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Directions and Policy for the Asian Development Bank
59. The international community recognizes that humanitarian relief efforts are only part of the assistance needed to address the full impact of emergencies and to reduce vulnerability in the future. As a result, institutions such as the Inter-American Development Bank (IDB) and the World Bank have reassessed the unique role that MDBs can play (Appendix 5). That role is multidimensional, and while it includes the traditional emphasis on rehabilitation and reconstruction, it also addresses the role of development cooperation as an emergency prevention and mitigation instrument and the transitional requirements between relief and renewed social and economic development. While the ADB Charter, as well as the charters of other MDBs, stipulates that the organization is not in the business of providing humanitarian relief as such, these humanitarian issues are critically important complements to emergency assistance while also addressing genuine development needs, and could be effectively addressed within a new ADB policy framework. 60. During the last decade ADB has gained considerable experience in dealing with disasters and the emergencies that accompany them. However, as discussed in Chapter III, ADB has tended to respond to such situations in an ad hoc fashion and with insufficient attention to the intense public scrutiny of disasters and emergencies. ADB has undertaken little regular stocktaking or systematic evaluation of best practices and has cooperated only minimally with relevant shareholders and disaster practitioners. Other problems are the lack of relevant training for ADB staff and the absence of focal points or core staff for disaster and emergency assistance. Ideally, core staff would provide knowledgeable assistance to operations staff. The lack of a systematic and flexible disaster and emergency assistance policy has exacerbated these weaknesses. 61. This section lays out a new, integrated policy within a disciplined framework for managing ADB disaster and emergency assistance, with an emphasis on linking the phases of the disaster management cycle, i.e., from prevention and mitigation through preparedness and recovery. The objective of this policy is to enhance ADB’s capacity and improve its effectiveness in assisting DMCs struck by disaster. The underlying principles of the new policy, which supersedes the 1987 and 1989 policies, include the following: 62. The new policy shifts the emphasis from only responding after disaster strikes to also supporting activities that anticipate and mitigate the likely impact of disasters that might occur. Modern societies cannot afford to value their social and material assets only after they have been lost in a disaster. Thus, ADB recognizes the importance of protective strategies that contribute to saving lives and that protect property and resources before they are lost. 63. ADB’s disaster and emergency assistance activities will be implemented within the context of working more closely with DMCs to help them adopt a new approach that emphasizes preventive measures. Furthermore, disaster rehabilitation and post-conflict reconstruction must be seen by ADB and its DMCs as involving much more than just building new roads, bridges, and schools. Such interventions should also strengthen or rebuild institutions, develop appropriate policies, and train people. Thus, ADB will conceptualize and implement strategies for short-term rehabilitation and reconstruction that lay the foundations for medium- and long-term development and broaden its approach to post-disaster assistance, natural and non-natural, to include prevention, mitigation, and preparedness. Each phase of intervention must be mapped to delineate strategic thrusts that, when coupled with well-defined activities, will constitute an integral part of disaster and emergency assistance. 64. The international community uses a systematic approach focused on risk and vulnerability that employs the concept of risk reduction or disaster risk management. The disaster management cycle is a dynamic process that encompasses the classical management functions of planning, organizing, staffing, leading, and controlling. It also involves many organizations that must work together to prevent, mitigate, prepare for, respond to, and recover from the effects of disaster.28 To prioritize its interventions and map its activities, ADB will consider the scheme, as drawn in Figure 5, which shows that disaster and its management is a continuum of linked activities, not a series of events that start and stop with each disaster occurrence. 65. As shown in Figure 5, the four major components or phases of the disaster management cycle are (i) development or prevention phase, (ii) disaster, (iii) emergency response or transition phase, and (iv) recovery. The development or prevention phase refers to national development and its inclusion in the disaster management cycle to impede the reoccurrence of a disaster and/or to prevent its occurrence from having harmful effects on communities or key installations. The emergency response or transition phase immediately follows the disaster impact and applies to a fairly short period when emergency measures are needed to deal with the disaster’s immediate effects. Emergency measures are mainly directed toward saving lives; protecting property; and dealing with the immediate disruption, damage, and other effects the disaster causes in relation to socioeconomic development patterns. Recovery is the process whereby communities and the nation return to their normal level of functioning following a disaster. The recovery process can be extremely protracted and take as long as 5–10 years or even longer, e.g., in the case of post-conflict situations.29 66. Figure 5 is applicable to natural and non-natural disasters, including post-conflict situations. Indeed, although differing somewhat in the trigger, scope, duration, and requisite actions, most emergencies generally result in widespread physical damage, death and displacement, and disruption of economic and social activities. Thus, regardless of the type of emergency, they all necessitate speed, flexibility, and accountability, and also share the relative importance of risk and vulnerability assessment, early warning, mitigation, and preparedness. Approach to post-conflict and natural disaster assistance may be different in nature and modalities but they have similar goals in providing immediate short-term assistance to rebuild/restore urgent priority economic, social, and administration capacity after disaster and emergency.
