corporate evaluation study on asian development fund x and xi operations

8/20/2019 Corporate Evaluation Study on Asian Development Fund X and XI Operations

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EvaluationIndependent

Asian Development Fund

X and XI OperationsOpportunity Amid Growing Challenges

Corporate

EvaluationStudy


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orporate Evaluation Study

September 2015

Asian Development Fund X and X I Operations

Opportunity Amid Groin! "allen!es

#e$eren%e &umber' SES' #EG 2015(0)Independent Evaluation' CS(*

+"is do%ument is bein! dis%losed to t"e publi% in a%%ordan%e it" AD,-s .ubli% Communi%ations .oli%y 2011/


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&O+E

In t"is report 3 re$ers to 4S dollars/

Dire%tor General

/ +"omas Independent Evaluation Department 6IED7Dire%tor

8/ 9ol:ma Independent Evaluation Division 1 IED

+eam leader

,/ Gra"am Senior Evaluation Spe%ialist IED+eam mem bers

+/ 4eda .rin%ipal Evaluation Spe%ialist IED;/ van #iuit" Senior Evaluation Spe%ialist IEDA/ ,ruba:er Senior Evaluation Spe%ialist IED&/ Gamo Senior Evaluation O$$i%er IED

?/ O%enar Evaluation O$$i%er IED/ @elo(Cabuan! Senior Evaluation Assistant IED

+"e !uidelines $ormally adopted by t"e Independent Evaluation Department 6IED7 on

avoidin! %on$li%t o$ interest in its independent evaluations ere observed in t"epreparation o$ t"is report/ +o t"e :noled!e o$ IED t"ere ere no %on$li%ts o$ interesto$ t"e persons preparin! reviein! or approvin! t"is report/

In preparin! any evaluation report or by ma:in! any desi!nation o$ or re$eren%e to aparti%ular territory or !eo!rap"i% area in t"is do%ument IED does not intend to ma:eany


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Abbreviations

AD, Asian Development ,an:A$DF A$ri%an Development FundADF Asian Development FundC.A %ountry per$orman%e assessmentC.S %ountry partners"ip strate!yC#8 Crisis #esponse 8indoD#F disaster response $a%ilityD#@ disaster ris: mana!ementE.C Ele%tri% .oer CorporationESG environmentally sustainable !rot"FCAS $ra!ile and %on$li%t(a$$e%ted situationsGACA. II Se%ond Governan%e and Anti%orruption A%tion .lan

GA. !ender a%tion planGEF Global Environmental Fa%ilityG;G !reen"ouse !asG@S Greater @e:on! Subre!ionIDA International Development Asso%iationIED Independent Evaluation DepartmentIFAD International Fund $or A!ri%ulture DevelopmentIFI international $inan%ial institution?ao .D# ?ao .eopleBs Demo%rati% #epubli%@DG @illennium Development Goal@$D# @ana!ement $or Development #esults@+# @idterm #evie

OC# ordinary %apital resour%es.,A per$orman%e(based allo%ation.C#AFI .a%i$i% Catastrop"e #is: Assessment and Finan%in! Initiative.CS pro


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ontents

.a!e

A%:noled!ments i

Foreord iii

Ee%utive Summ ary v

"apter 1' Introdu%tion and ontet 1

A/ Evaluation .urpose and #ationale 1,/ Sour%es and @et"odolo!y 2C/ Stru%ture o$ t"e #eport 2D/ +"e Development Contet

"apter 2' ADF Finan%in! and .er$orman%e *

A/ ADF Finan%in! Sour%es *,/ Allo%ation and Operational .atterns

C/ .er$orman%e o$ Completed ADF Operations 1D/ On!oin! .ro


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A%:noled!ments

+"is %orporate evaluation study as prepared by t"e Independent Evaluation teamin%ludin! ,en


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Foreord

@ost %ountries bene$itin! $rom t"e Asian Development Fund 6ADF7 "ave seen moderaterates o$ e%onomi% !rot" and redu%tion o$ in%ome poverty in t"e re%ent de%ade/ ,ut%ontinuin! %"allen!es in $ra!ile and %on$li%t a$$e%ted situations substantial in%ome andnon(in%ome disparities environmental de!radation in addition to persistent po%:ets o$etreme poverty %all $or reneed and more e$$e%tive development e$$orts in t"ese%ountries/ For AD, t"e overar%"in! !oals o$ in%lusive and environmentally sustainable!rot" in addition to re!ional inte!ration remain relevant but t"e institution mustma:e t"ese dire%tions more operational !oin! $orard/

+"e re$orm pro%ess set in motion under t"e Strate!y 2020 @idterm #evie provides a!reat opportunity $or AD, to s"i$t its or: onto a "i!"er level o$ e$$e%tiveness/Furt"ermore t"e pro


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Ee%utive Summary

+"e Asian Development ,an: 6AD,7 establis"ed t"e Asian Development Fund 6ADF7 in1)* as a Spe%ial Fund $or its %on%essional lendin! operations/ +"e ADF provides lointerest rate loans as ell as !rants to promote poverty redu%tion and improve t"e>uality o$ li$e in member %ountries it" lo per %apita in%omes and limited or lo%reditort"iness/ +"e ADF "as been replenis"ed 10 times sin%e its establis"ment it"t"e %urrent %y%le 6ADF XI7 %overin! 201201H/ +enty(nine %ountries are %urrentlyeli!ible to a%%ess ADF resour%es' 1* "ave a%%ess only to ADF resour%es 6Group A%ountries7 and 12 6Group ,7 "ave a%%ess to bot" ADF and AD,Bs ordinary %apitalresour%es 6OC#7/

+"is evaluation assesses t"e per$orman%e o$ ADF operations and provides su!!estions$or improvement/ +"e evaluation $o%uses on operations approved durin! ADF X6200)K20127 and t"e $irst "al$ o$ ADF XI 6201K2017 but in some areas %overs earlier

periods to !ain a lon!er perspe%tive/ +otal $inan%ial resour%es $or ADF X ere12/* billion and $or ADF XI are li:ely to surpass 1 billion/

+"e evaluation eamines t"e relevan%e o$ ADF operations t"eir responsiveness to ADF%ommitments and AD, strate!ies and t"eir results in parti%ular t"e operationsBsupport to in%lusive e%onomi% !rot" environmentally sustainable !rot" 6ESG7 andre!ional inte!ration in Asia and t"e .a%i$i%/ A mi o$ analyti%al met"ods as used'%ountry missions "ead>uarter intervies se%ondary do%ument revies topi%alba%:!round papers port$olio revies and synt"esis o$ prior evaluation $indin!s/

.overty is De%linin! but ADF ountries are Still ;i!"ly ulnerable

@ost AD F %ountries "ave redu%ed poverty/ In%ome poverty rates "ave de%lined in mostADF %ountries and li:e t"e rest o$ t"e Asia and .a%i$i% re!ion t"ey $a%e a !enerallypositive outloo: $or %ontinued !rot" and development/ ;oever re%ent e%onomi%so%ial and natural disaster s"o%:s "ave "urt poverty redu%tion/

Ine>uality "as not risen in t"e ma


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vi Asian Development Fund X and XI Operations

a%ross many o$ t"e %ountries it" a number o$ t"em slo to re%over/ +"eseeperien%es "i!"li!"t t"eir in%reasin! vulnerability/

ADF Su pport to In$rastru%ture Operations is Groin!

ADF loan and !rant resour%es "ave be%ome more %on%entrated on t"e t"ree main

in$rastru%ture se%tors/ Ener!y ater supply and ot"er muni%ipal in$rastru%ture andservi%es and transport and in$ormation and %ommuni%ation te%"nolo!y a%%ounted $orL o$ loan approvals durin! ADF IX/ +"eir s"are "as in%reased durin! ADF X and XI6200)K2017 to L o$ loan approvals/ ADF loan resour%es are spread amon! morese%tors t"an t"ose o$ OC# it" more loan resour%es !oin! to a!ri%ulture and naturalresour%es 61L %ompared it" L $or OC#7 edu%ation 6L %ompared it" 2L7 and"ealt" and so%ial prote%tion 6HL %ompared it" 0/1L7/ @ean"ile transport ener!yand a!ri%ulture are t"e dominant se%tors $or ADF !rants re%eivin! t"ree($ourt"s o$ t"e/ billion in !rant approvals over 200)K201/

Four subse%tors are dominant "ile some are no lon!er supported/

Durin! ADF X andXI t"e $our subse%tors dominant in lendin! ere' road transportM ater supply andsanitationM e%onomi% and publi% a$$airs mana!ementM and irri!ation draina!e and$lood prote%tion/ @ean"ile si areas t"at "ad re%eived ADF support in prior years areno lon!er supported under ADF X and XI/ +"ese are' ban:in! systems early %"ild"ooddevelopment $is"eries insuran%e and %ontra%tual savin!s livesto%: and slumup!radin! and "ousin!/ =ust one $orestry pro


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Executive Summary vii

publi% se%tor mana!ement 62L7 all s"o improvin! su%%ess rates $rom t"e earlier tot"e latter "al$ o$ t"e de%ade/

+"e "i!"est rated prouate time $or preparation and more intense supervision s"ould "elp/

Fo%us on pro


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viii Asian Development Fund X and XI Operations

In%lusive Gro t" #e>uires a Stron!er E $$ort

ADF operations ere to em p"asiCe and intensi$y support $or in%lusive !rot"/

In%lusive!rot" as adopted as a strate!i% a!enda in ADF X in line it" Strate!y 2020 andunder ADF XI a $urt"er %ommitment as made to intensi$y support $or in%lusive!rot"/ Donors and AD, also a!reed t"at in%lusive !rot" re>uires not only lar!e

in$rastru%ture investments but also support $or rural in$rastru%ture and promotin!e>uitable a%%ess to basi% servi%es alon! it" opportunities $or produ%tive employment/For ADF XI $urt"er emp"asis as !iven to rural poverty a!ri%ulture a%%ess to $inan%ialservi%es and parti%ipation in t"e labor mar:et/ Spe%i$i% a%tions $or ADF XI ere to's"arpen $o%us on in%lusive !rot" in %ountry strate!iesM en"an%e >uality o$ assessmentsand strate!ies $or promotin! in%lusive !rot"M and improve measurement o$ AD,Bs%ontributions to in%lusive !rot"/

.ro!ress "as been made in some areas/

#e%ent %ountry partners"ip strate!ies 6C.Ss7!ive more attention to in%lusive !rot" t"an did earlier strate!ies "ile AD, "asissued 6and reissued7 sta$$ !uidan%e $or in%lusive !rot" in C.Ss and automated itsproualitydi$$er a%ross %ountries/ Dia!nosti% studies on in%lusion and poverty are essential $oridenti$yin! %riti%al %onstraints to and opportunities $or a more in%lusive pattern o$!rot" and need to $eed into C.Ss more systemati%ally/ +"is :noled!e is important$or %ountry dialo!ue and needs to be %learly epounded and in$orm %ountry strate!iesma


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Executive Summary ix

pillar 2 it de%reased sli!"tly $rom L to *L and $or pillar it de%reased $rom 12L to)L/ +"e 201 Development E$$e%tiveness #evie $la!!ed t"e de%line in so%ialprote%tion operations as a %on%ern/ #e!ardless o$ t"e labellin! as pillar 1 or 2interventions %an and s"ould support in%lusion not ne%essarily pro


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x Asian Development Fund X and XI Operations

Some re!ional or!aniCations in ADF %ountries are doin! important or: to support

re!ional publi% !oods

/ Eamples are pro!rams to stren!t"en natural resour%emana!ement and disaster ris: redu%tion/ @ore e$$e%tive partners"ips it" t"eseor!aniations %an broaden AD,Bs impa%t/ AD, may %onsider alloin! a portion o$ ADF!rant resour%es to be provided to support t"ese or!aniations/

