Partnership Framework Arrangements

Partnership framework arrangements (PFAs), also expressed as framework cofinancing arrangements (FCAs), memoranda of understanding (MOU), and similar terms, facilitate better strategic collaboration, cooperation, and complementarity. PFAs involve a funding envelope to cover a broad range of planned and coordinated cofinancing activities over a period. They also serve as a tool for surfacing and resolving concerns that may arise during project negotiations. In 2019, ADB had active PFAs with 11 financing partners, with a total funding envelope of $20.25 billion.

PFAs can come in different forms—from a memorandum of understanding to an aide memoire to a framework cofinancing agreement─ depending on the preferences and limitations of a financing partner. For instance, ADB and the Agence Française de Développement (AFD) have a Partnership Framework Arrangement, ADB and the Eurasian Development Bank have a Framework Cofinancing Arrangement, and ADB and KfW have a Memorandum of Agreement.

Energy Expansion. The need to upgrade and expand Bangladesh’s transmission network is critical. Economic growth and increased power demand have congested its power grid in recent years. The Bangladesh: Dhaka and Western Zone Transmission Grid Expansion Project is helping address this concern, by enhancing power transfer capacity to the country’s load centers in the southern and western zones. The Asian Infrastructure Investment Bank is cofinancing this project, helping ensure financing for transmission lines, substations, and in improving institutional capacity.

Generally, PFAs detail the guiding principles of the partnership, the institutions’ common objectives, the scope of their cooperation and activities, and processes for monitoring, reporting, information exchange, and evaluation. PFAs may be updated through exchanges of letters. Specifically, PFAs

  • formalize the country, sector, and drivers of change priorities of the financing partner
  • establish the terms and mode of cofinancing
  • identify the roles and responsibilities of each party (such as project administration and information sharing)
  • indicate the financing partner’s amount available for cofinancing over a period

ADB’s first PFA was with the Government of Japan in 2007. This PFA, which they formalized as the “Framework Agreement for the Implementation of the Accelerated Cofinancing Scheme,” committed between $1 billion and $2 billion (equivalent) over 5 years for projects that enhance climate investments, strengthen regional cooperation, and support energy efficiency for countries in Central Asia, the Caucasus, and the Pacific. This was followed by agreements with the Republic of Korea and the Islamic Development Bank (IsDB) in 2008, the People’s Republic of China in 2009, and France’s AFD in 2010.

In 2019, ADB had active PFAs with 11 financing partners, with a total funding envelope of about $20.25 billion. Two were expanded in 2019—those for the Agence Française de Développement (AFD) and the KfW—and one was newly signed with the Asian Infrastructure Investment Bank (AIIB). Under all active PFAs, ten projects amounting to $3.74 billion were signed in 2019. This represents 77% of sovereign cofinancing operations for the year.

In the details below, figures for cumulative commitment include all PFAs from inception, not just the utilization for the latest active PFA.

ACTIVE PARTNERSHIP FRAMEWORK AGREEMENTS IN 2019

Abu Dhabi Fund for Development
Memorandum of Understanding

2015 to 2020

Cumulative Commitment for Projects

$30 million for 1 project

ADB and the Abu Dhabi Fund for Development (ADFD) signed their MOU on Establishing Cooperation Arrangements in February 2012. They extended it in September 2015 to cover collaboration from 2015 until 2020. Under this arrangement, ADFD provided $30 million to cofinance a transport project in 2019.

The arrangement between ADB and ADFD provides a general framework for both institutions to develop and undertake collaborative work to pursue common objectives more strategically and effectively. Their priority sectors of cooperation are education, energy, finance, health, regional initiatives, trade, transport, and urban services.