67. Prevention and preparedness activities entail planning and programming to enhance DMCs’ capacities to identify and cope with their most vulnerable areas. Prevention and preparedness should be mainstreamed into a country’s development process. During the prevention phase, prevention and preparedness measures might include (i) developing regional, national, and subnational emergency strategies; (ii) establishing an adequate institutional and regulatory emergency framework; (iii) carrying out risk and vulnerability assessments and developing concepts and instruments for crisis prevention, conflict transformation, and peace building and to apply these in development cooperation with the aim of institutionalizing this important trans-sectoral theme;30 (iv) creating information and early warning systems, and using information and communication technology to integrate with existing, real-time, global disaster information networks; (v) equipping and training specialized personnel; and (vi) promoting the funding of national trust funds and other mechanisms for sustainable financing of disaster preparedness in cooperation with the public, private, and civil-society sectors. 68. Mitigation activities include (i) protecting critical infrastructure, reinforcing vulnerable structures and adjusting building, land use, and zoning codes; (ii) constructing appropriate dams or dikes to prevent flooding and building breakwaters in ports and low-lying coastal areas; (iii) acquiring hazard reduction technology; and (iv) strengthening governance and social cohesion.31 Mitigation measures, while identified in emergency programming, in particular in the transition phase, should also be part of a country’s national development process. 69. In the wake of the disaster, immediate assistance must address the rehabilitation of high-priority physical and social infrastructure, e.g., water, sanitation, power, communications, and transport; the revitalization of basic services, particularly education and health care; and the need to jump-start economic productivity. After the emergency crisis is over, however, efforts shift to transitional social, institutional, and capacity requirements. These include the social and economic reintegration of displaced people, the demobilization and reintegration of former combatants, and the restoration of basic administrative and governance services. 70. During the transition phase, the emphasis should be on partnering with specialized (relief) agencies. Examples might include (i) providing seed and tools in tandem with the provision of food by the World Food Program; (ii) supporting capacity building and emergency (immediate), short-term rehabilitation of social infrastructure in partnership with the United Nations Children’s Fund or the International Federation of Red Cross and Red Crescent Societies to revitalize basic services and provide emergency medicines and immunizations; and (iii) providing basic infrastructure, livelihood training, and employment schemes in cooperation with a United Nations High Commission for Refugees repatriation and reintegration program. 71. During the recovery phase, assistance will begin with a joint damage and needs assessment with relevant partners to identify priorities; provide emergency, short-term transitional assistance; and begin to design comprehensive medium- to long-term rehabilitation and reconstruction programs for subsequent resource mobilization and implementation. Immediate, short-term recovery will focus on transitional needs and the rehabilitation of critical infrastructure, e.g., power, key means of transport, and communications, as well as on project preparation and capacity building. In the medium to longer term, however, rehabilitation and reconstruction will be undertaken through normal development projects. A comprehensive communications plan will be formulated during this phase in anticipation of ADB involvement in subsequent strategic phases as appropriate. 72. ADB’s extensive knowledge of and experience in its DMCs position ADB to act quickly in post-disaster situations. Resident missions and other ADB offices provide information that complements regularly updated in-house databases. ADB conducts country economic reviews and develops CSPs and CSP updates for DMCs and shares information and good practices with its development partners. Other regularly generated reports—such as monitoring, evaluation, needs assessment, gender, and environmental reports and social assessments — also add to the knowledge base. These complementary data sources allow ADB to quickly articulate strategically sound emergency responses when required. Nevertheless, ADB must continue to improve its data resources and analytical capabilities. To this end, the following analytical assessments will be drawn from existing information, as appropriate, and will be promoted by ADB in close partnership with relevant shareholders and specialized (relief) agencies. In the absence of legal or practical constraints, this information should be disseminated via ADB’s Internet site and other channels. 