Stren!t"ened Support $or F AS and Food Se%urity is &eede d

Di$$i%ult development %ontets arrant %loser attention and %are$ul approa%"es/

It is int"e FCAS %ountries "ere development remains most di$$i%ult/ As o$ 201 t"ey%onsisted o$ A$!"anistan &epal and seven .a%i$i% island %ountries/ Con$li%t a$$e%tedsituations are also $ound in %ountries not %urrently %lassi$ied as FCAS su%" as .a:istan/+"e prevalen%e o$ %on$li%t violen%e and politi%al e%onomy ris:s amon! AD, member%ountries "as been underestimated by AD, and arrants !reater operational attention/Ot"er multilateral development ban:s "ave re%o!nied t"at doin! business in $ra!ileand %on$li%t(a$$e%ted %ountries %osts more re>uires !reater supervision e$$ort t"anelse"ere and demands di$$erent approa%"es/

@ore support and resour%es $or F AS operations are needed/

Sta$$ and %onsultantresour%es $or FCAS or: in AD, are limited and t"e e$$ort to en"an%e t"e %apa%ity and%on$li%t(sensitivity o$ sta$$ in FCAS %ountries "as so $ar been limited/ +"e per%enta!e o$on!oin! operations t"at are on tra%: remains notably loer $or FCAS %ountries%ompared to ot"er %ountry !roupin!s/ @ean"ile supervision intensity 6as measuredby sta$$ days per pro


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Executive Summary xi

stren!t"en t"e supply side o$ t"e $ood se%urity %"allen!e $ood inse%urity is also due todemand(side %"allen!es t"at erode t"e pur%"asin! poer o$ "ouse"olds/

Addressin! t"e $ood se%urity %"allen!e re>uires a broader approa%"/

Sa$ety nets andot"er interventions t"at tar!et t"e vulnerable are needed to address demand(side%onstraints and restore pur%"asin! poer amid $ood pri%e "i:es/ A spe%i$i% a%tion $or

ADF XI as $or AD, to revie t"e Sustainable Food Se%urity Operational .lan 6adoptedin 200)7/ AD, %ondu%ted t"e revie in 201 do%umentin! bot" a%"ievements ands"ort%omin!s in t"e desi!n and implementation o$ t"e plan/ +"e plan as vieed to$all s"ort on stren!t"enin! AD, en!a!ements in a!ri%ulture it" support $ora!ri%ultural produ%tion and mar:ets livesto%: $is"eries and resear%" all de%linin!/

Suppo rt $or Ot"er ADF .riorities is .ositive

Disaster response support and t"e Disaster #esponse Fa%ility 6D#F7 "ave been ell

re%eived/

Support $or disaster response in ADF %ountries "as !ron and t"e D#F "asproven e$$e%tive durin! its pilot p"ase/ +"e D#F s"ould be mainstreamed and i$ possiblein%reased and $urt"er improvements are needed to streamline disaster responseoperations/ Demand $or disaster ris: mana!ement 6D#@7 support is li:ely to %ontinue!roin! and t"e re%ently adopted operational plan $or inte!rated disaster ris:mana!ement provides a $oundation $or improvin! t"e e$$e%tiveness o$ operations int"is area/ AD, s"ould stren!t"en support $or t"e buildin!(ba%:(better prin%iple indisaster response prouality!ender a%tion plans and tool:its and trainin!/ AD,Bs (year rollin! avera!e $or !ender(t"emed prouity or !ender mainstreamin! issome"at "i!"er $or t"e ADF t"an $or AD, overall/ #esults o$ !ender pro


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xii Asian Development Fund X and XI Operations

%"an!e/ +"ese in%lude' in%onsistent and ea: !overnan%e dia!nosti% studies in %ountryand se%tor pro!ramsM t"e de%linin! s"are o$ transport and ener!y operations it" a!overnan%e t"emeM limited use o$ te%"ni%al assistan%e in in$rastru%ture se%tors 6relativeto t"e rapid !rot" in lendin!7M ea: implementation o$ t"e Se%ond Governan%e andAnti%orruption A%tion .lan at t"e prouire %ontinuedand in someareas in%reasedsupport and responsiveness $rom AD, and t"e ADF/ Indeed t"e%ommitment to intensi$y support espe%ially $or in%lusive and environmentallysustainable !rot" ill remain "i!"ly relevant and AD, s"ould redouble its e$$orts toma:e t"is %ommitment a more meanin!$ul operational reality/

A re$ormed and better(resour%ed AD, %an ma:e a bi!!er di$$eren%e/

+o :ey $a%tors"en ta:en to!et"er provide an unpre%edented %"an%e $or AD, to improve itsdevelopment e$$e%tiveness espe%ially in ADF %ountries/ First is t"e Strate!y 2020@idterm #evie and t"e re$orm pro%ess t"at it set in motion in 201/ I$ implementedell t"e re$orms %an s"i$t AD, onto a "i!"er level o$ institutional e$$e%tiveness/Se%ond t"e pro


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Executive Summary xiii

+"is %ombination o$ a re$ormed and better(resour%ed AD, ould !ive it a uni>ueposition amon! development institutions and provide a real opportunity $or it to ma:ea bi!!er and better di$$eren%e espe%ially in t"e poorest and most vulnerable %ountries/Additional resour%es espe%ially !rant resour%es s"ould enable AD, to investsi!ni$i%antly more in so%ial se%tors and a!ri%ulture "i%" %an ma:e important%ontributions to t"e strate!i% a!endas/ +"e ne Sustainable Development Goals s"ould

provide a use$ul $rameor: in terms o$ identi$yin! opportunities $or deeper AD,en!a!ement/

#e%ommendations

8"ile t"e evaluation identi$ies ays in "i%" AD, %an improve its support in t"epriority areas $our %"an!es are %riti%al to raisin! its development e$$e%tiveness/+"e $olloin! points summarie t"e :ey re%ommendations it" a more detaileddis%ussion on t"ese provided in ?in:ed Do%ument )/ For ADF 12 AD, s"ould'

6i7

Stren!t"en support $or in%lusive !rot" and environmentally sustainable

!rot" and s%ale up %limate %"an!e a daptation and disaster ris: mana!e ment

e$$orts/

Opportunities $or ma:in! t"e !rot" pro%ess more in%lusive need to bearti%ulated and supported in C.Ss t"eir results $rameor:s and t"eir mauent and severe natural disasters demand not only e$$e%tivesupport $or disaster relie$ e$$orts in t"e a$termat" o$ events but proa%tive andupstream support $or disaster preparedness and ris: redu%tion andinstitutional development $or D#@/ +"is ill "elp build resilien%e espe%ially in%ountries it" stron! vulnerability but ea: institutional %apa%ity/


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;A.+E# 1

Introdu%tion and ontet

1/ +"e Asian Development ,an: 6AD,7 establis"ed t"e Asian Development Fund6ADF7 in 1)* as a Spe%ial Fund to serve as an instrument to %arry out its %on%essionallendin! operations/ +"e ADF provides loans on %on%essional terms and !rants6in%ludin! te%"ni%al assistan%e +AP7 to promote poverty redu%tion and improve t"e>uality o$ li$e in member %ountries it" lo per %apita in%omes and limited or lo%reditort"iness/ +"e ADF "as been replenis"ed 10 times sin%e its establis"ment it"replenis"ments ta:in! pla%e every years sin%e 1))*/ +"e %urrent %y%le 6ADF XI7 %overs201201H/

2/ +enty(nine %ountries are %urrently eli!ible to a%%ess ADF resour%es 6+able 17'1* in t"e ADF(only !roup 6A7 and 12 in t"e blend ADF and ordinary %apital resour%es6OC#7 !roup 6,7/ Group C member %ountries 6OC#(only7 are not eli!ible to re%eive ADFresour%es/1 Amon! t"e 2) %ountries ) are %lassi$ied as $ra!ile and %on$li%t(a$$e%tedsituations 6FCAS7 as indi%ated in t"e table/2

+able 1' ADF ountry Groupin!s

Group A 6ADF(only7 Group , 6,lend ADF(O #7

A$!"anistanQ ,"utan Cambodia 9iribatiQ9yr!y #epubli% ?ao .eopleBs Demo%rati%#epubli% @aldives #epubli% o$ t"e @ars"allIslandsQ @yanmar &auruQ &epalQ SamoaSolomon IslandsQ +a


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2 Asian Development Fund X and XI Operations

/ +"e evaluationBs main ob


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Introduction and Context 3

assessed at some dept" t"e pilot ADF Disaster #esponse Fa%ility 6D#F7 and AD,Bsbroader disaster ris: mana!ement 6D#@7 support and support $or FCAS and privatese%tor development/ +"ese are %overed in C"apter se%tions A , and C/ #elyin!lar!ely on eistin! evaluations and se%ondary do%umentation t"e evaluation reviessupport $or !ender e>uality !overnan%e and $ood se%urity/ +"e evaluation alsoassesses AD,Bs pro!ress in implementin! t"e %ommitments a!reed to in t"e ADF X and

XI Donors #eports Implementation .lans/ +"ese are in C"apter se%tions D and E/C"apter 5 eamines t"e ADF resour%e replenis"ment and allo%ation pro%esses/ FinallyC"apter H provides an evaluative assessment 6on relevan%e responsiveness and results7and %on%lusions/ #e%ommendations are in t"e Ee%utive Summary it" ?in:edDo%ument ) providin! details on t"e re%ommendations plus additional su!!estions/

/ ?in:ed do%uments and supplementary appendies are listed at t"e end o$ t"ereport in%ludin! lists o$ all persons met in AD, "ead>uarters and durin! %ountrymissions 6?in:ed Do%uments 2 and 7/

D/

+"e Developm ent ontet

)/ .overty "as de%lined in most ADF %ountries and li:e t"e rest o$ t"e Asia and

.a%i$i% re!ion t"ey $a%e a !enerally positive outloo: $or %ontinued !rot" anddevelopment/ ,ut t"ey "ave not $ully s"ared in AsiaBs su%%ess story/

10/ #elative to t"e rest o$ t"e re!ion t"eir e%onomies "ave seen more errati%e%onomi% !rot" loer per %apita in%ome !rot" and sloer so%ial pro!ress/ +"eirrelatively narro e%onomi% bases and "i!" relian%e on ot"er e%onomies ma:e t"emprone to eternal s"o%:s/ +"ey $a%e di$$i%ult !overnan%e and %apa%ity %"allen!es andsome su$$er $rom $ra!ility instability and %on$li%t in%ludin! at t"e subnational level/+"eir publi% in$rastru%ture is inade>uate and t"ey stru!!le it" environmentalde!radation t"e !roin! t"reat o$ %limate %"an!e and natural disasters/

1/ Development Snaps"ot' AD, Overall and ADF ountries

11/ ADF %ountries la! be"ind t"e rest o$ t"e re!ion on ma


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+able 2' Developmen t Dimensions and Indi%ators

Dimensions Indi%ators Jear

AD,

overall

ADF

%ountries

.overty

Employment

.opulation livin! on less t"an 1/25 a daya 6L7 2011 15/ 1)/58a!e and salaried or:ers in total employment 6L7 2012 2)/) */5

;uman

Development

#atio o$ !irls to boys in se%ondary edu%ation 2011 0/) 0/)Gross loer se%ondary edu%ation !raduation rate 6L7 2012 )0/2 H0/1

4nder(5 %"ild mortality 6number per 1000 live birt"s7 201 )/ 55/@aternal mortality ratio 6number per 100000 live birt"s7 201 1/ 1H/8ater Sanitation

In$rastru%ture

4rban population usin! improved drin:in! ater sour%e 6L7 2012 )H/5 )/H4rban population usin! an improved sanitation $a%ility 6L7 2012 *1/1 */*.aved roads 6:ilometers per 10000 people7 2011 1*/0 */2Ele%tri$i%ation rate 6overall L7 2012 /5 H5/5

