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Rehabilitation and Reconstruction - ADB's Role in Afghanistan and the Region
ADB’s approach and comparative advantagePostconflict reconstruction is closely linked to ADB’s overarching goal of reducing poverty in Asia and the Pacific, which aims to improve living standards in the region. This objective assumes even greater urgency in postconflict situations because the human cost of civil conflict is felt most acutely by the poor who are most vulnerable to external shocks. ADB follows a three-pronged approach for postconflict reconstruction, which is designed to support government efforts at overcoming the challenges of establishing and maintaining security and a stable political environment. ADB focuses on building capital; rehabilitating production and income, especially for the poor; and building capacity to improve aid absorption. This focus and the corresponding outputs are designed to contribute both directly and indirectly to the central objective of poverty reduction. ADB does not have a separate mechanism for providing postconflict assistance; like other MDBs, ADB deals with these situations through its existing mechanisms.10 The sequence of actions in developing a postconflict strategy closely follows ADB’s programming cycle. Each conflict situation in a DMC is monitored and reports are prepared for, and reviewed by, Management. During a conflict, staff members develop a detailed knowledge base on the changing situation and create an analytical framework for postconflict response. When possible, missions are fielded to conduct needs assessments and an interim country strategy and program (CSP) is prepared for providing emergency assistance. Assistance is extended for both natural and human-made disasters, with the natural claiming over 90% of the total disbursed to date. In the past, emergency loans were concentrated on infrastructure rehabilitation. Comparative advantageADB’s database of knowledge about DMCs in the Asia and Pacific region positions it to act quickly and efficiently in postconflict situations. Its regularly updated in-house database on each DMC is supplemented by its worldwide network of resident missions and offices (see the Knowledge and Support Activities chapter). Through its country economic reviews (CERs) and CSPs, ADB learns lessons that can be internalized and disseminated to its development partners. These instruments, along with annual CSP updates, provide a picture of each DMC and enable the rapid articulation of an emergency response should it be required. Ways MDBs could respond to emergencies in DMCs include streamlining the production of knowledge instruments and emergency preparedness programs; monitoring reports; and conducting needs assessments and environmental and social assessments prior to formulating transitional assistance strategies. Operational flexibilitySpeed is crucial to a successful postconflict response. ADB’s knowledge base allows it to respond rapidly and effectively when opportunities for providing aid arise. A rapid response requires flexibility over a range of areas, including mobilizing staff and budgetary resources and interpreting administrative procedures. The existing emergency policies provide for some latitude in decreasing the time involved in project and program processing cycles. This flexibility is extended to fund flow and payment systems to enable rapid disbursements of committed capital. Operational and administrative flexibility, combined with the ability to undertake rapid assessments prior to formulating an intervention strategy, has enabled ADB to effectively address diverse conflict situations in Cambodia, Sri Lanka, Tajikistan, and Timor-Leste, among others. Further streamlining procedures and softening loan terms could be elements of an emergency policy. Long-term commitmentThe reconstruction process is long and complex. The difficult decisions made by the government in the early stages will impact on the future of the nation and its ability to remain peaceful. ADB and other funding agencies provide the government in this situation with financial and technical support, which, in turn, signifies the international community's confidence and commitment to rebuilding the country, its institutions, and infrastructure. Political stability is central to postconflict reconstruction and must be assured by the ruling authorities. As ADB learned in Cambodia (see Box on Cambodia), early reconstruction assistance is as much about building partnerships with the government as it is about providing aid. The relationships formed early on will facilitate implementation in the long term. Economic growth can be expected to be rapid in the initial years of peace, before returning to levels that more accurately reflect the country’s situation. To capitalize on this growth, assistance should peak in the first postconflict year, and should focus on strengthening the government’s absorptive capacity. Further allocations would depend on the availability of concessional funds and aid effectiveness. Countries emerging from conflict in recent years have been able to take advantage of the ongoing revolution in transport and information and communication technology, allowing them to regain more quickly the economic strengths and capabilities lost or destroyed by conflict. This may allow them to extend the initial period of high growth. In this case, the approach used by the funding agencies to implement postconflict assistance would differ. It requires a commitment to maintain assistance at a relatively high level for a longer period and to focus such support toward creating the capacity necessary to take advantage of new technologies. This pattern of aid and expected growth would imply a much greater impact on ADB’s central objective of poverty reduction. Financing reconstructionAs a premier regional financial institution, ADB has committed relatively large sums to the reconstruction of postconflict DMCs as of 2002:
