Asian Development Bank Annual Report 2019

ADB Board of Directors as of 31 December 2019: Front, left to right: Directors Warotai Kosolpisitkul, Paul Dominguez, Kris Panday, In-chang Song, Takeshi Kurihara, Kshatrapati Shivaji, President and Chairperson of the Board Takehiko Nakao, Zhijun Cheng, Syurkani Ishak Kasim, Pierre-Emmanuel Beluche, Tony McDonald, Helmut Fischer. Back, left to right: Alternate Directors Yuemin Li-Misra, Shahid Mahmood, Leena Viljanen, Yu-Peng Tseng, Kenzo Ohe, Bayrammuhammet Garayev, Jin Lu, Karen Murray, Enrique Galán, Scott Dawson, Burak Müezzinoğlu, Jason Chung.

In 2019, the ADB Board of Directors held 40 formal meetings and 49 informal sessions. It approved 116 loans, grants, financing facilities, equity investments, and guarantees; and endorsed new country partnership strategies for Armenia, Azerbaijan, Bhutan, Cambodia, Fiji, Georgia, Nepal, and Uzbekistan.

MAJOR INITIATIVES

In 2019, the Board endorsed plans that set out how ADB will implement the seven operational priorities of Strategy 2030, the bank’s new long-term corporate framework. These plans will guide ADB’s work on (i) poverty and inequality; (ii) gender equality; (iii) climate change, disaster resilience, and environmental sustainability; (iv) livable cities; (v) rural development and food security; (vi) governance and institutional capacity; and (vii) regional cooperation and integration.

The Board approved a new corporate results framework for 2019–2024 that focuses on outcomes and aligns with Strategy 2030. It includes new indicators for poverty reduction and disability inclusion, digital transformation, knowledge and innovation, renewable energy, and quality infrastructure.

The contingent disaster financing mechanism, approved in August, is an important new tool for disaster resilience. It will help developing member countries (DMCs) prepare for, and respond to, disaster events such as extreme weather.

The Board approved mainstreaming the use of results-based lending to enhance ADB operations in DMCs, drive achievement of development results in government programs, strengthen government institutions, and foster partnerships with other development agencies.

In November, the Board approved the diversification of financing terms for regular ordinary capital resources sovereign lending to countries borrowing only from these resources. New financing terms will take effect on 1 January 2021, in line with Strategy 2030 guidance to apply differentiated approaches to meet diverse client countries’ needs.

The first-ever Board forum, held in February, discussed measures to improve Board effectiveness. The forum complements the Board and Management retreat, which in 2019 discussed fostering innovation, transforming the bank into a knowledge-based organization, and expanding private sector operations.

PARTNERSHIPS AND DIALOGUE

The Board values the exchange of ideas and opinions with government and donor partners, private sector groups, civil society organizations, and project beneficiaries. Board members gather first-hand knowledge of development needs by visiting several DMCs each year, where they inspect ADB-financed projects and consult stakeholders, and by engaging with experts in specialist areas.

In February, directors traveled to Papua New Guinea (PNG) and Cambodia, where they met the Prime Minister of PNG and the Deputy Prime Minister of Cambodia. In PNG, the group visited ADB-supported road projects and local communities in Goroka. In Cambodia, directors visited project sites for wastewater treatment, irrigation, and skills training.

In June, directors visited Mongolia and the People’s Republic of China (PRC), meeting Mongolia’s Deputy Prime Minister and the PRC’s Vice Premier. In Mongolia, they visited a hospital, an urban development project for informal settlements, and a solar power plant. In the PRC’s Guizhou and Yunnan provinces, directors visited rural poverty reduction, urban development, skills training, and water resource management project sites.

In September, the Board held a colloquium with a high-level advisory group on digital technology. The eight leaders from academia and prominent technology companies provided expert advice on applying digital technologies to ADB’s work.

In October, directors also visited Bangladesh, where they met the Prime Minister, and the Lao People’s Democratic Republic, where they met the Deputy Prime Minister. In Bangladesh, they visited camps in Cox’s Bazar where ADB is providing emergency assistance for displaced people. In the Lao People’s Democratic Republic, directors traveled to Vientiane, Bolikhamxay, and Luang Prabang provinces to observe flood and drought-risk management and mitigation, hydropower, and tourism development projects.

COMMITTEE HIGHLIGHTS

Directors serve on committees to oversee and guide ADB’s operations.

In 2019, the Audit Committee initiated an action plan to improve oversight of the private sector portfolio. It also recommended the selection of ADB’s external auditor and reviewed the Respectful Workplace Unit.

The Development Effectiveness Committee assessed evaluations of ADB’s use of private sector equity investments, Asian Development Fund operations, and multitranche financing facilities.

The Budget Review Committee discussed ADB’s preparation of the work program for 2020–2022, 2019 budget utilization, reforms in capital expenditure budgeting, and the bank’s 2020 budget.

The Board Compliance Review Committee assessed action on complaints raised under the Accountability Mechanism and recommended selection of a new member and chair to the Compliance Review Panel.

The Ethics Committee reviewed the code of conduct, ethics procedures, and associated guidelines applicable to ADB directors and the President. The review recommended amendments to bring these standards and procedures into line with the best practices of comparable institutions.

The Human Resources Committee discussed preparations for the 2020 review of ADB staff benefits. It also reviewed issues of respect in the workplace, staff mobility, use of experts, workforce analysis, and the human resources framework to support Strategy 2030.

Next: Financial Highlights  ›

Next: Chapter 1  ›

The Kacific1 satellite supported by ADB was launched on 16 December 2019 to bring low-cost broadband to remote areas of the region. It will boost access to services, information, and economic opportunities. Credit: Kacific/SpaceX

Underpinned by robust economic growth and clear development strategies, the Asia and Pacific region has made significant progress in reducing poverty and improving the quality of life. The number of people living in extreme poverty (on less than $1.90 a day) in the region has reduced from 1.5 billion to 264 million since 1990. Electricity is now available to most households in 80% of countries in the region, compared to 44% in 2000. Between 2000 and 2018, life expectancy at birth increased from 65.8 years to 71.8 years, and the under-5 mortality rate declined from 69.8 to 31.7 deaths per 1,000 live births in the region.

To continue the region’s impressive development trajectory, policymakers will need to identify new growth engines and give greater emphasis to the quality of growth.

The growth that drove these achievements, though still strong, is beginning to moderate. Economic expansion in Asia and the Pacific was 5.2% in 2019, down from an average of 6.6% across the previous decade. The countries of the region are being affected by sluggish global economic activity, trade tensions, weakening domestic investment, and worsening impacts of disasters. Key development challenges include large infrastructure gaps, rising inequality, and changing demographics.

To continue the region’s impressive development trajectory, policymakers will need to identify new growth engines and give greater emphasis to the quality of growth. They will need to harness technological innovation and foster new industries such as sustainable tourism, which can help generate quality jobs. Urbanization can also spur growth, but requires increased infrastructure investments, effective urban planning, and efforts to tackle congestion, rising housing costs, and pollution.

IMPLEMENTING STRATEGY 2030

ADB launched Strategy 2030 in 2018 to guide the support given to the bank’s developing member countries (DMCs). The strategy’s overarching vision is to achieve a prosperous, inclusive, resilient, and sustainable Asia and the Pacific, while sustaining efforts to eradicate extreme poverty.

See an overview of the region’s development challenges and ADB’s Strategy 2030 operational priority areas and targets.

ADB’s development objectives are aligned with the Sustainable Development Goals (SDGs) and the Financing for Development agenda, the Paris Agreement on climate change, the Sendai Framework for Disaster Risk Reduction, and the G20 agenda for quality infrastructure.

Under Strategy 2030, the bank aims to continue adding value to its provision of financing by developing new and innovative funding mechanisms, creating insightful knowledge products and services, and building strong development partnerships. ADB will expand its private sector operations and mobilize larger volumes of long-term cofinancing for greater development impact. ADB strives to improve the quality and speed of its services to its DMCs. This includes fostering the One ADB approach, which combines knowledge and expertise from across the organization to provide the best possible solutions to the diverse needs of the bank’s developing members.

In 2019, ADB responded to these needs by committing $33.74 billion in loans, grants, guarantees, equity investments, technical assistance, and cofinancing from partners.

The bank provided $4.49 billion in concessional assistance and $17.15 billion from its regular ordinary capital resources, which includes $3 billion in nonsovereign operations. It also generated $11.64 billion in project loan cofinancing. ADB extended $464 million in technical assistance, including $226 million from cofinancing. During 2019, the bank disbursed a record $16.47 billion in loans, grants, equity investments, guarantees, and debt securities, an increase of 16% from 2018.

ACTING ON OPERATIONAL PLANS FOR STRATEGY 2030

Strategy 2030 highlights seven operational priorities that are designed to respond effectively to global and regional development challenges. In September, ADB approved operational plans for the seven priorities. The plans will guide decisions on the selection, design, and implementation of projects, programs, and knowledge work to support the operational priorities of Strategy 2030. The plans identify expected outcomes, likely activities, and the links across sectors and themes to ensure the plans complement and reinforce each other.

Addressing Remaining Poverty and
Reducing Inequalities

This operational plan emphasizes support for lagging areas and vulnerable populations to reduce inequalities in access to opportunities; expand investment in human capital through education, universal health coverage, and social protection; and help generate quality jobs to support inclusive growth.

In 2019, for example, ADB provided an additional $200 million in financing to Pakistan for the government’s social protection program, the Benazir Income Support Program. The program supports the income of more than 5 million poor families across the country and has so far disbursed over $3.6 billion in cash transfers to improve their living conditions. ADB’s support for this, which began in 2013, has enabled the enrollment of over 855,000 women beneficiaries to the program.

As part of broader efforts to reduce poverty by preparing people for job opportunities, ADB committed a $300 million loan to support the Government of the Philippines to improve access to high-quality secondary education oriented to labor market needs. This results-based program will benefit about 10.6 million students already enrolled in high school nationwide and another 2 million secondary school entrants every year through to 2023.

Accelerating Progress
in Gender Equality

This operational plan highlights support for women’s economic empowerment and gender equality in human development, decision-making, and leadership. The bank will work to reduce women’s time poverty and help increase their resilience to external shocks. ADB investments aim to achieve these goals by supporting safer community infrastructure, greater access to employment and economic opportunities, and equality in skills development and leadership roles. ADB’s target is that, by 2030, at least 75% of its committed sovereign and nonsovereign investments will promote gender equality.

In May, the bank signed a $926 million loan to fund two lines for the Mumbai Metro Rail System in India, which will cater for an estimated 2 million passengers each day. The loan covers the procurement of 63 six-car trains, installation of signaling and safety systems, and establishment of a new dedicated metro operations organization. Features to directly benefit women include women-only carriages, mobile phone applications for women’s security, separate ticket counters, and reporting desks to address incidents of harassment. Women will also have improved opportunities for employment along the new lines, including a station staffed only by women.

A $926 million ADB loan to operationalize two lines for the Mumbai Metro Rail System in India will ease the distress of millions of commuters each day and help provide a cleaner, less congested city. Credit: Fly2Blue (CC0 1.0)

In April, ADB became the first multilateral development bank to secure a second grant from the Women Entrepreneurs Finance Initiative. The bank is using the $20.2 million grant to help 5,000 women in Viet Nam and the Pacific establish microenterprises and develop existing businesses. The program will expand access to finance, deliver courses in commercial acceleration and financial literacy, and provide mentoring and networking opportunities.

Tackling Climate Change, Building
Climate and Disaster Resilience, and
Enhancing Environmental Sustainability

In the face of rapidly growing greenhouse gas (GHG) emissions, increasing risks and impacts from climate change and disasters, and accelerating environmental degradation, ADB recognizes that tackling climate change, building climate and disaster resilience, and enhancing environmental sustainability are critical to achieving its Strategy 2030 vision of a prosperous, inclusive, resilient, and sustainable Asia and the Pacific. This operational plan focuses on scaling up support to address climate change, disaster risks, and environmental degradation; accelerating low GHG emission development; ensuring a comprehensive approach to build climate and disaster resilience; ensuring environmental sustainability; and increasing focus on the water–food–energy nexus. To support these goals, by 2030, at least 75% of ADB’s committed operations (on a 3-year rolling average, including sovereign and nonsovereign operations) will address climate change mitigation and adaptation, and climate finance from ADB’s own resources will reach $80 billion for the period 2019–2030.

In May, ADB launched a comprehensive action plan for healthy oceans and sustainable blue economies, targeting $5 billion in projects by 2024. The plan covers the development of sustainable marine economies, coastal pollution control, sustainable coastal infrastructure and ports, and ecosystem management and rehabilitation. Technical assistance will help DMCs develop policies and regulations to reduce marine plastic pollution and prepare investments in integrated solid waste management. The Republic of Korea pledged $350 million of cofinancing and $5 million for technical assistance for the Association of Southeast Asian Nations (ASEAN) Catalytic Green Finance Facility. This financing will support green infrastructure in Southeast Asia, focusing on projects to boost ocean health.

In September, ADB provided a $100 million loan to help establish the Shandong Green Development Fund, which will attract private, institutional, and commercial finance for investments in climate-friendly development in this eastern province of the People’s Republic of China. Shandong is the second most populous province in the country and is home to almost 100 million people. Its carbon-intensive economy has resulted in high GHG emissions. Projects under the fund are expected to reduce emissions by 2.5 million metric tons of carbon dioxide equivalent per year and will build climate resilience for at least 2 million people by 2027 by protecting coastal areas and introducing flood and drought control measures, including in agricultural regions. These investments will demonstrate a shift to a low-carbon and sustainable growth model that could be replicated by other regional economies.

In December, ADB met a key commitment to double its annual climate investments from $3 billion in 2014, setting a record high of $6.55 billion in climate-related financing in 2019, 1 year ahead of schedule.

Making Cities
More Livable

ADB aims to build cities in Asia and the Pacific that are competitive, green, inclusive, and resilient. This operational plan strives to improve the accessibility, quality, and reliability of services in urban areas; strengthen urban planning and financial sustainability of cities; and improve cities’ environment, climate resilience, and disaster management.