Ot"ers

Deposit a%%ounts in $inan%ial institutions 6per 1000 adults7 201 H*/2 5*/2Carbon dioide emissions 6metri% tons per %apita7 2010 / 0/)

AD, R Asian Development ,an: ADF R Asian Development Fund/a Epressed in pur%"asin! poer parity terms/&ote' Estimates are avera!es o$ a%tual %ountry values ei!"ted by population sie or imputed %ountry values"erever data are missin! $or t"e year re>uired ei!"ted by population sie/ ADF overall in%ludes all ADFdevelopin! member %ountries/Sour%e' AD, Development E$$e%tiveness #evie 201 S%ore%ard Si!nals and S%orin! @et"ods and StandardEplanatory Data Indi%ators/

2/

Grot" and Fis%al +rends

1/ ADF e%onomies "ave seen sli!"tly loer and more errati% !rot" rates relativeto non(ADF e%onomies over t"e past de%ade 6Fi!ure 17/ Countries %lassi$ied as FCAS"i%" ma:e up one(t"ird o$ ADF %ountries re%orded t"e loest and most volatile!rot"/ For .a%i$i% island states 6most o$ "i%" are %lassi$ied as FCAS7 per %apitain%ome !rot" over t"e past 0 years "as avera!ed less t"an 1L it" several%ountries eperien%in! de%linin! in%omes as population !rot" "as outpa%ed e%onomi%!rot"/10 Depressed !lobal %ommodity pri%es %on$li%t and instability and naturaldisasters "ave been t"e :ey !rot" %onstraints $or ADF e%onomies in re%ent years/

Fi!ure 1' GD. Grot" 200201

A R ADF(only , R blend C R OC#(only FCAS R $ra!ile and %on$li%t a$$e%ted situations GD. R !rossdomesti% produ%t/

&ote' Data $or &auru not available/Sour%e' Independent Evaluation Department %al%ulations based on International @onetary Fund 8orldE%onomi% Outloo: database 6O%tober 2017/

1/ +"e !rot" patterns "ave %ontributed to $is%al %"allen!es it" ADF(only andFCAS %ountries s"oin! "i!"er avera!e national !overnment bud!et de$i%its andvolatility 6Fi!ure 27/ ADF %ountries and a!ain FCAS %ountries in parti%ular also %arry"i!"er debt levels and rely more "eavily on development assistan%e/

10 IED/ 2015/ Corporate Evaluation Study' AD, Support to Small .a%i$i% Island Countries/ @anila' AD,/

ADF e%onomies

"ave seen loer

and more errati%

!rot" rates


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Introduction and Context 5

Fi!ure 2' Fis%al ,alan%e 200201

A R ADF(only , R blend C R OC#(only FCAS R $ra!ile and %on$li%t(a$$e%ted situations GD. R !rossdomesti% produ%t/&otes' Data $or &auru not availableM +imor(?este e%luded as an outlier 6avera!e $is%al balan%e o$ 1)/L7/Sour%e' Independent Evaluation Department %al%ulations based on International @onetary Fund 8orldE%onomi% Outloo: database 6O%tober 2017/

/

.overty and Ine>uality

15/ @ost %ountries $or "i%" data are available "ave per$ormed ell on redu%in!poverty based on t"e 1/51 a day re!ional poverty line applied by AD, in t"e 201 9eyIndi%ators analysis 6+able 7/11 Countries t"at "ave seen t"e lar!est absolute redu%tionsin t"eir poverty rates over t"e period 20052010 in%lude ,"utan Cambodia 9yr!y#epubli% ?ao .D# and &epalalt"ou!" $or some %ountries su%" as 9yr!y #epubli%t"is pro!ress "as stalled or reversed in re%ent years due to e%onomi% and ot"er s"o%:s/@any ADF %ountries ere espe%ially impa%ted by t"e !lobal e%onomi% %risis/ @oreoverin "al$ t"e %ountries one(>uarter or more o$ t"e populations 6as o$ 2010 estimates7 still$all under t"e re!ional poverty line/

+able ' .overty Estimates 4sin! t"e 1/51 a Day #e!ional .overty ?ine

.overty rate

6L7 +rend

ountries 2005 200 2010 20052010

Group A

,"utan 2*/H 1*/ )/5 De%reaseCambodia 5/5 / 25/ De%rease9yr!y #epubli% 1/2 11/2 12/H De%rease?ao .D# 5/1 H/* /1 De%rease@aldives /H 1/2 1/2 De%rease&epal 5*/5 H/) */2 De%rease+a


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1H/ +"e proportion o$ ADF %ountries t"at "as eperien%ed in%reasin! in%omeine>uality is smaller t"an t"at in non(ADF %ountries/ As measured by t"e Gini%oe$$i%ient in%ome ine>uality de%lined or as un%"an!ed in to(t"irds 612 o$ 17 o$%ountries $or "i%" data are available 6+able 7/ Gini %oe$$i%ients "ave risen in 2 o$ )%ountries in Group A o$ ) in Group , and 5 o$ 10 in Group C/

+able ' Ine>uality in Sele%ted ADF ountries

Gini oe$$i%ient

ountries Earlier Jear ?atest Jear +rend

Group A

,"utan 0/H 62007 0/* 620127 De%reaseCambodia 0/ 61))7 0/H0 6200)7 De%rease9yr!y #epubli% 0/5* 61))57 0/ 620117 De%rease?ao .D# 0/) 61))*7 0/H* 62007

In%rease

@aldives 0/H2* 61))7 0/* 62007 De%rease&epal 0/H* 61))57 0/2 620107 De%reaseSamoa 0/50 620027 0/0 6200H7 De%rease+auality

de%lined or as

un%"an!ed in

to(t"irds o$

%ountries $or

"i%" data are

available

A ran!e o$

%"allen!es

persist it"

some

intensi$yin!


24/93

;A.+E# 2

ADF Finan%in! and

.er$orman%e

1)/ +"is %"apter revies ADF $inan%in! sour%es and trends allo%ation patternsper$orman%e o$ %ompleted operations and implementation pro!ress $or on!oin!prouidity/

Fi!ure ' ADF #esour%es by #eplenis"ment ADF I to ADF XI

ADF R Asian Development Fund/&otes' Fi!ures epressed at e%"an!e rates spe%i$ied in t"e relevant ,oard o$ GovernorsB #esolutions/E%ludes t"e allo%ation to t"e +e%"ni%al Assistan%e Spe%ial Fund/ Ot"er #esour%es in ADF IADF in%ludedset(aside resour%es a%%umulated surplus and a%%umulated loan repayments/ #e$los ere distin!uis"ed$rom Ot"er #esour%es in ADF I/ From ADF IKADF XI Ot"er #esour%es %onsisted o$ ordinary %apitalresour%es net in%ome trans$er loan and !rant savin!s and %an%ellations li>uidity dradon andad


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,/

Allo%ation and O perational .atterns

1/ Allo%ation by ountry

21/ Eli!ibility $or ADF resour%es is based on t"e AD, Graduation .oli%y "i%"determines eli!ibility based prin%ipally on a %ountryBs per %apita !ross national in%omeand %reditort"iness/1 ADF resour%es are allo%ated usin! t"e per$orman%e(basedallo%ation 6.,A7 me%"anism "i%" de$ines t"e prin%iples and %riteria to !uideallo%ations/ +"e .,A priorities %ountry per$orman%e as assessed in annual %ountryper$orman%e assessment 6C.A7 s%ores as t"e basis $or allo%ation o$ ADF resour%es/,ut ot"er $a%tors su%" as debt levels and ot"er spe%ial %ir%umstan%es are %onsidered/All ot"er t"in!s bein! e>ual loer per %apita in%ome attra%ts additional resour%es asdoes a lar!er population/ C"an!es in per$orman%e are t"e most poer$ul in$luen%e on%"an!es in allo%ations/15

22/ ,an!lades" iet &am .a:istan &epal and Cambodia are t"e top $ivere%ipients o$ loan resour%es re%eivin! about to(t"irds o$ ADF X and XI approvalsdurin! 201201 6Fi!ure 7/ At t"e opposite end o$ t"e distribution 6not s"on in t"e

%"art7 are t"e small .a%i$i% %ountries' t"e Federated States o$ @i%ronesia 6FS@7 .alauand t"e #epubli% o$ t"e @ars"all Islands 6#@I7/ +"ey "ave re%eived / million5/ million and 1/5 million respe%tively over t"e H years alt"ou!" on a per %apitabasis t"ese %ountries "ave re%eived t"e "i!"est amount o$ ADF resour%es/

Fi!ure ' +op ADF ?oan #e%ipients ADF X and XI 6200)2017

ADF R Asian Development Fund A#@ R Armenia ,A& R ,an!lades" ,;4 R ,"utan CA@ R CambodiaGEO R Geor!ia 9GT R 9yr!y #epubli% ?AO R ?ao .eopleBs Demo%rati% #epubli% @O& R @on!olia @JAR @yanmar &E. R &epal .A9 R .a:istan .&G R .apua &e Guinea S#I R Sri ?an:a +A R te%"ni%alassistan%e 4T, R 4be:istan IE R iet &am/&ote' Only top 15 re%ipients in ADF(only and blend %ountries are s"on/Sour%e' ?oan +A !rant and e>uity approvals database/

2/ A$!"anistan +a


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ADF Financing and Performance 9

under ADF X to A$!"anistan and +imor(?este and under ADF XI to A$!"anistan and@yanmar/

2/ Over t"e 2005201 de%ade1H iet &am re%eived t"e "i!"est net trans$er o$ADF loan resour%es


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2/

O$$i%ial o$inan%in!

25/ Over 200)201 o$$i%ial %o$inan%in! raised $or ADF operations s"os no%onsistent pattern over t"e period 6Fi!ure H7/ +"e years 2011 and 201 re%orded t"e"i!"est levels o$ %o$inan%in! $or ADF/ In 2011 it as driven by %o$inan%in! to,an!lades" 6)H/ million7 and &epal 61H/H million7/ In 201 it as driven by

%o$inan%in! to .a:istan 6H51/ million7 &epal 62H0/5 million7 and iet &am625*/2 million7/

Fi!ure H' O$$i%ial o$inan%in! 6DA7 $or ADF Operations 200)201

ADF R Asian Development Fund DA R dire%t value(added/Sour%e' @ana!ementBs Dis%ussion and Analysis $rom Asian Development ,an: Annual #eports 200)201/

2H/ Durin! t"e 2005201 de%ade 1/ billion in o$$i%ial %o$inan%in! $rom Hbilateral and multilateral sour%es as raised $or AD, operations in ADF(eli!ible%ountries/ +"e ma


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Fi!ure *' Se%tor Distribution o$ ADF ?oans and O # ?oans 6by value7 2005201

ADF R Asian Development Fund A R a!ri%ulture and natural resour%es ED4 R edu%ation E&E R ener!y FI& R $inan%e;S. R "ealt" and so%ial prote%tion IA+ R industry and trade @4? R multise%tor OC# R ordinary %apital resour%es .S@ Rpubli% se%tor mana!ement +A R te%"ni%al assistan%e +AI R transport and in$ormation and %ommuni%ation te%"nolo!y8@S R ater supply and ot"er muni%ipal in$rastru%ture and servi%es/Sour%e' ?oan +A Grant and E>uity Approvals database/

2/ Alt"ou!" ADF lendin! is %on%entrated on t"e t"ree main in$rastru%ture se%torsADF loan resour%es are spread amon! more se%tors t"an OC# lendin!/ &early to(t"irds o$ OC# resour%es "ave !one toard t"e primary in$rastru%ture se%tors "ile $orADF it is


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+able 5' +op 10 ADF ?oan Subse%tors 6by value7 ADF IXXI

ADF IX ADF X ADF XI 62012017

#an: Subse%tor 6s"are7 Subse%tor 6s"are7

Subse%tor 6s"are7

1

+A I

' #oad +ransport 61L7+A I

' #oad +ransport 61HL78@S'

8ater Supply andSanitation 615L7

28@S

' 8ater Supply and

Sanitation 6*L7

8@S'

8ater Supply and

Sanitation 61L7

.S@'

E%onomi% and .ubli%

A$$airs @ana!ement 612L78@S'

4rban Se%torDevelopment 6HL7

A'

Irri!ation Draina!e andFlood .rote%tion 6L7

+A I

' #oad +ransport 610L7

FI&'

Finan%e Se%torDevelopment 65L7

.S@'

E%onomi% and .ubli%A$$airs @ana!ement 6*L7

A'

Irri!ation Draina!e andFlood .rote%tion 6)L7

5ED4'

Edu%ation Se%torDevelopment 6L7

A'

A!ri%ulture and #uralSe%tor Development 65L7

;S.'