In addition, ADB has committed $500 million in assistance to Afghanistan over a 30-month period from January 2002. This represents 11% of total donor commitments to the country. Macroeconomic and sectoral involvementADB’s assistance to postconflict DMCs emphasizes its catalytic role in both macroeconomic and sector development issues. To achieve macroeconomic stability, it is important to implement both sector policies and institutional reforms, and follow these with capital investments. ADB has followed this pattern. In Cambodia, for example, early assistance was geared toward macroeconomic management, followed by assistance for multisector rehabilitation. In Sri Lanka, ADB’s postconflict program largely supported rehabilitation of roads, schools, petroleum storage facilities, and community infrastructure (see Box on Sri Lanka). In Tajikistan, ADB helped the Government formulate a poverty reduction strategy, entered into a poverty partner- ship agreement with the Government, and followed these steps with reforms in transport and power, and rehabilitation loans in the agriculture and social sectors. All were combined with emergency assistance for natural disasters (see Box on Tajikistan). In Timor-Leste, ADB provided technical assistance grants in support of capacity building in the transport, power, telecommunications, microfinance, and other sectors (see Box on Timor-Leste). Capacity buildingADB’s technical assistance facility helps build essential security, technical/administrative, and political capacity in postconflict countries, without which the ability to effectively absorb aid would remain low. ADB is able to flexibly reallocate its technical assistance resources to meet the requirements of postconflict countries. Between 1987 and 2001, ADB provided 11 capacity-building technical assistance projects to postconflict countries. Cambodia’s projects were in the transport and agriculture sectors. In Sri Lanka, the emphasis was on environment, with technical assistance provided for integrating cleaner production techniques into industrial development. In Tajikistan, ADB supported institutional strengthening of the transport and energy sectors and provided capacity building for flood disaster management. All assistance to Timor-Leste was grant-financed for capacity building to manage key sectors of the economy. Experiences and lessonsADB has accumulated rich experiences in postconflict reconstruction through its activities in Cambodia, Sri Lanka, Tajikistan, and Timor-Leste (see http://www.adb.org/Countries/). As ADB prepared to resume operations in Afghanistan in 2002, it was able to draw on these experiences and the following lessons. Allocate significant resources for developing institutions: Poorly performing projects are often associated with an inappropriate policy or institutional framework. Cambodia’s policy-formulation capability could not maximize the potential of international assistance and external support was needed to formulate and implement the additional policy changes required. Sequence policy and institutional reforms appropriately: In Tajikistan, ADB learned the importance of sequencing policy and institutional reforms, especially when the situation remained volatile. Early efforts were followed by successful infrastructure rehabilitation in the road and power sectors. Prepare emergency loans: Lessons from Cambodia suggest that emergency loans should exclude components requiring long-term preparation; should adopt a process approach to allow flexible adjustment during implementation; should include flexible financing provisions, particularly for operation and maintenance; and should be complemented by follow-on projects that address policy and institutional issues. Coordinate activities among agencies at central and local levels: Experience in all postconflict countries highlighted the importance of efficient coordination among agencies to ensure rapid and effective implementation of emergency projects. Factor in postconstruction maintenance of project facilities: In all cases, it was evident that quality control in project preparation and adherence to safeguard provisions must be maintained in emergency assistance. Develop a strategy: Effective assistance for reconstruction requires a strategy for the country and for agency operations. The process of restoring and establishing human dignity, building an identity for the country, and restoring confidence of the people in their government cannot be left to chance. Strategic Approach to Emergency Assistance Dealing with emergencies is part of dealing with development. In the past decade, natural and human-made emergencies increased by over 60%, reaching 784 such emergencies by 2000. The events left almost 3 million people dead, another 2.4 billion affected, and trillions of dollars in financial investments and physical assets foregone or destroyed. Of the 15 poorest countries in Asia and the Pacific, nearly two thirds have experienced a conflict or natural disaster. In each event, the poorest members of society were hardest hit. Poverty and increased vulnerability are both a result and source of civil strife. Efforts toward reducing poverty depend on preventing, mitigating, and addressing the risk, vulnerability, and impact of emergencies. This, in turn, requires a greater focus on issues such as providing sustainable livelihood, improving weak governance, providing a transitional safety net, building institutional capacity, and dealing with depleted human and social capital. Effective and efficient emergency assistance requires resources and a strategic organizational response to events. Interventions in emergency preparedness and response should include prevention, transition, and emergency recovery phases.
