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p. 4 of 7 BACK | NEXT I. Introduction II. Reasons for Updating III. Process and Guiding Principles Adopted for Updating IV. Updated Sector and Theme Classification V. Implementation Arrangements VI. Next Steps Appendixes

Updating Sector and Theme Classification at the Asian Development Bank

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IV. Updated Sector and Theme Classification

A. Definition of Sectors and Themes

8. The updating exercise first focused on establishing clear definitions of the terms “sectors” and “themes.” These definitions (Table 1) are broadly consistent with definitions used by the United Nations system and the World Bank. They guided the updating exercise at ADB and will allow precise comparison of ADB’s resource allocation patterns with those of other international organizations.

B. Updated Sector Classification

9. Sector classification primarily tracks the trends in allocations of ADB’s operational resources to economic sectors. This information permits ADB to report on “from which entry points” ADB is supporting poverty reduction and MDGs.

10. Limitations of the Old Sector Classification. The old sector lists had a major limitation in capturing ADB’s operations in areas critical for poverty reduction and MDG attainment: (i) education, health, nutrition, and social protection; water supply, sanitation, and waste management (they were all categorized under a single sector titled “social infrastructure”); (ii) trade (small and medium-scale enterprises, export/import); and (iii) law, public sector management, and finance (categorized under “other sectors”). The old sector classification system also did not identify the exact sector coverage of projects classified under the “multisector” category.

11. Key Elements of Updated Sector Classification. The updated sector classification abolished the former “social infrastructure” category, and introduced three new categories: (a) education; (b) health, nutrition, and social protection; and (c) water supply, sanitation, and waste management. ADB support to these sectors go beyond infrastructure and cover service quality, capacity and institution building. Also added was a new category “law, economic management and public policy,” to accurately capture operations in these areas, which are also important entry points of operations addressing governance. The updated classification provides more detailed subsectors for each sector to track what types of support are covered under each sector. The multisector category is retained, but each multisector project is required to indicate (i) up to three predominant sectors that receive ADB support, and (ii) the approximate amount of resources allocated to each sector. The updated sector list abolished the category “other” from the sector list.

12. Sector Assignment. Sector assignment is mutually exclusive, i.e., one project registers one predominant sector, and one predominant subsector. One dollar of project cost is counted only once against a specific sector. Projects supporting more than one sector are registered as multisector projects, with corresponding assignment of up to three sectors or subsectors and estimation of project resources allocated to each of the three sectors.

13. Table 2 compares the old and updated sector lists, and Figure 1 is a graphic presentation of 2003 ADB operations using old and updated sector classification. Appendix 1 gives sector and subsector lists.

C. Updated Theme Classification

14. Thematic classification tracks how each project and ADB operations collectively support the strategic goals of ADB.

15. Limitations of the Old Themes. The old theme list had nine items, drawn from the previous strategic development objectives of ADB. There was duplicate tracking of poverty reduction using both poverty classification and theme classification. “Multitheme” and “other” categories did not provide accurate thematic distribution of operations.

16. Key Elements of Updated Theme Classification. The theme list was streamlined and fully aligned with (i) three PRS pillars, and (ii) crosscutting priorities of the LTSF. “Poverty reduction” was removed from the theme classification, as this is being captured separately through the poverty classification system. “Multitheme” and “other” categories were also removed.

17. Theme Assignment. Theme assignment is not mutually exclusive, i.e., one project can be assigned to up to three themes and subthemes (three subthemes can be chosen from one, two, or three themes). Theme assignment does not require a breakdown of resources attributed to each theme and does not involve hierarchy of themes (such as primary or secondary themes). Theme assignment is on the project logical framework (the purpose section) that should clearly explain which specific pillars and/or crosscutting priorities of the PRS and the LTSF are being addressed by the project.

18. Table 3 compares the old and updated theme lists, and Figure 2 is a visual comparison of the thematic classification of the 2003 lending operations using the old and updated theme lists. Each of the updated themes has more detailed subthemes. Appendix 2 gives the updated list of themes and subthemes.