73. Surveillance systems for early detection and warning of impending natural disasters already exist on a regional basis, e.g., ADPC in Bangkok, Thailand; Asian Disaster Reduction Center in Kobe, Japan; International Institute for Disaster Risk Management in Manila, Philippines; and Pacific Disaster Center in Hawaii, United States. ADB will partner with such regional institutions so that DMCs can enhance the quality of regional and subregional surveillance and early-warning systems, with particular emphasis on using information and communication technology for improved preparedness. ADB recently developed a prototype for quick response in the form of its action plan to address the SARS outbreak and conduct SARS risk and vulnerability assessments. ADB will also support regional surveillance and earlywarning facilities in DMCs, especially those that are historically prone to natural disasters and have implemented or are implementing national programs, e.g., Bangladesh, PRC, India, Indonesia, Pakistan, Philippines, Viet Nam. 74. CSPs and project appraisal work already incorporate environmental assessments that consider natural disasters, providing a foundation for mainstreaming mitigation and preparedness activities into ADB’s project lending and TA.32 ADB is also refining such existing instruments as social assessments to take conflict dynamics into account,33 in part to support early detection and the development of interventions to prevent tensions and perceived injustices from escalating into violent conflict. Social assessments can identify the beneficiaries and “losers” of project interventions, thereby providing early warning of the potential magnification of social cleavages and the attendant risk of civil conflict. 75. Emergency preparedness, mitigation, and prevention require systems for identifying, monitoring, and managing risks and vulnerabilities. Sound disaster reduction strategies are based on vulnerability and risk assessments and accurate information about DMCs’ institutional and operational capacities. The factors evaluated should include the vulnerability of critical facilities, the quality of social and economic infrastructure, and the status of early warning systems. Recognizing the importance of such intelligence, risk and vulnerability assessments will complement the environmental and social assessments in CSPs. 76. In countries or areas of countries where the ADB portfolio is inactive due to factors such as arrears, insecurity, or poor governance, watching briefs will help maintain ADB’s knowledge base and awareness of social and economic trends. Such briefs will typically be implemented through a third party, for example, an NGO or UN partner agency already on the ground. The information obtained by means of such briefs would allow ADB to respond quickly when conditions are ripe for emergency intervention and/or for resumption of activities. The World Bank has developed a similar instrument as part of its policy on conflict and development cooperation. The World Bank had updated its watching brief on Afghanistan for 3 years, and it proved valuable in helping the World Bank quickly build partnerships and prepare a strategy and program for its reentry into the country. ADB watching briefs will be disclosed to the public through the Internet and other channels, so that other shareholders may benefit from the information and analysis. 77. A damage and needs assessment mission, conducted in partnership with relevant shareholders and key local actors, will be a priority action after an emergency. The mission’s field report will provide the basis for preparing an RRP and, if appropriate, an interim operational strategy (IOS). The work of the damage and needs assessment mission will incorporate a wellplanned communications aspect. The mission will be kept informed of developments by the Government and will maintain lines of communication with relevant shareholders. The public will be informed of ADB actions as appropriate. 78. In emergency situations where a CSP is absent, outdated, or inadequate to guide an emergency response and/or to resume activities, an IOS will be prepared. The IOS, an emergency strategic document based on the watching brief and a damage and needs assessment, will provide critical policy recommendations for Board consideration, thereby setting the parameters for action. The IOS, which will set out ADB’s short- to medium-term plan for emergency response, will identify immediate priority assistance objectives (1–6 months) and medium-term objectives (6–18 months).34 Other components will include (i) a proposed program of TA and investments to meet stated objectives; (ii) a financing plan and ADB administrative budgetary requirements; and (iii) the identification of potential impediments to rapid disbursement, e.g., the country’s legislation or regulatory environment and disrupted implementation processes. The IOS will highlight exceptional measures that may be required to undertake the work and include an assessment of risks, entry and exit strategies, and contingency responses. Finally, the IOS will also define benchmarks and performancemonitoring indicators and a schedule for periodic Board briefings. 79. Emergencies often know no borders. Thus the IOS may incorporate activities in neighboring countries if the governments or authorities in those countries endorse and participate in such activities. This is consistent with ADB support of and expertise in regional strategy development and cooperation. 80. ADB staff, with consultant support, will lead the development of the IOS, in particular in the transition phase. This approach has been proven effective in emergency situations such as the Gujarat earthquake, where the services of domestic consultants were extended beyond the initial assessment mission to provide a critical presence and input into the immediate to medium-term responses. A similar arrangement was used in Timor-Leste to accelerate ADB’s response to the conflict-driven emergency. The country team will take the lead in preparing an IOS for all or part of a country under emergency conditions. ADB’s recent action plan to address the SARS outbreak, which may be seen as a SARS IOS, provides one useful prototype. That action plan (i) established immediate priority assistance to the PRC;35 (ii) identified medium-term objectives, including emergency RETA;36 (iii) highlighted desirable partnerships; and (iv) made recommendations for portfolio restructuring and processing. 