Catalog

	Table of Contents
p. 16 of 32 BACK | NEXT I. Introduction II. Assessment of Past Performance III. Rationale and Role IV. Operational Strategy A. Focusing Primarily on Existing Strengths B. Extending the Country and Sector Reach C. Wider Use of Innovative Financial Instruments D. Building Strategic Alliances and Partnerships V. Operational Improvements VI. Resource Requirements VII. Conclusions and Recommendations

Private Sector Operations: Strategic Directions and Review : IV. Operational Strategy

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D. Building Strategic Alliances and Partnerships

68. ADB has worked on PSO with various groups including sponsors, commercial lenders, and IFIs (bilateral aid agencies, ECAs, and other MDBs). Each group brings its own skills and experience and appetite for particular risks to the individual project. PSG already has well-developed abilities to foster alliances and will strengthen alliances that have worked successfully in the past and forge new ones as appropriate. To obtain the maximum benefit from these relationships, PSG must first identify ADB’s unique capabilities for any project and then bring in partners that complement rather than duplicate those capabilities.

69. ADB has long enjoyed constructive partnership with other MDBs in financing private sector projects and this will continue, especially (i) in frontier markets, large projects, and sectors where another MDB has relevant experience but ADB has relatively less; (ii) in piloting projects where neither party has experience and the risks can reasonably be shared; and (iii) in smaller DMCs such as the Central Asian republics, Pacific DMCs, and possibly others, and in small projects, where the transaction costs are high.

70. Joint efforts and joint support by multiple MDBs in a single project will also provide a stronger signal to the market of the MDBs’ confidence and commitment to a particular sector or undertaking, as well as a signal of confidence in the overall “country environment.” As partners and co-investors, MDBs can learn from each other: regional knowledge and sector expertise can be complementary, especially in frontier countries or sectors. Portfolio risk or charter considerations can limit an MDB’s investment appetite. Joint participation of multiple MDBs allows risk sharing and can make a project bankable. Indeed in large infrastructure projects, joint financing among MDBs may be key. When joining together in a small project, the MDBs typically combine their knowledge and skills to share preparation costs and make the size-cost tradeoff less acute.

71. ADB will continue discussions with the European Bank for Reconstruction and Development (EBRD), IFC, Multilateral Investment Guarantee Agency (MIGA), and increasingly, European Investment Bank (EIB), as well as with key bilaterals, on building strategic alliances and seeking joint participation in private sector projects in Asia.

72. One initiative to foster this kind of increased cooperation among the IFIs is the two-year old policy impediments database that collects inputs from MDBs, bilaterals, and ECAs regarding obstacles encountered by private sector projects in developing countries. The simplest function of the database is to share practical experiences and lessons learned among the institutions, and with all departments and offices in ADB, to support active coordination to help overcome these impediments. While some impediments may be hard to overcome because they reflect deep-seated legal or structural problems, others may be more easily removed by the simple expedient of bringing practical examples of the problem to the attention of policy makers.

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