Policy Overview

The second medium-term strategy strengthens the poverty reduction impact of ADB’s assistance and helps developing member countries meet their Millennium Development Goals. The strategy has five priorities: catalyzing investment, strengthening inclusiveness, promoting regional cooperation and integration, managing the environment, and improving governance and preventing corruption. In many respects, they reflect themes already identified under the first medium-term strategy and carry forward its unfinished agenda.

The second medium-term strategy strengthens the poverty reduction impact of ADB’s assistance and helps developing member countries meet their Millennium Development Goals

Catalyzing Investment

The sharp reduction in income poverty in the region in recent years is primarily attributable to high growth. However, there is a risk that growth may falter because of the poor investment climate. The second medium-term strategy emphasizes the need to help developing member countries improve the investment climate by supporting policy and institutional reforms, infrastructure development, and the development of quality human resources through investments in education and health. ADB will also seek to use its wide range of products to leverage cofinancing with public and private sector partners. ADB’s revised strategic framework for private sector development (adopted in February 2006) provides greater strategic clarity on private sector development at the corporate level. The new strategic framework aims to create an enabling environment for private sector development, mobilize additional finance, and develop ways of financing public goods and services. ADB’s new financing partnership strategy (adopted in July 2006) will also facilitate the implementation of this framework. This strategy enables ADB to be a more proactive and effective financing partner by shifting the focus from reactive and input-oriented cofinancing toward proactive and value-added financing partnerships, improving client orientation and selectivity, deepening and expanding the range of financing partnerships, ensuring relevance of products and services, improving access to knowledge, and fostering innovation in ADB, and introducing new approaches and changes in the business model in a phased manner.

ADB’s revised strategic framework for private sector development aims to create an enabling environment for private sector development, mobilize additional finance, and develop ways of financing public goods and services

Strengthening Inclusiveness

Although growth has helped reduce poverty, the benefits have not been evenly distributed. To strengthen inclusiveness, the second medium-term strategy underlines the importance of expanding productive employment in rural areas and generating higher productivity and wage incomes in the informal urban sector, combined with measures to address the non-income dimensions of poverty.

ADB helps its developing member countries strengthen inclusiveness to ensure equitable and sustainable development. Through its policy of inclusiveness, ADB encourages greater equity in access to services, resources, and opportunities; the active participation of poor and marginalized groups in social, economic, and political life; and household-level security to cope with chronic or sudden risks, especially among poor and marginalized groups.

The second medium-term strategy lays fresh emphasis on investing in key social development interventions to promote gender equality by supporting education for girls, better health for girls and women, and microfinance projects that help women.

Promoting Regional Cooperation and Integration

Regional cooperation and integration strengthens the growth potential of individual countries, thereby strengthening their capacity to reduce poverty. Integration helps link and better align growth in the smaller and less-developed countries with the faster-growing economies. Regional cooperation and integration also serve as a platform for regional initiatives to manage cross-border environmental and health risks. The second medium-term strategy mainstreams regional cooperation and integration as a means to reinforce country-level efforts to reduce poverty by supporting cross-border infrastructure to strengthen connectivity, promoting monetary and financial cooperation, developing advisory capacity for trade and investment cooperation and integration, and playing a larger role in providing regional public goods.

ADB’s regional cooperation and integration strategy, adopted in July 2006, lays out in greater detail how ADB plans to intensify its support in this area. It lists four ways by which ADB can support and promote cooperation and integration in the Asia and Pacific region: provide financial resources for regional cooperation and integration projects and programs, provide related technical assistance, and help countries mobilize funds and technical assistance from other sources; create, consolidate, and disseminate knowledge and information on regional cooperation and integration; help countries and regional or subregional bodies build institutional capacity to manage regional cooperation and integration; and catalyze and coordinate regional cooperation and integration in Asia.