An example of innovative and integrated urban transport planning can be found in an ADB-supported project in Gui’an, a fast-growing new city of Guizhou Province in the People’s Republic of China. The bank committed a $192.8 million loan for an intelligent transport system that will reduce pollution, cut traffic congestion, and improve transport safety in the city. This investment will finance real-time traffic and road-weather monitoring, a multimodal transport operations center, a traffic safety and emergency management system, and sustainable transport infrastructure such as clean-energy buses and electric-vehicle charging stations. The project will be a pilot for other cities, demonstrating integrated smart transport development.

In Tonga, ADB committed an $18.3 million grant in 2019 to fund priority urban infrastructure that will also enhance the country’s resilience to disasters and the effects of climate change, including rising sea levels. The project is designed to improve living conditions for around 36,000 Tongans in Nuku’alofa and other towns, with investment in flood management and drainage infrastructure, improved water supply services, and better solid waste management. ADB is also supporting the preparation of a climate- and disaster-resilient urban development strategy and investment plan for Tonga.

Promoting Rural Development
and Food Security

Under this operational plan, ADB will help transform agriculture and food supply systems to achieve higher incomes for farmers, provide safe and nutritious food to consumers, and spur economic growth in rural areas. The plan also highlights ADB’s role in supporting rural development by enhancing connectivity and services; building agriculture value chains with market infrastructure; and improving food security through better irrigation, farm inputs, and capacity building.

ADB will explore opportunities to help develop modern agriculture value chains; improve food safety policy and regulatory frameworks, standards, and certification; promote climate-smart and knowledge-intensive agriculture; enhance water service delivery and efficiency; improve access to rural finance; provide off-grid energy access; and improve rural health and education.

ADB’s efforts to improve water resources management and transform farming practices are highlighted in Cambodia, where agriculture contributes 22% of the gross domestic product. In December, the bank committed a $119.2 million financing package to help modernize and improve irrigation systems in four provinces, helping supply water to 43,500 hectares of farmland and benefiting 290,000 people. The project will also promote crop diversification through training and the establishment of at least 200 demonstration plots.

During 2019, ADB also continued to raise farming incomes and improve the quality of life in rural areas of Asia and the Pacific. In October, ADB provided a $45 million financing package for four northern provinces in the Lao People’s Democratic Republic, where poverty rates are three times higher than in the country’s urban areas. The project will help increase the production of high-value crops, introduce climate-resilient technologies to maximize production with less inputs, and provide up to 200 grants to farmers and entrepreneurs.

Strengthening Governance and
Institutional Capacity

This operational plan specifies that ADB will help improve public sector management functions and financial stability, develop institutional capacity to improve service delivery, and strengthen country systems and standards, with a focus on improving the efficient and effective implementation of development projects and programs.

The bank is working to boost revenue collection by broadening countries’ tax bases and, through international tax cooperation, is helping protect them against tax base erosion and profit shifting. ADB is facilitating state-owned enterprise (SOE) reforms to strengthen the accountability and performance of SOEs through improved corporate governance, competition and market contestability, and asset commercialization or divestment. The bank is also building capacity in subnational governments in recognition of the critical role they play in contributing to the SDGs.

In Indonesia, ADB committed a $500 million policy-based loan to support critical fiscal and public expenditure management reforms that aim to improve the quality of government spending on health, education, social protection, and infrastructure. Consistent with the government’s strategy to create sustainable and equitable growth, the program promotes reforms aligning medium-term expenditure with the National Medium-Term Development Plan and SDG targets, enhancing the national public expenditure system, and improving fiscal transfers and subnational governments’ spending for service delivery. In Uzbekistan, ADB committed policy-based assistance of $300 million for an ongoing program to strengthen the country’s economic management, leading to greater macroeconomic stability and sustained economic growth. The program is improving the government’s economic decision-making by modernizing macroeconomic data management systems. It is helping the government introduce reforms in fiscal and public financial management, strengthen risk-based banking supervision by the central bank, improve the governance and viability of SOEs, and promote an enabling environment for public–private partnerships (PPPs).

Fostering Regional Cooperation
and Integration

This operational plan specifies that ADB will help build greater and higher-quality connectivity between economies, expand global and regional trade and investment opportunities, and increase and diversify regional public goods such as sustainable management of shared natural resources, access to regional education and health services, and improved mechanisms for regional coordination.

Emphasizing regional cooperation in health, ADB signed agreements with the governments of Samoa and Vanuatu to fund the introduction of new vaccines through an ADB-supported Pacific regional project, which provided grants to Tonga and Tuvalu in 2018. The project will support the delivery of vaccines to reduce the incidence of pneumonia and diarrhea in children and protect young girls against the human papillomavirus, lowering the risk of cervical cancer, a leading cause of death in women in the Pacific. The project will benefit more than 500,000 young women and children across Samoa, Tonga, Tuvalu, and Vanuatu.

ADB committed a $45 million loan to Viet Nam to develop climate-resilient transport and urban infrastructure for cross-border tourism, including the upgrade of access roads and boat piers. This investment will generate economic opportunities to benefit about 168,000 residents, especially women, who manage or are employed in the majority of tourism-related enterprises, and improve living standards in secondary towns along the Greater Mekong Subregion Eastern Economic Corridor. To strengthen regional infrastructure, ADB formed a partnership with Kacific Broadband Satellites International Limited to help construct, launch, and operate a state-of-the-art satellite that will provide affordable, high-speed broadband internet connections to countries in Asia and the Pacific, especially in remote areas of small island nations in the Pacific, larger island nations like Indonesia and the Philippines, and others. ADB provided a $25 million loan from its own funds and mobilized a $25 million loan from the Japan International Cooperation Agency to finance the project.

IMPLEMENTING A NEW CORPORATE RESULTS FRAMEWORK

In September 2019, ADB approved a new corporate results framework for 2019–2024. The framework will be used as a basis for reporting on ADB’s operational and organizational performance and monitoring the implementation of Strategy 2030, including its targets for operations supporting gender equality and addressing climate change as well as increasing nonsovereign operations and commercial cofinancing.

The new framework is well-integrated with global development priorities, with almost three-quarters of its indicators mapped to the SDGs. ADB also reduced the number of results framework indicators by almost one-third while increasing their coverage and relevance. The framework incorporates new areas for measurement, including outcomes from the seven operational priority plans, One ADB collaboration, and knowledge work. More aspects of ADB’s nonsovereign operations are also covered by the new results framework.

EXPANDING PRIVATE SECTOR OPERATIONS

Under Strategy 2030, ADB is committed to scaling up its private sector operations to one-third of total operations by 2024. The bank also aims to attract $2.50 of long-term cofinancing for every $1.00 of its own financing for private sector operations by 2030.

During 2019, ADB prepared a new Operational Plan for Private Sector Operations, 2019–2024. This was endorsed by the Board in January 2020. While ADB will continue to support energy and finance sector investments, it will also increase its focus on private sector opportunities in agribusiness, education, and health as well as infrastructure projects beyond the energy sector. ADB will increase investments in fragile and conflict-affected situations, small-island developing states, and low-income countries. In middle-income and upper middle-income countries, private sector operations will focus more on lagging and poorer areas.

To implement the operational plan, ADB will provide tailored debt and guarantee products, broaden its local currency offerings, and reinforce its equity operations. ADB will use concessional finance to improve project bankability and technical assistance to improve project outcomes. The bank will attract third-party development financing through various credit enhancement products, including B-loans (cofinancing arrangements for a single borrower that are funded by commercial banks and other eligible financial institutions, helping to distribute related risks, with ADB acting as the lender of record), partial credit guarantees, and partial risk guarantees as well as through risk transfers, blended finance structures, third-party funding platforms for co-investment, and PPPs.

One of 38 private sector projects the bank committed in 2019 is a $14.2 million loan to the PRAN food and agribusiness group in Bangladesh to support the expansion plans of Sylvan Agriculture Limited. Sylvan aims to support inclusive agribusiness by boosting the incomes and skills of farmers, particularly women. ADB assistance will finance new processing facilities to produce potato-based foods and pasta. Under a gender action plan, women will comprise at least half of the 450 people directly employed in the new facilities. Gender wage gaps will be reduced, women’s facilities introduced, and greater technological assistance provided to women farmers. Potatoes for the new processing facilities, located in northeastern Bangladesh, will be sourced from around 2,000 contract farmers. Their incomes are expected to increase by at least 50% as they introduce new potato varieties and expand the areas they cultivate.

See how a $20 million loan is helping Hasfarm boost jobs in Viet Nam, the People’s Republic of China, and Indonesia.

CATALYZING AND MOBILIZING FINANCIAL RESOURCES

Engaging Development Partners

In line with Strategy 2030, ADB continues to strengthen collaboration with multilateral, bilateral, and private sector partners. In 2019, ADB actively engaged with existing partners to renew collaboration and stepped up its outreach to philanthropic institutions and corporate foundations to catalyze both finance and knowledge to assist its DMCs more effectively.

In total, sovereign cofinancing from bilateral and multilateral agencies and other financing partners reached $4.89 billion in 2019.

In total, sovereign cofinancing from bilateral and multilateral agencies and other financing partners reached $4.89 billion in 2019, including $2.01 billion from the Japan International Cooperation Agency for the Malolos–Clark railway project. Several partners expressed their intentions to expand cooperation with ADB. Agence Française de Développement signed a memorandum of understanding to achieve $2.5 billion in cofinancing during the next 3 years, while Germany’s state-owned development bank KfW signed a memorandum of understanding to achieve $2 billion in cofinancing during the next 4 years. ADB also signed a new framework agreement with the Asian Infrastructure Investment Bank that will guide overall cofinancing arrangements between the two institutions.

During the year, ADB established two new trust funds. The Ireland Trust Fund for Building Climate Change and Disaster Resilience in Small Island Developing States will provide $13.4 million for 2019–2024. The ASEAN Australia Smart Cities Trust Fund—which focuses on building livable cities that are green, competitive, inclusive, and resilient—has an initial allocation of $15.1 million.

To build stronger and more diversified partnerships and expand collaboration with new and emerging partners, ADB is working to align resource planning for external grants and trust funds with ADB’s internal resources and provide better access to financing partnerships data.

Promoting Public–Private Partnerships

ADB supports DMCs to develop sustainable infrastructure projects and deliver efficient and effective public services through PPPs. The bank helps DMCs improve their investment climates, formulate sound market regulations, and build robust legal and institutional frameworks to attract private sector interest in PPPs.

During the year, ADB was appointed as transaction advisor for the preparation of 13 infrastructure projects under the PPP modality, with a total estimated capital investment requirement of over $3 billion. ADB’s transaction advisory services achieved commercial closure of another PPP transaction in 2019, bringing mobilization of capital investments to $915 million since the inception of these services in 2014.

ADB also manages the Asia Pacific Project Preparation Facility—a multidonor trust fund with contributions from the governments of Australia, Canada, and Japan—to help prepare and monitor PPP projects, build government capacity, and create an enabling environment for PPPs. In 2019, the bank approved 17 new applications for the fund’s assistance and completed 6 preparatory projects.

Through its support for a solid waste management PPP project in Uzbekistan, ADB established collaboration with the Global Infrastructure Facility. The bank continues to seek further collaboration with other multilateral development banks to promote PPPs.

Next: Chapter 2  ›

New hope for maternal and child health in Tajikistan. A $32 million Asian Development Fund grant is upgrading health-care facilities and training in three districts.

Economic growth in Central and West Asia remained broadly stable in 2019, supported by a more expansionary fiscal stance and private sector credit growth.

Infrastructure spending and continued export gains boosted growth in Georgia. In Azerbaijan, fiscal stimulus and a pickup in gas production drove growth, while an expansionary fiscal policy supported growth in Kazakhstan and Tajikistan. In Armenia and the Kyrgyz Republic, the economy accelerated as a result of strong domestic demand and growing mining and manufacturing sectors, while Uzbekistan benefited from an improved investment climate. Faster expansion in hydrocarbon production and gas exports supported growth in Turkmenistan. A robust agricultural sector supported the economy in Afghanistan. In Pakistan, decisive policy measures helped reduce large macroeconomic imbalances and narrow the current account deficit in fiscal year 2019, although growth was constrained due to weaker economic activity.

To foster higher and more inclusive growth and raise living standards, the region must focus on promoting private sector-led growth, while improving the efficiency of state-owned enterprises. Improvements in human capital development through strengthening the quality of education, skills development, health and social protection services are needed in most countries. Continued investment in infrastructure and social services is required, together with policies to achieve stable and low inflation.

In 2019, ADB continued to help developing member countries (DMCs) address these challenges and achieve their development goals. The bank focused on helping to build competitive and inclusive economies, accelerate diversification away from hydrocarbons and other commodities, develop transformative investments in road corridors and municipal projects for livable and prosperous cities across the region, and promote renewable energy projects. ADB closely engaged with its DMCs through policy dialogue, technical assistance, policy-based loans, sector development programs, and financial intermediation projects; and by providing local currency financing.

ADB also endorsed new country partnership strategies for Armenia, Azerbaijan, Georgia, and Uzbekistan. All four strategies cover 2019–2023 and share the common goals of building market-oriented economies, ensuring inclusive and sustainable growth, and expanding trade.

STRATEGIC FOCUS

Addressing Remaining Poverty and
Reducing Inequalities

Across Central and West Asia, ADB focuses on creating economic and social development opportunities to reduce poverty and inequality. This is done through strengthening the investment climate for private sector development, investing in infrastructure, and improving education and health services for citizens.

ADB committed a $10 million policy-based loan in November as its first social sector investment in Armenia to help improve the quality and accessibility of education and health services for impoverished children and young people. In Tajikistan, implementation began on a $32 million grant to improve hospital and health-care centers. New infrastructure and equipment will be supplied, and staff and oversight agencies will be trained to plan and deploy human resources more effectively. A system to provide continuous medical education for doctors and midwives to improve the quality of maternal and child health care will also be established. In Pakistan, a $75 million secondary education improvement project in Sindh Province aims to improve the quality and access to secondary education, especially for girls, and bring in management of public schools by the private sector.

Accelerating Progress
in Gender Equality

ADB’s operations in Central and West Asia continue to prioritize gender mainstreaming.

