Asian Development Fund Operations: A Decade of Supporting Poverty Reduction

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Learning Lessons

nancing more useul. But the

challenges are growing, and there are

also vast gaps in perormance between

countries and sectors. Hence IED sees

the need or more ADF nancing in

tandem with the need to take stronger

action to improve development

eectiveness.

Highlights of Lessons

More nancingrom concessional

unds and or other nancing sourcesis

needed in Asia or poverty reduction and

environmental sustainability. Although

the past decade was marked by strong

economic growth and a reduction in

income poverty in Asia and the Pacic,

the absolute numbers o poor have

come down insufciently given a highpopulation growth. In some countries,

the numbers o extreme and vulnerable

poor have even been increasing. More

than 300 million people in ADF countries

still live on less than $2 a day. Moreover,

there has been insufcient progress

in human development and on the

non-income MDG targets. Additionally,

growing inequities and environmental

degradation present severe challenges

to the sustainability o progress. ADF

countries and others are acing the

growing impact o the worldwide

nancial and economic stress, while

climate change and related natural

disasters threaten lives, livelihoods, and

well-being. These challenges require

both substantially more nancial

resources and their more eectiveutilization.

Development eectiveness o ADF

operations needs to improve. Funding

must be matched by stronger eorts

and perormance outcomes, especially

in view o the tough challenges the ADF

countries ace. Evaluation o country and

sector assistance program evaluations

shows that physical inrastructure

investments (particularly in energy and

transport) were relatively eective in

achieving the envisaged development

outputs and outcomes, but not so the

support related to capacity development

and institutional or policy reorms.

Unless the utilization and maintenance

o assets or demand or services are

eectively addressed, inrastructure

investments will not generate or sustain

optimal economic benets. ADB needs

to make sure projects are supported

by the right reorms and capacity

development initiatives.

ADF projects were satisactory in

their relevance to country programs

but not so in their eectiveness and

sustainability and especially process

efciency (see gure ). ADB has takenmany efciency measures over the last

ew years and some improvements are

already visible in the ADF IX projects

completed by 2010. IED expects

efciency to rise urther, noting

that recently there have been ewer

project implementation delays. Project

success rates are based on the our

evaluation criteria relevance, efciency,

eectiveness, and sustainability,

but development eectiveness andoutcomes are more closely related

to the latter two. ADBs ocus now

needs to shit to more concern or

eectiveness and sustainability. Failure

to meet anticipated project outputs

and outcomes was oten due to lack o

stakeholder support and project designs

that did not adequately consider local

conditions and underlying development

problems. Project sustainability needs to

be improved through sustainability risk

Figure 1. Ratings of Completed ADF Operations by Category of ADF Eligible Countries, 20012010

Source: Independent Evaluation Department. 2011. The Asian Development Fund Operations: A Decade o Supporting Poverty Reduction in the

Asia and Pacifc Region. Manila: ADB

Blend countriesADF-only countries0

40

4080

20

60

60

% in graph reers to overall success rate o operations (% successul)

n Relevant

Percentage

ofoperationsrated

n Relevant n Sustainable n Ecient

80% 80%

66%54%

All ADF countriesBlend excluding

Pakistan

100


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assessments at the project, sector

and country levels, appropriate

actions to address identied risks, and

postcompletion monitoring. More

attention or impact evaluations within

ADB would also help, and there has

been a start on this. IEDs recent study

Managing or Development Results,with recommendations accepted by ADB

Management, gives urther pointers.

Lack o institutional capacity in ADF

countries is substantially aecting

project perormance. Past support

or capacity development has not

always achieved the envisaged

levels o institutional capability or

change. Capacity constraints are

particularly severe at subnational

levels. Country-level evaluations have

ound that ADB did not systematically

assess institutional capacity and

capacity constraints or use a capacity

development strategy to guide its

assistance. The majority o capacity

development eorts involved the

provision o one-o technical assistance

rather than holistic approaches

addressing the institutional context.