Agence Française de Développement
Partnership Framework Arrangement

(2016 to 2022) $4 billion

Cumulative Commitment for Projects

$2.65 billion for 30 Projects

ADB’s and Agence Française de Développement (AFD)’s partnership is built on their common goal of inclusive development and sustainable growth in Asia and the Pacific. In 2019, these two institutions strengthened their partnership by amending their existing PFA– originally signed in 2016–to increase their commitments from $1.5 billion each for the first 3 years to $2.5 billion each for the succeeding 3 years. In the first 3 years of the PFA, the two have exceeded their original individual commitment of $1.5 million, with France committing $1.58 billion. Two projects were committed for cofinancing under this arrangement in 2019– the Green Power Development and Energy Efficiency Improvement Investment Program—Tranche 2 in Sri Lanka and the Shandong Green Development Fund in the People’s Republic of China.

The PFA details the two organizations’ arrangements on enhancing institutional, research, and knowledge cooperation. It also reflects how they will pursue their operational cooperation in the form of cofinancing, joint research and development of knowledge products, a staff exchange program, and regular policy dialogue in the spirit of the Paris Declaration on Aid Effectiveness.

Asian Infrastructure Investment Bank (new)
Memorandum of Understanding

2019 to 2022

Cumulative Commitment for Projects

$200 million for 1 Project

ADB and the Asian Infrastructure Investment Bank (AIIB) signed their cofinancing framework agreement in March 2019. This new agreement guides the two organizations’ collaboration going forward and builds on their previous MOU on Strengthening Cooperation, which they signed in May 2016.

In 2019, three sovereign projects were committed for cofinancing with AIIB while several others are in the pipeline. They cofinanced the Dhaka and Western Zone Transmission Grid Expansion in 2019. ADB and AIIB are working together to improve economic and social development in Asia through cofinancing of infrastructure projects.

Eurasian Development Bank
Framework Cofinancing Agreement

(2016 to 2021) $1 billion

Cumulative Commitment for Projects

$395 million for 4 Project

ADB and the Eurasian Development Bank (EDB) first signed a framework cofinancing agreement in 2013, targeting $715 million for cofinancing ADB projects from 2013-2016. In 2016, they signed a new one for 2016-2020, targeting $1 billion cofinancing. To date, about $395 million for four projects have been committed under the FCA, which facilitates both parties’ collaboration in the sectors of agriculture, energy, public service, and transport. Their partnership covers work in their common member countries such as Armenia, Kazakhstan, Kyrgyz Republic, and Tajikistan.

International Fund for Agricultural Development
Framework Cofinancing Agreement

2018 to 2023

Cumulative Commitment for Projects

$120 million for 3 projects

ADB and the International Fund for Agricultural Development (IFAD) have two agreements, an MOU signed in 2003 and an FCA in 2004. The FCA was extended in 2018 to cover the period from 2018 to 2023. This agreement helps both institutes to identify different financing modes that can be used to support agricultural projects and activities in priority countries. It also enables them to work together in ensuring agricultural development and food security in select countries in Asia and the Pacific.

Islamic Development Bank
Framework Cofinancing Agreement

(2018 to 2022) $2 billion

Cumulative Commitment for Projects

$1.76 billion for 11 projects

ADB’s and Islamic Development Bank’s (IsDB) ongoing FCA was signed in 2017 and covers the period from 2018 to 2022. Under this agreement, IsDB committed $1.59 for ten projects. This arrangement builds on previous FCAs between the two, the first of which was signed in 2008.

ADB and IsDB focus on initiatives that hasten economic growth and improve the quality of life in their common member countries. Their projects have provided key infrastructure in Afghanistan, Azerbaijan, Bangladesh, Indonesia, Kazakhstan, Kyrgyz Republic, Maldives, Pakistan, Tajikistan, Turkmenistan, and Uzbekistan. Although the bulk of their projects focuses on power and transport connectivity, they also prioritize projects in the fields of education, urban development, agriculture, health, regional cooperation, private sector development, and public-private partnership.

Japan International Cooperation Agency
Memorandum of Understanding

(2015 to 2020) $10 billion

Cumulative Commitment for Projects

$3.89 billion for 8 projects

ADB and JICA signed a Memorandum of Understanding for Strategic Partnership for Sustainable and Inclusive Development through the Promotion of Quality Infrastructure Investment in Asia and the Pacific in 2015. Under this MOU, both agreed to provide about $10 billion in combined cofinancing to sovereign borrowers from 2016 to 2020. As of 31 December 2019, the combined cofinancing amount approved by ADB and JICA is roughly $7.3 billion– $2.37 billion by ADB and $3.89 billion by JICA. This includes a transport project in the Philippines. The agreement focuses on projects that promote resilience against natural disasters, reduction in environmental burdens and social costs, economic efficiency, safety in use and operation, and development of local human resources.

