Bangladesh: 40 Years of Partnership with the Asian Development Bank

8/12/2019 Bangladesh: 40 Years of Partnership with the Asian Development Bank

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BangladeshDevelopme

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Effectivene

ssBrief

40 Years of Partnership with the Asian Development Bank


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Bangladesh40 Years of Partnership

with the Asian Development Bank

Development Effectiveness Brief


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2013 Asian Development Bank

All rights reserved. Published in 2013.Printed in Bangladesh.

Publication Stock No. ARM146337-2

The views expressed in this publication are those of the authors and do notnecessarily reflect the views and policies of the Asian Development Bank(ADB) or its Board of Governors or the governments they represent.

Notes:

i. In this publication, $ refers to US dollars.

ii. The fiscal year (FY) of the government ends on 30 June. FY before acalendar year denotes the year in which the fiscal year ends, e.g., FY2012ends on 30 June 2012.

In preparing any country program or strategy, financing any project, or bymaking any designation of or reference to a particular territory or geographic

area in this document, the Asian Development Bank does not intend to makeany judgments as to the legal or other status of any territory or areas.

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Bangladesh and ADB: A Development Partnership .................................................................................. 1

Bangladesh Development Indicators ..................................................................................................... 2

Bangladesh Approvals and Disbursements of Loans and Technical Assistance Grants ............... 3

ADB's Contribution to Development and Poverty Reduction ................................................................. 5

Development Outputs from ADB-Supported Projects in Bangladesh ............................................ 6

Transport and Information and CommunicationTechnology: Connecting People with Prosperity ................................................................................ 7

Energy: Boosting Productivity ............................................................................................................... 9

Education: Providing Skills and Empowerment ..................................................................................12

Agriculture and Natural Resources: Striving for Food Security ....................................................... 14

Water Supply and Other Municipal Infrastructure andServices: Improving Urban Lives ........................................................................................................... 16

Finance: Boosting the Financial Markets ............................................................................................. 18

Organizational Operational Effectiveness: Improving Efficiency and Performance ............................ 21

Partnerships and Cofinancing: Harmonizing Resources ................................................................... 21

Portfolio Management ............................................................................................................................. 23

Future Challenges ..................................................................................................................................... 24

Contents

Tables and Figure

Tables

Table 1: Bangladesh Development Indicators ............................................................................................. 2

Table 2: Loan Approvals .................................................................................................................................. 3

Table 3: Loan Disbursements ......................................................................................................................... 3

Table 4: Technical Assistance Grants ............................................................................................................ 3

Figure

Cumulative Loan Approvals in Bangladesh by Sector, 19732012 .......................................................... 3


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1Bangladesh and ADB: A Development Partnership

Located in the Ganges deltaic plain, andembraced by India and Myanmar onthree sides and the Bay of Bengal on theother, Bangladesh is considered highlycalamitous, prone to natural disasterslike periodic floods and cyclones. Withincreasing resilience, Bangladesh has,however, made impressive gains inmacroeconomic management and socialdevelopment since the 1990s. DuringFY2009FY2012, gross domestic

product (GDP) growth ranged between5.7% and 6.7%, buoyed by strong exportrebound in the garment sector (about80% of total exports), and a surge inoverseas workers' remittances (11% ofGDP in FY2012). Stable macroeconomicmanagement helped the economy toovercome the effects of the globalrecession.

Bangladesh has succeeded inachieving steady reduction in poverty,with the population living below thenational poverty line falling from 59%in 1990 to 31.5% in 2010. During19912005, the population living belowthe poverty line declined at an averagerate of 1.2% per year, compared with0.3% during 19831990. The decline inpoverty has further accelerated to 1.7%per year since 2005, one of the fastest

rates of decline recorded worldwide.Bangladesh is now on track toachieve most of the MillenniumDevelopment Goals (MDGs). Childhealth and under-5 mortality indicatorshave improved by 67% from 1990 to2010 (46 per 1,000 live births in 2011)

1

with greater access to clean drinkingwater (83%) and sanitation. The gender

Bangladesh and ADB:

A Development Partnership

Bangladeshhas reduced

poverty from59% in 1990to 31.5% in2010.

Opposite: Theemphasis by the

Government ofBangladesh onfemale education

and genderequity has led towomen'sempowerment,

enhancingwomen'seconomic andpolitical roles.

1 World Bank. 2013. World Development Indicators, 2013. Washington D.C.


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Development Effectiveness BriefBangladesh2

exports have risen steadily, and becomea major contributor to growth and jobcreation, mostly for women.

ADB support for Bangladesh'sdevelopment has mainly includedlending for infrastructure and socialsector development, technical assistance

(TA) for capacity development, andpolicy advice. At the end of 2012, ADBhad provided 234 loans totaling $14.2billion, and 389 TA projects with a totalvalue of $228.4 million since the firstloan approval of $3.2 million in 1973 forfisheries development.

2Bangladesh is a

major recipient of concessional AsianDevelopment Fund (ADF) resources.

disparity in primary and secondaryeducation has been removed and thefertility rate has sharply declined (from3.1 in 2000 to 2.2 in 2010). The emphasisby the Government of Bangladesh onfemale education and gender equity hasled to women's empowerment,

enhancing women's economic andpolitical roles. The priority attached tosocial protection programs, and avibrant civil society has also contributedto improving social indicators.

