Print this page

Special Evaluation Study on Urban Sector Strategy and Operations
Completed 2006

The urban sector strategy (USS) was one of several sector strategies formulated around the end of the 1990s, and was intended to bring more coherence to the Asian Development Bank's (ADB) work in the urban sector. ADB recently decided to review and revise the USS. To provide the necessary analysis to revise the USS, it was agreed that the Operations Evaluation Department (OED) would contribute to the review preceding this revision.

Given that the USS has been in effect for only 6-7 years, and most projects approved after it was adopted are still in various phases of implementation, this evaluation pays limited attention to the on-the-ground impact of urban projects.

The study analyzes completed projects and technical assistance (TA) grants, reviews whether the USS's targets are being addressed, and assesses ongoing urban operations.

Additional questions addressed in the evaluation are

• why is ADB's urban sector program not much larger than it is today, given the rapid urbanization in the Asia Pacific region;
  
• what is the value added of ADB involvement in urban sector projects against the transaction costs, as perceived by ADB clients; and
  
• is a strategy needed and under what conditions would it be most effective?

The study did an extensive desk review, conducted a questionnaire survey of all ongoing urban sector projects (85% response rate), and undertook case studies for the People's Republic of China, India, and the Philippines.

  Summary of Findings

• ADB's institutional focus on the urban sector has been somewhat lost due to ADB's reorganization and new business processes, dissipation of ADB professional expertise in the urban sector, and an increasing focus on country strategies.



• Notwithstanding, the urban sector portfolio grew modestly after the issuance of the strategy. Before the strategy, urban sector lending constituted 9% of the total loans approved between 1993 and 1999 (11% if some large loans during the Asian Financial Crisis are excluded). After the USS, it accounted for 11.5% of total lending from 1999 to 2005.
• Because of the complexity of urban sector projects and the often lower capacity at local government level, urban sector projects require more TA support than some other sectors.



• The success rate of urban multisector projects is comparable to that of other sectors on average, whereas the performance of water and sanitation projects is somewhat weaker.

OED assesses the USS of 1999 as partly successful given lower efficiency in influencing operations, in spite of good relevance to Asia and the Pacific. Its ambition to go beyond what ADB was already providing up to that time was not realized.

OED assesses ADB's urban sector operations as broadly successful, mainly on account of the effectiveness of projects and TA, and in spite of their higher than average sustainability risks. Overall, ADB did not seize the opportunity to significantly increase the size and quality of its urban portfolio.

  Recommendations

The revision of the strategy is expected to be completed at end 2007. ADB's new Medium Term Strategy II (2006-2008)
[ PDF ] highlighted urban infrastructure as one of the core sectors in which ADB needs to expand its program. OED recommends that a business plan be drawn that sets out assumptions about the resources, the role of various ADB's divisions and resident missions, and the plans to address the organizational and staffing impediments that are restricting the significant growth of ADB's urban portfolio. ADB should also provide the Urban Sector Strategy II with a results-based framework, as well as give staff guidance on how to deal with corruption in the sector.