In 2019, ADB completed country gender assessments for Armenia, Azerbaijan, and the Kyrgyz Republic, which will inform the design of future investments and facilitate policy dialogue with country counterparts on accelerating gender equality.

In Kazakhstan, ADB partnered with the country’s National Chamber of Entrepreneurs to conduct a series of workshops on developing women’s entrepreneurship in rural areas, ultimately aimed at improving livelihood opportunities and growing incomes. Since May 2019, 300 women entrepreneurs have participated in the workshops.

Learn more about how ADB is helping women entrepreneurs in Kazakhstan expand their businesses.

Tackling Climate Change, Building
Climate and Disaster Resilience, and
Enhancing Environmental Sustainability

In 2019, ADB continued to advance climate change mitigation and adaptation and disaster resilience in its projects across Central and West Asia. This includes support for climate-resilient transport infrastructure, renewable electricity generation, disaster preparedness, and promotion of advanced climate technologies.

Under its transport investments, ADB integrated climate resilience into a $410 million road project in Georgia, a country with high exposure to natural hazards, and financed 24 state-of-the-art electric locomotives in a $170 million railway project that will cut Uzbekistan’s greenhouse gas emissions by 900,000 metric tons of carbon dioxide equivalent a year.

ADB committed $100 million to upgrade hydropower generation in the Kyrgyz Republic and added $1.5 million in additional financing from the Government of Switzerland for Pakistan’s National Disaster Risk Management Fund.

In 2019, ADB signed an agreement with the United Nations Development Programme to pilot, deploy, and scale up the business models of climate change technology ventures in Armenia. Through the agreement, ADB and the United Nations Development Programme will provide technical expertise and funding to help environment-oriented companies market new and emerging technologies that support the Sustainable Development Goals.

Making Cities
More Livable

In many parts of Central and West Asia, cities are under intense pressure from rapid urbanization, uncoordinated expansion, and limited infrastructure. ADB’s work in the region is prioritizing the transformation of such cities into safe, inclusive, and sustainable urban centers.

In 2019, ADB committed two $15 million loans and a $10 million grant from project readiness financing to respectively help fast-track projects delivering urban services in Uzbekistan; support balanced regional development in Georgia; and prepare a comprehensive tourism development plan in Tajikistan to inform the selection of strategic priorities in the tourism ecosystem and help develop a priority investment pipeline.

In Pakistan, ADB approved a $235 million loan for a bus rapid transit system in Karachi City. The project will provide quality public transport in the city, shorten travel times for users, reduce vehicle operating costs, and improve air quality and GHG emissions through an innovative waste-to-fuel scheme. In partnership with the Urban Climate Change Resilience Trust Fund, ADB also committed $9 million to support the preparation and engineering design of urban projects that will improve the quality of life for about 3.5 million people in at least five cities of Khyber Pakhtunkhwa Province.

Promoting Rural Development
and Food Security

ADB’s support for agricultural enterprises and rural communities in Central and West Asia involves significantly improving irrigation to help increase farming incomes, generating jobs in agricultural value chains, and improving food security in rural and urban populations.

In Afghanistan, ADB committed $348.8 million to provide a long-term sustainable solution to the availability and management of water in the Arghandab basin of Kandahar Province by increasing the storage capacity of Dahla Dam.

In Uzbekistan, the bank made new commitments to improve horticultural and livestock value chains. A $197 million loan is helping establish logistics centers in Andijan and Samarkand to improve the processing and distribution of horticultural products. Meanwhile, a $150 million loan will expand access to finance and markets for Uzbekistan’s livestock farmers and help develop veterinary practices.

Strengthening Governance and
Institutional Capacity

ADB continued to support its DMCs in Central and West Asia to strengthen their governance and institutional capacities in 2019. This includes measures to support the private sector by improving access to finance and supporting public financial stability.

In 2019, ADB extended a total of $1.8 billion to Pakistan to support key economic, energy, and trade reforms. This includes a $1 billion special policy-based loan approved in December as part of international efforts, led by the International Monetary Fund, to support Pakistan’s economic reforms. It is the first time ADB has used this lending modality. The package aims to help Pakistan address the root causes of its chronic fiscal crisis, diversify avenues to trade, enhance competitiveness, and reform its energy sector.

ADB committed policy-based loans of $300 million and $40 million for Uzbekistan and Armenia, respectively, to improve economic management in the two countries by supporting fiscal sustainability, private sector investment, and financial and capital market development.

As part of its ongoing assistance to Azerbaijan, ADB extended $250 million to strengthen public sector governance and fiscal management and encourage private sector development. This policy-based loan will support the implementation of rule-based fiscal planning, a public debt management strategy, and state-owned-enterprise reforms. It will help to develop non-oil enterprises and reduce the country’s vulnerability to external shocks.

ADB committed a $50 million policy-based grant to the Kyrgyz Republic to help create jobs and raise employment prospects by improving the country’s trade and investment climate, facilitating the growth of small and medium-sized enterprises, supporting public–private partnerships, and fostering industry-linked skills.

Fostering Regional Cooperation
and Integration

ADB’s efforts to promote regional cooperation and integration across Central and West Asia are largely channeled through the Central Asia Regional Economic Cooperation (CAREC) platform.

At the 18th CAREC Ministerial Conference in Uzbekistan in November, ADB emphasized its support for the energy and transport strategies that are part of CAREC Strategy 2030.

ADB committed a $110 million grant to Tajikistan to improve connectivity and safety along the Obigarm–Nurobod road, part of CAREC Corridors 2, 3, and 5, connecting Tajikistan to the Kyrgyz Republic. The road carries about 2,000 vehicles a day.

In August, the bank also committed $500 million to introduce important tariff and tax-related policy reforms that will bolster Pakistan’s export industries and increase their competitiveness. The investment will also strengthen key trade-facilitating institutions.

In 2019, ADB supported an assessment to determine Afghanistan’s readiness to join an expanded Central Asian Power System, joining Kazakhstan, the Kyrgyz Republic, Tajikistan, and Uzbekistan. An expanded Central Asian Power System will enhance regional energy security, improve regional power trade, and reduce GHG emissions from electricity consumption in the region.

See how an ADB loan of $410 million will help Georgia enhance road safety and boost trade and tourism.

KNOWLEDGE HIGHLIGHTS

In 2019, ADB provided tailored support to national statistical offices in Central and West Asia, assisting evidence-based policymaking and modernization of national statistical systems.

The bank formulated a skills-gap analysis for the Almaty–Bishkek Economic Corridor, suggesting ways to develop sustainable tourism in Kazakhstan and the Kyrgyz Republic, and produced a policy brief to examine the use of public–private partnerships for education in the Pakistan province of Sindh.

Through a joint program for knowledge and experience exchange, ADB is supporting the Government of Kazakhstan’s voluntary national review and nationalization of the Sustainable Development Goals.

ADB contributed to the first CAREC forum for capital market regulators, held in Islamabad, Pakistan, to discuss regional cooperation for developing capital markets, enhancing access to finance, and supporting private sector development. A CAREC high-level forum on infrastructure, jointly organized with the International Monetary Fund and the World Bank, discussed infrastructure financing needs, fiscal constraints, debt sustainability, and the need for more private sector involvement in infrastructure financing.

Next: East Asia  ›

A $130 million loan to the People’s Republic of China’s Gansu Province to develop a web-based platform to link farmers with consumers will improve competition and quality and help farmers get the best prices for their products.

Economic growth decelerated in East Asia during 2019. In the People’s Republic of China (PRC), growth moderated from 6.7% in 2018 to 6.1% in 2019, the lowest since 1990. In Mongolia, economic growth slowed to 5.1% in 2019 from 7.2% in 2018. International trade tensions and other external factors were the key causes of decline.

The countries of East Asia, while confronted by their own specific issues, still face common and long-standing development challenges. Environmental concerns—especially pollution—are significant, with considerable resources needed to mitigate the impacts of climate change. In the PRC, government efforts to eradicate extreme poverty by the end of 2020 were hampered by the recent economic slowdown. The PRC also needs to embrace industrial transformation and accommodate aging populations, while Mongolia needs to address underdeveloped infrastructure, a lack of export diversification, and unemployment.

ADB’s investments in East Asia are working to help overcome these challenges, with a focus on reducing pollution, strengthening responses to climate change, providing better access to social services, and boosting transport connectivity and trade in border areas. The bank is also working to improve the well-being of rural residents and promote inclusive economic growth across the region.

In particular, ADB is helping the PRC and Mongolia by informing policies and laws, building more effective institutions, supporting the use of advanced technologies, and establishing innovative green financing mechanisms. Some of this work has resulted in policy and institutional changes that can be shared with, and adapted by, ADB developing member countries (DMCs) in other regions.

STRATEGIC FOCUS

Addressing Remaining Poverty and
Reducing Inequalities

ADB’s work in East Asia to address poverty and reduce inequalities centers on improving health outcomes for the poor and disadvantaged, engaging the private sector to create quality jobs and raise income levels, and providing more inclusive services for aging populations.

In Mongolia, where the government has prioritized greater access to health services for impoverished and remote communities, ADB committed $16 million of additional financing in 2019 to fund the completion of a new district hospital that will directly benefit 320,000 poor residents of Ulaanbaatar. This complements an initial $76.1 million commitment to a program to improve primary health services in the country.

In the PRC, an example of ADB’s work to improve the quality of life for older residents is in the city of Yichang, where around 22% of the population is aged over 60. The bank committed a $150 million loan to pilot an integrated approach that will improve elderly care services and facilities, including for dementia patients; build a geriatric hospital and nursing home; and develop an advanced patient management and monitoring system.

Accelerating Progress
in Gender Equality

As part of broader efforts to advance gender equality in East Asia, ADB is helping develop high-technology transport systems that will ease the burden of travel for women and girls—the most frequent users of public transport—as well as provide them with more job opportunities.

In December 2019, for example, ADB committed a $192.8 million loan for a transport project in the district of Gui’an in Guizhou Province. The project includes gender-sensitive safety measures such as bright lighting and security cameras at bus stops and stations. The intelligent transport system (ITS) provides real-time traffic and road-weather monitoring and a facility to report incidents on a real-time basis to enhance security and respond to emergencies. At least 30% of people employed in the ITS control center will be women. The project will also run training courses in primary and middle schools to teach ITS coding concepts to at least 600 girls and encourage them to pursue science and technology careers.

Find out about the human-centered design behind the intelligent transport system in Gui’an, People’s Republic of China, that will help reduce pollution and improve safety.

Tackling Climate Change, Building
Climate and Disaster Resilience, and
Enhancing Environmental Sustainability

Pollution in general, and air pollution in particular, are serious concerns for the governments of the PRC and Mongolia.

In December, ADB committed a $160 million policy-based loan to further strengthen the Government of Mongolia’s ability to address severe air pollution in Ulaanbaatar. The loan is supporting immediate actions to reduce the burning of coal, together with reforms to promote the use of clean-energy resources for heating.

While ADB takes specialized approaches to address climate, environment, and disaster management challenges across East Asia, the bank prioritizes reducing the region’s greenhouse gas emissions.

In May, ADB signed a $392 million loan to demonstrate the use of advanced clean technologies for heating and cut greenhouse gas emissions by about 4 million metric tons of carbon dioxide equivalent annually in Shandong Province in the PRC. The investment showcases the use of geothermal, biomass, and waste heat to improve the living conditions and health of around 647,000 people.

Making Cities
More Livable

Rapid urbanization is a major development challenge in East Asia and ADB is working to foster inclusive and green urban development in the region. The bank signed a $200 million loan in May to support the use of advanced technologies to improve the urban environment and livability of Ziyang Municipality in Sichuan Province. The project is expected to benefit an estimated 3.6 million people by building flood control embankments, rehabilitating wetland areas, and turning a polluted landfill site into a park. A research and development center will be constructed and is expected to generate at least 5,000 jobs in the service and lighting industries.

The experience and knowledge gained from wetland rehabilitation, landfill transformation, and sustainable city development can be replicated in other cities along the Yangtze River Basin in the PRC and shared with DMCs in other regions.

See how daily life is getting better for families in the Bayankhoshuu ger area of Ulaanbaatar thanks to new infrastructure built under an ADB project, confinanced with the European Investment Bank.

Promoting Rural Development
and Food Security

Farmers, rural producers, and agribusiness entrepreneurs in East Asia have enormous potential to tap into high-value markets both domestically and internationally. ADB supports these rural enterprises with project financing and knowledge products that explore new technologies and techniques to maximize agricultural productivity.

In the PRC’s Gansu Province, the bank committed a $130 million loan to develop a web-based platform to enhance market access through a two-way automated information exchange system between farmers and consumers. The approach offers production information for consumers, while farmers will get access to market information and production support services, providing opportunities to improve livelihoods by accessing high-value markets. The project will also help improve food safety and the competitiveness of agricultural goods by using internet-of-things applications such as QR code scanners, soil fertility and moisture sensors, and remote sensing. Nearly 13,000 farming households are likely to be involved in contract farming and around 110,000 rural households are expected to benefit from using the information platform.

As part of ADB’s ongoing support for rural vitalization in the PRC, the bank committed a $300 million loan to address environmental degradation, modernize agricultural production systems, and boost rural incomes for 1.8 million people in the upper and middle reaches of the Yangtze River Basin.

Strengthening Governance and
Institutional Capacity

ADB investments help to enhance public financial management and increase stability in the finance sector in East Asia.

ADB committed $1.2 million in technical assistance to help Mongolia strengthen the capabilities of its national audit office by sharpening the monitoring of use of public funds and improving capacity to conduct financial, performance, and compliance audits. The project will also help develop a digital master plan in audit and financial management.

ADB also signed a memorandum of understanding with the PRC’s central bank, the People’s Bank of China, to support reforms and knowledge cooperation in the finance sector from 2019 to 2023. This will help the PRC strengthen its legal and regulatory frameworks for the finance sector and expand the use of technology to increase access to finance, particularly for small and medium-sized enterprises. ADB approved a $700,000 technical assistance project in December to support the implementation of initiatives under the memorandum of understanding and identify lessons from the PRC’s experience that can be applied in other countries.