The government's policy shifttoward greater market-orientation hasspearheaded the emergence of the privatesector as the key driving force forgrowth and poverty reduction. Garment

MDG = Millennium Development Goal.

Sources: Bangladesh Bureau of Statistics; Asian Development Bank. 2013. Key Indicators for Asia and the Pacific. Manila; Government of Bangladesh.2013. Bangladesh Primary Education: Annual Sector Performance Report.

Table 1: Bangladesh Development Indicators

Bangladesh Development Indicators

Non-MDG

Population (million), 2012 152.5

Annual population growth

rate (%), 2012 1.3

Overall adult literacy rate (%), 2011 56.8

2 ADB.1973. Fisheries Development Project. Manila (Loan no. 129-BAN [SF]; approved on 14 June 1973 for $3.20 million).

Adult literacy rate: male (%), 2011 61.3

Adult literacy rate: female (%), 2011 52.2

Population in urban areas (%), 2011 25.9

MDG

Population living on less

than $1.25 a day (%), 2010 43.3

Population living below the nationalpoverty line (%), 2010 31.5

Under-5 mortality rate per 1,000 live

births, 2011 46.0

Population using an improved drinkingwater source (%), 2011 83.0

Population using an improved drinkingwater source: urban (%), 2011 85.0

Population using an improved drinking

water source: rural (%), 2011 82.0

Net enrollment in primary

education (%), 2011 98.7

Net enrollment in primaryeducation: boys (%), 2011 97.2

Net enrollment in primary

education: girls (%), 2011 99.4


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3Bangladesh and ADB: A Development Partnership

Table 2: Loan Approvals ($ million)

ADF = Asian Development Fund; OCR = ordinary capital resources.Source: ADB.

OCR SovereignADF

OCR Non-

SovereignADF

Total

Type of Loan 1973-2008

1,4088,312

127

11

9,858

2009

600428

0

0

1,028

2010

800449

0

0

1,249

2011

450450

30

0

930

2012

410658

25

0

1,093

Total

3,66810,297

182

11

14,157

Bangladesh Approvals and Disbursements of Loans and

Technical Assistance Grants

ADF = Asian Development Fund; OCR = ordinary capital resources.Source: ADB.

Table 3: Loan Disbursements ($ million)

Type of Loan

OCR

ADF

Total

621.00

7,087.04

7,708.04

1973-2008

718.31

350.00

1,068.31

2009

185.27

283.75

469.02

2010

124.67

287.58

412.25

2011

255.85

354.23

610.08

2012

1,905.10

8,362.60

10,267.70

Total

Source: ADB.

Table 4: Technical Assistance Grants ($ million)

Total

183.2

1973-2008

12

2009

7.6

2010

9.4

2011

13.4

2012

228.4

Total

Figure 1: Cumulative Loan Approvals in Bangladesh by Sector, 19732012

Public Sector Management

7%

Multisector7%

Agriculture15%

Water Supply and Other MunicipalInfrastructure and Services

7%

Transport21%

Energy24%

Education9%

Finance5%

Health1%

Industry and Trade4%


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5ADB's Contribution to Development and Poverty Reduction

During 19731985, a large share (37.3%)

of ADB assistance was directed towards

agriculture and natural resources, in line

with the government's planned priorities

for attaining food self-sufficiency. ADB

assistance during 19862001 shifted to

emphasize development of growth-

promoting sectors. A sharpened focus

on hard infrastructure saw energy and

transport together accounting for 55% of

total ADB assistance. In line with 2005

country partnership strategy priorities,

assistance for energy, transport, and

education was further enhanced during

20062010. Support was also stepped up

for water supply and other municipal

infrastructure and services.

Under the country partnershipstrategy, 20112015, ADB has been

providing assistance within the Strategy

2020 development agendas of inclusive

economic growth, environmentally

sustainable economic growth, and

regional cooperation. In the first 2 years

(20112012) of the strategy period, over

half of the total allocation was directed

to the energy and transport sectors, and

one fifth went to the education sector.Under the finance sector, a capital

market program loan was provided

accounting for close to another fifth of

the total allocation. Support was also

extended to agriculture and urban water

supply and sanitation. ADB plans to

phase out support for primary

education, and increase assistance for

secondary education and skills

programs, including assistance to build

sustainable technical and vocational

education and training capacity, to

better meet labor market requirements.

The overarching objective of ADB

support is to contribute to the goals of

enhancing growth and cutting poverty

set in the government's Sixth Five-Year

Plan, FY2011FY2015.

ADBs Contribution to

Development and Poverty

Reduction

Opposite:Bangladesh is ontrack to achievemost of theMillennium

DevelopmentGoals, withnotable

improvement inchild health,maternal health,under-5 mortality

indicator, accessto clean drinkingwater, andsanitation.

Infrastructure development hasbeen a key focus of ADB inBangladesh.


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km = kilometer; MW = megawatt; SMEs = small and medium-sized enterprises; Tk. = taka; PPP = publicprivate partnership.Source:ADB estimates.