So%ial .rote%tion 6L7

H A' A!ri%ulture and #uralSe%tor Development 6L7

E&E' Ele%tri%ity +ransmissionand Distribution 6L7

E&E' Ener!y Se%torDevelopment 6*L7

*.S@'

E%onomi% and .ubli%A$$airs @ana!ement 6L7

ED4'

.re(.rimary and ,asi%Edu%ation 6L7

E&E'

Ele%tri%ity +ransmissionand Distribution 6HL7

;S.'

;ealt" Systems 6L7+A I

' 4rban +ransport 6L7E&E'

?ar!e ;ydropoer 65L7)

A'

8ater(,ased &atural#esour%es @ana!ement 6L7

FI&'

@oney and Capital@ar:ets 6L7

ED4'

4pper Se%ondaryEdu%ation 6L7

10 .S@' .ubli% Administration6L7 ;S.' ;ealt" Systems 6L7 ED4' +e%"ni%al Edu%ation ando%ational S:ills +rainin! 6L7Subtotal

52L

Subtotal

H*L

Subtotal

*L

ADF R Asian Development Fund A R a!ri%ulture and natural resour%es ED4 R edu%ation E&E R ener!y FI& R$inan%e ;S. R "ealt" and so%ial prote%tion IA+ R industry and trade @4? R multise%tor .C# R pro


30/93


stron!ly it" AD,Bs lon!(term strate!i% priorities or by t"e pre$eren%es o$ member%ountries t"emselves/

/ Debt sustainability %on%erns and support $rom ot"er development partners areimportant $a%tors in$luen%in! t"e use o$ ADF !rant resour%es/ ?oo:in! $orard it"t"e prouivalent trend $or AD, overall is H2L H2L and 55L loert"an t"e ADF levels/1 In$rastru%ture pro


31/93


t"e de%ade/ +"ese same $ive ere also t"e top ADF loan re%ipients under ADF X and XI6t"rou!" 2017/ ;al$ t"e +A re%eived by ADF %ountries "as !one into t"ree se%tors'publi% se%tor mana!ement 61L7 transport and in$ormation and %ommuni%ationte%"nolo!y 61*L7 and ener!y 61HL7/ AD,Bs support $or publi% se%tor mana!ementoperations in ADF %ountries "i%" in%ludes support $or publi% se%tor re$orms and%apa%ity development is appropriate !iven t"e %"allen!es t"ese %ountries $a%e/

*/ #e!ional +A 6$rom all sour%es7 totaled 1/2H billion over 2005K201 pea:in!at nearly 200 million in 201 it" t"e approval o$ several lar!e +A pro


32/93


rates in 200 and 200) ere driven by less t"an su%%ess$ul or unsu%%ess$ul pro


33/93


Fi!ure )' Su%%ess #ates o$ ADF(Finan %ed .ro


34/93


Fi!ure 10' Su%%ess #ates o$ ADF(Finan%ed .ro


35/93


,o 1' .ro


36/93


5/

Fa%tors 4nderlyin! 8ea: E$$i%ien%y and Sustainability

5/ Five %ountry evaluations "ad less t"an e$$i%ient ratin!s/ Amon! t"e most%ommonly identi$ied $a%tors $or t"ese ratin!s ere' %apa%ity %onstraints inimplementin! a!en%ies la%: o$ %ounterpart $unds sta$$in! delays overly optimisti%

implementation s%"edules %omple desi!ns t"at did not a%%ount $or limited %apa%ityand %onsultant re%ruitment delays 6see +able H $or ot"er $a%tors7/

+able H' Fa%tors ited $or 8ea : E$$i%ien%y in ountry Evaluations

6i7 Capa%ity %onstraints in implementin!a!en%ies

6ii7 Cost overruns6iii7 ?a%: o$ %ounterpart $unds6iv7 Delays due to reor!aniations in

!overnment or AD,6v7 Delays in sta$$in! implementation units6vi7 De$i%ient pro%urement %umbersome

pro%edures and poor mana!ement6vii7 4nsuitable %ontra%tors and %onsultants

6viii7 Constru%tion(related delays

6i7 Overly optimisti% implementation periods67 ?imited AD, e$$orts to build %apa%ity

it"in !overnment ma:in! it di$$i%ult $or!overnment to supervise %ontra%tors

6i7 Implementin! a!en%iesB un$amiliarity it"AD, pro%edures

6ii7 Comple desi!ns t"at $ailed to a%%ount $orea: implementation %apa%ity

6iii7 Delays in %onsultant re%ruitment

AD, R Asian Development ,an:/Sour%es' Country assistan%e pro!ram evaluations $or A$!"anistan 62002 ‒20117 ,"utan 62001 ‒200)7 9yr!y #epubli%61)) ‒20107 ?ao .eopleBs Demo%rati% #epubli% 62000 ‒200)7 @aldives 61)* ‒20107 .a:istan 62002 ‒20127 .apua &eGuinea 62001 ‒2017 +a


37/93


$olloed by a revie o$ underlyin! $a%tors t"at %ontributed to limited developmentimpa%ts in t"e si %ountry pro!rams it" less t"an satis$a%tory and partly satis$a%tory development impa%t assessments/ Amon! t"e si %ountries it" less t"an satis$a%tory or partly satis$a%tory development impa%ts 4be:istan as in t"e uni>ue position o$"avin! an overall su%%ess$ul ratin!/

+able ' Development Impa%ts o$ ountry .ro!rams

Satis$a%tory Developme nt Impa%t

?ess + "anN.artly Satis$a%tory

Development Impa%t

+a


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51/ In t"e @aldives e$$orts toard re!ional development o$ t"e outer islands ereat t"e pilot sta!e/ AD,Bs %ontribution to t"e tsunami emer!en%y response as beloepe%tations as several subpro


39/93


55/ Consultations it" re!ional or!aniations in t"e .a%i$i% $ound some %on%ernabout absorptive %apa%ity in t"e re!ion/ +"e ability o$ t"e smaller island states inparti%ular to utilie development resour%es e$$e%tively is a %"allen!e !iven ea:nessesin pro


40/93


as %onsultants in t"e smaller .a%i$i% %ountries as ell as more %reative and $leible useo$ te%"ni%al assistan%e re$le%ts AD,Bs e$$orts to stren!t"en supervision/

5/ +"e evaluation identi$ied t"e "i!"est rated ADF($inan%ed pro


41/93

;A.+E#

+"e Strate!i% A!endas

5)/ ADF X and XI operations ere to ali!n it" AD,Bs lon!(term %orporatestrate!i% $rameor: adopted in 200Strate!y 2020"i%" set out t"e t"reestrate!i% a!endas o$ in%lusive e%onomi% !rot" ESG and re!ional inte!ration/ Donorsvieed t"ese a!endas as "i!"ly relevant to t"e needs o$ ADF %ountries and en%oura!edAD, to prioritie support $or in%lusion sustainability and inte!ration in t"e pursuit o$t"e broader !oal o$ a%"ievin! an Asia and .a%i$i% re!ion $ree o$ poverty/

A/ In%lusive Gro t"

1/

+"e "allen!e

H0/ As dis%ussed in C"apter 1 available indi%ators present a !enerally positive storyin terms o$ poverty redu%tion and ine>uality in most ADF %ountries/ ,ot" t"e number o$people livin! belo t"e 1/25 a day poverty line and in%ome ine>uality as measured byt"e Gini %oe$$i%ient "ave $allen in t"e mauitable a%%ess to basi% servi%es alon! it" opportunities $or produ%tive employment/

H2/ ADF XI provided a more re$ined arti%ulation o$ in%lusive !rot" re$le%tin! an

evolvin! understandin! o$ t"e issue/ It noted t"at risin! ine>uality not only %ontributesto in%reasin! development !aps it"in and beteen %ountries but also a$$e%ts t"e pa%eo$ !rot" and its impa%t on poverty redu%tion/ =obless !rot" and barriers to servi%es$or omen and ot"er disadvanta!ed !roups underpin e%lusion and $ra!mentation/Attention to rural poverty a!ri%ulture a%%ess to $inan%ial servi%es and parti%ipation int"e labor mar:et as emp"asied/

H IED/ 201/ In%lusion #esilien%e C"an!e' AD,Bs Strate!y 2020 at @id(+erm/ @anila' AD,/

Donors and AD,

a!reed to

intensi$y

support $or

in%lusive ! rot"


42/93

Te Strategic Agendas 25

H/ As part o$ t"e broader e$$ort to intensi$y support $or in%lusive !rot" severalspe%i$i% a%tions ere identi$ied $or ADF XI' a s"arpened $o%us on in%lusive !rot" inC.SsM en"an%ed >uality o$ assessments and strate!ies $or promotin! in%lusive !rot"Mand improved measurement o$ AD,Bs %ontributions to in%lusive !rot"/* Donors In201 IED endorsed similar measures in its evaluation o$ AD, support $or in%lusive!rot" %allin! $or stron!er %ountry dia!nosti% studies and better tra%:in! o$ t"e

per$orman%e o$ AD,Bs in%lusive !rot" interventions amon! ot"er re%ommendations/

H/ Strate!y 2020Bs in%lusive !rot" $rameor: is built on t"ree pillars' 6i7 "i!"sustainable !rot" t"at %reates and epands e%onomi% opportunities 6pillar 17M6ii7 broader a%%ess to t"ese opportunities to ensure t"at all se!ments o$ t"e population%an parti%ipate in and bene$it $rom e%onomi% !rot" by improvin! "uman %apa%itiest"rou!" investments in edu%ation "ealt" and basi% so%ial prote%tion as ell asen"an%in! t"e poorBs a%%ess to mar:ets and produ%tive assets 6pillar 27M and 6iii7 so%ialsa$ety nets to prevent etreme deprivation 6pillar 7/

/

Evaluation Findin!s

H5/S"arpenin! in%lusive !rot" $o%us and dia!nosti% studies in .Ss/

Attention to

in%lusive !rot" "as in%reased in re%ent C.Ss %ompared to earlier ones alt"ou!" it isnot alays identi$ied as an epli%it development ob


43/93


re$eren%e to loer(in%ome !roups omen or la!!in! areas and "ot"ey mi!"t bene$it $rom t"e pro!ram/2

H*/ In%lusive !rot" and poverty dia!nosti% studies need to be more systemati%allyprepared and $eed into t"e development o$ %ountry and se%tor strate!ies/ +"orou!"dia!nosti% analyses are essential to developin! e$$e%tive interventions/ +"is

:noled!e($irst $inan%e $ollos3 approa%" as re$erred to by AD,Bs Sout"east AsiaDepartment is an e$$e%tive ay to mainstream :noled!e or: into %ountrypro!rammin! and prouired to address t"is in%ludin! possibly moreinvolvement by departments su%" as AD,Bs E%onomi% #esear%" and #e!ionalCooperation Department/