Fostering Regional Cooperation
and Integration

ADB’s efforts to foster regional cooperation and integration in East Asia focus on improving transport connectivity and streamlining cross-border trade and travel.

ADB committed a $27 million loan to expand Mongolia’s international trade by upgrading facilities at the border crossings of Bichigt and Borshoo, which connect the country to the PRC and the Russian Federation.

The bank also committed a loan of $58.5 million, cofinanced by the High-Level Technology Fund, to help improve surfaces and safety along 176 kilometers of Mongolia’s Ulaanbaatar–Darkhan and Khuiten Valley–Arvaikheer road sections, which link the PRC and the Russian Federation through Mongolia’s capital.

KNOWLEDGE HIGHLIGHTS

ADB emphasizes adding value to its financial investments through knowledge work targeted to the needs of East Asia. This helps to identify innovative approaches that can be replicated both within and outside the region.

In 2019, in response to a request by the Government of the PRC, ADB supported a series of workshops to promote dialogue on aging, technical and vocational education and training, and rural vitalization. Participants from central and provincial governments and academia shared their knowledge and experiences to help identify priorities for policy reform and investment planning.

To assist the PRC’s National Development and Reform Commission, ADB prepared papers giving detailed research and policy recommendations for the country’s 14th Five-Year Plan, 2021–2025. These papers focus on climate change, ecosystem services, rural vitalization, urbanization, inclusive development, the role of local government, and the development framework for the PRC’s modernization strategy.

ADB signed two significant knowledge collaboration agreements in 2019. It partnered with Alibaba to better assist the implementation of the PRC’s rural vitalization strategy, taking advantage of the latest digital technologies such as e-commerce and cloud computing; and with the Asia-Pacific Finance and Development Institute on South–South knowledge cooperation and capacity building of DMC officials in related areas of finance and development. The bank also organized innovation workshops on topics such as education, elderly care, and green finance to discuss next-generation investments.

In November, using research gathered during an ADB investment project, the bank published a brief, Integrating Persons with Disabilities into Mongolia’s Society, which suggests reforms to better assess the needs of persons with disabilities and improve their access to infrastructure, transportation, education, and employment.

Next: Pacific  ›

A chore soon to be obsolete in Ebeye, the Marshall Islands. ADB support is now connecting thousands of homes to a 24/7 supply of safe drinking water. A $5 million grant from ADB in 2015 and a $4 million grant from Australia financed the construction of a new desalination plant for the island.

In 2019, the combined gross domestic product of Pacific economies expanded by 4%, the region’s fastest average growth since 2015. It followed historically low economic growth of 0.4% in 2018, when the Pacific was hit by a major earthquake and tropical cyclones.

This growth story highlights the crucial role played by disaster response and recovery in shaping the region’s development progress and explains why ADB moved to expand its financing for disaster resilience in 2019.

On top of the support for disaster response, recovery, and reconstruction, financing is needed for climate change adaptation and to overcome an infrastructure backlog causing gaps in basic services. For example, access to reliable electricity is only about 33% among Pacific developing member countries (DMCs), compared with 87.4% globally. Similarly, provision of safe water (52.6% versus 88.5% globally) and sanitation services (30% versus 68% globally) are lagging.

The 2019 ADB Annual Meeting was the first held in a Pacific DMC, Fiji. It was attended by more than 3,500 representatives from 76 countries. Among the issues discussed at the Annual Meeting were sustainable tourism and its potential to boost national and regional development efforts, the role of private sector financing for disaster risk management and climate resilience, and the importance of actions to improve ocean health. There were also discussions on ways to respond to heightening global economic uncertainty, the role of digital technologies for financial inclusion, new tools for sustainable infrastructure development, and other topics. The event’s theme was “Prosperity Through Unity.”

During the year, ADB endorsed a new country partnership strategy for Fiji, covering 2019–2023. The strategy aligns with the government’s goals for Fiji to become a South Pacific business hub by improving transport and digital connectivity, developing a skilled workforce, and creating productive jobs.

STRATEGIC FOCUS

Addressing Remaining Poverty and
Reducing Inequalities

Extreme poverty has declined in the Pacific, but at a rate significantly slower than the overall decline across the Asia and Pacific region. In 2019, ADB accelerated efforts to ensure access to adequate health care, essential infrastructure, and social services.

The bank is working to reduce the incidence of pneumonia and diarrhea in children and minimize outbreaks of vaccine-preventable diseases. In February 2019, ADB committed $11.3 million to Vanuatu and $7.5 million to Samoa as part of a $25.1 million package to deliver a comprehensive vaccination program in the region. This follows commitments to Tonga and Tuvalu in 2018.

In Papua New Guinea (PNG), ADB is administering $38 million additional financing from the Government of Australia to improve health outcomes in lagging rural areas by upgrading 20 district hospitals.

To advance the delivery of basic services into poor and disadvantaged communities, ADB committed $11 million to prepare projects for improved urban water supply, sanitation, and solid waste management in the Federated States of Micronesia, Solomon Islands, and Vanuatu. The bank also committed $37 million in 2019 to improve urban water and sanitation in Solomon Islands, with an additional $3 million as project readiness financing.

Accelerating Progress
in Gender Equality

Empowering women is vital to achieving inclusive, resilient, and sustainable development in the Pacific. Despite progress in advancing gender equality in many Pacific DMCs, a significant proportion of women and girls still face poverty and inequality as well as limitations on their access to essential services and resources. There is a gender gap in labor force participation—in 2017, the Pacific female labor force participation rate was at 44.3%, more than 8 percentage points lower than for males. Pacific women have limited representation in decision-making structures—in 2017, only 6% of parliamentarians in the Pacific were women. Violence against women and girls remains a concern—in several Pacific DMCs, more than 30% of women reported being sexually abused before 15 years of age.

ADB continues to incorporate gender considerations into its projects, with a view to creating livelihood and career opportunities for women. As part of a $5 million grant to Tonga, for example, ADB included actions addressing key legislative barriers to employment for women in the labor market.

In Fiji, an ADB loan of $65 million supports the economic empowerment of women by embedding gender considerations into measures to improve budget systems and institutions, boost the productivity and competitiveness of state-owned enterprises, and generate new business and quality jobs.

Tackling Climate Change, Building
Climate and Disaster Resilience, and
Enhancing Environmental Sustainability

ADB continues to offer innovative solutions for Pacific DMCs to develop renewable energy sources, reduce greenhouse gas emissions, and build environmental sustainability.

Through the Pacific Renewable Energy Investment Facility, ADB has committed $55.2 million and will administer $32.4 million in cofinancing from the Government of Australia and the Green Climate Fund to support renewable energy projects in the Federated States of Micronesia, Nauru, Tonga, and Tuvalu. Under the $6 million project for Tuvalu—ADB’s first-ever assistance to the country’s energy sector—the bank is helping install solar power and battery systems to reduce Tuvalu’s heavy reliance on fossil fuels for power generation.

Making Cities
More Livable

Small island developing states across the Pacific have limited expertise in urban planning, development, and management.

There is an urgent need to improve water and sanitation services in the fast-growing urban populations of Kiribati and the Marshall Islands. ADB is providing a $13 million grant for Kiribati to address the high incidence of waterborne diseases and improve hygiene practices in South Tarawa. For the Marshall Islands, a $5 million grant was approved to prepare projects that will improve urban water and sanitation services in Majuro and solid waste management in Ebeye.

Learn how a new water and sewage treatment plant in Ebeye, the Marshall Islands, is helping to make people healthier and safer.

In Tonga, ADB committed $18.3 million to provide high-priority urban infrastructure in Nuku’alofa, supporting flood risk management, water supply and solid waste management, and disaster and climate resilience. The bank is also administering additional financing of $290,000 from the Government of Australia for an ongoing project to support waste management services in the capital.

In PNG, ADB is administering cofinancing of $800,000 from the People’s Republic of China Poverty Reduction and Regional Cooperation Fund to expand access to safe water in the Tete settlement of Port Moresby.

Promoting Rural Development
and Food Security

Rural communities in the Pacific generally have fewer economic opportunities and less access to basic services than the urban population. ADB works to improve livelihoods in rural areas and outer island communities by strengthening their connections to major markets.

In Samoa, for example, ADB committed $62.3 million in grant funds to upgrade Apia’s port, which is the country’s only international maritime gateway. Given Samoa’s geographical isolation from international markets, maritime connectivity is critical to the economy. The rehabilitation of port infrastructure, along with the construction of a customs facility, will enhance agricultural exports and streamline imports.

For Kiribati wholesale grocer Rosarie Kum Kee, a new road financed by ADB’s Asian Development Fund and other donors has helped transform her business. But further investment in Kiribati remains crucial.

Strengthening Governance and
Institutional Capacity

Improving public service delivery is a key priority for ADB in the Pacific, alongside support for government reforms to fiscal and monetary policy, state-owned enterprises, revenue mobilization, and private sector development.

ADB is providing $74.5 million in assistance to Fiji, the Marshall Islands, Tonga, and Tuvalu, along with a $225,000 technical assistance grant to Niue, to improve government management of public finances; build capacity to respond to external shocks; and expand private investment by streamlining the policy, legislative, and regulatory environments for business.

In Tonga, where lack of information to guide resource allocation has led to poor health services and outcomes, ADB committed $7.5 million to help design and implement a new digital health information system. The system will improve the quality and reliability of health statistics and promote digital patient records, allowing for more consistent patient care and better strategic decision-making.

Fostering Regional Cooperation
and Integration

Transport infrastructure plays a key role in integrating the many small island economies of the Pacific. In addition to the seaport project in Samoa, ADB provided a $5 million grant to Tonga for preparatory work to construct a bridge across the Fanga’uta Lagoon and to upgrade the main wharf of Nuku’alofa Port.

Many of ADB’s flagship technical assistance programs for the Pacific are regional in coverage and foster cooperation and dialogue among DMCs. In 2019, ADB committed $2 million in technical assistance grants to help Pacific member countries improve their business environments and generate inclusive economic growth led by the private sector. The bank also committed $2 million in grants to the Pacific Region Infrastructure Facility Coordination Office, which helps plan, prioritize, coordinate, and manage infrastructure in the Pacific.

KNOWLEDGE HIGHLIGHTS

In May 2019, ADB published a special 10th anniversary issue of the Pacific Economic Monitor, one of the most influential economic publications in the region. It features policy briefs on the effects of climate change, impacts of natural hazards, income and purchasing power, service delivery, women’s economic empowerment, and labor markets.

In August, ADB’s Pacific Private Sector Development Initiative released Finding Balance 2019: Benchmarking the Performance of State-Owned Banks in the Pacific, a report that profiles the roles, performance, market context, and regulatory frameworks of 13 state-owned banks in 10 Pacific countries. The report suggests these banks can deliver much-needed business financing, particularly for small to medium-sized enterprises and in sectors such as agriculture and fisheries.

ADB’s Pacific Fellows Program aims to enhance the capacities of government officials to plan and manage development initiatives and projects. In 2019, officials from PNG, Timor-Leste, and Tonga participated in the program.

Next: South Asia  ›

Student Bibi Marium learns a new skill to boost her job prospects. An ADB-supported program in Bangladesh is helping train more than 320,000 people for jobs relevant to industry needs.

Reflecting South Asia’s economic expansion in recent years, countries within the region have continued to make solid development progress. Bangladesh moved to lower middle-income status in 2015 (joining regional counterparts Bhutan and India), while Sri Lanka achieved upper middle-income status in 2018 (joining the Maldives).

In 2019, domestic demand—particularly private consumption and infrastructure spending—boosted growth in Bhutan, Bangladesh, and Nepal. However, in India, economic growth fell to 5% from 6.1% in the previous year as a credit shortage lowered domestic demand. In the Maldives, weak infrastructure investment dragged on growth, while Sri Lanka’s growth also fell following a terrorist attack in April.

South Asia requires significant investment in both economic and social infrastructure to sustain its economic growth, deal with the impacts of climate change, and promote gender equality and social inclusion.

ADB’s operations in South Asia are focused on infrastructure connectivity, including developing regional transport corridors, linking farming communities to markets, and developing advanced urban transport infrastructure such as metro and railway connectivity.

In India, ADB committed a record $3.18 billion for sovereign projects and $965 million for nonsovereign projects.

South Asia’s advanced infrastructure needs require an integrated multisector approach, as well as substantial investment from the private sectorADB has undertaken economic corridor and other studies to determine where growth centers would be located and ensure coordinated planning of investments for sustainable growth. To help address South Asia’s environmental challenges, ADB is also incorporating the latest high-efficiency, low-carbon technologies into its infrastructure projects.

ADB committed more than $2.2 billion in investments across sovereign and nonsovereign operations to railway development in South Asia in 2019, marking a significant strategic shift in the bank’s infrastructure portfolio.

Social services across the region need to address not only areas of market demand, but also barriers to gender equality and social inclusion.

To ensure optimum economic and social impact, development projects ranging from transport and trade to education and technology must consider the impoverished and socially disadvantaged members of South Asian societies.

In 2019, ADB endorsed new country partnership strategies for Bhutan and Nepal. Bhutan’s strategy covers 2019–2023 and focuses on fostering economic diversification and reducing spatial and social disparities. Nepal’s strategy covers 2020–2024 and aims to improve infrastructure for private sector-led growth, access to devolved services, and environmental sustainability and resilience.

STRATEGIC FOCUS

Addressing Remaining Poverty and
Reducing Inequalities

New ADB commitments in 2019 for inclusive skills training and more reliable and competitive power will help tackle poverty and inequalities in the region.

In Bangladesh, where many vulnerable communities lack industry-relevant skills, ADB committed $150 million for a training program to boost the employment prospects and productivity of the country’s young workforce. In Sri Lanka, where the government has prioritized applied science and technology as avenues to better-paid jobs, ADB committed $145 million for a project that is enabling four universities to equip graduates with technology-oriented skills and entrepreneurial attitudes. It is estimated that 7,250 students (35% of them women) will enroll in these new science and technology programs.

To spur jobs growth and improve livelihoods, India requires a more reliable and competitive power supply for industry and services. ADB has committed $451 million for a power investment project along the Chennai–Kanyakumari Industrial Corridor, which will allow more power—including from renewable sources—to be transferred from new generation facilities in the south to the north where it is most in demand.