81. ADB’s emergency lending and TA instruments tend to be limited in scope, and focus mainly on natural disasters, with an emphasis on the recovery phase (Chapter III). Such instruments are problematic for countries affected by conflict-driven or health emergencies, e.g., the recent SARS outbreak, and for prevention, preparedness, and mitigation. Furthermore, even when ADB makes funds available, the terms may not be sufficiently concessionary for effective overall assistance. Thus, many DMCs find themselves caught in a dilemma between diverting limited development resources and capacity to address emergency needs or providing an emergency response that is insufficient to maintain ongoing development. Maximizing the concessionality through financial and nonfinancial terms would alleviate the financial burden DMCs face when attempting an adequate response to emergencies. 82. In countries with operational portfolios, the first consideration in an emergency situation is to review the possibility of restructuring ADB resources within and across existing projects and sectors.37 The restructuring exercise is included as part of the initial damage and needs assessment mission. The subsequent report or IOS will make recommendations for portfolio restructuring, both within and across sectors, and for the appropriate use of loan savings. However, under no circumstances, portfolio restructuring will be undertaken in a manner inconsistent with ongoing development priorities and activities. Restructuring will be justified on the basis of funds exceeding the amount required to achieve original project objectives and/or changed circumstances whereby the original objectives are no longer relevant or can no longer be implemented in the desired time frame. In either case, the DMC must approve any restructuring proposal. 83. ADB may agree to reallocate surplus funds from other loans to DMCs for disaster rehabilitation (Appendix 6).38 In special cases with particularly urgent rehabilitation needs, ADB may reallocate outstanding loan proceeds for rehabilitation purposes in response to changed government priorities because of the disaster and resulting emergency. Current conditions for such reallocation are that (i) the scope of ongoing projects can be reduced without adversely affecting the benefits of existing project components, (ii) the ongoing projects and rehabilitation needs are in the same sector, and (iii) the government lowers the priority of ongoing projects because of the emergency. 84. These conditions will now be modified to take into account possibilities for portfolio restructuring in DMCs within and across sectors. All reallocations will be justified in the RRP or IOS, as appropriate, and will be permitted with Board approval of the RRP or IOS. However, this option will not be detrimental to normal lending operations in the country and will be consistent with the government’s priorities given the emergency. 85. ADB does not have a formal mechanism for providing specific emergency assistance, whether for rehabilitation after a natural disaster or for post-conflict reconstruction, and has therefore handled such situations through normal channels. A new approach to emergency situations is proposed through an EAL exclusively designed for short-term transitional assistance. The EAL emphasizes rapid approval of short-term and small loans to help rebuild high-priority physical assets and restore economic, social, and governance activities after emergencies. The following paragraphs discuss the scope, terms, and conditions of EALs. 86. The EAL is designed to mitigate immediate losses to priority assets, capacity, or productivity rather than to provide relief or comprehensive reconstruction. EALs will provide immediate short-term assistance that may include (i) rehabilitating priority water services, power, transport, and communications infrastructure; (ii) regenerating livelihoods and boosting productivity; (iii) providing transitional safety-net support and revitalizing basic social services; and (iv) preparing for planned, comprehensive reconstruction investments. EALs should be linked with and complement humanitarian relief efforts by other development partners, consistent with the objective of easing the transition from relief to normal development. EAL may involve policy dialogue, in particular in post-conflict situations. 87. In 1987–2002 the size of ADB rehabilitation assistance loans ranged from $0.5 million to $500 million (Appendix 1, Table A1.1; and Figure 3). ADB originally used rehabilitation assistance loans during the first 12 months following a disaster. The revised 1989 policy extended the completion limit to 3 years post-disaster, with no ceiling on loan size. Given that disasters leading to unpredictable emergencies place substantial pressure on planned development resources, and on scarce ADF resources in particular, the use of EALs will be restricted to the transition phase and used exclusively for priority rehabilitation. 88. Loans for priority emergency needs will be differentiated from large-scale reconstruction assistance. Emergency loans are generally smaller than normal development loans, consistent with their focus on immediate short-term requirements, e.g., rehabilitating critical infrastructure and meeting basic needs as identified by means of a damage and needs assessment. A proposed EAL must be clearly justified and a clear relationship established between the cost and the proposed EAL amount, along with a specified time frame for implementation and a completion period normally of up to 2 years for natural disasters and 3 years in post-conflict situations, exceptionally extended for, at most, 2 additional years when the destruction and dislocation are deemed extreme, taking into account the DMC’s weakened absorptive capacity following a disaster. Normal development loans to address comprehensive, medium- to longterm reconstruction, including prevention and mitigation activities, should complement EALs. 89. Under current