Description

This country assistance program evaluation assesses the performance of ADB country strategies and assistance programs for the Lao People's Democratic Republic during the period of 2000–2009. It identifies factors affecting this performance, draws lessons, and makes recommendations for improving the future performance of ADB assistance.

Overall assessment

The overall performance rating, determined by aggregating the performance ratings of individual sectors and crosscutting areas for the study period is successful. The performance of ADB assistance is satisfactory in strategic positioning; relevant in program relevance; and less efficient in achieving outputs and outcomes, effective in achieving outcomes and institutional development, likely sustainable, and satisfactory in development impact. All the evaluated sectors follow a closely similar pattern, with most criteria (excepting efficiency) showing good performance. It should be noted that the low efficiency was mainly because of the chronic implementation delays across sectors, reflecting weak implementation capacity in executing agencies and complexity in the design of some projects. The risks linked to weak recurrent cost funding for operation and maintenance, the weak domestic revenue base, and high aid dependency still persist.

Key findings and lessons

Governance, transition, and capacity development. There is a need to take into account critical structural changes in governance such as the changing roles and powers of central and subnational institutions in the system of government. Much greater emphasis needs to be placed on long-term institutional development, especially at the subnational level.

Focus and synergies. ADB needs to limit lending to too many sectors and to prepare to phase out some sectors (e.g., health) or subsectors based on a clear action plan, considering both ADB corporate priorities and the country's sector situations and partner coordination.

Modalities and approaches. Continuity and long-term commitment in core sectors is required to deliver sustainable development outcomes. A stand-alone approach to projects has severe drawbacks in a country highly constrained by resource and capacity deficits. There is a clear need to adopt more program-based approaches in sectors for long-term engagement.

Harmonization and coordination. ADB's actual delivery on harmonization and coordination outcomes has been constrained by its limited human resources, particularly technical experts, to actively participate in policy dialogues. Support for the strengthening of country systems has not always been an integral element of sector assistance, and key initiatives relevant to this goal, such as public finance reform, have sometimes been treated as stand-alone efforts rather than integrated into all-sector programs, based on a program-based approach.

The role of the Lao Resident Mission. If ADB is to place greater emphasis on presenting knowledge solutions to this small economy in transition, one way to proceed is to further expand the capacity and responsibility of the resident mission, as well as the sector divisions, to enhance ADB's service delivery and program implementation.

Sustainability and risk management. ADB and other development partners need to help the government address emerging vulnerability that threatens growth in the Lao PDR and its development path. Solutions need to be mainstreamed and coordination with other partners and the government needs to be pursued to address the underlying issues.

Recommendations

The following recommendations are proposed for management's consideration in the next country partnership strategy, to be implemented during the period 2012-2016.

• Strengthen ADB assistance to governance reforms and build public sector financial management capacity, especially in further developing and implementing a medium-term fiscal framework to support the reforms under the new economic and social development plan
• Help develop government's integrated medium-term capacity-development programs based on a careful needs assessment, instead of one-off technical assistance, to address systemic and crosscutting issues such as capacity constraints, focusing also on the capacity at the subnational level
• Continue support in the areas of environmental and social protection for mainstreaming environment and social safeguards and of climate change adaptation based on past success
• Build on innovative financing modalities and implementation mechanisms to meet the growing funding requirement and demand for sustaining the growth path, avoiding high transaction costs, and enhancing efficiency and synergies
• Further enhance ADB's service delivery and program implementation results through better coordination between sector divisions and the Lao Resident Mission

Contents

• Introduction
• Background Information During the CAPE Period
• Evaluation Methodology
• Summary of Evaluation Findings
• Overall Performance Rating
• Conclusions
• Appendixes