Catalog

	Table of Contents
p. 14 of 26 BACK | NEXT I. Introduction II. Changes in Development Environment and Agenda III. Themes for Organizational Effectiveness IV. Objective and Principles of Organizational Change V. Analysis of Options VI. Main Features of Organizational Change A. New Geographic Regions B. Enhancing Country Focus: New Regional Departments C. Function and Structure of Regional Departments D. Establishment of a new Regional and Sustainable Development Department E. Role and Responsibilities of Vice Presidents F. Establishment of a Management Committee G. Strategy and Policy Department H. Upgrading the Private Sector Group to a Private Sector Operations Department I. Office of External Relations J. Economics and Research Department K. Office of the Secretary / Office of the General Counsel L. Knowledge Management M. Project Administration and Portfolio Management N. Risk Management O. Checks and Balances VII. Complementary Changes VIII. Challenges and Responses IX. Budget Implications and Implementation Plan X. Conclusions XI. Recommendations

Reorganization of the Asian Development Bank : VI. Main Features of Organizational Change

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H. Upgrading the Private Sector Group to a Private Sector Operations Department

75. The LTSF recognizes that “involvement with the private sector is expected to increase substantially in the years to come” and that “for ADB’s private sector operations to have a meaningful and relevant impact, it must undertake a critical mass of private investment.” The LTSF, the Private Sector Development (PSD) strategy and the Poverty Reduction Strategy all recognize the importance of catalyzing the private sector and private capital flows as part of the long-term solution to poverty reduction. Private sector development has three main thrusts:

1. enabling environments;

2. business opportunities; and

3. private sector operations (PSO).

Primary responsibility for mainstreaming the first two elements of the strategy will be with the Regional Departments. To help strengthen the regional departments’ private sector development work, specialists in the RSDD will provide support through the PSD network and provide information about best practices. The Steering Committee established by the President to oversee implementation of the PSD strategy will continue to develop ways of enhancing the integration of the public and private sector, and resolving ADB-wide policy issues.

76. The issue of whether to put private sector units into the operations department was considered. PSO began in ADB as a unit within a public sector operations department. The lesson learned from that experience was that due to the nature of private sector transactions, which require specialized skills and expertise and different operational processes and procedures, ADB-wide PSO should be the responsibility of a single dedicated group within ADB. As a result, PSG was formed in 1995. To now split up PSG into departmental units was not considered appropriate as

1. the loss of critical mass in putting together PSO transactions would adversely affect portfolio quality;

2. it would increase the possibility of conflicts of interest between ADB’s public and private sector activities, and

3. it may be seen as a “downgrading” of PSO.

77. In the light of ADB’s renewed commitment to private sector development, upgrading PSG to a Private Sector Operations Department (PSOD) with a full-time director is a natural progression for PSO within ADB. It will enable PSOD to effectively fulfill the new challenges presented by the changing environment, implement the PSO operational strategy, address the span of control issue (which is currently over-stretched) and enable PSOD to respond flexibly to client needs. PSOD will have two divisions, and will be responsible for project finance, capital markets, investment funds management, and risk management. As an operations department, PSOD will report to one of the operational Vice Presidents. Appropriate procedures will be put in place to ensure that each operational Vice President has responsibility for PSO in his/her region.

78. In addition to its core activities of PSO, PSOD will participate in mainstreaming the PSD strategy and will use its private sector expertise in several ways:

1. the head of PSOD will continue to be part of the Steering Committee established by the President to oversee implementation of the PSD strategy;

2. a full-time director for PSOD will be dedicated to promoting PSO within ADB and will have a more focused agenda to ensure PSO is integrated with ADB’s country programs; and

3. at least one PSOD staff will be designated as the focal point for the PSD strategy and work primarily in the areas of privatization, corporatization and public-private partnerships. Integration of all ADB’s support for private sector development within the CSP will be achieved through participation of private sector operations staff in country strategy and programming activities. Heads of the Regional Departments will need to ensure that all private sector projects are consistent with the strategy for each country within his or her department and that each country program reflects the PSD strategy.

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