Development Outputs from ADB-Supported Projects

in Bangladesh

Education

Classrooms built or upgraded (number) 40,964

Associated facilities built or upgraded (number) 31,631

Primary studentsdropout rate

From 50.5% (2007) to improved (%) 26.2% (2012)

Teachers trained (number) 284,000

Students with stipend (number) 6,295,541

Students benefiting (number) 21,317,886

Energy

Installed power generation capacity (MW) 390

Transmission lines constructed or upgraded (km) 606

Distribution lines constructed or upgraded (km) 13,824

New households connected to

electricity (number) 45,000

Transport

National highways, regional, district,and rural roads built or rehabilitated (km) 10,746

Beneficiaries from roads constructed

or rehabilitated (number) 115,476,898

Chittagong ports vessel turnaround time (days) 3

Bangladesh Railway revenue from freight

and passenger (Tk.million) 23,659

Finance

Loans to SMEs provided ($ million) 76

Accounts opened for loans to SMEs, and end

borrowers reached (number) 14,461

Loans provided for capital marketdevelopment ($ million) 303

Capital market regulation strengthened

(number of regulations) 12

Loan provided for publicprivate infrastructure

development ($ million) 165

Agriculture, Natural Resources, and Water Resources

Farmers trained (number) 802,545

Microcredit provided to farmers whose

income increased (number) 876,309

High-value crops and new technologiesadopted by beneficiaries (number) 241,182

Embankments built (km) 348

People benefiting from irrigationfacilities (number) 1,087,500

People protected from flooding (number) 5,557,500

Water Supply and Other MunicipalInfrastructure and Services

Roads culverts constructed and improved (km) 773

Bridges constructed and improved (km) 0.53

Urban population served with tap water

for drinking (number) 341,200

Slum areas improved (number) 264

Urban sector loans provided ($ million) 615.5

Primary healthcare centers established

through PPPs (number) 132

Patients provided primary

healthcare (number) 38,899,754

Public Sector Management

Policy reforms accomplished in anticorruption,judicial, and financial subsectors with

ADB assistance (number) 47

Capacity development under ADB-assisted

governance program (number) 12

Multisector

Emergency assistance loans provided ($ million) 120

Beneficiaries from emergency

assistance projects (number) 25,000,000

Sector Outputs Achieved20072012

Sector Outputs Achieved20072012


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Transport, and

Information and

Communication

Technology:

Connecting Peoplewith Prosperity

Infrastructure deficit and consequenthigh transport costs have beenconstraining market-led economicgrowth and access to social services inBangladesh. ADB's partnership withBangladesh for development of itstransport network has helped reduce thetime and cost of moving goods andservices across the country. FollowingStrategy 2020, ADB continues to helpBangladesh improve road network,bridges, regional connectivity andtransport efficiency. ADB has alsohelped raising seaport efficiency byimproving infrastructure andautomation, in addition to makingrailways attractive to users by improving

the rail infrastructure and enhancing itsoperational efficiency through reforms.ADB provided a total of 39 loans and56 TA projects in the transport and theinformation and communicationtechnology (ICT) sector during19732012. ADB assistance to the

development of the sector in Bangladeshaccounts for 21.22% of total ADBassistance to Bangladesh during 19732012, amounting to about $3.0 billion.

ADB has been the lead agency insupporting improvements in theinfrastructure and operational efficiencyof railways. The ADB-assisted RailwaySector Investment Program, approved in2006 for $430 million, with $30 millionfrom ADF resources and $400 millionfrom ordinary capital resources (OCR)

as a multitranche financing facility, issupporting the construction of newrailway tracks, including the64-kilometer (km) Tongi-Bhairab Bazardouble tracks on the Dhaka-Chittagongrailway, as well as the renovation ofexisting tracks. All physical developmentworks are linked to a reform agenda,which is helping to strengthen the core

ADB assistancehas helpedimproving

capacity andefficiency ofChittagong Port .


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business activities of BangladeshRailway, and enabling it to operate on acommercial footing.

The ADB-assisted Chittagong PortTrade Facilitation Project, which wascompleted in 2012, helped automate theChittagong port's container

management system, thereby boostingthe operational efficiency of the port.Sharifuzzaman Chowdhury, 55, a seniormanager of a reputed internationalshipping agent in Chittagong, observed aremarkable improvement in the port'sefficiency, with the container dwell timereduced from 18 days to 10 days, andvessel turnaround time reduced to 3days from 8 days between 2007 and2012, and quicker access to the portfrom the capital city and hinterlands.The installation of a computerizedcontainer terminal management system,the construction of a 1.7 km access-controlled road to the Chittagong portand New Mooring container terminals,and improvements in the port's internalinfrastructure were all financed under a$30.6 million ADB OCR loan under the

Chittagong Port Trade FacilitationProject. Approved in 2005 andcompleted in 2012, the project triggeredrapid expansion of Chittagong port'scontainer handling capacity, from600,000 twenty-foot equivalent units in2004 to 1.3 million twenty-foot

equivalent units in 2012. It helped toincrease trade, and protect theenvironment by mitigating the adverseimpacts of oil spills from vessels. Inaddition, the improved portinfrastructure and connectivity are likelyto promote regional cooperation andintegration, with Chittagong portserving as a regional hub for maritimetransportation. ADB has recentlyprovided a TA grant for preparation of aMaster Plan for Chittagong port.

ADB assistance resulted inconstruction and/or rehabilitation ofabout 10,746 km of roads during20072012. ADB is providing technicalsupport to the government for afeasibility study and detailed engineeringdesign for the Dhaka-ChittagongExpressway, which will connect regional

Bangladesh

needs toimprove itsrailway system,

which is a cost-effective andenvironment-friendly mode

of transport.