Accelerating Progress
in Gender Equality

ADB is advancing gender equality across South Asia by supporting inclusive infrastructure development, improving financial literacy, and expanding access to commercial capital.

In India, ADB has invested in a project in Chhattisgarh to enhance transport connectivity with bus stops that are accessible to women, children, the elderly, and people with disabilities (many of whom are cared for by women). The project also includes bright streetlighting for better user security.

To foster enterprises led by women in Bangladesh, ADB committed $50 million to support microenterprise owners and aims for a loan portfolio with at least 70% women borrowers. ADB also committed a $50 million loan to a Sri Lankan state-owned bank to promote financial inclusion and support micro, small, and medium-sized enterprises—including women-led businesses—located outside Colombo District.

Tackling Climate Change, Building
Climate and Disaster Resilience, and
Enhancing Environmental Sustainability

In South Asia, ADB’s approach to climate change, disasters, and other environmental issues focuses on investments in economically viable and sustainable projects that promote climate-resilient infrastructure and low-carbon technology.

In Bangladesh, ADB committed $392.1 million to finance a new railway link connecting the Cox’s Bazar district to the national and regional rail network. By reducing the need for road travel, the project will decrease greenhouse gas emissions by 46,647 metric tons of carbon dioxide equivalent annually.

New trains funded as part of a $200 million project to boost rail capacity in Bangladesh are providing safer, faster, and more energy-efficient travel.

In Nepal, ADB committed $63 million in additional financing to improve flood management and river health in the polluted Bagmati River Basin. The funds will rebuild and reinforce riverbanks, construct a wastewater treatment plant, train communities along the river on flood early warning systems, and restore heritage buildings damaged in the 2015 earthquakes.

ADB also collaborated with the Korea Environmental Industry and Technology Institute to prepare a prefeasibility study on solid waste management in the state of Uttarakhand in India.

Making Cities
More Livable

ADB is helping build livable cities across South Asia through projects that alleviate congestion and improve water supply and sanitation.

In October 2019, ADB committed two loans totaling $148 million to finance infrastructure such as roads and drains that will relieve traffic congestion and prevent flooding in Dhaka and Khulna, densely populated and rapidly growing cities in Bangladesh. As part of a $160 million rail investment in Sri Lanka, ADB will help provide electric locomotives and training in modern railway technologies to improve city services, cut journey times, and reduce air pollution.

As part of further knowledge collaboration with the Republic of Korea, ADB and the Korea Water Resources Corporation (K-water) helped build long-term capacity for enhanced water management in Bangladesh. They assisted the Dhaka Water Supply and Sewerage Authority to plan improved training facilities, a research center, and an integrated water operations center.

In a different kind of living environment, ADB continues to provide amenities for around 632,000 displaced people in temporary camps around Cox’s Bazar. In 2019, the bank helped install community bathing facilities, streetlights, and piped water supply; and began work on food distribution centers, cyclone shelters, and storm water drainage systems.

Learn how partnership with ADB has been helping Kolkata become a more livable city.

Promoting Rural Development
and Food Security

ADB is working to connect rural communities, ensure food safety, and strengthen agricultural trade standards to help guarantee sufficient and sustainable food production in South Asia. Improving farmers’ access to markets will help boost agricultural productivity and incomes, as well as promote investment in agribusiness and agriculture value chains.

Across Bangladesh, India, and Sri Lanka, ADB committed a combined $550 million to connect people living in farming communities to agricultural markets and regional centers by upgrading rural roads. It also committed $91 million to improve water management and agricultural productivity in Karnataka, India.

ADB committed a $50 million policy-based loan to the Government of Nepal to improve its food safety measures, enhance agricultural trade standards, and promote agricultural commercialization. Through a separate $50 million project, the bank is also helping Nepalese farmers develop collective enterprises such as commercial farming, milk collection centers, mustard oil and rice mills, and seed and tea processing factories, with value chain development and business facilitation support.

Strengthening Governance and
Institutional Capacity

Effective and inclusive development in South Asia hinges on strong institutional capacity, good governance, and stable financial markets. ADB supports public sector reforms, helps improve service delivery, and develops governance capacity.

In 2019, the bank committed a $30 million policy-based loan to develop Bhutan’s financial markets. The reforms are expected to lead to a 7% increase in the volume of bonds traded in the capital market through to 2023. Technical assistance will help the government prepare regulatory frameworks and conduct background analyses, build the capacity of government agencies and financial institutions to implement reforms, and improve the financial literacy of disadvantaged people.

As part of major new commitments for road projects in India, ADB has introduced financial concessions that will increase investments and harness private sector expertise in project design, implementation, and operation.

Fostering Regional Cooperation
and Integration

South Asia needs to attract investment in cross-border infrastructure to drive regional cooperation and integration. Such investment will help build economic connectivity, lower trade and energy costs, and improve access to social infrastructure and services.

In 2019, ADB committed $495 million to reduce travel times along regional corridors connecting Nepal with India and Bangladesh and improve connections to Sri Lanka’s international port under the South Asia Subregional Economic Cooperation (SASEC) Program.

KNOWLEDGE HIGHLIGHTS

ADB supported the development of an action plan by India’s Ministry of Shipping to promote coastal shipping. The plan details the initiatives required to achieve annual cost savings of $1.19 billion while adding 150–160 million tons of cargo yearly by 2025.

The bank also conducted a study on Asian experience in intergovernmental fiscal transfers, which was submitted to India’s 15th Finance Commission to support the country’s public financial management.

ADB released the book Borders without Barriers: Facilitating Trade in SASEC Countries, which examines priorities for trade facilitation in member countries of the SASEC Program. To buttress the case for trade facilitation, the publication discusses the expected development impacts of increased trade for SASEC member countries.

Next: Southeast Asia  ›

Commitments totaling $1.1 billion in Indonesia will support fiscal and public expenditure management reform, promote finance sector development and inclusion, and encourage private infrastructure investment, together bolstering efforts to reduce poverty and income inequality.

Southeast Asia has averaged solid economic growth over the past 15 years, but uncertainties in global trade, weaker investments, and extreme weather have dampened growth performance in the past 3 years. Nevertheless, the number of people living in extreme poverty on less than $1.90 a day fell from 129 million in 2002 to 33 million in 2015.

Yet countries across the region exhibit the highest levels of economic inequality in all of Asia and the Pacific, and infrastructure investment of $184 billion a year is needed to support inclusive and sustainable growth.

Southeast Asia’s populations are aging rapidly, particularly in Thailand and Viet Nam, putting pressure on national budgets to pay for pensions and health-care costs. Reforms are needed to ensure a social safety net, adapt to an older workforce, and address rapid urbanization.

The region is also experiencing greenhouse gas emissions and vulnerability to climate change. Four countries in Southeast Asia are among the 36 nations with the highest disaster risk. There is an urgent need for climate-responsive project designs, integrated disaster risk management, and green infrastructure development.

ADB devotes more than half of its portfolio for Southeast Asia to infrastructure development (transport, energy, water and urban services, and agriculture and natural resources). By doing so, it is providing significant support for improved economic productivity and resilience to climate change in the region’s developing member countries (DMCs).

The bank is also supporting reforms in public sector management and finance. This is helping to strengthen government institutions, particularly in expanding the delivery of, and access to, public services.

In 2019, ADB approved a new country partnership strategy for Cambodia, covering 2019–2023. The strategy aims to accelerate the country’s competitiveness and economic diversification, strengthen human capital and lifelong learning, foster sustainable and inclusive development, and improve governance.

STRATEGIC FOCUS

Addressing Remaining Poverty and
Reducing Inequalities

ADB is helping its DMCs in Southeast Asia reduce poverty, expand access to employment and other economic opportunities, and deliver the education and skills training needed to help the disadvantaged acquire better jobs.

In 2019, ADB provided $748.6 million in policy-based loans to finance measures that will improve government spending on health, education, skills development and training, and social protection in Indonesia, the Lao People’s Democratic Republic (Lao PDR), the Philippines, and Viet Nam. The bank also supported reforms in curriculum, assessment, teacher development, technical-vocational-livelihood education, career guidance, public financial management, and school-based management in the Philippine secondary education system through a $300 million results-based loan to boost the employment prospects of about 20 million students from the poorest 40% of households in the country by 2023.

In Cambodia, ADB supported a $40 million policy-based loan to increase access to finance and introduce new financial services for poor communities, including in rural areas, the agricultural sector, and small and medium-sized businesses. The program supports the adoption of a national financial inclusion strategy; key legislation, including the Trust Law, e-Commerce Law, and Consumer Protection Law; and incorporation of financial literacy in the school curriculum. In Indonesia, the bank is supporting a program to deliver a 40% increase in access to financial services for the country’s poorest 40% by the end of 2020.

Accelerating Progress
in Gender Equality

To support gender equality across Southeast Asia, ADB financed projects specifically designed to improve the education and health of women and girls.

In the Lao PDR, ADB committed a $50 million loan to improve girls’ enrollment, retention, and completion rates in formal education in 12 disadvantaged and ethnically diverse districts. The project is upgrading 60 schools to provide additional classrooms, laboratories, libraries, and separate dormitories and washing facilities for girls and boys. The bank is also helping meet the dietary needs of around 9,400 girls and women of reproductive age through a $45 million watershed management project that, as part of its outputs, will establish 100 nutrition schools.

In Viet Nam, ADB committed $100.6 million to develop communication and awareness campaigns on sexual and reproductive health, including maternal and child health.

Through a regional initiative, Mekong Innovative Startups in Tourism, ADB is promoting youth- and women-led entrepreneurship. The initiative has so far provided access to a startup ecosystem—including advice from investors, mentors, incubators, and government agencies—for 43 promising tourism technology firms and social enterprises in Cambodia, the Lao PDR, Myanmar, Thailand, and Viet Nam.

Tackling Climate Change, Building
Climate and Disaster Resilience, and
Enhancing Environmental Sustainability

Throughout 2019, ADB scaled up support to address Southeast Asia’s unique challenges relating to climate change, disaster risks, and environmental degradation.

In Cambodia, ADB committed $7.6 million for a solar power project to reduce the cost of electricity through private sector investments in renewable energy. These plants are expected to avoid emissions of at least 148,650 metric tons of carbon dioxide equivalent annually.

Learn more about how ADB is helping Cambodia boost its adoption of solar energy.

To address disaster risk in Viet Nam, ADB committed $188.4 million, with cofinancing of $4.5 million from the Government of Australia, for a transport connectivity project that incorporates climate-resilient features into Greater Mekong Subregion (GMS) corridors in northwestern provinces. These features include slope protection in areas prone to landslides and rockfalls and higher standards of road construction to address climate risks.

Meanwhile, regional technical assistance to the GMS is helping to implement climate investment plans for the agriculture, energy, and transport sectors; conduct pilots on low-carbon agriculture and green freight; boost capabilities in environmental planning, environmental data management, and pollution control; and foster policy dialogue on reducing the environmental footprints of agricultural practices.

Making Cities
More Livable

ADB takes an integrated approach to making Southeast Asia’s cities more livable. It is forging long-term partnerships by implementing a structured roadmap with each city and financing projects that address issues such as water security, access to sanitation, flood protection, and urban mobility.

ADB has also begun due diligence for projects to address basic urban services in rapidly urbanizing cities. These projects will also help to mitigate damage from pollution, waste, and development on the environment—especially in coastal cities in Cambodia, the Lao PDR, the Philippines, and Viet Nam, where the urban impact on marine and biodiversity health is a major concern. The projects will strengthen urban development policy and regulatory frameworks and improve institutional effectiveness in cities and public utilities.

Promoting Rural Development
and Food Security

ADB is supporting sustainable and resilient rural development and food security for Southeast Asian countries by upgrading irrigation efficiency, water resources management, and flood and drought risk management to enhance agricultural productivity. The bank also invests in agriculture value chain infrastructure and agribusiness development as well as enhancing livelihoods in rural and remote communities.

During 2019, ADB invested $3 million in a regional technical assistance project to implement climate-smart agriculture, pilot innovative farming technologies, and help mobilize financing for agribusinesses in GMS countries.

In Myanmar, the bank committed $195 million to reduce the food insecurity and poverty of about 1.8 million people in the regions of Ayeyarwady, Chin, Sagaing, and Tanintharyi. The project will develop and finance at least 15,000 livelihood subprojects that build community resilience. This includes village access or farm roads, small bridges, water supply, electric grid connection, and multipurpose centers.

Strengthening Governance and
Institutional Capacity

For some DMCs in Southeast Asia, the challenges of fiscal management, revenue generation, and financial market stability continue to impede their development. ADB designs and finances programs to help these countries build institutional capabilities and distribute financial resources more appropriately and effectively.

ADB committed $1.1 billion in 2019 across three investments supporting regulatory reform in Indonesia. The first is designed to underpin financial stability, deepen the financial market, and enhance financial inclusion. The second will help align Indonesia’s expenditure program to its national development plan and the Sustainable Development Goals and improve service delivery at the subnational government level. The third will help mobilize private sector investments for much-needed infrastructure projects.

In the Lao PDR and the Philippines, ADB committed policy-based loans of $45 million and $300 million, respectively, to bolster public financial management and fiscal consolidation; develop new public debt management and tax laws; improve the governance of planning and budgeting; and enhance resource management, revenue collection, and service delivery by local governments.

In December, ADB committed $23.3 million to strengthen the capabilities of the recently established Philippine Competition Commission.

Fostering Regional Cooperation
and Integration

In Southeast Asia, ADB concentrates on initiatives to develop economic corridors, reduce trade and travel barriers, enhance energy access, develop sustainable tourism, support agribusiness value chains, and create biodiversity corridors. During 2019, ADB committed $233.4 million to support transport connectivity and strengthen tourism infrastructure in Viet Nam. Policy-based loans to Indonesia and Viet Nam will also enhance finance sector integration.

In April, ADB and the Association of Southeast Asian Nations (ASEAN) launched the ASEAN Catalytic Green Finance Facility in Thailand. The facility has created a truly global partnership for green finance in the ASEAN region and attracted financing commitments of $1.3 billion, receiving support from 11 development partners across Asia, Europe, and the United States.

