Regions and Countries

	Table of Contents
p. 5 of 9 BACK | NEXT Executive Summary I. Introduction II. Current Development Trends and Issues III. Pacific DMC Development Strategies IV. ADB's Development Experience V. ADB's Strategy VI. Delivering the Pacific Strategy VII. Risks and Performance Monitoring and Evaluation Appendixes

Responding to the Priorities of the Poor: A Pacific Strategy for the Asian Development Bank 2005-2009

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IV. ADB's Development Experience

A. Impact of Past Assistance

63. While no single evaluation of ADB’s assistance to the Pacific is available, important insights are available from a PNG country assistance program evaluation, thematic evaluations (e.g., of public sector reform programs²³), an internal desk assessment of the implementation of the Pacific Strategy 2000–2004, and project completion and project performance audit reports. These are outlined in Appendix 5. The Pacific Strategy 2000–2004 had five broadly defined “strategic objectives” (economic management, governance, and public sector reforms; PSD; gender; environmental protection; and poverty reduction) and four “supporting objectives” (capacity building, infrastructure, financial sector development, and participation of civil society). Some objectives have received relatively little attention during this period (e.g., gender and financial sector reforms). In other areas important new work, especially analytic work on poverty, PSD, and the environment, is only now bearing fruit.

64. The objective on economic management, governance, and public sector reforms represented an area of continuity of work from the Pacific Strategy 1995–1999, and here the impact is clearer. The reinstatement and maintenance of macroeconomic stability, and to a lesser degree fiscal stability, often in the face of macroeconomic crises, has been a significant achievement in most PDMCs, made through ADB and other agency support (though Solomon Islands is a significant exception). PDMCs now place a much higher priority on maintaining macroeconomic stability. However, the public sector reform elements have had more mixed impact and sustainability, depending largely on the levels of local ownership of the reform objectives. Finally, the private sector response to the economic and public sector reforms has been generally disappointing, for reasons now highlighted. Different approaches will be necessary for improved performance in these areas in the future.

65. The 2000–2004 Pacific Strategy also introduced a three-part typology of the PDMCs involving (i) high natural resource, high poverty PDMCs (PNG, Solomon Islands, Vanuatu); (ii) moderate resource, good social development PDMCs (Cook Islands, Fiji Islands, FSM, Samoa, Tonga); and (iii) low resource, small, and vulnerable islands (Kiribati, RMI, Nauru, Tuvalu). This was a useful typology for highlighting variability among countries, as well as some common traits among groups of countries within the region. One deficiency was that it did not address quality of governance, a major theme of the strategy and the source of important differences within the three groups. For this reason, the practical impact of the typology was modest, with the clearest achievement being a focus during the strategy period on developing trusts funds for vulnerable and resource poor atoll countries such as Tuvalu, Kiribati and Marshall Islands. A more country-specific analysis is suggested for the new strategy period.

66. The PNG country assistance program evaluation and internal desk review highlight the difficulty of achieving significant impact without a medium- and long-term commitment to a manageable number of clearly defined objectives. ADB needs to be more selective and focused in the Pacific. Thematic evaluations point to the importance of understanding the institutional environment within which programs and projects work, and of addressing the root causes of problems in the performance of key institutions. These findings are complementary, suggesting the need for a broader, more analytic approach, with longer time frames, in fewer areas of focus. This is challenging to achieve in a region with many diverse, but relatively small-scale, requirements for assistance.

67. Lessons drawn from project-level evaluations and completion reports highlight the crucial importance of participation, broad and deep ownership by beneficiaries and community organizations, and effective development of human capacity. Participatory activities that build local ownership have been noted in a large number of project completion reports as being critical factors in success or failure, with broad engagement involving the private sector, CSOs and communities, and government often crucial. This requires correct identification of the major stakeholders, at both the community and official levels. Equally important is that participation be sustained and embedded in local processes, especially if the focus is on difficult reforms.