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corridors, and also extending advisoryservices for implementing it under apublicprivate partnership (PPP)financing modality. ADB is alsocatalyzing regional cooperation andintegration by financing road and ICTconnectivity under the South Asia

Subregional Economic Cooperationprogram, and thereby promotingaccelerated economic cooperation inSouth Asia. Climate change andenvironmental considerations are beingintegrated and streamlined byencouraging climate-resilient andsustainable transport, including low-carbon options and mass urbantransport systems.

Energy: Boosting

Productivity

Bangladesh faces major challenges todeveloping its energy sector to cope withthe growing industrial and domestic

demand for seamless energy (power andgas) supply. Energy shortages andlimited electrification are key sectorconstraints. About half of the country'spopulation does not have access toelectricity. During peak periods, up to30% of demand remains unmet.

To meet energy sector challenges,ADB has provided cumulative assistanceof $3.41 billion (24% of total ADBassistance to Bangladesh, the highest

The Bangladesh-India electrical grid interconnection is South Asia's first ever interconnectionbetween two national power grids using a high voltage direct current interconnection. The photoshows the high voltage direct current switchyard in Kushtia connecting the electrical grids of

Bangladesh and India.


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Evaluation Department of ADB in 2009concluded that ADB's work in the sectorhad been significant and successful.

3

In the power subsector, there havebeen notable improvements between2002 and 2012. The electrification raterose from 10% in 1994 to 50% in 2012,an improvement made against a morethan 160% rise in demand during20022012. The overall system loss fellto 12.26% in 2012 from 15.67% in 2009.Annual per capita power generationrose from 183 kilowatt-hours (kWh) in2007 to 292 kWh by December 2012.The financial performance of mostcompanies in the sector, has alsoimproved due to higher tariffs, better bill

among all sectors). Key energy sectorinterventions by ADB have includedincreasing power generation capacity,improving transmission systems,strengthening distribution systems,improving and expanding ruralelectrification, capacity building tostrengthen regulations, and reforms.Unbundling of the major power and gasentities into smaller operational sectorcompanies has been a major priority forADB assistance, in order to ensure better

performance and accountability, anddevelop renewable energy, and energyefficiency initiatives. An energy sectorassessment program evaluationundertaken by the Independent

ADB focuses onpromoting clean

energy to helpenhance energysecurity.

3 ADB. 2009. Sector Assistance Program Evaluation for Bangladesh Energy Sector. Manila.


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collection, improved financialtransparency, and increased metering.

ADB is also supporting regionalcooperation to connect power gridsbetween countries, to facilitatecommercial trading of power. A 40 kmcross-border transmission line between

Bahrampur in India and Bheramara inBangladesh has been financed by ADBfor $112 million (from ADF resources)to facilitate an initial power flow of500 megawatts (MW) into Bangladeshfrom the Indian grid, with scope for laterexpansion to 1000 MW.

Under the ADB-assisted PowerSector Development Program (loanapproved in 2003 for $186 million fromOCR, and completed in 2012) and theongoing Sustainable Power Sector

Development Program (loan approvedin 2007 for $465 million including$65 million from ADF resources and$400 million from OCR), new powergeneration capacity of 390 MW wasinstalled, 606 km of transmission lineswere constructed and/or upgraded,13,824 km of distribution lines wereconstructed and/or upgraded, and45,000 new households were connectedto electricity during 20072012.

To support clean and renewableenergyin line with Strategy 2020emphasizing climate change, ADB in2012 approved the ongoing PowerSystem Expansion and EfficiencyImprovement Investment Program, aloan of $700 million from OCR fundson a multitranche financing facilityarrangement to assist Bangladesh inachieving increased energy sectorcontribution to low-carboneconomic growth.

Under the ADB-assisted PowerSector Development Program(loanapproved in 2003 for $186 million fromOCR, and completed in 2012), a 2 x120MW gas-fired power station atSiddhirganj, and a National Load

Dispatch Center at Rampura, Dhakawere established, and the existingdistribution systems in 10 major townsin the northwest zone were modernized.The project helped minimize the overalltechnical and nontechnical distributionlosses from 13.25% in 2010 to 12.11% in

2012. The construction and renovationof distribution lines and augmentationof 33/11 kilovolt substation capacitycreated scope for 200,000 new consumerconnections in the future. The NationalLoad Dispatch Center at Dhakafacilitated efficient and economicdispatch by maximizing generation fromleast-cost generators, and enhanced gridmanagement. The project wascofinanced by the Norwegian Agencyfor Development Cooperation for

$10.0 million. The automatic flour millowned by Tajul Islam, 52, in Bogra, nowoperates round the clock to meetpeaking demand, thanks to theimproved power supply facilitated by theproject. "Power supply is now steadierwithout long hours of load shedding inthe evening. My business is now gettingbetter. I can now produce and delivermore flour to my customers in time,"Tajul Islam noted.

In the gas subsector, ADB hasprovided $830 million through 10 loans,and 13 TA grants amounting to about$7.4 million. The TA projects haveimproved operational efficiencies,prepared a gas master plan, drafted a gaslaw, developed a policy on private sectorparticipation in gas pipelines, andevaluated options for private sectorparticipation. ADB supported thepreparation of the Gas Subsector ReformRoad Map, and the Gas Sector System

Loss Reduction Plan. ADB is alsosupporting increased access to naturalgas at affordable prices across thecountry, which would lead to reductionin deforestation in rural areas and betterair quality in secondary cities.


