Country Assistance Program Evaluation for Azerbaijan | Asian Development Bank

Raising Development Impact through Evaluation

Country Assistance Program Evaluation for Azerbaijan

Evaluation Document | 14 January 2019

The Asian Development Bank (ADB) program in Azerbaijan over 2011–2017 consisted of 47 lending and nonlending operations totaling $5.1 billion: 21 sovereign loans and guarantees, 10 nonsovereign loans, and 16 technical
assistance projects.

The evaluation finds the program successful, with strengths such as proactive engagement and support for macroeconomic policy reform outweighing weaknesses in some other areas. The main sector programs in energy, transport, water and other urban infrastructure and services, and public sector management were all found successful, although the large transport program was found successful on the borderline, on account of weaker effectiveness and efficiency especially in earlier years. ADB’s five special priorities for the Azerbaijan program in (i) inclusive economic growth and reduction of regional disparities, (ii) environmentally sustainable growth, (iii)
regional cooperation and integration, (iv) economic diversification, and (v) capacity development were all relevant and impactful, with regional cooperation and capacity development work even rated as highly impactful. 

Strategic recommendations. ADB should take a more integrated view of its support, with a greater focus on building human and social capital in parallel with developing and improving physical infrastructure and supporting policy reform. Where ADB has had its greater success, it has been where these elements have come together. Considering the limitations imposed by the government’s decision to refrain from new external borrowing for a period, ADB should use a broader range of its instruments and modalities as part of a new strategy in Azerbaijan. ADB support for the diversification of the economy must include more analytical work, a focus on the non-oil tradable sectors, and a more proactive involvement in private sector operations beyond simple onlending operations. For this to be successful, however, ADB will have to bolster its private sector operations presence in Baku.

Operational recommendations. ADB should step up its due diligence and preparatory work for its operations to handle expectations properly and avoid delays or failures, especially in transport operations. The experience from the evaluation period suggests that outcomes would have been much better if project delays in energy, transport, and water and other urban infrastructure and services had been avoided. In nonsovereign operations, detailed  monitoring is imperative to adequately assess the systemic risks facing banks and other potential clients. ADB should expand its policy dialogue, drawing on the iterative and interpersonal approach that has proved valuable in areas such as fiscal and tariff reform.

A consultation mission with Azerbaijan authorities on a draft of the evaluation in December 2018 confirmed the findings, assessments, and issues raised in the report.

Note on IED's Country Evaluations and Validations

Using its 2015 Guidelines for the Preparation of Country Assistance Program Evaluations and Country Partnership Strategy Final Review Validations, the Independent Evaluation Department (IED) intends to provide an objective and informed judgement of the performance and results of country partnership strategies (CPSs), particularly in terms of their relevance, effectiveness, efficiency, sustainability and development impacts.

In ascertaining relevance, IED considers not only the alignment of the program with country needs and government objectives, but also cross-sector CPS objectives, appropriateness of modalities and sector program designs, and sufficiency of donor coordination.

The effectiveness of a country program in delivering results is also an important aspect of an IED evaluation. Primary focus is on the achievement of the outcomes and outputs of ADB interventions (and the likelihood of achievement if the program is still ongoing), as worded in CPSs and their results frameworks. These include knowledge products and institutional development efforts.

Performance and results are likewise judged from an efficiency perspective, that is, whether the program was delivered in a cost-effective and timely manner, and generated value for money. It also considers the capacity of executing agencies that may contribute to start up and implementation delays, and cost overruns.

Another critical element of IED's evaluation is the likely sustainability of results over the medium term, technically, financially, environmentally, socially, politically, and institutionally. Further, IED looks at how results led to development impacts. Specifically, whether ADB contributed to achieving the CPS objectives, directly through its sector programs and implementing cross-cutting agenda(s) across various modalities in different sectors and by various development partners.

IED gives special importance to cross-cutting objectives by considering how the cross-sectoral and thematic objectives of the CPS are articulated in the results framework and provided with appropriate indicators and targets; and how the program achieved the cross-sector thematic results. Equal weights are given to the achievement of sector and cross-cutting objectives in the relevance and development impact assessments, in both country assistance program evaluations (CAPEs) and CPS final review validations (CPSFRVs). This aligns with ADB's increasing emphasis on achieving corporate strategic priorities.

In preparing its country evaluations and validations, IED conducts document reviews, consults with concerned departments, staff, governments and other stakeholders, and undertakes evaluation missions. IED has put in place a quality assurance system to ensure consistent application of its 2015 guidelines. In CPSFRVs, IED's primary focus is to validate the evidence presented in the CPS Final Review.