A more holistic approach is required,ocusing explicitly on inclusive growth.

Not only are the results o individual

projects and their sustainability

important; also vital are their

complementarities within and across

sectorsand with reorms in policies,

administration and governance. For

example, the potential socioeconomic

benets o new or improved rural roads

were not always realized in the absence

o eorts to enhance rural incomeopportunities and improvements in

education and health acilities and

environmental services. Inrastructure

investments should also help address

lagging MDGs. However, coordination o

sectoral eorts is preerable to complex

multi-sector projects with a large

number o non-core sector components.

IED conducted case studies o 50 ADF

VIIIX projects and concluded that they

did not necessarily have to be targeted

primarily to the poor. There was little

dierence between the share o

targeted and general interventions on

poverty impact.

The environment increasinglyconstitutes a crucial challenge or Asia

and the Pacic and new approaches

need to be tested ast. The share

o projects with environmental

sustainability objectives increased

rom 8% in ADF VIII to 34% in ADF X.

Work is ongoing in ADB on several

environmental initiatives related to

climate change, clean air in Asian cities,

energy eciency, sustainable transport,

and the nexus between environment

and poverty. Unortunately, as these

initiatives are airly new, it is too early to

ully assess their results. IED produced

two evaluation knowledge bries in

this area: a 2009 IED study on the

greenhouse gas implications o ADBs

energy operations and a 2010 study

on reducing carbon emissions rom

transport projects. Management agreed

to the recommendations, leading to

action plans.

ADF plays an important part in

ADBs ambitious agenda on regional

cooperation and integration (RCI). ADF

IX donors provided essential support

or this agenda by setting aside 5%

o ADF IX resources or RCI initiatives,

and ADF X donors increasing that to

10%. ADF operations addressing RCI

increased rom 7% in ADF VIII to 31% in

ADF X. IEDs 2008 evaluation o ADBsregional cooperation assistance program

in the Greater Mekong Subregion

rated it successul and recommended

that ADB could urther improve by

(i) emphasizing the additionality in

regional benets during the design

and implementation o subregional

projects; (ii) engaging in greater policy

dialogue; (iii) supporting policy and

procedural reorms to ease sotware

constraints to derive greater regional

benets rom investments in hardware,

and (iv) paying more attention to results

ormulation, monitoring o progress, and

cost eectiveness. IEDs recent validation

o the South Asia Regional Cooperation

Partnership Strategy (20062008)Completion Report conrmed ADBs

partly satisactory rating. It highlighted

that concessional resources should be

used to mobilize other unding sources.

ADF needs to continue its special

attention or ragile countries and

situations. IED evaluated ADBs

approach to ragile countries and

situations (FCAS) in 2010. The projects

in FCAS were rated borderline eective.

However, there were some successes

rom using sector wide approaches

and private sector partnerships. The

IED study concluded that the FCAS

approach enabled ADB to provide

timely assistance to FCAS countries.

ADB needs to devise a dierentiated

approach to engage in FCAS,

depending upon the nature o confict,

ragility, and varying conditions in the

countries.

Flexibility is crucial i the ADF is to be

able to play a role in mitigating the

eects o the global economic and

nancial crises. The crisis o 20082009

aected nearly two-thirds o Asias

developing countries, a majority o them

ADF countries. There is no mechanism

to support responses to economic crises

in ADF countries. ADB responded to the

20082009 crisis with an allocation out

o the ADF commitment authority o$400 million to help the most scally

stretched ADF-only countries. In

addition, ront-loading o up to 100% o

their allocation or 20092010 provided

urther relie. However, the countries

most aected received relatively less

additional resources, in part due to the

infexibility in ADFs perormance-based

allocation.


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Learning Lessons is a synthesis o key evaluative lessons drawn

rom the experience o ADB operations and non-ADB sources.

Lessons presented in this brie are not prescriptive, and users are

advised to careully review these lessons in the context o country,

sector, and thematic conditions.