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to 38.6% in 2011. A study by the ADBIndependent Evaluation Departmentassessed ADB's performance in theoverall education sector as successful.

4

ADB assistance in developing theeducation sector in Bangladeshaccounted for 9.32% of total ADB

assistance to Bangladesh during19732012, amounting to $1.28 billion.ADB-assisted education projects havehelped to modernize education byincreasing equity of access, enhancingquality, and improving policy,governance, infrastructure, and servicedelivery. In the Second PrimaryEducation Development Program, oneof the world's largest projects using asector-wide approach, ADB was the leadorganization among 11 development

partners. Building on the success of theproject,

5in July 2011, ADB approved a

follow-up loan for $320 million fromADF resources to finance the ThirdPrimary Education Development

Education: Providing

Skills and

Empowerment

The education system in Bangladesh hasbeen suffering from poor quality, high

dropout rates, and skills shortages.However, during the past few decades,Bangladesh has made good progress inraising access to education, and teachingquality, and reforming the overalleducation system. ADB assistancecontributed to raising overall netenrollment in primary education from87.2% in 2005 to 98.7% in 2011. Passrates in secondary school certificateexaminations improved from 52.6% in

2004 to 82.0% in 2011, and in highersecondary certificate examinations from47.7% in 2004 to 70.2% in 2011. Insecondary school, cycle completionincreased significantly from 20% in 2005

4 ADB.2008. Education sector in Bangladesh: What worked well and why under the sector wide approach? Manila.5 ADB. 2003. Second Primary Education Development Program. Manila. (Loan 2015-BAN [SF] for $109.8 million; project

completed in 2011).

Children's

classroom

learningexperience hasimproved in

Bangladesh.


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Project, which will cover 1 year ofpreprimary education and 5 years ofprimary education.

Under secondary education, theTeaching Quality Improvement Project,approved in 2004 for a loan of $68.91million from ADF resources, andcompleted in June 2012, helped thegovernment to strengthen capacity totrain secondary school teachers. TheSecond Teaching Quality ImprovementProject, approved in 2012 for a loan of$70 million from ADF resources, isexpected to promote a strengthenedsecondary teacher education system.The Secondary Education SectorDevelopment Project, approved by ADB

in 2006 for a loan of $85.0 million fromADF resources, and scheduled to becompleted in December 2013, is helpingthe government build on critical reformsto strengthen the management andtransparency of secondary education.The project financed training of 284,000

teachers in creative question methods inthe secondary school certificateexaminations, and distributed stipendstotaling $14.6 million to 1.3 millionpoor students during 20072010. Theproject positively impacted on thesecondary education system by helpingto increase the gross enrollment ratefrom 46% in 2005 to 61% in 2011,decreasing the dropout rate from 80% in2005 to 56% in 2011, and increasing thecompletion rate from 23% in 2005 to43.75% in 2011. Mominul Haque, asenior teacher of a secondary school inBrahmanbaria noted, "My school wasjust like any other school in the vicinity,imparting conventional education to the

students till 2009." "But the scenario haschanged; the school is now equippedwith computers and other IT materials.The students can now use computers,and the teachers are trained on contentdevelopment for ICT-based teaching,"said Mominul.

ADB-assistededucationprojects have

helped tomodernizeeducation byincreasing

equity ofaccess,enhancingquality, and

improvingpolicy,governance,

infrastructure,and servicedelivery.


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$2.07 billion, which is 15.95% of totalsupport to Bangladesh. Currently, 8 loanprojects amounting to $395.64 millionare under implementation, which isabout 8.33% of the portfolio.

ADB has been closely involved indeveloping Bangladesh's agriculture and

natural resources sector (crops, inputliberalization, livestock, fishery, andforestry), rural development, and waterresources management. ADB assistancehas benefited the poor and reducedgender gaps in participation. ADB hassupported commercialization ofagriculture, agribusiness development,diversification of high value crops, andvalue chain development. ADBassistance has contributed toestablishing the policy and institutional

framework for decentralized andparticipatory water resourcesmanagement, including sustainableoperation and maintenance and costrecovery by water managementassociations. ADB is also helping the

Agriculture and

Natural Resources:

Striving for Food

Security

Bangladesh needs to ensure sustainedhigh growth in agriculture, improverural infrastructure, and adoptinnovative approaches to water resourcesmanagement to reduce rural poverty andimprove food security. Despite a declinein the share of agriculture in GDP,agriculture remains important for foodsecurity for the majority of thepopulation, with about half of the laborforce engaged in agricultural activities.ADB therefore continues to supportagricultural growth through investmentsin crop diversification, flood control andirrigation, and rural roads. As of 2012,ADB assisted Bangladesh with 58 loanprojects or programs in the agricultureand natural resources sector, worth

ADBs recentprojects inagriculturesubsector have

focused mainlyon crop

diversification,high valuecrops, andimprovement ofagri-products

marketing.


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government in implementing theBangladesh Climate ChangeAction Plan.

