidence placed in it suggests. A closed-door roundtable convened by the United Nations Development Programme with the three major global credit rating agencies concluded that poor governance explains roughly a quarter of sovereign defaults, yet the indicators used to anticipate it remain built on perception surveys, applied with undisclosed weightings, and prone to confusing income levels with willingness to pay (UNDP, 2025; Ozturk, 2016). Twenty African countries have never been rated at all, and the absence of institutional judgement functions, in practice, as a judgement of its own. Capital treats the unrated the way it treats the unstable.
Ratings are the most visible mechanism among several performing the same function. Multilateral development banks now describe an underused asset of their own: strategic intelligence, the accumulated capacity to interpret political and institutional forces that ordinary due diligence cannot reach, embedded across fragility assessments, country strategies, and staff judgement on the ground (Bisca, 2026). Private standard-setting bodies exert a parallel influence, since indices used to allocate passive capital can steer money toward or away from entire countries through inclusion or exclusion, without any government casting a vote on the matter (Tan, 2022). Indicators of this kind have never functioned as neutral description; they act, in Davis, Kingsbury and Merry’s account, as an assertion of the power to produce knowledge, reorganising how decisions get made and by whom (Davis, Kingsbury and Merry, 2010). Sovereign ratings, governance indicators, multilateral diagnostics, and private index construction are separate institutions performing the same underlying institutional function: converting uncertainty about a country into a judgement that capital can act upon.
Evaluation has always existed within development finance, but its position within the system has changed. As official aid recedes and private capital assumes greater importance, evaluative institutions move from supporting investment decisions to structuring the conditions under which those decisions become possible. They no longer sit at the edge of the system, quietly informing choices made elsewhere, but at its centre, determining not merely how a project is priced but whether an entire country is legible to capital in the first place. That authority has expanded with remarkably little scrutiny of how it is exercised, who holds it, or what recourse exists when it is exercised badly.
Development finance has spent the past decade refining how to mobilise more private capital. The more consequential question, still largely unasked, is who governs the judgements that determine where it goes.
References
Afonso, A., Gomes, P. and Rother, P. (2007) ‘What “Hides” Behind Sovereign Debt Ratings?’, ECB Working Paper No. 711.
Bisca, P.M. (2026) ‘Capital with a Compass: How to Unlock Investments in the Hardest Places’, Brookings, 17 July.
Davis, K.E., Kingsbury, B. and Merry, S.E. (2010) ‘Indicators as a Technology of Global Governance’, Straus Institute Working Paper 11/10.
Ozturk, H. (2016) ‘Reliance of Sovereign Credit Ratings on Governance Indicators’, European Journal of Development Research, 28, pp. 184–208.
Tan, C. (2022) ‘Private Investments, Public Goods: Regulating Markets for Sustainable Development’, European Business Organization Law Review, 23, pp. 241–264.
UNDP (2025) ‘Governance and Sovereign Credit Ratings: Best Practices for African Countries’, 11 November.
World Bank Independent Evaluation Group (2026) ‘The World Bank Group’s Approach to the Mobilization of Private Capital for Development’.