In addition, ADB and JICA also signed an MOU establishing the Leading Asia’s Private Sector Infrastructure Fund (LEAP), with equity of $1.5 billion from JICA. LEAP aims to stimulate investment in quality and sustainable private sector infrastructure in Asia and the Pacific, including through public-private partnerships.

KfW
Memorandum of Understanding

(2020 TO 2023) $2 billion

Cumulative Commitment for Projects

$4 billion for 19 projects

In November 2019, ADB and KfW, the German state-owned development bank, expanded their existing cofinancing partnership with an additional $2 billion over the next 4 years to support continued economic development in Asia and Pacific Region. This revised MOU for cofinancing expands the previous $2 billion cofinancing partnership that ADB and KfW launched in 2014 and renewed in 2017 for an additional $2 billion. Three projects were cofinanced in 2019 under this arrangement: Green Energy Corridor and Grid Strengthening in India; Fiscal and Public Expenditure Management Program-Subprogram 3 in Indonesia, and the Shandong Green Development Fund in the People’s Republic of China.

From 2014 to 2019, their collaboration has produced 14 cofinanced projects. Their sectors of common interest include renewable energy and energy efficiency, urban infrastructure including urban mobility and climate finance, small and medium-sized enterprises financing and financial inclusion, health, vocational training, and regional integration.

Nordic Development Fund
Memorandum of Understanding

2011 onwards

Cumulative Commitment for Projects

$45.7 million for 18 projects

*Cumulative commitment includes one non-sovereign technical assistance

ADB’s and the Nordic Development Fund’s (NDF) ongoing collaboration is under an MOU, signed in January 2011, for institutional cooperation and cofinancing of programs and projects. This arrangement specified the type of initiatives the fund supports, which includes projects on climate change mitigation and adaptation. To date, this partnership has cofinanced 19 projects.

ADB and NDF work on projects in the fields of energy, infrastructure, and natural resources sectors. NDF projects are currently concentrated in Bangladesh, Cambodia, the Lao People’s Democratic Republic, Nepal, Sri Lanka, and Viet Nam.

OPEC Fund for International Development
Framework Cofinancing Agreement

(2016 to 2021) $600 million

Cumulative Commitment for Projects

$236 million for 11 Projects

ADB’s and the OPEC Fund for International Development’s (OFID) ongoing collaboration is through an FCA they signed in August 2016 that runs through to 2021. This FCA provided $600 million in cofinancing for projects from 2016 to 2021 and expands the previous MOU they both signed in April 2015.

ADB and OFID support projects focused on energy (renewable energy and energy efficiency), transport, agriculture, water supply and sanitation, education, and health. In 2019, the Central Asia Regional Economic Cooperation Corridors 2, 3, and 5 project in Tajikistan was cofinanced under this arrangement.

Republic of Korea (Ministry of Economy and Finance)
Memorandum of Understanding

(2018 to 2020) $650 million

Cumulative Commitment for Projects

$1.82 billion for 20 projects

The current partnership of ADB and the Republic of Korea’s Ministry of Economy and Finance is under an MOU signed in May 2018. This agreement builds on the gains of their two previous MOUs signed in 2011 and 2015, and their original FCA signed in 2008.

The 2018 MOU runs until 2020 and details Korea’s commitment to provide $650 million of concessional loans to cofinance ADB projects and programs. Projects under this MOU focus on transport, energy, environment, health, public governance and education. The MOU also prioritizes information and communication technology (ICT)-based projects. In 2019, two projects were cofinanced under this MOU: the Ulaanbaatar Air Quality Improvement Program in Mongolia and the Energy Sector Reforms and Financial Sustainability Program—Subprogram 1 in Pakistan.