policies, rehabilitation assistance loans may be made from OCR or ADF, depending on the borrowing country’s eligibility for and access to ADB’s resources at the time of loan negotiations.39 However, given that the burdens created by sudden and unpredictable emergencies fall hardest on the poor, emergency assistance operations for DMCs in Groups A, B1, and B2 should normally be financed from available ADF resources. ADF allocations to support post-conflict operations will be made on the basis of the IDA-13 framework for postconflict assistance. This system will sharpen the focus on performance, but provides for judgment to take account of the complexities and heterogeneity of post-conflict situations.40 90. ADF-financed EALs will carry interest of 1% per year and a maturity of 40 years, including a grace period of 10 years, with repayment of principal at 2% a year for the first 10 years after the grace period and 4% a year thereafter.41 For OCR loans, in particular to DMCs in Group C, a grace period of up to 8 years and maturity of up to 32 years will apply. If the borrower’s request is justified, total interest for the grace period, and the front-end fee and commitment charge, if applicable, can be estimated and included in the loan amount. The estimated total interest for the entire grace period and the front-end fee and commitment charge, if applicable, can be allocated under the interest during construction category in the loan allocation. ADB financing may exceed the country’s cost-sharing limit because of exceptional circumstances.42 91. ADB does not at present have grant financing in ADF, in particular to assist the poorest and most vulnerable post-conflict countries. Such countries not only lack the financial resources needed to shoulder the economic burden, but also the institutional and human resources capacities needed to deal quickly and comprehensively with emergencies. In the context of the ongoing negotiations on the eighth replenishment of ADF (ADF IX), donor members have endorsed a proposal that a portion of ADF IX resources should be allocated on a grant basis to poor DMCs emerging from conflict.43 92. ADB will consider the following eligibility criteria for EALs: 93. EALs will be used exclusively for the prompt restoration of services to the population and will not attempt to address medium- to long-term economic rehabilitation investments or sector or institutional problems unrelated to the emergency. This implies that EALs should not include conditionalities linked to macroeconomic policies. EALs may, however, include conditionalities related to the underlying causes of the emergency that are directly related to emergency preparedness, mitigation, and prevention measures, e.g., hazard mapping, infrastructure design, and land use. An EAL may also include conditionality in relation to improved governance processes that will help prevent a reoccurrence of a similar disaster or that will mitigate the damage should such a disaster occur again. 94. While EALs must comply with ADB safeguard policies pertaining to the environment, involuntary resettlement, and indigenous peoples and any future safeguard policies,44 the need for expeditious processing necessitates procedural flexibility. In the case of the environment policy, management can waive the 120-day rule for disclosure of summary environmental assessment reports and the two-step public consultation requirement for category-A projects (those with a potentially significant environmental impact) on a project-by-project basis. 95. In the case of the policies on involuntary resettlement and indigenous peoples, even if the initial poverty and social assessment identifies likely adverse effects, standard surveys and consultation requirements based on the feasibility study may not be possible before Board circulation. In such cases, a resettlement framework and/or an indigenous peoples development framework will be included in the RRP and legal agreements for Board circulation. The RRP will identify policy, procedures, and requirements to be applied during loan implementation. In all cases, the RRP must justify any departure from standard procedures with reference to the specific circumstances of the project and the EAL processing schedule. 96. Normal lending is often appropriate as an immediate next step after an EAL. The RRP or IOS will provide a basis for prioritizing and preparing the initial comprehensive reconstruction loan, and may also include the redesign of projects under preparation but not yet approved. Such comprehensive financing adheres to normal loan terms, conditions, and policies, and may be similar to sector or program lending vehicles with relevant sector conditionalities. Prevention, mitigation, and preparedness activities will be incorporated in development loans. 97. ADB could also consider the feasibility of providing assistance for setting up catastrophe insurance schemes through public-private partnerships in the insurance industry and cautiously exploring the use of capital markets to develop such insurance.45 This precautionary approach would provide a mechanism for promoting mitigation measures, for example, by setting premiums according to local hazards or risks and issuing policies conditional upon the attainment of certain land-use practices. 98. TA for disaster and emergency can provide support to address immediate short-term requirements in the wake of a disaster and to enhance the reach and impact of an EAL. TA may cover (i) building national and regional capacity for emergency surveillance, preparedness, mitigation, and prevention linked to an EAL; (ii) preparing an IOS; and (iii) preparing emergency assistance programs and/or projects. This TA may also be appropriate for initiating timesensitive, critical components of early emergency assistance programs, e.g., engaging in the removal of rubble and cleanup; repairing critical water, electrical, and sanitation services; controlling and stabilizing buildings, terrain, and physical structures; acquiring critical equipment and supplies for basic services; accessing emergency seeds and tools to jump-start productivity; and carrying out special studies and surveys for the rapid preparation of emergency activities. 99. Table 1 summarizes the proposed analytical and assistance instruments in relation to phased responses to disaster management and emergencies.