Ensuring fast and effective rehabilitation and other emergency assistance requires flexible policies and lending instruments that enable approval of urgently needed short-term and small loans. Reconstructing Cambodia Cambodia is one of Asia’s poorest countries. The agenda for economic and governance reform is large, and the challenge of poverty reduction is huge. But Cambodia is making progress as it works to rebuild, and to heal the deep scars left by decades of war and civil strife. Cambodia joined ADB in 1966. After nearly 2 decades without operations, ADB reentered Cambodia in 1992, before the United Nations sponsored elections the following May. This early start led to a strong working relationship with the Government. ADB’s first technical assistance was provided in 1992 and included four components: development planning, economic statistics, fiscal management, and monetary policy. The project—implemented in cooperation with the International Monetary Fund and United Nations Development Programme—helped formulate the country’s first comprehensive economic strategy. In November 1992, ADB ap- proved its first loan to Cambodia in about 2 decades. The $70 million multisector emergency loan funded the reconstruction of basic physical infrastructure, such as the primary road network, schools, institutes, universities, and irrigation schemes. Electricity was restored in the major cities of Phnom Penh, Siem Reap, and Sihanoukville. ADB prepared its first full country operational strategy for Cambodia in 1995, with capacity building as the main pillar of support. At the same time, ADB helped the Government formulate its Socioeconomic Development Plan, 1996–2000. ADB operations were soon expanded to rural Cambodia, home to 90% of the population and the worst poverty. ADB targeted more than 70% of its assistance to the countryside. In 2000, ADB’s focus turned to governance and the lack of basic laws and accountability institutions. ADB helped formulate a legislative framework and helped strengthen accountability institutions such as the National Audit Authority. A comprehensive governance assessment studied public administration reform, fiscal reform, decentralization, legal and judicial reform, and regional integration. The Government used the assessment in preparing its Governance Action Plan, the recently formulated second Socioeconomic Development Plan, and the National Poverty Reduction Strategy. A key theme in each is the need for good governance and the rule of law. For more on Cambodia, see page 84 and http://www.adb.org/Cambodia/. Responding to Peace in Sri Lanka Since 1983, armed conflict between the Sri Lankan Government and the Liberation Tigers of Tamil Eelam (LTTE) has claimed more than 60,000 lives and displaced a further 700,000–800,000 people. The conflict is estimated to have cost the equivalent of the country’s 1996 gross domestic product, and to have lowered economic growth by 2–3% per year for the past 20 years. In February 2002, the Government and the LTTE signed cease-fire agreements that essentially ended daily conflict. The Government lifted restrictions on the movement of essential commodities into and out of LTTE-controlled areas. The cease-fire has held. However, the physical and social infrastructure in the northeast of the country is in ruins. The area’s economy is improving, but recovery is slowed by the extent of the devastation and the presence of land mines and unexploded ordnance. For much of the conflict, ADB’s strategies and programs acknowledged the existence of the fighting and its impacts but did not specifically address them. This changed in 2001, when ADB approved a $25 million loan to help finance the Northeast Community Restoration and Development Project. The Project aimed at improving small-scale social and economic infrastructure and income generation. The project design was defined by the need for balance among communities, between Government and LTTE-controlled areas, and between rural and urban needs; the need for flexibility to permit a rapid response to changing security and humanitarian requirements; and the need to involve communities in determining the nature of assistance. The flexibility built into the Project in its design and during implementation made it effective in the post cease-fire period. ADB’s support facilitated the mobilization of loan resources for other projects to undertake