Find out more about the new ASEAN Catalytic Green Finance Facility, created under the ASEAN Infrastructure Fund to help de-risk green infrastructure projects and attract private capital.

ADB also prepared a long-term strategic framework for the GMS to guide the subregion’s integration and economic growth. As part of the bank’s role as regional development advisor for the Brunei Darussalam–Indonesia–Malaysia–Philippines East ASEAN Growth Area, ADB supported the creation of a Green City Action Plan for Kota Kinabalu in Malaysia, making it a pilot for other cities in the subregion.

KNOWLEDGE HIGHLIGHTS

In 2019, ADB and Indonesia’s Ministry of National Development Planning conducted a joint study on policies to support the development of the country’s manufacturing sector. This study was used in the formulation of Indonesia’s new national development plan.

The bank helped leverage regional knowledge and hosted a workshop in Indonesia on e-mobility and electric vehicles to explore opportunities for sovereign and nonsovereign investments.

In the Philippines, ADB and the Organisation for Economic Co-operation and Development conducted a joint review of local job creation and employment skills strategies. The technical study served as the intellectual underpinning of ADB’s investment in school-to-work transition programs.

In Myanmar, ADB held a series of workshops and other training activities to build project implementation capacities, including those related to disbursement, procurement, financial management, and monitoring and evaluation. It also conducted workshops during September and November to help strengthen environmental and social safeguards in the country.

Next: Chapter 3  ›

Engineers at a power plant in central Sumatra, Indonesia. ADB provided support for the construction of the 275 megawatt combined-cycle gas turbine power plant.

The private sector is the single-largest contributor to economic growth in developing economies. Private enterprises not only generate most quality jobs, they also contribute to government tax revenues and introduce innovations that heighten efficiency and productivity. Yet significant challenges in business environments and gaps in financial markets in Asia and the Pacific hamper efforts to achieve more inclusive and sustainable growth.

In response, ADB continues to devise innovative approaches and apply critical thinking to maximize the potential of private enterprise to deliver on development goals.

Learn now ADB helps private companies generate development impact.

Through policy advice, technical assistance, policy-based lending, guarantees, and project lending, ADB sovereign operations help developing member countries (DMCs) create enabling market conditions and develop the institutional capacity to attract private sector investment. Through its nonsovereign operations, the bank helps raise environmental, social, and governance standards; provide financing that may not be available or is restrictive via commercial markets; and improve development outcomes.

ADB is expanding into new and frontier markets; scaling up its nonsovereign operations beyond traditional energy infrastructure and finance; and moving into environmental infrastructure, transport, information and communication technology, agribusiness, education, and health. The bank is also enhancing its local currency offerings and further developing its equity investments platform, while mobilizing more cofinancing through its credit enhancement, syndications, and asset management activities.

ADB has set a target to expand private sector operations to reach one-third of total operations in number by 2024. Solid progress was made on this undertaking in 2019, when the bank committed private sector investments for 38 projects, covering 16 different DMCs as well as 7 regional projects. Projects committed in 2019 totaled $3 billion. ADB also generated a record $6.98 billion in private sector cofinancing, almost half of which was long-term cofinancing, and mobilized $125 million from transaction advisory services.

STRATEGIC FOCUS

Addressing Remaining Poverty and
Reducing Inequalities

In 2019, ADB continued to assist in broadening access to financial services to support health care, education, and business development. The bank focused 21% of its private sector investments on inclusive business initiatives that will improve the lives of poor and disadvantaged people.

In the People’s Republic of China (PRC), ADB committed $150 million to support an innovative agreement with leasing company Far East Horizon Limited to improve 50 public hospitals across the 12 provinces where per capita income is lowest. The project will finance the lease or purchase of modern medical equipment and the construction, expansion, or refurbishment of hospital buildings and associated medical facilities. This scalable financing approach is a means of rapidly delivering improvements in hospital and medical care for people in communities where average health-care expenditure is only 40% of the level in urban areas.

In the Philippines, ADB invested a combined $12.5 million from its own funds and the Leading Asia’s Private Sector Infrastructure Fund (LEAP) to support PHINMA Education Holdings’ plan to expand capacity and acquire new tertiary education institutions. The project focuses on students from low-income households and aims to improve their access to quality tertiary education and increase their employability. The investment is projected to help PHINMA Education expand student enrollments from 68,819 to 114,000 during its first 5 years of operation.

In India, where there is an ongoing need to expand financing for micro, small, and medium-sized enterprises (MSMEs), ADB provided $150 million to Fullerton India Credit Company Limited. Financing will be extended to borrowers in lagging areas and women-led MSMEs. The project aims to reach at least 2.9 million MSME borrowers, including 2.7 million women and 950,000 MSME borrowers from underserved states.

In many remote and less-developed areas of Asia and the Pacific, access to broadband internet connections can stimulate economic growth and generate employment to reduce poverty and inequality. In December, ADB provided $50 million in funding to launch the Kacific1 satellite to deliver high-speed broadband internet to isolated areas across the region. The satellite will deliver internet that will enable better education and health services, improve access to information, and drive more trade and connectivity between countries.

Accelerating Progress
in Gender Equality

During 2019, ADB promoted the economic empowerment of women through its private sector operations by expanding their access to housing, finance, and entrepreneurial opportunities.

ADB committed a $30 million loan to ASA Philippines Foundation, a nongovernment organization that provides microfinance solely to low-income women borrowers, allowing them to meet their livelihood and business needs. The project will support at least 2 million women-owned microenterprises by 2024, especially those in conflict-affected and lagging areas.

In Georgia, where many small businesses are operated by women and basic finance can be scarce, ADB is working to expand access to affordable loans. It committed a $22.3 million loan and a $500,000 technical assistance grant for Credo Bank to launch new products, including home improvement and mortgage loans, to reach lower-income households in rural areas and on the periphery of the country’s capital of Tbilisi. The investment will allow Credo to expand its services to customers, most of whom are women, with a target of financing at least 26,000 additional low-income borrowers (half of them women) by 2023.

In Pakistan, ADB provided a $25 million loan to assist the not-for-profit Kashf Foundation, one of the country’s leading microfinance providers, in lending to low-income households and women-led MSMEs. The investment will help women to access market opportunities and maximize their commercial potential.

Tackling Climate Change, Building
Climate and Disaster Resilience, and
Enhancing Environmental Sustainability

Active private sector projects supported by ADB helped reduce greenhouse gas (GHG) emissions by a combined 18.3 million metric tons of carbon dioxide equivalent (CO2e) in 2019.

In India, ADB committed $746.2 million equivalent in Indian rupees in long-term financing—the largest single nonsovereign loan ever committed by ADB—to the Indian Railway Finance Corporation to fund a track electrification project. This is part of a broad modernization program that will help India’s railway sector transition to electric power and away from dependence on fossil fuels.

In Viet Nam, there is a need to boost the share of renewable energy in the country’s power mix and decrease dependence on coal for power generation. ADB is therefore supporting the first large-scale installation of floating solar panels in Viet Nam, which will be the largest installation in Southeast Asia. The bank committed a $37 million loan to Da Nhim–Ham Thuan–Da Mi Hydro Power Joint Stock Company for the installation of a 47.5 megawatt (MW) facility on the reservoir of the company’s existing Da Mi hydropower plant. The package includes a $17.6 million loan from ADB’s own funds, supplemented by $15 million from the Canadian Climate Fund for the Private Sector in Asia I and II, and $4.4 million from the LEAP fund, both to be administered by ADB. The project aims to generate 63,000 megawatt-hours of electricity and reduce GHG emissions by at least 30,000 metric tons of CO2e annually by 2023.

In Nepal, ADB committed a $60 million loan to Nepal Water and Energy Development Company Private Limited to help build and operate a 216 MW run-of-river hydropower plant on the Trishuli River. One of the largest private sector investments in Nepal to date, the plant is expected to provide over 1,200 gigawatt-hours (GWh) of clean electricity to the grid and reduce GHG emissions by 446,000 metric tons of CO2e annually. It will enhance Nepal’s energy security and reduce imports of electricity.

In Solomon Islands, the government has prioritized replacing diesel-fired power generation to reduce GHG emissions and drive down the electricity tariff by as much as 35% with least-cost energy generation. ADB provided public–private partnership (PPP) advisory services to the Ministry of Finance and Treasury for its first PPP, a hydropower project developed on the Tina River. The project is unique in that six concessional cofinanciers’ loans, amounting to $201 million and with varying terms and conditions, are on-lent to a private entity to construct, operate, and maintain the hydropower plant. ADB helped the ministry set up the fund administration procedure by preparing operations manuals and engaging an administrative agent. It also conformed all bilateral loan terms and conditions to reflect the on-lending agreement, coordinated discussions among cofinanciers, and assisted negotiation of bilateral loans. The advisory services provided helped build the capacity of the ministry to handle potential PPP projects in the future.

Making Cities
More Livable

In 2019, ADB facilitated private sector solutions to help make city life more sustainable. These included projects in waste-to-energy, wastewater, and transport.

Through a $100 million loan, ADB is helping Shanghai SUS Environment Company Limited deliver integrated urban waste management in the PRC. The loan will finance innovative waste-to-energy facilities in low carbon eco-industrial parks. The facilities will treat 1.8 million tons of municipal solid waste, generate 437.5 GWh of clean energy, and reduce GHG emissions by about 1.2 million metric tons of CO2e annually. ADB also committed a $60.7 million loan to Maxwealth Financial Leasing Company Limited to advance industrial and municipal wastewater treatment in the PRC. The investment will finance at least six wastewater treatment plants, helping to increase treatment capacity, improve the urban environment, and enhance quality of life for around 2.2 million residents.

In Thailand, ADB committed a $310.9 million loan for the construction of two new rail lines as part of Bangkok’s mass rapid transit system. The new lines, to be operated by the Northern Bangkok Monorail Company Limited and the Eastern Bangkok Monorail Company Limited, will reduce traffic congestion and air pollution from vehicles. The construction phase will generate 2,000 jobs, with the new lines projected to serve a combined 592,000 passengers every day when operations begin in 2030.

In the Philippines, ADB provided transaction advisory services to the Bases Conversion and Development Authority for the procurement of electric power distribution infrastructure for New Clark City, the country’s first technologically smart, environmentally sustainable metropolis. The city’s power project will introduce the Philippines’ first wide-scale, fully underground smart grid, delivering power generation efficiencies and affordability for customers.

Promoting Rural Development
and Food Security

ADB’s private sector agribusiness operations in 2019 supported climate-smart agriculture and environmentally responsible rural development.

In Kazakhstan, ADB provided a $20 million loan to RG Brands, a leading food and beverage company, to modernize its regional distribution chains. The loan will finance the purchase of 18,750 energy-efficient coolers for small convenience stores in Kazakhstan and the Kyrgyz Republic, at least half of which are owned by women. The coolers will help reduce GHG emissions by 4,200 metric tons of CO2e and improve the livelihoods of shopkeepers.

In Mongolia, the government has set development goals to enhance agricultural productivity, expand local value chains, diversify exports, and create jobs. ADB is providing a $7.4 million loan to help Milko LLC expand its raw milk and fruit procurement and dairy processing capacity. The increased procurement will benefit around 1,000 smallholder farmers and herders (the majority of them women).

In Indonesia, ADB provided a $5 million loan to PT SASL and Sons Indonesia to help develop the coconut industry in Central Sulawesi. The project will finance a modern processing plant to manufacture high-value coconut products for export, benefiting about 9,500 smallholder farmers and creating jobs for more than 1,200 people, mostly women.

Strengthening Governance and
Institutional Capacity

Through lending and technical assistance operations in 2019, ADB helped strengthen the institutional capacity of DMCs to improve their business environments for private sector development, attract investment, and foster PPPs.

In Solomon Islands and Bhutan, ADB helped expand knowledge of PPPs and develop project pipelines. The bank also helped the government establish a PPP Center of Excellence in Solomon Islands and implemented a pilot project in Bhutan.

In Thailand, where long-term development plans require the expansion of water transport services and investments in water infrastructure, an ADB training program helped the Marine Department improve its capacity to prepare and structure PPP projects for the development, operation, and management of seaport infrastructure with private sector participation. The program educated departmental staff on PPP concepts and models, the potential of PPPs to achieve national targets in the port sector, and the roles and responsibilities of stakeholders in PPP projects.

Andrew Acquaah-Harrison, Chief Executive Advisor at the GMR Megawide Cebu Airport Corporation, explains how partnership with ADB helps private sector projects deliver value to the communities they are part of.

Fostering Regional Cooperation
and Integration

In 2019, ADB committed $50 million to support regional cooperation and promote financial resilience by enabling corporations and infrastructure projects to access local currency and regional bond markets. The investment is an additional capital contribution to support continuous guarantee operations of the bank’s Credit Guarantee and Investment Facility (CGIF). ADB created the facility as a trust fund to help develop local currency and regional bond markets in the Association of Southeast Asian Nations (ASEAN)+3 region. The ASEAN+3 region is composed of Brunei Darussalam, Cambodia, the People’s Republic of China, Indonesia, Japan, the Republic of Korea, the Lao People’s Democratic Republic, Malaysia, Myanmar, the Philippines, Thailand, and Viet Nam. As of 31 December, CGIF has been able to issue 35 guarantees, with an outstanding balance of $1.91 billion. Since its inception, none of the CGIF-guarantee bonds have defaulted and no CGIF guarantee has been called upon.

ADB’s Trade Finance Program (TFP) facilitated 4,832 transactions in support of cross-border trade finance during 2019. By providing banks with guarantees and loans, the TFP helps close market gaps for trade finance, estimated in 2019 to be $1.5 trillion globally. The 2019 transactions were valued at $5.4 billion, with $3.5 billion cofinanced by banks, private insurers, and official agencies. Of the TFP’s 2019 transactions, 4,069 supported small and medium-sized enterprises (SMEs) and 1,361 supported trade between DMCs. Among the 21 countries covered by the TFP, the most active in 2019 were Armenia, Bangladesh, Mongolia, Pakistan, Sri Lanka, and Viet Nam.