100. ADB’s mandate is to use its resources to finance development of its DMCs through loans, guarantees, and TA for the preparation, financing, and execution of development projects and programs that contribute to harmonious economic growth of the region as a whole.46 ADB’s mandate does not allow the institution to engage in peacemaking, peacekeeping, or humanitarian relief. Other international aid agencies, regional bodies, NGOs, and the UN normally assume these functions. 101. In addition to these contingent conditions, ADB also adheres to the following minimum operational entry criteria, which are particularly important in conflict-driven emergencies: 102. ADB project processing procedures involve 48 steps for TA processing from concept to final report and more than 50 steps for processing a loan from feasibility report to approval.47 ADB’s new business processes have streamlined this process,48 but a further shortening of processing time is necessary in the case of emergencies for EAL. After ADB has received a formal request for emergency assistance from the relevant government or authority, the appropriate regional department, in close consultation with the anchor for emergency assistance (see the subsection on Institutional Arrangements) and the relevant resident mission, as appropriate, will address issues that include the (i) choice of lending and financing instruments, (ii) administrative budgetary requirements, (iii) action timetable, and (iv) partnership arrangements. This process would be similar to that which ADB used to prepare its emergency response to the SARS outbreak. 103. For EAL, appropriate financial and economic internal rates of return will be flexibly used, with the emphasis on least-cost solutions not prejudicial to quality assurance in rehabilitation or reconstruction work. ADB will not insist on stringent cost recovery practices, as the main purpose of EAL is the immediate rapid restoration of damaged basic structures, infrastructure, and productive activities (footnote 11). 104. The damage and needs assessment will be followed by an RRP.49 Loan negotiations will follow management consideration of the proposed EAL. The draft RRP along with loan documents will be submitted to the Board for consideration. The processing time frame will not exceed 12 weeks and special abbreviated Board submission will be done within 1 week after RRP circulation. Documentation for TA will also be streamlined. 105. Reviews of previous emergency operations (Chapter III) revealed several implementation constraints, including weak institutional capacity, scarce technical and managerial skills, procurement delays, insufficient counterpart funding, delays in recruiting consultants, and inadequate attention to effective external communications. These constraints do not differ greatly from the typical implementation and absorptive capacity constraints of normal projects. This suggests that standard ADB operational policies, including those on procurement, consulting services, financial management, and disbursement, should continue to “be liberally interpreted to ensure speedy and effective rehabilitation” in the case of emergency assistance.50 106. Project implementation readiness will be assessed and accelerated as part of the initial damage and needs assessment mission. Appropriate actions may include (i) establishing appropriate project implementation bodies, (ii) formulating a comprehensive communications plan,51 (iii) developing procurement and financial management systems, (iv) specifying monitoring and evaluation indicators, and (v) providing for the timely release of funds to ensure accelerated implementation. 107. EALs will require more resources to prepare, appraise, and supervise than ordinary loans because of the need for a speedy and transparent response. Thus, the supervision and monitoring of emergency projects must be enhanced to ensure quality and effectiveness under conditions of urgency and flexibility. This will require paying special attention to expedited procurement and disbursement arrangements and modified safeguard policies (as deemed appropriate). 108. Emergency assistance activities should adhere to standard ADB performance evaluation requirements.52 However, based on lessons learned, ADB is developing specific performance indicators for emergency response activities. Standard ADB auditing procedures should apply to EALs, but a “special audit” focusing on governance; financial accountability (e.g., certification of accounts); and transparency should be carried out soon after the completion of emergency projects.53 109. ADB’s existing emergency procurement policy stipulates that in the case of rehabilitation loans, guidelines may be flexibly interpreted, including relaxing international competitive bidding requirements, in the interest of expediency. Existing policies on advanced procurement, retroactive financing, and local currency cost financing should be followed. To the extent possible, ADB will encourage the procurement of domestic goods and services as a way to stimulate local economic recovery. For the procurement of civil works, force account should be used only when bidding is not practical. Local competitive bidding with a short bidding period should be used to procure civil works for immediate emergency assistance. 110. For goods and services, prudent international shopping is recommended, with the bidding period reduced from the current 30 days to 7–15 days. In the case of local contractors, a registration system that lists approved contractors based on criteria such as experience and financial and technical capacity may be used. Postqualification could be used for unregistered contractors.54 Consultants recruited and contractors prequalified or selected under ongoing loans could be used without resorting to new bidding and prequalification. ADB should follow procurement procedures using normal commercial procurement practices for the private sector and government procurement procedures for public sector procurement where such procedures are functioning and appropriate. 