*0/Improved m easurement o$ A D,Bs %ontributions to in%lusive !rot"/

.ro!ress isbein! made on t"is priority/ In 2012 AD, added ne in%lusive !rot" indi%ators to t"eresults $rameor: in%ludin! t"ree ne indi%ators at level to monitor t"e proportion

o$ AD, operations supportin! t"e t"ree pillars o$ in%lusive !rot"/ 5 In 201 AD, also

2 AD,/ 200)/ AD,Bs .a%i$i% Approa%"' 2010201 / @anila/ AD,/ 2012/ 9noled!e First' .ro!ressin! 9noled!e @ana!ement in t"e Sout"east Asia Department

20102011/ @anila/ AD,/ 201/ Guidelines on In%lusive E%onomi% Grot" in t"e Country .artners"ip Strate!y/ @anila/5 +"e AD, %orporate results $rameor: %overs AD, operations as ell as t"e subset o$ operations supported

by t"e ADF/ +"e results $rameor: "as $our levels/ ?evel 1 tra%:s development pro!ress in Asia and t"e.a%i$i% to monitor t"e %ontinued relevan%e o$ Strate!y 2020/ It does not assess AD, per$orman%e as itre$le%ts %olle%tive development e$$orts and results/ ?evels 2 measure AD,Bs per$orman%e in ee%utin!Strate!y 2020/ ?evel 2 $o%uses on AD,Bs %ontribution to development results t"rou!" t"e delivery o$

Dia!nosti%

studies in

advan%e o$ .Ss

are needed to

s"arpen

pro!ram desi!ns

AD, added ne

in%lusive !rot"

indi%ators to t"e

results

$rameor:


44/93


revised its prouality(at(entry perspe%tive7t"at "ile re%ent C.Ss !ive satis$a%tory attention to t"e $irst to pillars somestrate!ies paid too little attention to t"e t"ird pillar/

*1/ 8"ile all t"ree pillars are ne%essary to develop a port$olio $or !reater in%lusionit %annot be assumed t"at so lon! as pro


45/93


missions/ As epe%ted t"ese dis%ussions %overed a ide ran!e o$ perspe%tivesalt"ou!" several %ommon t"emes emer!ed/ 8"ile in%lusive !rot" is re%o!nied as apriority ea%tly "o AD, !oes about pursuin! t"is a!endaand in parti%ular "at it"as been doin! di$$erently in re%ent years to intensi$y support $or in%lusive !rot"as o$ten di$$i%ult to dis%ern/ +"is as espe%ially t"e %ase in %ountries "ere t"e%omposition o$ AD,Bs port$olio "as not $undamentally %"an!ed in t"e past de%ade/

@ission teams $ound a tenden%y amon! %ounterparts bot" in resident missions and in!overnment to presume t"at all interventions supported by AD, naturally or eventuallybene$it t"e poor/ 8"ere and "o AD, supports in%lusive !rot" as relatively easierto identi$y in t"ose %ountries "ere it "as 6i7 a%tively supported pro!rams in la!!in!areas and tried to address disparities in%ludin! t"ose stemmin! $rom %on$li%t6ii7 embedded in%lusion($o%used %omponents into ma


46/93


**/ In Sri ?an:a AD,Bs support $or in%lusive !rot" "as been in$luen%ed by nearly de%ades o$ %ivil %on$li%t "i%" resulted in t"e !radual e%lusion o$ t"e nort" andeastern provin%es o$ t"e %ountry $rom t"e $ormal e%onomy/ AD, support $or %on$li%t(a$$e%ted areas started ell be$ore pea%e as de%lared/ +"is support in%luded a mi o$national level prouality in parti%ular in terms o$ t"e ruralurbandivide as an important issue/ As dis%ussed in C"apter 1 +auality appears to "ave orsened/

0/Intensi$yin! support $or in%lusive !rot"' an overall assessment/

Alon!sidesome positive developments t"ere are some %riti%al areas "ere more e$$ort is neededi$ AD, is to ma:e !ood on its %ommitment to intensi$y support $or in%lusive !rot" inADF %ountries/ 8"ile re%ent C.Ss re$le%t !reater attention to in%lusive !rot" and"ile AD, "as improved sta$$ !uidan%e and its pro%ess o$ %ate!oriin! pro


47/93


do%uments su%" as t"e Frameor: o$ In%lusive Grot" Indi%ators "i%" %onsolidates>uantitative indi%ators $or monitorin! in%lusive !rot" trends and patterns in%ountries %an %omplement t"ese !uidelines/51 @oreover t"rou!" t"e @+# pro%ess6$ootnote 17 AD, "as pled!ed to %ontinue stren!t"enin! t"e in%lusive !rot" $o%us inC.Ss/

2/ 8"ile better %ate!oriin! o$ prouality or non(in%lusive !rot" is a !reater %"allen!e in some ADF %ountriest"an in ot"ers/ 8"ere ine>uality is !reatest or "ere it "as in%reased most AD, mayant to step up its support $or e$$orts to address t"e :ey %onstraints and pursue t"e:ey opportunities $or in%lusive !rot"/

H/ Countries in Asia and t"e .a%i$i% underinvest in t"e t"ird pillar o$ so%ialprote%tion in%ludin! sa$ety net pro!rams/ +"is as do%umented in t"e 2012 IEDevaluation on so%ial prote%tion52 and is ell re%o!nied in AD,Bs 201 So%ial .rote%tion

Operational .lan/5

+"is re>uires AD, to $o%us more attention and resour%es on so%ialprote%tion interventions a!ain per"aps $o%usin! on t"ose %ountries or re!ions "ereso%ial prote%tion and sa$ety nets are most limited/ ,uildin! stron!er sa$ety nets is also a%riti%al part o$ $ood se%urity/ Food inse%urity remains a %on%ern $or many ADF %ountries/Sa$ety nets and ot"er interventions t"at dire%tly tar!et "ouse"olds or individuals are

51 AD,/ 201/ Frameor: o$ In%lusive Grot" Indi%ators 201' 9ey Indi%ators $or Asia and t"e .a%i$i% Spe%ialSupplement/ @anila/

52 IED/ 2012/ Spe%ial Evaluation Study' AD,Bs So%ial .rote%tion Strate!y 2001 / @anila' AD,/5 AD,/ 201/ So%ial .rote%tion Operational .lan 201K2020 / @anila/

E%onomi%

!rot" remains

essential but its

e$$e%ts on

poverty and

ine>uality di$$er

a%ross %ountries

ountries in Asia

and t"e .a%i$i%

underinvest in

so%ial prote%tion


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ne%essary to address demand(side %onstraints and restore peopleBs pur%"asin! poeramid $ood and $uel pri%e "i:es/

*/ Finally it ould pay $or AD, to $urt"er mainstream its in%lusive !rot" $o%usa%ross ot"er strate!i% and operational areas/ For eample t"e lin:s beteen in%lusive!rot" and ESG %an be stren!t"ened/ AD,Bs re%ent e$$ort to promote more in%lusive

business is anot"er eample/ ,o provides an additional dis%ussion onoperationaliin! in%lusive !rot"/

,o ' OperationaliCin! In%lusive Grot"' +oards a ommo n 4nderstandin!

Sin%e adoptin! in%lusive !rot" as a strate!i% a!enda under Strate!y 2020 in 200 AD, "as%ontinued to %lari$y t"e a!enda and its analyti% and operational appli%ation/ +"e IndependentEvaluation Department "as %ontributed analyti% and evaluative inputs/ Over time some importantpoints o$ %onsensus "ave been rea%"ed in terms o$ "o best to operationalie in%lusive !rot"/

+"ere is a %ommon understandin! t"at AD,Bs in%lusive !rot" a!enda must be tailored to %ountryneeds and t"at stron!er in%lusive !rot" dia!nosti% studies are needed in %ountry partners"ipstrate!ies/ It is also !enerally a!reed t"at in%lusion ou!"t to be vieed $rom a port$olio perspe%tiverat"er t"an pro


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"en %ompared it" lar!er %ountries su%" as t"e .eople-s #epubli% o$ C"ina 6.#C7 andIndia/

)/ ADF %ountries are etremely diverse "i%" a$$e%ts t"e nature and s%ale o$ t"eirenvironmental sustainability priorities/ +"e diversity amon! ADF %ountries is %learlymani$ested in terms o$ s"arp di$$eren%es in t"eir territorial demo!rap"i% and

e%onomi% sies and prosperity/ 4rbaniation is very uneven/ Cambodia &epal .apua&e Guinea Sri ?an:a and some o$ t"e .a%i$i% island states 6e/!/ Solomon Islands+on!a and anuatu7 "ave a >uarter or less o$ t"eir populations in tons and %ities/Ot"er ADF %ountries 6e/!/ Armenia @on!olia @ars"all Islands .alau and +uvalu7 areno more t"an 50L urban/

)0/ ,asi% environmental indi%ators and environmental sustainability %on%erns alsovary/ +"e area under $orest %over ran!es $rom very lo e/!/ 2L in A$!"anistan and.a:istan to over to(t"irds o$ t"e land area e/!/ in ,"utan ?ao .D# and several.a%i$i% %ountries/ Annual avera!e de$orestation rates beteen 2000 and 2010 ereli:eise >uite di$$erent $rom net de%reases in $orest loss 6i/e/ net a$$orestation7 in,"utan 9yr!y #epubli% .alau 4be:istan and iet &am to %omparatively "i!" rateso$ $orest loss in Armenia Cambodia @yanmar .a:istan and +imor(?este/ .oor urbanair >uality is a si!ni$i%ant problem in numerous %ountries parti%ularly ,an!lades"Cambodia &epal .a:istan and iet &am/ Contributions to !lobal !reen"ouse !as6G;G7 emissions amon! ADF %ountries ere "i!"est in .a:istan 4be:istan and iet&am even t"ou!" t"ey ere small in relative terms/ +"e lar!est ADF emitter 6.a:istan7a%%ounted $or


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6i7 %limate %"an!e 6AD, ould assist %ountries to move t"eir e%onomies onto a lo(%arbon !rot" pat" and support %limate resilient development %limate adaptationP7M6ii7 livable %ities 6AD, ould support %ountries to redu%e t"eir %arbon $ootprints and"elp t"em address environmental problems resultin! $rom rapid urbaniation7M and6iii7 %omplementary a%tions 6AD, ould "elp %ountries' mainstream environmental%onsiderations into %ountry poli%ies and stren!t"en le!al re!ulatory and en$or%ement

%apa%ities o$ publi% institutions it" respe%t to environmental %on%ernsM and supportre!ional %ooperation to provide e$$e%tive approa%"es on s"ared environmental publi%!oods7/

)/ ADF X operations ould "elp !overnments inte!rate environmental%onsiderations into t"eir development plannin! and pro!rams support subre!ionalenvironment pro!rams and in%orporate measures to support %limate %"an!emiti!ation and adaptation/5 For ADF XI %limate %"an!e espe%ially adaptation andin%reased vulnerability to natural disasters ater s%ar%ity unplanned and unsustainableurbaniation pollution and loss o$ $orest %over and biodiversity ere t"e priorities/5) ADF %ountries need "elp to address t"ese issues in t"e $orm o$ investments insustainable in$rastru%ture e%osystem mana!ement and en"an%ed environmental!overnan%e in%ludin! improved %omplian%e and en$or%ement/ AD, as to en"an%e

support $or pro


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!overnan%e and mana!ement %apa%ity to t"e list o$ AD, dire%tions in relation to ESGt"at is also no identi$ied as !reen !rot"/H1 +"e Environment Operational Dire%tionsalso retains respondin! to %limate %"an!e as a priority and %"ara%teries it as animperative t"at %uts a%ross ea%" o$ t"e ot"er t"ree/H2 Despite t"e r"etori%al move aay$rom livable %ities in t"e Environment Operational Dire%tions several re%ent AD,investment pro


