Effectiveness of Multiproject Lending
This study reviews multiproject lending in the Pacific islands and other smaller ADB developing member countries. The lending modality, which was approved in 1978, facilitates support for projects that would normally be too small for individual loan financing.
Twelve multiproject loans have so far been approved totaling $40.8 million. They comprise four to Tonga, two to the Cook Islands, two to Samoa, one to Vanuatu, two to Bhutan, and one to the Maldives. The average loan size was $3.5 million.
The review concludes that ADB's experience with multiproject lending has been poor; due in part to weaknesses in project loan cycles, such as insufficient attention paid to project rationales and insufficient project preparation.
The small economies of the countries also contributed to the low success rates. Isolation and remoteness, sociocultural factors, resource limitations, and skill shortages meant it was difficult to identify and implement projects with high economic rates of return.
Even so, the study recommends that multiproject lending should be retained as a financing modality for smaller developing countries. However, multiprojects should be supported only when they are focused on a limited number of subprojects, each of which should have a strong rationale and be complementary to overall objectives; and the institutional capacity of executing and implementing agencies to properly manage multiprojects is assured.
- Executive Summary
- The Rationale for Multiprojects
- Multiprojects to Date
- Factors Contributing to Unsatisfactory Results
- Measures for Strengthening the Success of Multiprojects
- Efficiency and Development Considerations
- Possible Options for Bank Lending to the Smaller DMCs
- Conclusions and Recommendations