The ADB-assisted Second SmallScale Water Resources DevelopmentSector Project helped Bangladesh inmanaging its water resources by

introducing a participatory rehabilitationand management mechanism. Approvedby ADB in July 2001 for $34.0 millionfrom ADF resources with cofinancing bythe Government of the Netherlands for$24.3 million, and completed in 2010,the project was implemented in 61 ofthe country's 64 districts. About 300subprojects built sustainable watermanagement infrastructure, benefiting180,000200,000 hectares (ha) of landcultivated by over 280,000 farm

households. Each subproject covered anarea of up to 1,000 ha, benefiting anaverage area of some 650 ha. The projectoutputs included increased productionof rice by 180,000 tons per year. Thecumulative amount of microcredit

disbursed was over Tk140 million(about $1.8 million equivalent) to 28,180farmers, increasing their incomes.The project generated employmentopportunities of about 3.7 millionperson-days for local labor to completeabout 9.7 million cubic meters of

earthworks for the project. Overall, theproject contributed to poverty reductionby boosting agricultural production inthe project areas and beyond. AmirHossain, 49, a farmer in Magura district,used to see the farmland in the wholearea being inundated by floodwater inthe wet seasons, and suffering from ascarcity of water for irrigation in thesummer, allowing a maximum of twocrops each year. But those gloomy dayshave passed, thanks to the Second Small

Scale Water Resources DevelopmentSector Project. "We now have threecrops a year. Our community watermanagement association manages timelywater supply to our farm landsthroughout the year," he said.

Agricultureremains

important forfood securityfor the majorityof the

Bangladeshipopulation,with about half

of the laborforce engagedin agriculturalactivities.


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Water Supply and

Other Municipal

Infrastructure andServices: Improving

Urban Lives

Bangladesh has been facing enormouschallenges to providing adequate urbanservices and improved environments forits rapidly growing urban populationin recent decades. In 2012, over 40million people (25.9% of the totalpopulation)

6were living in urban areas.

The contribution of urban areas to GDPgrew from 26% in 1973 to 48% in 2011.The poverty rate in urban areas declinedfrom 45% in 2000 to 22% in 2011.

Under the ongoing Second CropDiversification Project, approved byADB in 2010 for a loan of $40 millionfrom ADF resources, a total of 35,000

small farmers, including 22,000 women,have so far been trained in theproduction of high-value crops; about16,000 ha of land has been converted forhigh-value crop production; andmicrocredit equivalent to a total of$11.0 million has been disbursed toabout 59,000 small farmers. The projectis expected to increase rural income in27 districts of southwest and northwestBangladesh.

Bangladeshneedsinnovativeapproaches to

waterresourcesmanagement

to reduce ruralpoverty andimprove foodsecurity.

6 World Bank.2013. World Development Indicators, 2013. Washington D.C.


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ADB has so far providedBangladesh with 16 public sector loanstotaling about $909.10 million forimproving urban water supply andsanitation, waste management, andoverall urban development. In addition,Bangladesh received an amount of

$164.10 million for health and socialprotection, including urban primary

healthcare. The strategic priority forADB assistance related to water supplyand other municipal infrastructure andservices in Bangladesh has been povertyreduction through development ofphysical infrastructure, shared growth,social development, and good

governance. The ADB IndependentEvaluation Department assessed ADB's

ADB

introducedtrenchlesstechnology for

layingundergroundwater pipes toimprove the

water supplysystem inDhaka City.


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interventions in improving water supplyand sanitation as effective on balance.7

The Urban Governance andInfrastructure Improvement Project($60 million), approved in 2002 andcompleted in December 2010, and theongoing Second Urban Governance and

Infrastructure Improvement (Sector)Project ($87 million), approved in 2008,focus on enhancing accountability inmunicipal management andstrengthening capabilities. These twoprojects have been contributing toimprovement of urban infrastructure,water supply, sanitation, and slum areas,thereby generating employment (about537,249 person-days under the UrbanGovernance and InfrastructureImprovement Project), and empowering

women by increased participation in theadministration and developmentprograms of thepourashavas(municipalities).

The most significant intervention byADB in Bangladesh's urban water supplyand other municipal infrastructure andservices has been the ongoing DhakaWater Supply Sector DevelopmentProgram, for $200 million, including$50 million from ADF resources and$150 million from OCR. The project isassisting to provide clean potable waterto the capital city's fast-growingpopulation. The outcomes of the projectinclude a massive rehabilitation ofexisting pipelines and metered houseconnections which is underway;providing access for 50,000 slumdwellers to the supply network of DhakaWater Supply and Sewerage Authority(DWASA) by the end of 2013, and laterextending it to other slums in the project

area; introducing trenchless technology(without digging up roads) for pipelinelaying in Bangladesh, and improvedDWASA's financial performance with

reduced non-revenue water loss to lessthan 30%.

Finance: Boosting the

Financial Markets

Bangladesh faces the challenge ofmeeting increasing needs for capitalinvestment in the absence of well-functioning capital markets, anddiversification away from thepredominantly bank-based system offinancial intermediation. ADB assistanceto the finance sector is primarily focusedon the capital market, development ofsmall and medium-sized enterprises(SMEs), and infrastructure financing.

ADB assistance has contributed topositive outcomes including enhanceddiscipline in the capital market, leadingto financial growth and development.Support for the development of bondand equity capital markets has beencatalyzing balanced development of thefinancial sector.

Since 1973, total ADB assistance toBangladesh's finance and industry andtrade sectors has been $2.26 billion,which is about 15.94% of the total ADBassistance to the country. The first twoADB loans to Bangladesh's financialsector (banking subsector) were approved

as early as 1973, followed by a loan for the

banking subsector in 1983, and anotherloan for the financial sector in 1985.

