Corporate Evaluation Study on Asian Development Fund X and XI Operations

Most countries benefiting from the Asian Development Fund (ADF) have seen moderate rates of economic growth and reduction of income poverty in the recent decade. But continuing challenges in fragile and conflict affected situations, substantial income and non-income disparities, environmental degradation, in addition to persistent pockets of extreme poverty, call for renewed and more effective development efforts in these countries. For ADB, the overarching goals of inclusive and environmentally sustainable growth in addition to regional integration remain relevant, but the institution must make these directions more operational going forward.

The reform process set in motion under the Strategy 2020 Midterm Review provides a great opportunity for ADB to shift its work onto a higher level of effectiveness. Furthermore, the projected increase in resources stemming from the ADF-OCR merger, both in larger loan and grant envelopes and ADB’s operating budget, should provide space to increase the footprint and effectiveness of operations. A reformed and better resourced ADB should seek a bigger and better difference in ADF countries.

Additional resources, including grant resources, could enable ADB to invest significantly more in social sectors, climate resilience, and agriculture—areas where operations to date have been limited, but which can make important contributions to the strategic agendas. The just launched Sustainable Development Goals provides a framework for identifying opportunities for deeper ADB engagement.

Each country situation is different and ADB support needs to continue to be country specific. Yet there is a common need to support inclusive growth through the deployment of portfolios of projects comprising both infrastructure and social sector interventions. At the aggregate level, support of environmentally sustainable growth is also a priority, involving scaling up action on climate change. ADB’s value added could come in its engagement on public goods and transboundary issues, for example natural resource management, livable and greener cities, and disaster risk reduction.

ADB’s engagement in knowledge generation and transfer is not just a priority for middle income countries. Because of the ADF funded Technical Assistance Special Fund, ADB has the opportunity to support more systematic and operationally relevant diagnostic studies to inform governments and strengthen public and private investments. This knowledge-first approach can have especially high payoffs if it is set up to feed into country strategies. In addition to inclusive and sustainable growth, strategic areas of concern include fragility and conflict, private sector development, financial sector management, disaster risk reduction and adaptive capacity.

Together with suggestions on ADF’s replenishment process, deployment of staff resources as well as evaluation results, this report outlines an operational approach for ADB to foster inclusive and sustainable development in Asia’s poorest and most vulnerable countries.