essential and symbolic operations in the conflict areas once the cease-fire was in place. These included reconstructing the highway linking the northern city of Jaffna with the rest of the country and restoring Jaffna’s power distribution system. As the peace process moves forward, the international community will find itself working in an environment of temporary institutions and fluid structures. Flexibility in program design will be key. For more on Sri Lanka, see page 108 and http://www.adb.org/Srilanka/. Tajikistan gained independence following the breakup of the Soviet Union in 1991. The sudden demands of nationhood and the 1992–1997 civil war left the economy in ruins. By 1996, gross domestic product had contracted more than 60%. Unemployment exceeded 30%, and it was estimated that over 80% of the population lived in poverty. A reconciliation process that began in 1997 culminated in parliamentary elections in 2000, and the ensuing strong economic growth has supported social stability. Building on the work of its development partners and in consultation with the Government and nongovernment organizations, ADB prepared an interim operational strategy for Tajikistan in October 1998. ADB focused on supporting the transition to a market economy, assisting in postconflict rehabilitation, and supporting natural disaster rehabilitation. Efforts to rebuild agriculture, infrastructure—particularly roads and power—and social sectors were given priority. ADB and Tajikistan concluded a poverty partnership agreement (PPA) in 2002 based on the national poverty reduction strategy, marking ADB's first PPA with a Central Asian republic. Growth and exports have improved, but poverty is still widespread. ADB is supporting the Government in ensuring that economic opportunities are broad-based, addressing the narrow base of economic growth, and achieving fair distribution of the benefits of growth. ADB has approved 10 loans to Tajikistan totaling $173 million. The loans cover postconflict rehabilitation, road and power sector reform, agriculture sector support, emergency assistance efforts, and regional cooperation. Support to strengthen human and institutional capacity is key to development, and ADB has approved 29 technical assistance projects worth $15 million to aid this work. For more on Tajikistan, see page 82 and http://www.adb.org/Tajikistan/. The people of East Timor, now Timor-Leste, voted overwhelmingly for independence in 1999. Within weeks, an estimated 70% of the country's physical infrastructure had been destroyed and close to 80% of the population displaced. Three months later, in December 1999, the Trust Fund for East Timor (TFET) was created at a donors’ meeting in Tokyo. Priorities for use of the fund were set with support from ADB and the World Bank. ADB took on the task of rehabilitating infrastructure: initial efforts focused on the urgent need for roads, ports, water, and power supply. Comprehensive support for capacity building was needed in all areas. Road rehabilitation and maintenance work linked previously isolated communities and created an estimated 300,000 person-days of employment. Two water supply projects brought safe water to 240,000 people in rural areas and 15,000 in Dili, the capital city. These labor-intensive projects created an estimated 90,000 person-days of employment. A focus shift from emergency, humanitarian, and security needs to development activities is reflected in ADB’s port and microfinance projects. They focus on poverty reduction and economic and social development. Since operations began in Timor-Leste, ADB has approved 20 technical assistance projects worth $8.6 million. Many support TFET-funded projects with project preparation and capacity building. A poverty assessment—undertaken by the Government, ADB, Japan International Cooperation Agency, United Nations Development Programme, and World Bank—helped prepare the country’s first National Development Plan, released in May 2002. The Plan includes a national poverty reduction strategy based on four elements: promoting opportunities for the poor; improving access to basic social services; enhancing security, including reducing vulnerability to shocks and improving food security; and empowering the poor. For more on Timor-Leste, see page 97 and http://www.adb.org/Timor-Leste/.  ____________________
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