In 2004, ADB assisted thegovernment with a program loan forSMEs amounting to $35 million fromADF resources, to strengthen the policyenvironment for SMEs, improve access

to finance, and provide related supportand capacity building. This was followedby another project loan in 2009 for$76 million from ADF resources to

7 ADB. 2009. Sector Assistance Program Evaluation for the Urban Sector and Water Supply and Sanitation in Bangladesh.Manila.


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finance the ongoing developmentproject for SMEs, and a TA project topromote women's entrepreneurship. In2008, ADB approved the PublicPrivateInfrastructure Development FacilityProject for $165 million ($83 million in

ADF resources and $82 million in OCR)to meet the need for long term financingof large-scale infrastructure.

The Infrastructure DevelopmentCompany Limited (IDCOL), agovernment owned entity and theimplementing agency, has beenproviding funds at commercial termswith maturity of more than 20 years,which are otherwise currently notavailable in the market. The PublicPrivate Infrastructure Development

Facility supports IDCOL's renewableenergy program, which brings solarpower to rural households and is one ofthe most successful solar home system(SHS) programs in the world. IDCOL'sSHS program had installed more than2 million systems by 2013. The program

aims to double installations by 2015, fora total of 4 million SHSs. It targets poorBangladeshis living in remote areaswhere grid electricity is not expected toreach in the foreseeable future. Underthe PublicPrivate Infrastructure

Development Facility Project, a total of330,000 SHSs have been funded byIDCOL using the proceeds from ADB'sADF loan. This has contributed tosavings of $408 million and a reductionof 2.48 million tons of carbon dioxideemissions over the 20-year life cycleof SHSs.

To help create a deeper and more

stable capital market, ADB approved the

$300 million Second Capital Market

Development Program in November2012, which encapsulates a policy

framework for a well-functioning

financial system that supports basic

capital and investment needs, as well as

the longer-term economic objectives

of Bangladesh.

Bangladesh hasemerged as a

global topgarmentsexporter, andthe sector

greatlycontributes togrowth and jobcreation, mostly

for women.


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21Organizational Operational Effectiveness: Improving Efficiency and Performance

Efficiency and

Performance

An independent country assistanceprogram evaluation of ADB strategiesand assistance programs in Bangladeshfor the period 19992008 found theADB program generally consistent withgovernment priorities and countrystrategies. The overall performance ofthe ADB assistance program wasassessed as satisfactory. The share ofproblem projects was reduced from 12%of the portfolio in 2005 to 0% in 2009and 2010, and the disbursement ratio for

project loans steadily increased from13.0% in 2005 to 18.8% in 2010, and19.2% in 2012, although the successrates of ADB-assisted projects declinedfrom 79% in the 2000s to 62.2% in 2012.Other parameters of ADB performanceup to 2012 include 100% satisfactoryprojects, of which 9% were assessed ashighly satisfactory during 20102012.

Most recently, performance of someprojects has not fully met expectations.For instance, important lessons werelearned during implementation of theRoad Network Improvement andMaintenance Project (approved in 2002for a loan of $65 million from ADFresources, and completed in 2010).Protracted procurement of theconsulting services and under

performance of the civil workscontractor led to delayed projectimplementation. However, concertedefforts by ADB and the government,

through close monitoring and effectiveguidance to the executing agency,streamlined the implementation issuesleading to completion of the project in2010 with most of its objectivesachieved. Lessons learned from thisproject are being reflected in the designof future projects.

Partnerships and

Cofinancing:Harmonizing

Resources

Extensive cooperation by ADB withdevelopment partners and civil societyorganizations has contributed toenhanced coherence and harmonizationof development assistance. ADB hasbeen coordinating closely with otherdevelopment partners including theCanadian International DevelopmentAgency, the Danish InternationalDevelopment Agency, the Departmentfor International Development of theUnited Kingdom, the EuropeanCommission, German developmentcooperation through GIZ and KfW, the

Organizational

Operational Effectiveness:

Improving Efficiency andPerformance

Opposite:The beaming

student of gradethree seeminglylooks forward toa bright future,

but many inBangladeshcannot complete

even primaryeducation.


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International Fund for AgriculturalDevelopment, the Islamic DevelopmentBank, Japan International CooperationAgency, the Government of theNetherlands, the Government ofNorway, the OPEC Fund forInternational Development, the Swedish

International Development Agency, theSwiss Agency for Development andCooperation, and the World Bank.

During 19782012, the cumulativeamount of cofinancing through loansand grants was $4.38 billion, comparedwith $14.10 billion of ADB financing,with the education, transport, energy,and agriculture and natural resourcessectors being the major recipients.The cumulative amount of cofinancingduring 20082012 was $3.40 billion,

including about $2.80 billion in loansand $611 million in grants, compared with$4.84 billion of ADB financing.

ADB has been strengthening anddeepening existing partnerships with allstakeholders in Bangladesh, including

the private sector, civil society, academia,and development partners throughinteractive communications includingworkshops, seminars, group discussions,and meetings.

As emphasized in Strategy 2020,

ADB is also working to strengthen

knowledge sharing by producing anddisseminating knowledge across

developing member countries. ADB has

been disseminating operational

knowledge by sharing project documents,

and sector and economic analysis with

stakeholders. In addition, ADB has

periodically conducted thematic studies,

and produced and shared its Quarterly

Economic Update. ADB has also

continued to commission studies on

specific economic issues (e.g., exportdiversification, determinants of inflation,

and economic analysis of subsidies),

helping stakeholders in the public and

private sector in reviewing and

determining their policies.