111. EALs may include quick-disbursing components; however, they are not program loans. Quick-disbursing components of an EAL should only be used to finance a list of imports identified as necessary for an effective recovery program. Disbursements should be allowable up to 100% of eligible project costs. Imprest accounts should be used wherever possible to expedite disbursements, and a specific increase in ceilings on imprest funds should be allowed given that immediate and large disbursements are key to effective and timely emergency assistance. 112. A sector lending approach and active community participation are preferable to support flexible subproject selection and to enhance the ownership by and direct benefits to the most affected and vulnerable groups. To balance the need for speed and flexibility with concerns about fraud and corruption, ADB should ensure that basic internal controls are built into the systems and stringent monitoring mechanisms put in place. More intensive supervision, perhaps from the resident mission, will be encouraged to provide more frequent checks on performance. 113. For immediate emergency responses, no more than 30% of loan proceeds should be used for retroactive financing of expenditures. Expenditures must have been incurred and paid for after the emergency occurred. In the case of reallocations of existing loans, expenditures will have to be incurred before the effective date of the reallocation for reimbursement by ADB. Supplementary financing may be required if ongoing ADB projects experience serious damage from a disaster. If several projects are affected, a new rehabilitation project could effectively handle damage to all such projects together with damage sustained elsewhere. 114. In emergency situations, implementation capacity is typically stressed, with the government’s technical capacity often stretched in the case of natural disasters and depleted in the case of civil strife. Thus, TA is often useful, with project preparatory TA focusing on feasibility and sector studies, and advisory TA concentrating on capacity building and policy reform. Such TA should complement the proposed EAL. Direct selection, negotiation, and hiring are desirable when justified to expedite technical services required in emergency situations. Time-consuming competitive bidding processes should be avoided wherever possible. Qualified and existing consulting services on the ground should be extended and retrofitted to address emergency needs, as in the recent Gujarat earthquake project. 115. For the past two decades ADB has addressed emergencies caused by natural disasters based on its 1987 and 1989 policies. In recent years it has also dealt with non-natural emergencies, initially in Cambodia and Sri Lanka, and, more recently, in Afghanistan, Tajikistan, and Timor-Leste. The latter efforts involved case-by-case decision making and efforts dispersed across the organization. While generally effective, the interventions for emergency responses were lacking in cross-fertilization and synergy. ADB’s recent experience with preparing an emergency response to the SARS outbreak provides a model for more effective collaboration in dealing with emergencies. The use of an ad hoc monitoring committee, focal points, and working groups was effective from a management perspective and improved the quality of the final product. The following sections outline revised institutional arrangements designed to enhance ADB’s flexibility and effectiveness in responding to emergency situations. 116. An anchor position for emergency assistance activities will be created in the Regional and Sustainable Development Department to (i) review the application and implementation of ADB’s disaster and emergency assistance policy and practices, (ii) coordinate ADB’s emergency response and help the Office of Cofinancing Operations with emergency resource mobilization, (iii) provide support and guidance to regional departments staff and liaise with the ADB’s internal emergency management system, and (iv) strengthen partnerships and interagency relations. The anchor will also internally and externally promote this policy. An emergency specialist with a broad multidisciplinary background, including knowledge of disaster risk management, will staff the anchor position. If training in disaster risk management is provided to ADB staff, implementation of the emergency assistance policy will require only limited incremental resources. 117. A secondment program from external partner agencies, in particular specialized international and/or bilateral agencies from ADB member countries, could support the anchor for emergency assistance with professionals being seconded for 6–12 months (subject to renewal). Seconded personnel will not be considered consultants, but as specialized staff from partner agencies who bring skills and perspectives different from and complementary to those of ADB staff. This represents a cost-effective and innovative approach to emergency assistance within ADB. At the same time, secondments will strengthen partnerships in an area where no one agency can address the multifaceted needs of affected communities. 