Gender and Development Policy

Two thirds of the world’s poor live in the Asia and Pacific region. Most are women. In many societies, women are denied access to basic services and essential assets such as land, and are excluded from decision making. Empowering women economically and socially is crucial to achieving ADB’s goal of poverty reduction.

ADB adopted its policy on gender and development in 1998. A review of the policy’s implementation experience after 5 years was completed in 2006, and included desk studies, consultations with and technical inputs from ADB’s External Forum on Gender and Development, and selective consultations with developing member country officials and ADB staff.

Aside from assessing the gender quality of ADB loans at entry, the implementation review also involved rapid gender assessments of the impacts of selected loans with gender-responsive designs being implemented in Bangladesh, Cambodia, Nepal, and Pakistan. While the projects and programs were at various stages of implementation, the gender assessments were able to identify some with intermediate gender impacts. The most impressive were found in projects that included a detailed project gender action plan linked to the project’s main components with clear targets and indicators for monitoring. These were mainly agriculture and rural development projects in which ADB’s resident mission gender consultants had worked closely with the executing agency to develop, refine, and implement a detailed gender action plan.

The rapid gender assessments provide strong evidence that including comprehensive project gender action plans in loans significantly improves the project’s results for women, promotes gender equality, and empowers women. Project gender action plans are found to be an effective tool for gender mainstreaming as they provide a road map for implementing the project’s gender design features. It is thus recommended that they be applied more systematically to the design of ADB loans.

The full reports of the implementation review of ADB’s policy on gender and development and the rapid gender assessments are at www.adb.org/Gender/gad-review.asp.

Empowering women economically and socially is crucial to reducing poverty

Managing the Environment

Strong demographic pressures and high growth are both taking a heavy toll on rural and urban environments. Poor people typically bear the greatest burden of pollution and environmental degradation. ADB will focus its assistance on energy efficiency, urban environment improvement, and sound natural resources management. As part of this effort, ADB completed the first phase and began implementing the second phase of the energy efficiency initiative, a three-phase program launched in 2005 that aims to expand ADB’s investments in clean energy projects. More specifically, the second phase of the initiative will aim to develop country-level and regional strategies and action plans to meet the targets already set, explore the possibility of establishing an Asia-Pacific fund for energy efficiency, develop the necessary institutional capacity in ADB to scale up as well as to monitor and evaluate activities implemented under the initiative, and implement immediate energy efficiency investment opportunities.

ADB’s carbon market initiative was adopted in November 2006 to respond to issues of energy security and global climate change. It aims to enhance the viability of alternative clean energy sources in developing countries and help developed countries meet their greenhouse gas emission commitments under the Kyoto Protocol.

ADB has launched three interrelated programs to fill existing market gaps to help project designers in its developing member countries positively engage with the carbon market: the establishment of the Asia- Pacific Carbon Fund, a dedicated project cofinancing facility; the provision of specialist technical support for clean development mechanism developers and projects through a technical support facility; and the provision of marketing support services to the project developers to promote the sale of carbon credits through a credit marketing facility.

Improving Governance and Preventing Corruption

Good governance is critical for poverty reduction, as weak governance hurts the poor disproportionately. ADB recognizes the essential role of governance in development. Governance is closely related to equitable and inclusive growth. It is also important for private sector efficiency. Under the second medium-term strategy, ADB will undertake more focused governance activities and renew its commitment to fighting corruption. Priority activities will focus on public financial management, including procurement, public expenditure management, legal and regulatory work, and capacity development in sectors and subsectors where ADB is active. ADB will work closely with other multilateral development banks to develop a common framework for preventing corruption. To enhance ADB support in these areas, the implementation of ADB’s governance and anticorruption policies was comprehensively reviewed. The second governance and anticorruption action plan was adopted in July 2006 based on the findings and conclusion of the review. The plan is focused on improving risk assessments, ensuring that risks are properly taken into account during project design, increasing attention to project implementation, and improving staff skills in these areas.

ADB will focus its assistance on energy efficiency, urban environment improvement, and sound natural resources management