Contact UsIndependent Evaluation Department

Asian Development Bank

6 ADB Avenue, Mandaluyong City

1550 Metro Manila, Philippines

Tel +63 2 632 4100

Fax +63 2 636 2161

www.adb.org/evaluation

[email protected]

Written by Henrike Feig, Ganesh Rauniyar under the guidance o Walter Kolkma,Director, and Vinod Thomas, Director General, Independent Evaluation.

Disclaimer

The views and assessments contained herein do not necessarily refect the

views o the Asian Development Bank (ADB) or its Board o Directors or the

governments they represent. ADB does not guarantee the accuracy o the

data and accepts no responsibility or any consequence o their use.

About the Independent Evaluation at Asian Development Bank

The Independent Evaluation Department evaluates the policies, strategies,

operations, and special concerns o the Asian Development Bank

relating to organizational and operational efectiveness. It contributes to

development efectiveness by providing eedback on perormance and

through evaluation lessons.

Conclusions

Although the ADF nanced only a small

share o developing member countries

investment expenditures, ADF has likely

contributed to economic growth by

helping them (i) improve connectivity

through transport investments; (ii)

increase the level and reliability o powersupplies; (iii) develop legal, regulatory,

and institutional rameworks or nance

and commerce; and (iv) increase

agricultural production. This track record

is an encouraging context or nancing

development eorts.

But the circumstances o ADF countries

also call or much stronger eort to

encourage inclusive and sustainable

development. Investments needto be better geared towards the

enhanced access o smaller enterprises

to investments; improved urban,

social, and environmental services;

increased rural connectivity and

electrication; and enhanced economic

participation. Greater capacity to carry

out development eorts is an ultimate

goal, while a stronger results orientation

remains vital or ensuring a eedback

loop or stronger perormance.

Recommendations

n Seek additional nancing or ADF

operations, particularly or ADF-

only countries, to urther reduce

poverty (income and non-income)

and enable them to better cope

with vulnerabilities.

n Increase education, rural

inrastructure, water and

sanitation, and environment

operations to help achieve related

non-income MDG targets.

n Base ADF capacity development

initiatives on results-oriented

strategies or counterpart

institutions in key sectors. Avoid

one-o technical assistance and

address cross-sector issues, the

sector policy environment, legal

or regulatory powers, nancial

resources, and sta incentives.

n Strengthen ADF operations

through the adequate allocation

o technical assistance to improve

project design and country

institutional capacity. Investigate

the implications o the recent

decrease in technical assistance

allocations relative to nancial

assistance or country-level project

preparation and advisory services.

n Improve ADF operations by

adopting a proactive, holisticapproach to addressing

sustainability concerns in country

strategies and programs: (i) identiy

and mitigate risks to project

sustainability during programming;

(ii) pay more attention to the risks

to sustainability o outputs and

outcomes and their mitigation

during implementation; and

(iii) undertake post-completion

monitoring o selected projects

and programs.

References

Independent Evaluation Department

(IED). 2011. Special Evaluation

Study:The Asian Development Fund

Operations: A Decade o Supporting

Poverty Reduction in the Asia and

Pacifc Region. Manila: ADB.

IED. 2011. Special Evaluation Study:

Managing or Development Results.

Manila: ADB.

IED. 2010. Special Evaluation Study:Post-Completion Sustainability o ADB-

Assisted Projects. Manila: ADB.

IED. 2009. Evaluation Knowledge Brie:

Greenhouse Gas Implications o ADBs

Energy Sector Operations. Manila: ADB.

IED. 2010. Evaluation Knowledge Brie:

Reducing Carbon Emissions rom

Transport Projects. Manila: ADB

IED. 2008. Regional CooperationAssistance Program Evaluation: Greater

Mekong SubregionMaturing and

Moving Forward. Manila: ADB.

Documents

Asian Development Fund Operations: A Decade of Supporting Poverty Reduction