In 2019, ADB’s Supply Chain Finance Program supported 577 transactions valued at $119 million, with $59.3 million cofinanced by partner financial institutions. This program works with corporates and partner financial institutions to enhance access of SME suppliers to working capital. It complements the TFP by assuming corporate risk and developing both domestic and cross-border trade. For 2019, 78% of the transactions supported SMEs.

OTHER APPROACHES TO DEVELOPING THE PRIVATE SECTOR

Widening Geographic Coverage

In many economies across Asia and the Pacific, development needs go unfinanced and unmet because of real or perceived risks of investment. ADB works to encourage private sector investment in these economies.

In 2019, the bank significantly expanded its private sector operations in new and frontier markets, including fragile and conflict-affected contexts and small island developing states.

In April, ADB approved $100 million for a renewable energy program in the Pacific, which aims to drive self-sustaining private sector development, reduce continued reliance of power utilities on grants and subsidies, and increase renewable energy supply. The program uses an innovative blend of financing support and credit enhancement to overcome barriers to private investment. It is an umbrella facility that uses donor funds to backstop payment obligations of power utilities. This is combined with a partial risk guarantee to address long-term liquidity risk and breach of contract. ADB is also sourcing and using available grant funds from development partners as a credit enhancement tool that will mobilize private financing in Pacific DMCs.

In Afghanistan, ADB is promoting renewable energy development and helping 77 Construction, Contracting, and Trading Group become the country’s first private sector-financed independent power producer. The bank provided a $4 million loan to help build a 15.1 MW solar power plant that will generate about 27.5 GWh of electricity and avoid 8,500 metric tons of CO2e GHG emissions annually. As part of the project, ADB will also administer a $3.9 million loan from the Canadian Climate Fund for the Private Sector in Asia II.

Strengthening the Finance Sector and Capital Markets

Although domestic capital markets in Asia have developed significantly over the last 20 years, many less developed countries still struggle to foster adequate financial market infrastructure and remain largely dependent on bank lending. Specialized financial products such as project bonds and climate bonds remain generally underdeveloped.

To help overcome these issues, ADB now offers financing in the local currencies of 22 DMCs, with disbursed local currencies in nonsovereign operations almost doubling from $1.03 billion in 2015 to $1.99 billion in 2019, and the percentage of local currency operations within the overall disbursed nonsovereign operations portfolio increasing from 22% to nearly 29% over the same period. Local currency loans and investments in 2019 were denominated (in descending order of magnitude) in Indian rupee, Thai baht, Chinese renminbi, Kazakhstan tenge, Georgian lari, Philippine peso, and Malaysian ringgit.

In 2019, ADB also invested in two landmark green bond issuances—the AC Energy Green Bond Project ($20 million committed in January) and the Energy Absolute Green Bond for Wind Power Project ($98.2 million, or B3 billion, committed in September). Both were the first-ever green bonds for the issuers.

Through ADB’s encouragement, AC Energy obtained the Climate Bond Standard Certified status, making the offering the first certified, publicly listed climate bond in Southeast Asia (listed on the Singapore Stock Exchange). This regional project will support private sector financing of green energy options across Southeast Asia. It contributes to the ASEAN’s objective of sourcing 23% of its member nations’ primary energy from renewable sources by 2025.

The proceeds from Energy Absolute’s bond issuance will be used to support long-term financing of the company’s 260 MW Hanuman wind farm located in Chaiyaphum Province in Thailand. The project is expected to generate 450 GWh of electricity annually and reduce GHG emissions by 200,000 metric tons of CO2e every year.

In Georgia, ADB invested $6.8 million into JSC Evex Hospitals’ corporate bond issuance. The proceeds of the issuance will be used to refinance some of Evex Hospitals’ debt and support the company to achieve better operational efficiency, quality of services, and governance. It will also support Georgia’s capital market development, particularly the deepening of its corporate debt securities and overall local currency bond market.

Using Private Equity Funds to Extend Reach

Private equity fund investments enable ADB to leverage the local knowledge of fund managers in unfamiliar markets and sectors. They also diversify risk across companies, industries, and regions to extend development impact and provide more reliable returns. ADB can partner with private equity firms to fulfill joint investment opportunities and complement the bank’s direct equity investments.

ADB’s current private equity mandate was reinforced by the findings of an independent evaluation report published in 2019. The report suggested refining the bank’s private equity funds strategy to ensure financial sustainability while prioritizing value addition and development impact. While ADB targets primarily growth equity funds in the region, it also selectively supports inclusive business and early-stage funds.

Since its first private equity fund investment in 1984, ADB has invested over $1.8 billion and mobilized $12 billion of third-party capital into more than 80 private equity funds across DMCs.

In 2019, ADB made a $5 million equity investment in Kaizen Private Equity II Private Limited, a $79 million education-focused private equity fund. Kaizen will invest in up to eight education businesses in South Asia and Southeast Asia to improve the access, quality, and affordability of education in the lower middle-market segments in those regions. In particular, Kaizen will make investments in K–12 education, preschools, online education, vocational training, and test preparation. ADB’s involvement is expected to help garner the trust of institutional financiers and enhance funding availability for the private education sector.

ADB also made a $40 million equity investment in Everbridge Partners Fund I, a targeted private equity fund to provide growth capital to middle-market companies in the health-care, business services, and consumer sectors in India, the PRC, and countries of Southeast Asia. The project will help deepen capital markets and support Asia’s growing private sector.

In India, ADB made a $10 million equity investment in Tata Capital Growth Fund II. Tata Capital will use the proceeds to invest equity capital for minority stakes in a portfolio of 10 to 12 lower middle-market companies, including SMEs. Focus sectors for the fund include financial services, health care, manufacturing, and information technology. Through the investment, ADB aims to contribute to India’s economic development by providing critical growth capital to well-managed companies, which will generate jobs in sectors servicing the country’s increasing domestic consumption and urbanization.

In the PRC, ADB made a $30 million equity investment in CDH VGC Fund, L.P. The fund will provide growth capital to about 20 private companies focusing on health care, their supply chains and/or their customers, and technology. This will help promote private sector development, encourage entrepreneurship, and support the transition of the PRC’s economy from one focused on manufacturing to one driven increasingly by technology and innovation.

SCALING UP SUPPORT FOR PUBLIC–PRIVATE PARTNERSHIPS

ADB encourages project financing in cooperation with the private sector in all its core operations. PPPs can play an important role in addressing the huge shortfall in infrastructure investment across Asia and the Pacific. By investing in new technologies, bringing innovative solutions, and encouraging more transparent organizational structures, the private sector has the potential to improve operational efficiency as well as asset and service quality.

ADB provides transaction advisory services and assists public and private sector clients in structuring and procuring viable projects, particularly PPPs.

During 2019, the bank secured 13 new transaction advisory mandates in Pakistan, Palau, the Philippines, the PRC, and Uzbekistan. These mandates include the development of information and communication technology facilities, transport infrastructure, a health-care facility, solar power plants, the rehabilitation of public schools, and the long-term operations and management of district heating facilities and water supply and sanitation services.

See how a PPP project supported by ADB transaction advisory services is building a livable, sustainable, and resilient city in the Philippines.

The Asia Pacific Project Preparation Facility (AP3F) and transaction advisory services assist DMCs and their public sector agencies to prepare and structure infrastructure projects with private sector participation, including privatization through PPPs, and bring them to the global market. Technical assistance through the AP3F was completed in 2019 to Bhutan (project definition for the Ministry of Finance), Thailand (capacity building for the Marine Department), Solomon Islands (capacity building for the PPP Center of Excellence and the Tina River hydro project), Samoa (outsourcing for the Electric Power Corporation), and Timor-Leste (support for the Tibar Bay Port PPP). During the year, the AP3F also approved 15 applications for technical assistance totaling $15.8 million. Four countries will receive project definition and capacity-building assistance, and six will receive project preparation and monitoring assistance.

CATALYZING AND MOBILIZING FINANCE

A key development challenge for Asia and the Pacific is limited available financing, whether long-term for infrastructure and other productive assets, or short-term for trade, early-stage business development, or microenterprises. Developing Asia alone will require annual infrastructure investments of $1.7 trillion per year. A notable 30% of the $1.5 trillion global trade finance gap also originates from developing Asia.

ADB continues its efforts to address these significant financing gaps. In 2019, the bank mobilized long-term cofinancing of $3.54 billion, with more than 90% coming from commercial cofinancing partners and the rest from official sources. The main cofinancing products used were parallel loans (47%), risk transfers to the private insurance market (18%), parallel equity (17%), B-loans (5%), and guarantees (4%). This cofinancing was against ADB’s own nonsovereign financing commitment of $2.36 billion, net of risk transfers.

Of the 38 nonsovereign projects signed in 2019, 19 featured cofinancing from partners.

In Pakistan, ADB extended $15 million from its own resources and raised cofinancing of $10 million through a B-loan to help expand the lending operations of microfinance institution the Kashf Foundation. The B-loan comprised $5 million from the Netherlands Development Finance Company and $5 million from responsAbility Investments, a Swiss international impact investor, contributing for the first time to an ADB-financed project.

Naseema Kosar, hard at work in her apricot drying plant. A $25 million syndicated ADB loan is helping women-led micro, small, and medium-sized enterprises in Pakistan access finance.

In Indonesia, where there is a priority to use cleaner fuels to generate electricity, ADB provided support for the construction of a 275 MW combined-cycle gas turbine power plant in Riau Province in central Sumatra. The project is expected to reduce GHG emissions by 375,000 metric tons of CO2e every year from 2022 onwards. Having committed $70 million from its own capital resources, ADB catalyzed cofinancing through an $82 million B-loan from commercial banks by providing a partial risk guarantee and another $20 million loan from the LEAP fund.

KNOWLEDGE HIGHLIGHTS

In May, ADB released the second edition of the Public–Private Partnership Monitor, which sets out the status of the PPP environment in 12 DMCs. With the aim of providing business intelligence to the private sector, the publication assesses 200 quantitative and qualitative indicators relating to regulatory frameworks, institutional capacity for implementation, PPP market maturity, and financial facilities. These assessments are intended to foster dialogue between the public and private sectors and support an enabling environment for PPPs.

Through the Trade Finance Program (TFP), ADB provided training in anti-money laundering and countering the financing of terrorism (AML/CFT) to partner banks in Bangladesh, Fiji, Pakistan, and Uzbekistan. The TFP also expanded its online training to include internationally recognized courses and certifications in AML/CFT. Since regulatory issues around AML/CFT are a major contributor to trade finance market gaps, the TFP developed a diagnostic tool, the Trade Finance Scorecard, to address these.

Next: Chapter 4  ›

At ADB, women now account for 36.6% of international staff, demonstrating good progress toward the bank’s target of 40% by the end of 2022.

ENHANCING SERVICE TO ADB MEMBERS

Improving ADB Products and Instruments

In August 2019, ADB introduced contingent disaster financing as a type of policy-based lending to help vulnerable countries prepare for, and respond to, natural hazards such as typhoons, floods, earthquakes, droughts, and tsunamis. Five Pacific island member countries are already using the modality to strengthen disaster preparedness, with quick-disbursing and flexible budget support available when disaster events occur.

September, ADB approved the use of results-based lending (RBL) as a regular financing modality for its operations. Since it was piloted by the bank in 2013, RBL has supported 19 programs developed by governments of developing member countries (DMCs), enhanced the accountability of these programs, and created incentives to deliver and sustain results. The findings from the pilot phase showed that RBL helped strengthen country ownership of development projects by linking funds disbursement with the achievement of agreed results.

In 2019, ADB increasingly used new financing modalities introduced in 2018, such as project readiness financing and small expenditure financing, in its regional operations. The bank committed over $107 million in project readiness financing in 2019. Small expenditure financing of $10 million was also approved for the Kyrgyz Republic, enabling support for small pilot projects to demonstrate new technologies, international standards, and management approaches for possible scale-up.

Throughout the year, ADB continued to provide training to ADB staff and DMC officials on its lending modalities and products. The bank conducted 22 learning events. To reach a wider audience and enhance learning, ADB also developed an e-learning module on lending modalities.

ADB Indonesia Resident Mission, Jakarta. Indonesia was a founding member of ADB in 1966. Today, it is among the bank’s largest shareholders and sovereign borrowers.

Maintaining a Strong Country Presence Through Field Offices

In 2019, ADB started a review of the operations of its field offices to help build their capacity to implement Strategy 2030. The review focuses on how ADB, through its field offices, can strengthen the quality and efficiency of its support to DMCs, including its sovereign and nonsovereign operations and knowledge services. The review is scheduled for completion in 2020.

ADB maintained its commitment to strengthen staff numbers in its field offices in 2019. More than 900 staff are based in field offices, with over 80% of the field office staff locally recruited.

See ADB’s new office in Palau, which is full of special features unique to the country.

Modernizing Business Processes and Improving Operational Efficiency

In 2019, ADB continued efforts to modernize its business processes and improve operational efficiency.

In order to improve process efficiency and reflect the new operational priorities of Strategy 2030, ADB updated operations manuals and staff instructions on bank policies and financing modalities. These included the templates for country partnership strategies and approvals for sovereign operations and the operations manual and staff instructions for small expenditure financing facilities.

Promoting Digital Transformation

Critical to delivering on Strategy 2030, ADB accelerated its information technology (IT) reforms and digital transformation initiatives. It adopted a cloud-based content and telecommunication platform to improve collaboration and sustainability and increase mobility and resiliency. The 27 new digital products introduced include a customer relationship management system that tracks leads and activities and a loan system for guarantees for nonsovereign operations. The e-procurement system was deployed to 25 field offices to increase efficiency. An integrated partner fund accounting system was also delivered, streamlining and automating processes for income and cost allocations reporting. A modern IT service desk system was delivered to improve internal IT support services. A new procurement complaints system was also implemented, while IT services supported the establishment of new ADB offices in the Pacific. These reforms and digital transformational initiatives—taken together as a whole—allowed ADB to transition smoothly and effectively, without disruption to its operations, to work-from-home arrangements for all staff beginning March 2020 during the COVID-19 pandemic.