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ill "elp to improve t"e tra%:in! o$ %limate %"an!e operations in $uture/ +"isnotit"standin! ADF %ommitments as a s"are o$ all AD, %ommitments 6i/e/ ADF andOC#7 identi$ied as bein! $or ESG "ave also pro!ressively in%reased over t"e past 10years $rom 15L o$ t"e total on avera!e beteen 2005200 to 2L in 201201/

Fi!ure 1' ADF ?oan and Grant Approvals it" ESG +"em e 2005201

ADF R Asian Development Fund ESG R environmentally sustainable !rot"/Sour%e' Independent Evaluation Department/

100/ 8"ile t"e in%reased numbers o$ pro


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Fi!ure 15' S"are o$ ADF ?oan and Grant A pprovals in Ener!y and +ransport Subse%tors

200200 and 200 )201 6by volume7

ADF R Asian Development Fund IC+ R in$ormation and %ommuni%ation te%"nolo!y/&ote' +"e $olloin! ener!y and transport subse%tors are not in%luded "ere' ener!y utility servi%esM pipelinesMreneable ener!yind biomass and aste !eot"ermalM oil and !as transmission and distributionMin$ormation and %ommuni%ation te%"nolo!yM transport mana!ement and poli%iesM multimodal lo!isti%sM and

urban roads and tra$$i% mana!ement/Sour%e' Independent Evaluation Department/

10/ +"e s"i$t in transport "as been sloer/ +"e number o$ sustainable urbantransport pro


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investments only a $e %ountries do in(dept" studies on environmental %onditions/HH For its part AD, is no implementin! ater se%tor assessments in %ountries asre%ommended in t"e 8ater Operational .lan 20112020/H* ADF a!ri%ulture and naturalresour%e se%tor pro


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%omponents $unded t"rou!" eternal sour%es "ave yet to be re!ularly repli%ated it"AD, $inan%in!/ In addition a re%ent IED evaluation o$ AD,Bs initiatives to supporta%%ess to %limate $inan%e $ound t"at t"e mainstreamin! o$ miti!ation interventions byAD, "ad been lar!ely limited to %lean ener!y prouality mana!ement 6e/!/ internationalriver basins biodiversity terrestrial and marine e%osystem mana!ement air pollution

and G;Gs7/ AD, s"ould support more livable and !reener %ities and stren!t"enedenvironmental !overnan%e at all levels o$ publi% administration parti%ularly in ADF%ountries "ere t"e needs $or $inan%ial and te%"ni%al support and institutional %apa%itybuildin! tend to be !reatest/

110/ AD, s"ould %ontinue re$inin! its de$inition and ta!!in! o$ ESG in t"e .CS/Given t"at mu%" o$ AD,Bs business remains in$rastru%ture t"e ESG ta! ould be moreappropriate i$ it %ould be assi!ned a proportional ei!"t 6i/e/ t"e s"are o$ total prouestion is "et"er ESG out%omes are bein! a%"ieved/

111/ Greater inte!ration beteen ESG and in%lusive !rot" and re!ional%ooperation ob


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%limate %"an!e a!enda/ Similarly a stron!er inter$a%e beteen ESG and re!ional%ooperation and inte!ration 6#CI7 %ould "elp %limate %"an!e miti!ation by $o%usin!more on re!ional and !lobal publi% !oods "ile also "avin! potentially si!ni$i%antpositive impa%ts on sustainable liveli"oods and lo%al %ommunities as is alreadyo%%urrin! it" international road %orridors in t"e Greater @e:on! Subre!ion 6G@S7/

112/ Furt"er mainstreamin! o$ %limate %"an!e %onsiderations in%ludin! in relationto D#@ in C.Ss and usin! more o$ t"e AD,Bs on resour%es to support bot" ESG($o%used investment and +A operations s"ould be a priority/ +"e initial steps ta:en toestablis" an internal Climate C"an!e Fund in 200 s"ould be s%aled up/ In additionAD, s"ould $ollo up IEDBs re%ommendations in t"e a%%ess to eternal %limate $inan%eevaluation 6para/ 10*7 parti%ularly to %reate and bro:er ne :noled!e to bettersupport %ountries as t"ey trans$orm t"eir e%onomies introdu%e innovative $inan%ialprodu%ts and levera!e ot"er sour%es o$ publi% and private $inan%e $or t"is purpose/

/

#e!ional Inte!ration

1/

+"e "allen!e

11/ Colle%tive and %oordinated a%tion is essential to %on$rontin! t"e !roin!number o$ %"allen!es $a%in! t"e Asia and .a%i$i% re!ion as ell as to levera!in!!rot" and development opportunities/ +"e pursuit o$ !lobal and re!ional publi%!oods in parti%ular development(relevant publi% !oods related to environment and%limate %"an!e "ealt" se%urity and :noled!e demands more e$$e%tive #CI/

11/ In t"is re!ard Strate!y 2020Bs re%o!nition o$ re!ional inte!ration as a strate!i%a!enda and #CI as a %ore operational area as and remains "i!"ly relevant to t"ere!ion to ADF %ountries and to AD,/ 8"ile AD, "as already establis"ed a !oodreputation $or its #CI support and role as an "onest bro:er it" eamples o$ su%%ess$ulinterventions in all $ive re!ions :ey %"allen!es in $uture in%lude $urt"er broadenin! t"e$o%us o$ AD,Bs #CI operations beyond p"ysi%al %onne%tivity stren!t"enin! AD,Bs

%apa%ity development role and improvin! #CIBs %ontribution to t"e ot"er strate!i%a!endas o$ in%lusive !rot" and environmental sustainability/

2/ ADF .riorities

115/ +"e potential $or #CI to levera!e t"e !rot" potential o$ ADF %ountries asemp"asied in ADF X it" %ross(border pro


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se%urity $ood se%urity and %limate %"an!e as ell as t"e need to address ot"er so%ialand environmental e$$e%ts o$ $aster !rot"/

/

Evaluation Findin!s

11*/ #CI(t"emed ADF operations "ave !ron over time/ As epe%ted about one(

$ourt" o$ all ADF pro


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total o$ H2 prouirements $or determinin! prouestion o$ "o AD,Bs #CI e$$orts %an more dire%tly support t"e ot"er

to Strate!y 2020 a!endas o$ in%lusive !rot" and ESG/ Finally t"e dis%ussionsreemp"asied t"e spe%ial role t"at AD, %an play as an "onest bro:er espe%ially $orsmaller %ountries/

*5 For eample in order to a%%ess resour%es $rom t"e International Development Asso%iation 6IDA7 set(aside$or re!ional pro


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/

Opportunities $or ADF 12 and ,eyond

12/ AD, "as establis"ed a stron! #CI reputation but it needs to broaden itsoperational $o%us on #CI in ADF %ountries buildin! on its %ore pillar 1 operations/."ysi%al %onne%tivity remains a ma


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;A.+E#

.ro!ress on Ot"er ADF

.riorities

12*/ In addition to and in support o$ t"e t"ree strate!i% a!endas donors and AD,a!reed to support ot"er priorities durin! ADF X and XI emp"asiin! si areas' D#@FCAS private se%tor development !ender e>uality !overnan%e and $ood se%urity/.ro!ress in support $or t"ese additional priorities is dis%ussed "ere/

A/ Disaster #is: @ana!em ent and t"e D isaster #esponse Fa%ility

1/

+"e "allen!e

12/ Asia and t"e .a%i$i% su$$ers disproportionately $rom natural "aards/ Sin%e2000 eart">ua:es "ave :illed *000 people orldide it" AD, developin!member %ountries sustainin! *L o$ t"ese deat"s/ E%ludin! t"e ;aiti eart">ua:e )Lo$ eart">ua:e deat"s "ave o%%urred in AD, developin! member %ountries sin%e 2000/*H

12)/ +"e 1 "i!"est ran:ed %ountries in t"e orld $or "istori% avera!e annual lossper %apita 6;AA?7** are all island states nine o$ "i%" are AD, .a%i$i% member%ountries/* +"ese %ountries li:e many ot"er ADF %ountries "ave "eavy %on%entrationso$ residents and in$rastru%ture lo%ated it"in 500 meters o$ t"eir %oastlines/ Coastaladaptation ill re>uire substantial $inan%ial resour%es but many o$ t"e %ountries la%:

bot" t"e resour%es and %apa%ity to adapt ade>uately/*)

10/ Deat"s and ot"er impa%ts o$ natural "aards in%ludin! on e%onomi% !rot"poverty redu%tion and overall development are a top %on%ern $or t"e entire Asia and.a%i$i% re!ion/ A %ombination o$ population !rot" urbaniation and ot"er $a%tors areat play in%ludin! t"e e$$e%ts o$ %limate %"an!e on bot" !radual and intense disasters/

*H

,ased on t"e analysis o$ eart">ua:e $atalities reported in t"e International Disaster Database6"ttp'NN/emdat/beNdatabase7/** ;AA? is t"e annual avera!e o$ disaster e%onomi% losses over t"e "istori% re%ordt"at is t"e sum o$ t"e

e%onomi% losses $rom disasters durin! a period o$ years durin! "i%" t"e re%ord is ell(:non divided byt"e number o$ years/ 8"ile t"ere may be $e or no losses over a s"ort period o$ time t"e ;AA? a%%ounts$or losses t"at may o%%ur more in$re>uently/ ;AA? also provides an indi%ation o$ t"e amount o$ resour%esneeded ea%" year to %over %osts o$ lon! term losses $rom a "aard/ Sour%e'"ttps'NNdata/"d/rlabs/or!NdatasetNmulti("aard(avera!e(annual(loss7/

* 4nited &ations Development .ro!ramme/ 2015/ Global Assessment #eport on Disaster #is: #edu%tion @a:in! Development Sustainable' +"e Future o$ Disaster #is: @ana!ement / Anne 2 +able / 4&/

*) ?/ 9umar and S/ +aylor/ 2015/ Eposure o$ Coastal ,uilt Assets in t"e Sout" .a%i$i% to Climate #is:s/ &atureClimate C"an!e/ &ature .ublis"in! Group/

@any o$ t"e

%ountries la%:

bot" t"e

resour%es and

%apa%ity to ada

ade>uately


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2/

ADF .riorities

11/ Strate!y 2020 re%o!nied disaster assistan%e as a non(%ore area o$ operationsbut over time AD, and t"e ADF "ave played an in%reasin! role in supportin! D#@e$$orts in%ludin! disaster response and re%onstru%tion support/

12/ 4nder ADF X no epli%it %ommitments $or D#@ ere made/ ;oever underADF XI ADF %ountriesB vulnerability to natural "aards as re%o!nied as a :ey %on%ernand a %"allen!e to poverty redu%tion it" %lear lin:s to es%alatin! %limate %"an!e/ AD,as to "elp ADF %ountries it" %ountry(driven %limate %"an!e adaptation pro!rams bypromotin! t"e mainstreamin! o$ adaptation and disaster ris: redu%tion into nationaldevelopment plans and C.Ss "elpin! to build resilien%e in :ey se%tors and %limate( anddisaster(proo$in! pro


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Progress on Oter ADF Priorities 45

15/ Country missions to Cambodia and Samoa t"e $irst to re%ipients o$ D#Fsupport provided in(dept" perspe%tives on t"ese %ountriesB eperien%es it" t"e D#Fand AD,Bs D#@ support more !enerally/ Complementin! t"ese missions dis%ussions ont"e D#F and D#@ ere "eld it" :ey in$ormants in AD, "ead>uarters and it" .a%i$i%re!ional or!aniations based in Suva Fiuired on "et"er t"ey be rebuilt

ea%tly as be$ore it" t"e same ris: o$ dama!e in t"e $uture or "et"er t"eirre%onstru%tion s"ould "ave $eatures t"at ould redu%e t"e li:eli"ood o$ $loodin! in$uture/ Dis%ussions it" E.C and ot"ers su!!ested t"at t"e S;.s ere bein! rebuiltsubstantially t"e same as be$ore it" $lood prote%tion o$ t"e relevant %"annels %ited ast"e responsibility o$ t"e @inistry o$ &atural #esour%es and t"e Environment "i%" "asre%eived !rant $undin! $rom t"e ?east Developed Countries Fund administered by t"e4nited &ations Development .ro!ramme and GEF/