118. The anchor for emergency assistance will develop a list of available or on-call specialists to respond to specific needs for technical inputs. These can be obtained from ADB staff and/or regional and global agencies on a consultant or partnership basis. Examples include (i) specialists in mine action from international NGOs, consulting firms, or the United Nations Mine Advisory Services; (ii) specialists in earthquake- and/or flood-proof construction design from regional bodies such as ADPC and the Asian Disaster Reduction Center; (iii) specialists in disaster risk management from the International Institute for Disaster Risk Management; (iv) specialists in region-specific emergency management from the Pacific Disaster Center; and (v) health specialists from the World Health Organization. In addition, a number of regional and global climate and weather forecasting bodies could partner with ADB to provide periodic information as part of country risk and vulnerability assessments. ADB has already approved RETA grants to strengthen one regional body.55 These RETAs should be evaluated and steps taken to integrate the results more directly into ADB policy, operations, and staff development. 119. Regional departments are responsible for policy implementation. Each of the five regional departments will designate a focal point for emergency operations. These staff members, in addition to regular duties, will be key components of an emergency network coordinated by the anchor for emergency assistance. They will participate in critical staff meetings and provide a functional linkage between policies and operational programming. 120. Each resident mission will designate one staff member who, in addition to regular duties, will serve as the country focal point for contact in an emergency. These staff members will be trained and electronically linked to the Manila-based emergency network. The staff members serving as resident mission focal points will (i) play a central role in emergency risk assessment and early warning; (ii) take primary responsibility for ongoing supervision, monitoring, and reports on emergency activities in the countries; and (iii) coordinate emergency operations closely with other agencies and actors. 121. Participatory processes are an integral part of ADB’s work, with the focus on enhancing poverty reduction through meaningful inputs and ownership on the part of shareholders. ADB considers that nurturing public, private, and civil-society participation in all areas of operations is vitally important, and nowhere is this imperative more critical than in the area of emergency preparedness and crisis response. Even though the time frame may be more compressed than under normal circumstances given the exigencies of emergency assistance, ADB will continue to use an extensive consultative and participatory process in project design to the extent possible. Effective communications facilitate this process. 122. In providing technical and financial assistance, particularly during the damage and needs assessment, in the course of resource mobilization and management, and throughout implementation, ADB forges working relationships with partners at all levels. ADB’s participation in such international bodies as the UN Economic and Social Council, Multilateral Banking Committee, and various NGO forums on emergency preparedness plays a key role. NGOs, civil society, and relief and humanitarian agencies represent significant partners who must help bridge the gap between relief and development programming. For the current proposal, ADB multi-shareholder consultation, popular participation, and local ownership of the reconstruction and development process are essential. 123. Because relief and development play important complementary roles in dealing with emergencies, and given that ADB’s mandate prohibits it from taking on a humanitarian and/or political role, ADB can most effectively leverage its assistance only through public-private-civilsociety partnerships. ADB expects that counterpart requirements for ADB loans will be satisfied by recognizing the full range of resources contributed to the emergency effort by national private and public entities as well as by other bilateral and multilateral agencies. In this context, ADB gives priority to coordinating with other agencies to obtain the best possible resource mobilization and complementarity. 124. The implementation of this new policy implies an expanded mandate. For internal resource requirements, appropriate staffing (e.g., one emergency specialist and one national officer) and associated costs (e.g., logistics, a management information system, communications and consultation, and training) will be considered. Regional departments, including resident missions, will also consider how to make resources available to implement their emergency focal point responsibilities (e.g., one staff member designated as a regional focal point). The resources required to implement this policy, one time or recurrent, will first be met from existing available resources to the extent possible. Incremental resources will be identified and these will be required for policy coordination and engagement of short-term consulting services, including mission travel. Training in disaster risk management will be included in ADB’s annual staff development program. The training program is expected to be extensive in content and significant in application, covering staff in both regional departments and resident missions. The use of a secondment program could be cost-effective, and ADB will pursue this approach on a trial basis. 125. With regard to requirements for operational program resources, strategic planning will add onto the mandate to implement preventive measures, e.g., mitigation of and preparedness for natural disasters and prevention of conflicts. This implies additional demands for knowledge products and services, and should be taken into account when mobilizing resources for planning, especially for ADF countries. However, demands for scarce ADF resources are heavy, and ADF countries hit by unanticipated natural disasters can put pressure on assigned development resources. In such cases, portfolio restructuring within and across sectors will be a priority. Such restructuring should also be considered when planning annual resource mobilization. In the context of planning for emergencies and reconstruction in ADF borrowers, the proposed policy will use the IDA-13 conflict and natural disaster framework as a reference for planning ADF assistance (Appendix 7).56
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