ADB in 1995 was the first multilateral development bank to adopt a special policy on governance. Over the years, supplementary policies like the Anticorruption Policy (1998) were adopted to broaden and strengthen ADB's governance work. ADB’s Strategy 2020 identifies governance as a key driver of change.
ADB's Policy on Governance guides the organization's work in enhancing governance quality in developing member countries and defines four elements of good governance: accountability, transparency, predictability and participation.
Public officials must be accountable or answerable for their actions and responsive to the entity from which their authority is derived. ADB promotes accountability in government to build capacity to undertake economic reforms, implement reforms successfully, and provide citizens with an acceptable level of public services. Evaluation criteria and oversight mechanisms are necessary to measure the performance of public officials and to make sure standards are met.
Participation refers to the involvement of citizens in the development process. Beneficiaries and groups affected by projects or other development interventions need to participate so that the government can make informed choices with respect to their needs, and social groups can protect their rights. ADB promotes participation in governments by
- Encouraging the participation of project beneficiaries and affected groups
- Improving the interface between the public and private sectors
- Empowering local government by letting them take ownership of projects
- Working with NGOs to mobilize and reach out to project beneficiaries
A country's legal environment must be conducive to development. A government must be able to regulate itself via laws, regulations and policies, which encompass well-defined rights and duties, mechanisms for their enforcement, and impartial settlement of disputes. Predictability is about the fair and consistent application of these laws and implementation of government policies.
Transparency refers to the availability of information to the general public and clarity about government rules, regulations, and decisions. It can be strengthened through the citizens' right to information with a degree of legal enforceability. Transparency and disclosure in government decision-making and public policy implementation reduces uncertainty and can help inhibit corruption among public officials.
ADB's work in governance
ADB has undertaken significant work in these areas, strengthening accountability institutions such as audit agencies, anticorruption commissions, and the judiciary. Its support for judicial reform in India, Pakistan, and Philippines is strengthening the rule of law, which is crucial to encourage private sector investment and combat corruption.
ADB launched its Second Governance and Anticorruption Action Plan (GACAP II) in 2006 to refocus its efforts in this area.
A risk-based, flexible approach
ADB has adopted a risk-based approach to governance and prioritization of areas for ADB support. What risk is being assessed? The risk of reduced development effectiveness—that DMC and ADB development objectives will not be met, or will be adversely affected by poor governance, weakly performing institutions or vulnerability to corruption.
Since ADB resources and influence are limited, the organization focuses on major risks, which are also considered opportunities for capacity development. Strengthening public financial management and procurement systems, as well as combating corruption, are at the core of ADB's current governance work. The use of country/sector assessments determine focus and identify priorities.
To address governance and corruption issues, improve ADB’s performance in the implementation of its governance and anticorruption policies, and to design and deliver better quality projects and programs, ADB aims for longer term, flexible arrangements for capacity development.