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Investing in the Millennium Development Goals: The Role of the Asian Development Bank

Remarks by
Richard Vokes
Country Director
Asian Development Bank

Colombo, Sri Lanka
19 November 2007

First, let me say that it is a pleasure and privilege to be at this event to launch this third overview report reviewing progress towards the achievement of the MDGs in the Asia Pacific Region that has been prepared together with UNESCAP, UNDP and the ADB. These three reports have been supplemented by other more sector and issue specific reports such as those on Water, Gender and Inequality, Access to Basic Services, and so on, that have sought to track in detail the progress in achieving specific goals in the Asia Pacific Region. Success in reaching the MDG targets depends critically on what happens in the Asia-Pacific Region and especially on what happens here in South Asia.

Like this event itself, the task of achieving the MDGs is a joint one, between developing nations and their development partners. The importance of this partnership was re-emphasized in the Paris Declaration signed in 2005. This stressed the need for development partners to work together to support country owned development programs and to seek to harmonize and streamline their procedures and ensure accountability on all sides as a way of improving the effectiveness with which aid and external assistance are used as we seek to meet the challenge set by the MDGs.

How then is the ADB seeking to play its part in helping the Asia-Pacific Region achieve the MDGs? In fact the signing of the Millennium Declaration in 2000 came shortly after ADB had adopted its own Poverty Reduction Strategy in 1999 which identified poverty reduction as its overarching goal. In 2001, ADB published in Long-Term Strategic Framework designed to help guide its operations in the period up until 2015, the target date for the achievement of the MDGs. The Long-Term Strategic Framework identified three core strategic areas:

• sustainable economic growth
• inclusive social development
• governance for effective policies and institutions and a number of cross-cutting themes seen as critical to the goal of poverty reduction, as well as a means to fine tune and adjust strategic priorities in the light of experience

In the period since, ADB has made a major investment in the MDGs. In the period between 2001-2006, ADB approved loans of around $35bn or an annual average of around $5.8bn. Additional support was provided in the form of grants and technical assistance. But again I want to highlight the partnership involved here. In addition to approval from its own funds, on an annual basis, ADB is able to mobilize between $2-3bn from co-financing partners. Equally, if not more importantly, the borrowing countries make important contributions in the form of counterpart funding on the projects and programs which they ask ADB to support while targeted beneficiaries also often make cash or in-kind contributions to the projects and programs. All of this helps to maximize the level of investment in the MDGs. And finally, through coordination and cooperation between governments and their development partners, as highlighted in the Paris Declaration, ADB seeks to complement the vital work of other development agencies and bilateral donors, whether in the form of loans or grants, in the support of the MDGs.

Much of the support given by ADB is designed to support economic growth. As this and earlier reports have shown, strong economic growth is a key to poverty reduction in the Asia-Pacific Region. And much has been achieved in this regard. Between 1990-2001 the proportion of people living on less than $1 per day fell from 31% to 21%. Despite the still relatively high growth in population the absolute number of poor fell by over 250 million, and this significant reduction in the number of poor has continued since. Growth has been the primary driver of poverty reduction in this period. But as the Report indicates, growth is not enough. Growing inequality, both between rich and poor groups and rich and poor areas has emerged as a key challenge, since the greater the inequality the less impact growth has on poverty reduction. Again this point is well documented in this latest report.

Growth then not only needs to be sustainable, it needs to be pro-poor and inclusive. This calls for policies and investment that remove barriers and obstacles to the participation of poorer groups and regions and the creation of sustainable employment and livelihoods. Investment in improved infrastructure, including better roads and ports, power and rural electrification, irrigation remain vital. But clearly if growth is to be pro-poor and inclusive, these investments need to be matched by adequate investment in good quality education and health services, in water supply and sanitation systems, in micro-credit, and in programs to reduce gender and other forms of discrimination. Finally, improved governance is recognized as also being essential to achieving these goals.

The task ahead therefore remains a formidable one, requiring extensive investment and technical and knowledge support across a wide range of sectors. In volume terms, ADB’s funding is concentrated in the area of hard infrastructure, notably transport and energy. We make no apology for this in that significantly increased investments in infrastructure in Asia, and especially in South Asia, including Sri Lanka, are needed to both sustain and increase economic growth. It also has to be recognized that by their nature such infrastructure projects are costly. Even though the impact of growth on the MDGs may be indirect, as I have mentioned earlier, it has been the prime driver of poverty reduction of the last two decades.

But investment in other areas is also increasing, especially in those areas where we see progress towards the MDG targets lagging, for example Goal 7: Ensuring Environmental Sustainability and halving the proportion of people without access to safe drinking water and basic sanitation. ADB support to these areas in volume terms has more or less doubled between 2001-2006. Under its Water Financing Program for the period 2006-2010 a key target is to provide 200m people with access to safe drinking water and improved sanitation. ADB’s own direct support for health is comparatively limited. This is an area where, based on comparative advantage, we are happy to see other agencies take the lead, not least the World Bank and WHO, who in turn receive considerable support in this area from bilateral development partners. But at the same time, improved access to water supply and basic sanitation are also key factors in improving health of both the rural and urban poor.

In Sri Lanka, good progress is being made in achieving the MDG targets for water supply and sanitation, major challenges include regional disparities as well as urban-rural disparities. Another challenge is finding suitable water sources from which additional or new water supplies can be drawn, also pointing to the need for a comprehensive water resource management. But further improvements in water supply and sanitation are a government priority in Sri Lanka that ADB will seek to support under its new Country Partnership Strategy.

In the case of education, while levels of funding by ADB have not increased, there has been a growing emphasis on improving the quality of investment in education. As is the case in the health sector, simply increasing expenditure may not lead to improved outcomes, unless attention is also paid to quality and effectiveness of the delivery systems. Primary education is one are where progress towards achieving the MDGs has been good. Sri Lanka has had an enviable record in this area and has already achieved near universal primary education, high literacy rates and gender equality in basic education. The problem now in terms of basic education relates more to certain marginalized groups and areas and the need to maintain or improve quality. Reflecting the strong progress in basic education, ADB support in Sri Lanka, and indeed in many of our Developing Member Countries, is focusing more on secondary, and technical and vocational education, areas that will be key to sustaining future growth, employment and livelihoods.

These are just a few important examples of the kind of work that ADB and other development partners are supporting. By setting clear MDG targets, the international community, both donor countries and development institutions and developing countries, have provided a solid basis on which to measure the progress of our development efforts. Achieving all of the MDGs by 2015 remains a huge challenge that will require both substantial investment and real determination. I hope in this brief presentation I have been able to show that both ingredients for a successful outcome are indeed available. As long as we are not complacent, as long as we continue to build effective partnerships, and channel adequate resources to those areas where we have been slipping behind, without neglecting those areas where good progress is being made, we can still achieve the targets set back in 2000.

Thank you