ADB's Japan Funds: Japan Fund for Poverty Reduction

Evaluation Document | 31 August 2007
This special evaluation study evaluated Japan Fund for Poverty Reduction (JFPR) performance, analyzed issues and constraints, and made recommendations and suggestions to assist in future implementation.

The Japan Fund for Poverty Reduction was set up in May 2000 to provide grants for innovative poverty reduction activities in ADB's developing member countries.

Grants from the Fund are not for technical assistance but for direct relief that also builds capacity for self-help and income generation. They finance small investments linked to ADB loans to pilot-test approaches that can later be expanded into loan projects and incorporated into ADB's operations. ADB is thus to gain opportunities to work more directly with communities as well as nongovernment organizations and civil society.

This report is part of a special evaluation study by the Operations Evaluation Department of ADB on the three grant funds administered by ADB's Office of Cofinancing Operations. It evaluated the extent to which the Fund has met its objectives, analyzed issues and constraints, and made recommendations and suggestions to assist in future implementation.

Overall, the Fund was rated relevant, effective, efficient, and sustainable following the criteria used to evaluate public sector operations.

Summary of findings

Based on the evaluation findings, the study concluded that:

  • The Fund aligns well with ADB's strategic objectives while individual projects are in line with both country partnership and national poverty reduction strategies.

  • The Fund has generally met its specific objectives related to innovation and Japan's visibility. The original intention to expand projects into loan projects has been met, but overall at a lower level than expected.

  • All ADB staff interviewed considered JFPR a valuable program that placed ADB in a better position to deal in a practical way with poverty-related problems. They reported strong ongoing demand for JFPR projects, as reflected in the project pipeline.

  • Overall, the JFPR is a success. Of the 17 completed projects evaluated, 23% were rated highly successful, 65% successful, and 12% partly successful. The proportion of projects rated successful or higher (88%) compares well with the success rate of the overall ADB loan program (65% of completed projects).

  • Evidence of a sound design was not a strong point of many of the JFPR projects evaluated (i.e., they did not include design and monitoring frameworks), yet most projects achieved their intended outcomes, so presumably design was adequate.

  • The administration of JFPR projects does not follow standard ADB process. The projects require approval by the Japanese embassy at the concept stage and by the Government of Japan at the final design stage, in addition to the normal ADB approvals.

  • The design template is based on that for the Japan Social Development Fund of the World Bank, which differs from ADB's standard templates. Project monitoring and completion reports also follow Japan Social Development Fund processes. They give little information about outcomes, and are not integrated with ADB's monitoring systems.

  • Projects can be implemented in several ways, all of which are suitable under appropriate circumstances, but the contribution of NGOs is worthy of note, particularly the willingness of some international NGOs to fund temporary deficits from their own resources, adding flexibility to implementation.

  • The relative success of JFPR is mainly due to (i) the small scale and manageability of projects, (ii) the relevance of projects to the real needs of poor unities, (iii) close involvement and motivation of most project officers, (iv) implementation by NGOs that are highly motivated and close to their communities, and (v) the consequent reduction in rent seeking and bureaucratic inefficiency.

  • ADB's Office of Cofinancing Operations is effective but understaffed. The unit would benefit from the addition of staff for technical and monitoring support. The appointment of focal points in ADB departments would also assist in program development and management.

Recommendations

Based on the evaluation findings, the study concluded that:

  • Country partnership strategies should specifically include a strategy for the use of JFPR, as relevant.
  • JFPR systems should be moved closer to ADB's core business practices.
  • Grant size restrictions should be reviewed: while the grants should remain of modest size, the possibility of increasing the maximum grant to $3 million, or even $5 million, with adequate justification, should be considered.
  • Resident missions should be involved in project design and, where appropriate, have responsibility for project supervision.
  • Beneficiary targeting is critical and needs detailed attention during project design and implementation. Projects should target the enterprising poor.
  • The use of grants for disaster recovery should be reviewed. JFPR may be suited to addressing localized disasters, not regional emergencies.
  • The Government of Japan might reconsider its role in approval with increased input at the concept and design stages.
  • Staff in the Office of Cofinancing Operations should be increased to provide more inputs in design, and more frequent monitoring in the field. Links with the Regional and Sustainable Development Department should be developed.
  • Given the innovative and pilot nature of projects and potential for expansion, greater emphasis should be given to learning from projects and disseminating findings.

Contents 

  • Data
  • Executive Summary
  • I. Introduction
  • II. Context
  • III. Performance Assessment
  • IV. JFPR Management
  • V. Conclusions, Issues, Lessons, and Recommendations
  • Appendixes