Before one can realistically challenge and change these institutions, it is important to understand the complex process by which their policies and programs are derived. The result is that programs often represent a less than optimal compromise. A major deficiency in the decision process is the lack of direct input into policy and programs by the people most impacted in the project areas. This is particularly true in poverty-alleviation programs. There is an effort to include the voices of multiple stakeholders, particularly those in the impacted areas, but this activity is normally minimal when projects are being developed.
Poor governance is another reason for high failure rates.
Studies by the World Bank in Africa have shown, not surprisingly, that only when the government is committed to reform do development programs lead to economic growth and poverty alleviation. Therefore, there is a need for development banks to more carefully evaluate the commitment of borrowing governments and to discriminate among nations when lending. Such discrimination is virtually impossible, given the structure of development banks. The development banks have also been faced with a decade of rapid change, particularly in the global economy. Private capital flows now dwarf loans from these lending institutions.