The 4.8 kmBangabandhuBridge, openedto traffic in

1998, over theriver Jamuna isone of the

modelshowcases ofdonor'ssuccessful

harmonizationin Bangladesh.


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23Organizational Operational Effectiveness: Improving Efficiency and Performance

The Third Primary EducationDevelopment Project is the modelshowcase of donors' harmonization.Approved by ADB in 2011 for$320.0 million from ADF resources, theproject is cofinanced for a total of$735.0 million by eight otherdevelopment partners including AusAidfor $35.0 million, the CanadianInternational Development Agency for$65.0 million, the Department for

International Development of the UnitedKingdom for $190.0 million, theEuropean Union for $70.0 million, JapanInternational Cooperation Agency for$30.0 million, the Swedish InternationalDevelopment Agency for $45.0 million,and the World Bank for $300.0 million.

Portfolio Management

Delays in implementing development

projects continue to constrain the

development of Bangladesh. ADB has

assisted the government in streamlining

age-old processes for approving

Development Project Proforma and the

Technical Assistance Project Proforma.

Delays in procurement of goods and

services have been another major

handicap. In 2012, $3.19 billion out of

$5.3 billion in net loans remained

undisbursed, indicating the inert

challenges to the country's system and to

ADB project administration procedures.

The ADB-supported South Asia Subregional Economic Cooperation Bangladesh-India ElectricalGrid Interconnection Project signaled a new era in energy cooperation in South Asia and is likelyto herald further power trading agreements, resulting in more effective use of existing energyresources in the region. Photo shows Honorable Prime Minister of Bangladesh Sheikh Hasina (3rd

from right), Indian Minister for New and Renewable Energy Dr. Farooq Abdullah (6th from left),and other senior officials at the inauguration of Bangladesh-India electrical grid interconnectionon 5 October 2013.


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During the past 5 years, portfoliomanagement has shown signs ofimprovement, thanks to concertedefforts by ADB and the government toimprove project implementation. Annualcontract awards and disbursement

improved from the $300 million to

$350 million thresholds in 20052006 to$629.7 million and $426.4 million in2011, and $643 million and $610 millionin 2012, respectively. ADB has ensuredthat project readiness filters arerigorously applied in project preparation,

whereby all critical paths of anticipatedprocedural and performance delays aretaken care of in advance, embeddingadequate measures to overcome theanticipated bottlenecks. ADB continuesto conduct tripartite portfolio reviewmissions with the borrower's representatives

and the executing agencies reviewing theprogress of project implementation andsector development issues, andproviding guidance to resolve them.ADB has helped enhance the capacity ofthe executing agencies by regularlyimparting training on procurement,social safeguards, and financialmanagement. It is expected that thesewill result in a significant improvement

through a much-needed increase in thenet transfer of resources.

Future Challenges

Despite good progress, Bangladesh stillfaces critical challenges to sustainable

economic development, includingdeveloping infrastructure, boostinginvestment, improving the businessclimate, enhancing the efficiency of thefinance sector and the capital market,and developing skills.

To assist Bangladesh in overcomingthese challenges, ADB, through itspublic sector operations, will continue toplay a key role in supporting investmentsand policy and institutional reforms inenergy, transport, education, and water

supply and other municipal infrastructureand services. ADB will also continue itssupport for agriculture and naturalresources and financial marketdevelopment. ADB continues to step upsupport for regional cooperation inpower, transport, and trade facilitation,and promote PPPs by supportinginstitutional development in keyinfrastructure sectors. ADB will alsostep up its private sector operations,emphasized in Strategy 2020.

Despite good

progress,Bangladesh stillfaces critical

challenges,includingdeveloping

skills andinfrastructure,boostinginvestment and

improving thebusinessclimate.


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Development Effectiveness Brief: Bangladesh40 Years of Partnership with the Asian Development Bank

Bangladesh has made impressive socioeconomic gains with a steady rise in its gross domesticproduct, a decrease in overall rates of poverty, boost in social development, and steadymovement toward achievement of the Millennium Development Goals. The AsianDevelopment Bank (ADB) has been a key partner in Bangladeshs struggle for a better futuresince 1973 by contributing to critical economic and governance reforms. As of November2013, ADB's cumulative lending for Bangladesh amounted to about $15.3 billion for242 loans, and technical assistance grants amounted to about $232.41 million for402 projects. The country is also one of the largest recipients of concessional AsianDevelopment Fund resources. ADB has been the second-largest source of financing, andone of the lead development partners in the energy, water supply and sanitation, agricultureand natural resources, finance, education, and transport sectors of Bangladesh.

About the Asian Development Bank

ADBs vision is an Asia and Pacific region free of poverty. Its mission is to help its developingmember countries reduce poverty and improve the quality of life of their people. Despite theregions many successes, it remains home to two-thirds of the worlds poor: 1.7 billionpeople who live on less than $2 a day, with 828 million struggling on less than $1.25 a day.ADB is committed to reducing poverty through inclusive economic growth, environmentallysustainable growth, and regional integration.

Based in Manila, ADB is owned by 67 members, including 48 from the region. Its maininstruments for helping its developing member countries are policy dialogue, loans, equityinvestments, guarantees, grants, and technical assistance.

Asian Development Bank6 ADB Avenue, Mandaluyong City1550 M M il Phili i

Documents

Bangladesh: 40 Years of Partnership with the Asian Development Bank