1 +"e @ao bird 6Gymnomya samoensis 7/

.revious natura

disasters in

Samoa re>uired

a diversion o$

resour%es to

relie$ and

re%onstru%tion

e$$orts


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10/ For Cambodia ADF approved 1 million in D#F $inan%in! to supportre%onstru%tion o$ national provin%ial and rural roads and irri!ation systems dama!edby t"e September and O%tober 201 $loods/ +"is $olloed earlier AD, support inresponse to $loods in 2011/ Field visits and %onsultations $ound most ma


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1/ On t"e .a%i$i% Catastrop"e #is: Assessment and Finan%in! Initiative 6.C#AFI72 "ile AD, as involved in t"e early analyti%al and development sta!es its la%: o$parti%ipation in t"e subse>uent insuran%e sta!e e%ept t"rou!" a small on!oin! +Aas a missed opportunity/ It is un%lear "y AD, %"ose not to %ontinue its parti%ipationin t"e insuran%e sta!e but !iven t"e use$ulness o$ t"e .C#AFI $or D#@ and %limate%"an!e or: AD, s"ould eplore "o it %an remain an en!a!ed partner/ @oreover

%ountry ris: analyses underta:en as part o$ t"e initiative need to be better inte!ratedinto %ountry plannin! e$$orts/ AD, is utiliin! .C#AFI outputs in a +A on Stren!t"enin!Disaster and Climate #is: #esilien%e in 4rban Development in t"e .a%i$i% 6approved20127/

15/ +"e issue o$ adaptive %apa%ity emer!ed as a %on%ern durin! several %ountry%onsultations it" t"e %ommon vie t"at ADF %ountriesB %apabilities to plan andmana!e %limate %"an!e adaptation e$$orts are $undamentally inade>uate !iven t"es%ale o$ t"e %"allen!e/ AD, "as provided +A support $or %limate %"an!e adaptation inmany ADF %ountries but t"is remains a %riti%al %on%ern and one $or "i%" AD, needsto pursue additional opportunities in%ludin! t"rou!" %o$inan%in! and partners"ips tosustain and "ere possible s%ale up support/ AD, %an ma:e a si!ni$i%ant %ontributionby en"an%in! t"e availability and ta:e(up o$ te%"nolo!y $or adaptation plannin! and

investments/ +"e .C#AFI "as been an e%ellent eample o$ t"is/ 8"ile .C#AFIBs !enesisas in support o$ a subse>uent $inan%in! initiative its te%"nolo!i%al $oundation "asproven to be a ma


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operationalie AD,Bs %ommitment to t"e buildin!(ba%:(better prin%iple on D#Fsupported prouirements and investment/

1)/ +"ird $urt"er e$$orts are needed to streamline post(approval pro%esses andimplementation o$ D#F($inan%ed operations/ +"is ill ensure t"at AD, is as responsiveas it %an be in t"e %riti%al immediate a$termat" o$ t"ese events/ @ore $leibleme%"anisms s"ould be %onsidered su%" as' $urt"er de%entraliation o$ de%ision ma:in!aut"ority to resident missions on D#F( and D#@(related operations to permit moretimely and better in$ormed a%tionsM $urt"er simpli$yin! pro%urement rules $or sele%tedservi%es and materialsM and establis"in! pre(approved %ontra%ts $or sele%ted servi%est"at ill obviously be needed on re%urrin! basisin%ludin! t"rou!" re!ional servi%eprovision arran!ementsto $a%ilitate better plannin! transparen%y and predi%tability/

150/ Fourt" AD, s"ould %ontinue to eplore $urt"er innovations in disaster ris:$inan%in!/ +"is as already identi$ied as a priority in t"e inte!rated D#@ operationalplan 6$ootnote 7/ +"is may be an opportunity $or %ollaboration it" ot"er $inan%iers

su%" as t"e 8orld ,an:/ Catastrop"e bonds $or eample "ave been a standardalternative ris: trans$er me%"anism in t"e private and publi% se%tor $or to de%ades"ave been used in +ur:ey and t"e Caribbean and are no possible t"rou!" t"e .C#AFI/Ot"er $inan%ial instruments su%" as an emer!en%y bud!etary dra(don $a%ility $orre"abilitation o$ dama!ed in$rastru%ture s"ould be eplored to o$$er ADF %ountries as

many options as possible to buildin! $is%al and $inan%ial resilien%e to disasters/5

AD,/ 201/ Inte!rated Disaster #is: @ana!ement Operational .lan' 2012020/ @anila/5 Su%" as "at t"e 8orld ,an: re$ers to as %atastrop"e de$erred debt obli!ation 6Cat(DDO7/

Furt"er e$$orts

are needed to

streamline post(

approval

pro%esses

+"e inte!rated

D#@ plan

provides a

$oundation $or

$urt"erin! t"e

s%ale and

e$$e%tiveness o$

operations


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151/ Fi$t" in addition to supportin! relie$ e$$orts in t"e a$termat" o$ disasters AD,s"ould strive to "elp stren!t"en disaster ris: redu%tion disaster preparedness andadaptation %apa%ity espe%ially "ere t"ere is stron! vulnerability and ea:institutional %apa%ity/ AD, s"ould %ontinue to %ollaborate it" ot"er mauentlysupport to t"e %on$li%t(a$$e%ted nort"east o$ Sri ?an:a as dis%ontinued a$ter t"e%on$li%t ended in 200) and as repla%ed by national development pro!rams but t"ea$ter(e$$e%ts o$ %on$li%t remain relevant/ In a%tuality t"e $inal sta!es o$ t"e %ivil arresulted in more a%ute "ards"ip in t"e nort"east/ Similarly $ra!ility arisin! out o$subnational %on$li%t in ot"er %ountries "as re%eived limited attention by AD, even in%ountries li:e .a:istan "ere it also a$$e%ts national development out%omes/

155/ Jet $ra!ility is not limited to %ountries %lassi$ied as FCAS as s"on by t"e 2015&epal eart">ua:e and t"e idespread persisten%e o$ subnational %on$li%t in many

%ountries o$ t"e Asia and .a%i$i% re!ion $or eample in .a:istan as ell as in middle(

H For eample' Se%retariat o$ t"e .a%i$i% #e!ional Environment .ro!rammeM ?east Developed CountriesB Fund

under t"e 4nited &ations Development .ro!ramme and GEFM Deuts%"e Gesells%"a$t $Vr InternationaleTusammenarbeit Gmb; 6GIT7 t"rou!" its ?oss and Dama!e .ro!ram and =apan 6.C#AFI premium%overa!e7/

* As announ%ed a$ter a =uly 2015 meetin! o$ .a%i$i% Islands Forum Forei!n @inisters/See' "ttp'NN$orei!nminister/!ov/auNreleasesN.a!esN2015N


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in%ome %ountries li:e t"e ."ilippines "i%" are e%luded $rom t"e FCAS list be%auset"e subnational %on$li%t t"ey eperien%e "as not been %onsidered su$$i%ient to %lassi$yt"em as FCAS 6sin%e t"eir "armonied %ountry per$orman%e ratin!s ere above t"e /2t"res"old a!reed amon! t"e IFIs7/ ;oever t"e poor per$orman%e o$ .a:istanBsport$olio "i%" "as "istori%ally been amon! t"e ea:er ADF port$olios attests to its$ra!ility/ +"e %"allen!e is to apply t"e FCAS approa%" systemati%ally to all situations

"ere it is relevantnot only to t"ose in t"e FCAS list but also to t"ose e"ibitin!some dimensions o$ $ra!ilityand to ensure t"e sustained support t"at enables t"ese%ountries to build t"e systems and resilien%e needed to address t"eir $ra!ility and%on$li%t ris:s/

2/ ADF .riorities

15H/ ADF X emp"asied t"e need $or spe%ial attention to be paid to ea:lyper$ormin! %ountries de$ined as %ountries it" ea: !overnan%e ine$$e%tive publi%administration and rule o$ la and %ivil unrest/) In 200* AD, identi$ied 12 su%"%ountries based on C.A ran:in! and prevalen%e o$ %on$li%t/)0 AD,-s approa%" $or or:in t"ese %ountries "ad to pillars' 6i7 sele%tivity and $o%us and 6ii7 strate!i%partners"ips/ AD, %ommitted itsel$ to employin! di$$erentiated modes o$ en!a!ementand instruments based on spe%i$i% %ountry $ra!ility %"ara%teristi%s/ ADF XI in%ludedFCAS as one o$ t"ree t"emes $or spe%ial %onsideration and reiterated AD,Bs%ommitment to t"e 200* approa%"/ AD, identi$ied 11 o$ 2 ADF %ountries as FCAS'to %on$li%t(a$$e%ted %ountries and nine $ra!ile .a%i$i% %ountries/

/

Evaluative Findin!s

15*/ A 2010 evaluation by IED on t"is topi% $ound t"at t"e 200* approa%" remainedrelevant but needed stren!t"enin! to en"an%e t"e development e$$e%tiveness o$ FCASoperations/)1 Amon! ot"ers t"e evaluation re%ommended 6i7 re%o!niin! $ra!ility and%on$li%t %"ara%teristi%s o$ %ountries in%ludin! at subnational levels durin! C.SpreparationM 6ii7 ta:in! a di$$erent approa%" to $ra!ile %ountries $rom %on$li%t(a$$e%ted

%ountriesM and 6iii7 buildin! operational $leibility and lon!(term pro!rammati%approa%"es in FCAS/ It also re%ommended en"an%in! resour%es and %ountry and AD,%apa%ity $or FCAS or:/ +"ese a%tions "ad not yet been underta:en at t"e start o$ ADFXI 62017/

15/ In 201 AD, $urt"er re$ined its approa%" and issued an Operational .lan $orEn"an%in! AD,Bs E$$e%tiveness in Fra!ile and Con$li%t(A$$e%ted Situations/ +"is $or t"e$irst time a%:noled!ed t"e eisten%e o$ subnational %on$li%t as a determinant o$$ra!ility/ +"e operational plan aimed to ali!n AD,Bs FCAS road map it" nedevelopment approa%"es to en!a!in! e$$e%tively in FCAS)2 "i%" vie pea%ebuildin!and state(buildin! as pre%onditions $or better development out%omes/ +"e nedevelopment paradi!m %alls $or FCAS operations to be %are$ully tailored to t"e uni>ue%ontet and %ir%umstan%es o$ ea%" a$$e%ted %ountry based on an analysis o$ a nationBs

) AD,/ 200*/ A%"ievin! Development E$$e%tiveness in 8ea:ly .er$ormin! Countries' +"e Asian Development,an:Bs Approa%" to En!a!in! it" 8ea:ly .er$ormin! Countries/ @anila6"ttp'NN/adb/or!NDo%umentsN.oli%iesNA%"ievin!(Development(E$$e%tivenessNSe%@0(0*/pd$7/

)0 +"e 12 %ountries identi$ied in 200* as ea:ly per$ormin! ere A$!"anistan Federated States o$@i%ronesia 9iribati ?ao .D# &epal .apua &e Guinea #epubli% o$ @ars"all Islands Solomon Islands Sri?an:a +a