Following the approval of the first stage of ADB’s Digital Agenda 2030, the bank established governance mechanisms for effective budget and project management and benefits tracking. It initiated 12 new projects, including the design of a new sovereign operations system. ADB also established a digital innovation sandbox program, which will enable the application of artificial intelligence and robotic process automation to be explored. Improving data quality continues to be a priority for the bank, including the establishment of a corporate data dictionary.

ADB received a 2019 CIO 100 Award for its use of cloud computing to optimize business processes. The awards celebrate the innovative use of IT to deliver business value.

Achieving Timely and Value-for-Money Procurement

After signing a procurement framework agreement with the World Bank in December 2018, ADB signed a similar agreement with the European Bank for Reconstruction and Development in November 2019.

At the project level, ADB signed project implementation agreements that allow the use of the procurement rules and procedures of the World Bank and the European Bank for Reconstruction and Development for two water projects in the Pacific (in Kiribati and Solomon Islands) and one power project in Uzbekistan cofinanced by ADB.

In April 2019, ADB launched e-learning modules on its new procurement framework to help the bank’s staff and borrowers apply the framework. This was supported by a series of guidance notes and videos. ADB also held 54 capacity-building events and trained more than 1,800 participants on the new framework.

Strengthening and Use of Country Safeguards

In 2019, ADB continued to support the governments of Indonesia and Sri Lanka in undertaking diagnostic studies for use of country safeguards in ADB-supported operations. The bank also updated preliminary country safeguard assessments for Bangladesh, Bhutan, Myanmar, and Viet Nam. Across the year, ADB delivered safeguards training programs on the environment, indigenous peoples, and resettlement, with each attended by staff, executing and/or implementing agencies, and other stakeholders. The bank also initiated a study of project-level grievance redress mechanisms across ADB-supported projects. Throughout 2019, all ADB projects were assessed for environmental and social impacts, as required by the bank’s Safeguard Policy Statement.

Addressing the Concerns of People Affected by ADB Projects

In 2019, the ADB Accountability Mechanism—an independent forum that allows people adversely affected by ADB-supported projects to voice complaints and seek solutions—received 37 complaints (compared to 39 in 2018). Of these, 2 requested compliance review (one was deemed ineligible by the Compliance Review Panel and the other was still being processed at year-end), 10 requested problem-solving, and 3 were identified as eligible by the Special Project Facilitator. There was 1 complaint pending with the Complaint Receiving Officer and 24 were closed for failure to comply with the minimum requirements under the policy.

The Office of the Compliance Review Panel held 10 outreach events in various DMCs and published guidance on compliance review. It also organized workshops that produced a working draft of a regional and national accountability mechanism framework for financial intermediaries. The Office of the Special Project Facilitator conducted 10 training programs on grievance redress mechanisms and problem-solving, attended by ADB staff and executing and/or implementing agencies from DMCs.

A joint learning report—a collaboration between the two offices mentioned above, the Independent Evaluation Department, and the Sustainable Development and Climate Change Department—analyzed the complaints received by the Accountability Mechanism from 2016 to 2018 (when the mechanism received the highest number of complaints since its inception in 2002). The report recommends improving risk screening as part of project-level safeguards and enhancing the effectiveness of project-level grievance redress mechanisms.

Strengthening Collaboration with Civil Society Organizations

During 2019, ADB deepened its engagement with civil society organizations (CSOs) in Mongolia and Georgia. In Mongolia, ADB and CSOs helped community members develop a transport project in ger areas (tent communities). In Georgia, CSOs and government officials participated in training courses to strengthen collaboration on ADB-financed projects. CSOs and ADB staff also worked together to identify the environmental aspects of a proposed transport project in Georgia.

ADB engaged with CSOs at a number of key events in 2019. At the 52nd ADB annual meeting in Fiji, about 140 CSO representatives joined discussions on the bank’s draft operational plans for Strategy 2030. At the 7th Asian Youth Forum, ADB project officers and CSO representatives designed 70 youth-led solutions in road safety, ocean health, youth and disability, jobs and livelihoods, and livable cities. The forum attracted over 300 young people and development stakeholders from 28 countries.

ADB also launched an interactive suite of tools for ADB staff, government officials, and CSOs on the bank’s Development Asia website. These tools provide a range of options for deepening civil society engagement in the Pacific.

ADB’s Asian Youth Forum celebrates young people’s role as partners and beneficiaries in advancing development throughout the region. The 7th Asian Youth Forum was held at ADB headquarters in August.

STRENGTHENING ADB AS AN INSTITUTION

Ensuring a Robust Resource Base

In February 2019, ADB completed the midterm review of Asian Development Fund 12 and, in November, the bank began negotiations with donors for the replenishment of Asian Development Fund 13, along with the replenishment of Technical Assistance Special Fund 7.

Treasury

In 2019, the Treasury Department led a new technical assistance project to build capacity in sovereign asset and liability management. It launched its first secured overnight financing rate-linked bond and continued to offer sterling overnight index average-linked bonds and green bonds. Green bonds and thematic bonds provide an opportunity for socially responsible investors to invest in ADB projects in climate financing and development areas such as water, gender, and health. The bank continued to expand its local currency borrowing and initiatives, reaching 23 member currencies.

In 2019, ADB issued thematic bonds and green bonds amounting to $2.7 billion in Australian dollars, euros, Hong Kong dollars, Norwegian kroner, pounds sterling, and Swedish kronor. The bank’s outstanding green bonds at year-end totaled about $6.8 billion ($5 billion in 2018), while outstanding thematic bonds totaled $102 million for water, $189 million for gender, and $110 million for health.

Audit

The Office of the Auditor General (OAG) issued 13 audit and 8 advisory reports in 2019. These covered operations, administration and operations support, finance and risk, and IT.

The OAG continued to support ADB’s regional departments in helping DMCs strengthen public sector internal audit offices. In August 2019, the OAG hosted an academic forum on applying digital technology to internal auditing. The dialogue with academic leaders from universities in Asia and the Pacific, Europe, and North America provided insights on practical digital technology solutions for internal auditors in public sector institutions.

During the year, the OAG continued to adopt advanced technology and innovative practices in internal audit. It piloted the use of drones in one of its country portfolio audits to capture bird’s-eye views of project sites and is exploring the use of drones to improve asset inventory for complex site visits. The OAG also expanded its annual country risk assessment model and built an automated validation tool for loan covenants.

ADB is piloting the use of drones and robotic process automation to support internal audit and boost efficiency.

Risk Management

In 2019, ADB devoted substantial resources to monitoring, mitigating, and managing the risks associated with its operations. These include cyber threats and risks to business continuity, credit, and treasury operations. The bank strengthened the knowledge base of its risk professionals to support ADB’s expanding nonsovereign operations, reinforced its risk governance framework, and implemented a new information system to support and protect the use of structured derivatives.

ADB reviewed its capital adequacy framework in light of Strategy 2030, reassessed its loss provisioning policy to allow for new accounting standards for expected credit losses, and provided technical assistance to regional financial institutions to expand their knowledge and capabilities in risk management.

Administrative Expenses

ADB continues to rationalize internal administrative spending and improve cost efficiency. Among major contributors to cost efficiency are IT reforms, operational efficiency improvements, and measures to strengthen budget management and improve resource efficiency in ADB’s administrative services.

Enhancing Human Resources

Human Resource Management

ADB’s career opportunities continued to attract strong interest in 2019, with 493 job openings generating 41,275 applications from 66 of its 68 members. ADB implemented various recruitment initiatives to bring in staff with specialist skills in project design for sovereign operations, expand the bank’s nonsovereign operations, and increase its staff presence in the Pacific. As a result, ADB recruited 371 specialists in 2019, including 9 new staff for the bank’s Pacific country offices. There was also a rise in uptake of ADB’s secondment and internship programs, which hosted 41 secondees and 37 graduate students as interns, respectively.

In December, ADB began using artificial intelligence to enhance its recruitment and selection processes, with the introduction of “MARI,” the bank’s artificial intelligence chatbot. MARI allows ADB to screen applicants more efficiently and enables real-time interaction to improve the recruitment experience for candidates.

ADB also commissioned an independent gender pay gap study. The findings showed that there are no significant or unexplained gaps in pay between women and men in comparable roles at ADB. The bank has continued to focus on hiring and retaining women in senior roles. Women now account for 36.6% of ADB’s international staff, demonstrating good progress toward the target of 40% by the end of 2022.

These initiatives saw ADB receive Economic Dividends for Gender Equality (EDGE) Move (level 2) certification. EDGE is the leading standard for workplace gender equality, and ADB is the first international financial institution certified with EDGE level 2.

ADB has made progress toward workplace gender equality and will continue this sustained focus and commitment.

Maintaining its strong culture of diversity and inclusion, ADB supported its lesbian, gay, bisexual, transgender, and related communities (LGBT+) in celebrating International Day Against Homophobia, Transphobia, and Biphobia and the LGBT+ Pride celebration month.

ADB also developed a human resource framework to support the implementation of Strategy 2030. The framework includes initiatives on employment agility, talent management, job architecture, investment in human capital, and corporate culture and values.

Learning and Development

ADB continued to support the career development and growth of its staff and encouraged the sharing of knowledge and expertise across its departments, locations, and job roles.

In 2019, 72 staff participated in rotation programs and short-term assignments, broadening their skills and knowledge and enhancing their workplace experiences as they engaged in work with a different department or region.

ADB updated its executive leadership program, launched three new leadership programs, and introduced an executive coaching program. The suite of practical programs now targets leaders at all levels of the organization, with a focus on fostering innovation and collaboration. In 2019, 82 staff participated in the leadership programs and 6 staff commenced executive coaching.

To encourage supervisors and their teams to embrace a performance culture, 11% of ADB supervisors completed training to improve team performance in 2019.

Conflict Management

In 2019, ADB sought to manage conflict within the organization more proactively by involving the Office of the Ombudsperson earlier in the conflict resolution process. In 2019, this independent office helped address approximately 450 cases that involved over 650 individuals.

The office also hosted the 4th annual conference of the Asia Pacific Ombuds Regional Advisory Committee, providing an opportunity to share knowledge with professionals in ADB member countries.

Leading Anticorruption and Integrity Initiatives

ADB’s Office of Anticorruption and Integrity (OAI) improved the efficiency of its investigative process in 2019. This resulted in a record number of closed complaints and investigations (up 16% and 93%, respectively, from 2018) and an increase in remedial actions imposed on external parties, including debarments and reprimands (up 47% from 2018).

The OAI expanded its in-country partnerships with eight DMCs in Central and West Asia, Southeast Asia, and the Pacific, helping to strengthen tax integrity policy and law reforms. It also assisted seven DMCs in Central and West Asia, East Asia, South Asia, and Southeast Asia to strengthen governance, institutional capacity, and compliance with international standards for anti-money laundering and combating the financing of terrorism.

A review of ADB’s Respectful Workplace Unit’s pilot period affirmed the value of the unit, which in 2019 served 107 visitors. Based on the review, an Office of Professional Conduct—which will raise awareness, deliver training, and advise staff on workplace concerns—was established.The OAI will continue to investigate workplace misconduct.

The OAI conducted eight proactive integrity reviews of projects valued at a total of $1.8 billion, including an emergency assistance project. It organized 98 outreach events catering to over 8,700 participants, supported high-level learning events across Asia, contributed to the G20 anticorruption working group, and launched ADB’s first gamified e-learning course.

Strengthening Disclosure and Transparency

ADB’s Access to Information Policy came into effect on 1 January 2019. In 2019, ADB proactively disclosed to the public 4,930 project documents.

ADB recognizes the right of people to seek and receive information about its operations. In 2019, the bank received 4,209 formal requests for information. Of these, 3,544 (84%) were deemed valid and the rest were identified as spam. ADB acknowledged 69% of the valid requests within the required 7 days and responded to 83% within the required 30 days. ADB responded to 93% of the valid requests by the end of the year.

Providing Legal Services

The Office of the General Counsel (OGC) contributed legal perspectives to key ADB policies in 2019. It helped develop policies on the diversification of financing terms for regular ordinary capital resources sovereign lending operations and contingent disaster financing, and on the implementation of project readiness financing and the small expenditure financing facility. The OGC successfully concluded host country agreements with Singapore and for six ADB country offices in the Pacific. It also supported the processing of ADB’s sovereign, nonsovereign, and transaction advisory projects, and implementation of its borrowing program.

The OGC’s role in law and policy reform work in 2019 included supporting Papua New Guinea in its enactment of an arbitration law and accession to the United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards. The office also conducted a nationwide judicial training program in Pakistan to prepare judges for the establishment of gender-based violence courts, as well as supporting the Philippines in its enactment of a new Islamic banking law.

ADB staff member at the Tajikistan Resident Mission. ADB established a new team to provide administrative services support to its field offices.

Delivering Effective Administrative Services

In January 2019, ADB established a new team to provide administrative services support to its field offices. This team coordinates action on requests that relate to field office creation, expansion, or relocation. The team helped establish a new field office in Singapore and two in the Pacific. It also assisted in relocating five field offices and coordinated the expansion of another seven.

ADB’s corporate e-procurement system—which reduces purchase processing times, enhances sourcing, and provides auditable processes—was fully implemented into the bank’s Manila headquarters in 2019. The system was launched into ADB field offices starting March 2019.

ADB extended measures to ensure business continuity—responding to unforeseen circumstances or changes in the operational environment—to its regional and operational departments. As well as providing crisis management training for staff, the bank deployed new technologies and training packages to help keep staff appraised of changing security situations and provided assistance when needed. ADB also launched an entry access project that will substantially modernize security arrangements at headquarters and serve as a baseline for security measures at its field offices.

In addition to using renewable energy to power the building, ADB ensures that activities at headquarters are carbon neutral by purchasing credits for unavoidable emissions. In 2019, the bank purchased carbon credits to offset emissions made from 2016 to 2018.

Since ADB promotes a working environment that encourages staff interaction and the exchange of ideas, several workspace fit-outs were completed that showcase modern approaches to more open workplace communication and collaboration.

Next: Appendixes  ›

The demand for ADB assistance remained strong in 2019 and our activities strongly aligned with the priorities of Strategy 2030. Masatsugu Asakawa, ADB President

ADB Armenia Resident Mission, Yerevan.