68. Promoting more efficient and effective institutions for the management of transport, energy and water supply and sanitation infrastructure has been critical to increasing the impact and sustainability of ADB’s lending operations in these traditional focus areas. This focus has usually led to more business-oriented approaches for government departments and SOEs. Some successes have been achieved (such as reform of public works departments in Samoa and of Fiji Power in the Fiji Islands), but in many cases much work remains to be done. The 2000–2004 Pacific Strategy also highlighted private sector participation in delivering these services as an appropriate strategy, but few suitable opportunities have emerged to date.

69. Capacity building has been a major focus of ADB activity in the Pacific, but the record of achievement is mixed. Too often, capacity building has been related to the objectives of the project rather than of the host organization, or the capacity-building requirements have been insufficiently analyzed, planned, or coordinated. In future, diagnostic studies of institutions require strengthening. Approaches need to accept the likelihood of high levels of staff turnover in the Pacific and to manage for high turnover. Consultants are widely used and often assume significant responsibilities for ADB projects in the Pacific. Their effective use is a significant component of the success or failure of capacity building objectives. Terms of reference need to better specify a capacity-building role and integrate this role with host organization objectives.

B. Portfolio Performance and Status

70. Key lending portfolio performance data are provided in Tables E1 to E4 in Appendix 2. The data show mixed and often weak portfolio performance, both in terms of disbursements and quality of outcomes. Borrowing by PDMCs has gradually declined in recent years, leading to negative net resource transfers in several countries. This decline has been a consequence of reduced capacity to borrow in PNG, the largest borrower, and disruption to lending programs in Fiji Islands and Solomon Islands following political disturbances. Delays in loan effectiveness and implementation are common, due to limited capacity within PDMC governments to fulfill ADB loan preparation and administration requirements.

71. Loan project evaluation ratings suggest relatively high rates of success for energy and for transport and communications projects, and much lower rates of success for agriculture and natural resources, for social infrastructure, and for finance sector projects. The clearer and more tangible objectives of the infrastructure projects may contribute to these ratings. Policy-based program loans have had mixed results, with political instability often undermining progress and the environment for reforms. In some cases, it may also be that the reforms, insufficiently communicated or too narrowly owned, have contributed to political instability.

72. Project evaluation ratings by country highlight Fiji Islands and Tonga as having relatively high rates of project success, while PNG, Samoa, Solomon Islands, and Vanuatu have relatively low rates of success. In the case of Samoa, there is recent evidence of improved portfolio performance. These variations are a consequence of differences in government capacity, ability or willingness to provide counterpart funding, and more results-oriented project management in the better performing PDMCs.

C. Conclusions and Lessons for the Strategy

73. A key conclusion and lesson for ADB operations in the Pacific from past assistance is that the development process itself is central to development outcomes—that how we do things is perhaps as important as what we do. Ensuring widespread and appropriate participation and ownership of development programs, especially reforms, is crucial to initial outcomes and to sustainability. Governments and development partners need to engage broadly, including with the private sector, CSOs, and communities. Building capacity requires more careful analysis of institutional issues and constraints and different approaches. Revisiting more thoroughly the concept of providing scarce human resources through enhanced regional cooperation is an important option.

74. Greater participation and more effective capacity development needs to be underpinned by improved availability of data on and analysis of key development issues, and this information needs to be communicated effectively to a range of audiences. Greater awareness of key development issues is essential to building demand for good governance, and for the policies and institutions that will produce good development outcomes.

75. Modest portfolio performance suggests concerns about capacity in PDMC governments, and that ADB project modalities may be placing a high administrative burden on governments. Effectiveness of project preparation and administration processes in Pacific environments needs ongoing review, with a view to streamlining administration and reinforcing capacity in PDMCs. Modalities that involve the private sector and civil society in the delivery of development programs also warrant greater attention.

76. A message that emerged from the consultations on the Pacific Strategy was the importance, in a heavily aid-dependent region, of all development partners providing assistance in a manner that does not distort the incentives for good financial management in PDMCs. The risk of governments being unable to fund recurrent costs of aid-funded infrastructure and the incentive to underfund maintenance in the expectation of receiving replacement infrastructure are simple examples. This risk and incentive highlight the importance of policy dialogue, development partner coordination, and a broad and long-term view of the impact of aid programs. Delivering this more considered approach will require ADB’s limited resources to be better focused on clearly defined objectives.

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