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politi%al e%onomy t"e nature and %auses o$ its $ra!ility and t"e roots o$ its %on$li%t/+"e operational plan identi$ied a set o$ a%tions) to mainstream $ra!ility( and %on$li%t(sensitive approa%"es in AD,Bs %ountry strate!ies and operations en"an%e resour%es $orFCAS or: and adopt FCAS(sensitive internal pro%esses to address t"e uni>ue%"allen!es in FCAS %ountries/

15)/ 8"ile t"ese a%tions appear to respond to some o$ t"e previous limitations o$FCAS or: t"ey "ave not been mat%"ed by ade>uate a%tions in pra%ti%e/ For eample"ile ot"er IFIs "ave re%o!nied t"at doin! business in FCAS %ountries %osts more andre>uires !reater supervision e$$ort t"an else"ere AD, invests even less sta$$ time onsupervisin! prouate and t"e e$$ort to en"an%e t"e %apa%ity and %on$li%t(sensitivity o$ operational sta$$ in FCAS %ountries "as been limited/

1H0/ Fra!ility remains one o$ t"e bi!!est obsta%les to pea%ebuildin! and povertyredu%tion and a t"reat to !rot" and stability/ Jet t"e s"i$t in AD,Bs approa%" and itsali!nment it" t"e international paradi!m is not yet evident in most o$ t"e %ountrystrate!ies and support pro!rams/ ,y 2015 "al$ o$ t"e orldBs poor ill live in $ra!ilestates/ +"e Independent Evaluation GroupBs 201 study estimated t"at 5 million

people) live in %ountries %lassi$ied as $ra!ile and %on$li%t(a$$e%ted states/ +i%e asmanyover 1 billion peoplelive in $ra!ile situations in %ountries not %lassi$ied asFCAS/ Amon! AD,Bs developin! member %ountries 5 million people live in FCAS%ountries it" anot"er H million in transitional %ountries t"at "ave re%ently movedout o$ t"e FCAS list i/e/ 121 million live in FCAS %ountries/ ;oever t"is is less t"an"al$ t"e number livin! in subnational $ra!ile and %on$li%t(a$$e%ted situations/ +"e%ombined total is estimated at 252 million/

1H1/ A re%ent Asia Foundation study)5 provides empiri%al eviden%e o$ idespreadsubnational %on$li%t in Asia "i%" until it as $irst a%:noled!ed in AD,Bs operationalplan in 201 6see para/ 157 as unre%o!nied and is still lar!ely i!nored by AD,%ountry strate!ies and operations/ .rotra%ted subnational %on$li%ts in Asia a$$e%t moret"an 11 million people/ Compared it" ot"er re!ions Asian subnational %on$li%ts lastnearly ti%e as lon! 6/ years7 as t"e !lobal avera!e 61H/ years7/ @any o$ t"ese%on$li%ts !o t"rou!" periods o$ dorman%y but even "en t"e violen%e %eases $or sometime t"e :ey %on$li%t dynami%s are still present and t"e %ore politi%al so%ial ande%onomi% $a%tors t"at drive t"e %on$li%t %ontinue to simmer over time and o%%asionallyre%ur/ @any subnational %on$li%ts o%%ur in perip"eral border re!ions and an estimatedarea o$ 1/*H million s>uare :ilometers ti%e t"e sie o$ Indonesia is a$$e%ted bysubnational %on$li%ts/

1H2/ AD, "as $o%used more on %ountry per$orman%e and !overnan%e issues t"an on%on$li%t analysis and %on$li%t(sensitive pro!rammin!/ +"is !ives rise to to sets o$

) +"e a%tions %ommitted AD, to' 6i7 %ontinue e$$orts to ma:e %ountry strate!ies and plans $or all FCAS

%ountries more $ra!ility( and %on$li%t(sensitive 6ii7 stren!t"en "uman resour%es $or FCAS operations6iii7 see: to in%rease $inan%ial resour%es $or FCAS operations 6iv7 adopt di$$erentiated business pro%esses $orFCAS operations and develop a more appropriate ris: $rameor: 6v7 develop an institutionalstren!t"enin! $rameor: $or FCAS %ountries and 6vi7 re$ine its approa%" to identi$yin! FCAS %ountries by"armoniin! its %lassi$i%ation met"od it" t"at used by ot"er multilateral development ban:s/

) +"e Independent Evaluation Group report $ound t"at *0 million live in %ountries %lassi$ied as lo(in%ome$ra!ile and %on$li%t(a$$e%ted states 6FCS7 "ile million live in loer(middle and middle(in%ome FCS%ountries/ See Independent Evaluation Group/ 201/ 8orld ,an: Group Assistan%e to ?o(In%ome Fra!ileand Con$li%t(A$$e%ted States / 8as"in!ton DC' 8orld ,an:/

)5 On subnational %on$li%t see +"omas .ar:s &at Colletta and ,en Oppen"eim/ 201/ +"e Contested Cornerso$ Asia' Subnational Con$li%t and International Development Assistan%e / San Fran%is%o CA' +"e AsiaFoundation/

Doin! business

in F AS

%ountries %osts

more and

re>uires !reate

supervision

+"e s"i$t in

AD,Bs approa%"

is not yet

evident


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problems/ First it leads to an underestimation o$ %on$li%t situations in many Asian%ountries 6su%" as .a:istan7 despite re%ent eviden%e t"at subnational %on$li%ts areendemi% and %on%entrated "eavily amon! t"em/ Se%ond it leads to t"e !raduation o$$ormer %on$li%t(a$$e%ted %ountries too soon $rom t"e FCAS list be$ore t"ose %ountries6su%" as &epal7 "ave e%onomi%ally and institutionally over%ome t"e underlyin! driverso$ $ra!ility/ Ot"er IFIs li:e t"e 8orld ,an: "ave addressed t"e persisten%e o$ $ra!ility

drivers t"rou!" t"e introdu%tion o$ e%eptional allo%ations $or prolon!ed support $orturn(around situations in post(%on$li%t and reen!a!in! %ountries/

1H/ A re%ent IED evaluation o$ AD,Bs .a%i$i% approa%" $ound t"at t"ese small island%ountries $a%e development %"allen!es t"at are very di$$erent $rom t"ose $a%ed byot"er developin! %ountries 6$ootnote 107/ +"e .a%i$i% port$olio also %ontains t"e "i!"estnumber o$ %ountries a$$e%ted by FCAS amon! AD,Bs re!ional departments but t"is isdue to t"eir sie and !eo!rap"i%al isolation rat"er t"an to %on$li%t/ +"ese %ountries relyon o$$i%ial development assistan%e to supplement t"eir limited ta revenues and toprovide a minimal level o$ publi% servi%es/ 8"ile development in less isolated %on$li%t(a$$e%ted %ountries %ould eventually be addressed $ra!ility in .a%i$i% %ountries is moreinnate/ +"e ne .a%i$i% Approa%" 20152020 ill need a %ustomied lon!(termapproa%" $or smaller island %ountries "et"er t"ey are identi$ied by AD, as FCAS ornot/

1H/ Country pro!rams in several FCAS do not re$le%t su$$i%ient understandin! o$$ra!ility and %on$li%t drivers/ Even in %on$li%t(a$$e%ted %ountries C.Ss "ave not beensystemati%ally based on $ra!ility and %on$li%t analysis/ 8"ile t"e %ountry pro!rams inA$!"anistan and +imor(?este responded to %lient needs t"ere as no eviden%e o$$ra!ility and %on$li%t analysis nor mu%" eviden%e o$ %on$li%t sensitivity in prouantity and >uality o$ trained%on$li%t( and !overnan%e(spe%ialists more epli%it %ommitments in %ountry strate!iesand more %ustomied approa%"es to operational desi!n and implementation/)H +"eFCAS port$olio "as also improved at t"e A$ri%an Development ,an: in part due to alar!e multi(donor Fra!ile States Fa%ility set aside by t"e A$ri%an Development Fund anddue to a !rot" in t"e sta$$ stren!t" o$ t"e Fra!ile States 4nit/ +"ese %onditions do not

)H Independent Evaluation Group/ 201/ 8orld ,an: Group Assistan%e to ?o(In%ome Fra!ile and Con$li%t( A$$e%ted States' An Independent Evaluation/ 8as"in!ton DC/ +"e 8orld ,an:/

ountry

pro!rams in

several F AS do

not re$le%t

su$$i%ient

understandin!

o$ $ra!ility and

%on$li%t drivers


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eist at AD,/ Su%%ess rates $or AD,Bs FCAS %ountries "ave s"on re%ent improvementbut t"is is based on a limited sample o$ pro


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Fi!ure 1*' Avera!e Group #an:in!s in Doin! ,usiness Indi%ators 201

A R ADF(only , R blend C R OC#(only FCAS R $ra!ile and %on$li%t a$$e%ted situations/&ote' +"e "i!"er t"e avera!e ran: t"e orse t"e %onditions $or doin! business/Sour%e' 8orld ,an: Doin! ,usiness Indi%ators/

1*0/ +"e ma


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1*/ AD,Bs results $rameor: and s%ore%ard as reported in t"e annual DevelopmentE$$e%tiveness #evie reports s"o t"at $or private se%tor development t"e level 1indi%ators used in t"e %urrent s%ore%ard are' 6i7 deposit a%%ounts in $inan%ial institutions6number per 1000 adults7M and 6ii7 time to start a business 6days7/ 4nder ADF X and XIno spe%i$i% tar!ets ere set $or t"ese/ +"e level 2 %ore se%tor indi%ators $or private

se%tor development are' 6i7 trade($inan%e supported 6$inan%ial amount per year7M6ii7 mi%ro$inan%e loan a%%ounts opened or end borroers rea%"ed 6number7disa!!re!ated into $emale and maleM and 6iii7 small and medium(sied enterprise 6S@E7loan a%%ounts opened or end borroers rea%"ed 6number7/ ADF X and XI set outepe%ted outputs $or level 2 indi%ators 6ii7 and 6iii7/

/

Evaluation Findin!s

a/ ADF So verei!n Operations

1*/ +"e s"are o$ t"e private se%tor development(t"emed operations in t"e totalnumber o$ ADF operations in%reased $rom 2L in 200) to 5L in 201 avera!in! 2)Ldurin! t"e period/ @ost o$ t"e private se%tor development(related approvals are in

publi% se%tor mana!ement transport and ener!y se%tors/ ;oever $or t"e $inan%ese%tor t"ere "as been a de%line in t"e number o$ operations it" a private se%tordevelopment t"eme/ +o meet t"e Strate!y 2020 tar!et t"at private se%tor operationsma:e up 50L o$ all AD, operations by 2020 t"ere ill "ave to be an a%%eleration o$ADF private se%tor development(related approvals durin! t"e net 5 years/

1*5/ About to(t"irds o$ ADF private se%tor development(t"emed operations durin!200)201 emp"asied poli%y re$orms and .../ .oli%y re$orm operations in%ludedimprovements in t"e investment %limate stren!t"enin! o$ institutions and $inan%ese%tor development/ ... operations $o%used on establis"in! t"e institutional$rameor: $or ... and !reater private se%tor parti%ipation in publi% se%tor investmentpro!rams/ +"ere as a de%line in t"e s"are o$ private investment operations providin!resour%es e/!/ %redit lines to t"e private se%tor mainly t"rou!" $inan%ial institutions/+"e de%line in t"is subt"eme is %onsistent it" t"e ADF X strate!y "i%" %alled $or lessdire%t %redit provision and !reater use o$ poli%y operations/

1*H/ +"e value o$ +A pro


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Fi!ure 1' .rivate Se%tor Ope rations Ap provals in ADF(Eli!ible ountries 2005 201

ADF R Asian Development Fund .SO R private se%tor operations/Sour%e' Independent Evaluation Department/

1*/ Durin! 200)201 **L o$ private se%tor operations approvals in ADF%ountries ere in t"e $inan%e 6HL7 and ener!y 61L7 se%tors/ +"ere ere $ive pro

corporate evaluation study on asian development fund x and xi operations

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