Farewell Address - Takehiko Nakao

Speech | 16 January 2020

Farewell address by Takehiko Nakao, President, Asian Development Bank, 16 January 2020, ADB headquarters, Manila, Philippines

1. Introduction

Good afternoon.

The Honorable Carlos G. Dominguez, Secretary of Finance, and Governor of the Philippines in the ADB; The Honorable Benjamin E. Diokno, Governor of the Central Bank, and Alternate Governor of the Philippines in the ADB; Mr. Ernesto Abella, Undersecretary of the Department of Foreign Affairs; distinguished guests, ADB Board members, colleagues, friends, ladies and gentlemen.

Thank you very much for coming to this event. I am very pleased that so many fellow staff, including from Resident Missions by video link, and spouses have joined us this afternoon.

I am so grateful for the kind remarks by Secretary Dominguez, Vice President Deborah Stokes, Staff Council Chairperson Au Shion Yee, and Executive Director and Dean of the Board of Directors, Syurkani Ishak Kasim.

This is the last day for me as the President of Asian Development Bank (ADB). I became the President on April 28, 2013 and have served this bank for almost seven years.

During these seven years, I have visited almost all member economies, and have been to many of them multiple times. In total, I have been on missions abroad 131 times amounting to 750 days. I met with state leaders, ministers, and senior officials, and exchanged views with scholars, students, business leaders, entrepreneurs, civil society organizations, and media. I have visited many ADB project sites on the ground and had opportunities to talk with people who are beneficiary from these projects. Every time I visited countries, I felt people’s enthusiasm for development, profound histories, and pride for their respective cultures.           

During the past years, with support from member governments, Board members, management team, and staff, we have achieved many things. My time at ADB has been rewarding. I am departing ADB with a deep sense of satisfaction and gratitude.

2. Changes in Asia

When I visited Beijing in the beginning of December last year as my last mission abroad, I attended an interview program by a Chinese English TV network. A reporter asked me what were the main changes in the region during my presidency at ADB. Although this broad question was not expected, I mentioned three points which I had had in my mind.

The first is the growing presence of Asia in the global economy. While the world economic growth has been slow after the global financial crisis, Asian economies have continued solid growth and their collective share of the world economy has increased considerably. In many countries, economic fundamentals are sound, and growth momentum is maintained.    

The second change is that we are now seeing clearer signs of impact from new technologies. Digital technologies, artificial intelligence, big data and other advanced technologies have great potential to improve life of people and contribute to narrowing various gaps in the society. But there are also risks related to increasing income inequality, privacy and jobs.

The third change is political and geopolitical, reflecting evolutions of globalization, new technologies, larger presence of emerging economies, and others. Multilateralism has been called into question. Also, new international players such as Asian Infrastructure Investment Bank (AIIB) and New Development Bank (NDB) have been established.

3. Growing roles of ADB

In such changing circumstances, I believe the role of ADB to support development of member countries and promote cooperation in the Asia and Pacific region and beyond is becoming even more important. To fulfill its role and to be appreciated by its member governments, ADB must continue to change and reform itself.   

First, ADB must effectively combine finance with knowledge. Today, many member countries can finance their projects by themselves and have strengthened their capacity to prepare and implement projects. It is imperative that ADB strengthens its own expertise and knowledge. There are opportunities to make best use of advanced technologies in ADB’s operations in such areas as energy, transport, water, agriculture, education, health, and financial services.

I wish ADB’s sector and thematic groups, which we established during my term, will continue to promote “One ADB” approach and help build and share knowledge across departments. ADB’s expertise in safeguard policies for environmental and social impacts, procurement, economic research, treasury operations, legal affairs, risk management, and independent evaluation are all essential sources of our knowledge service to member countries. The book we published just yesterday, Asia’s Journey to Prosperity, is a comprehensive account of Asia’s 50 years of development experiences. This is one important example of ADB’s contribution to producing Asia-based knowledge.

Second, we must maintain our efforts to strengthen ADB’s financing capacity. The reform of 2017 to merge the concessional lending operation of the Asian Development Fund (ADF) into the Ordinary Capital Resources (OCR) brought a much larger combined equity and enabled expansion of both regular and concessional lending operations. ADB’s annual lending operations increased from $14 billion in 2013 to $22 billion in 2019.

ADB must continue to have sufficient scale of lending and grant operations so that it keeps its presence and relevance in the Asia and Pacific region while minimizing the burden of capital increases on member and ADF donor governments. With this objective in mind, member and ADF donor countries as well as borrowing countries must continue to examine the options for ADB’s future and consider their respective roles. ADB itself must also continue to make the utmost effort to save on its administrative costs.

In relation to ADB’s financing capacity, I am encouraged by two achievements last fall. One is the reform to introduce differentiated pricing in which more developed borrowing countries pay higher interest rates. I appreciate many developing member countries for supporting this reform. Another is a broad support to the direction of ADF13 replenishment at the donor meeting. This ADF replenishment covers years 2021 to 2024, and aims to strengthen grant support for poorer and more fragile countries in important areas, including climate change and gender equality.     

Third, ADB should play an important role in tackling the global agenda in areas such as climate change, ocean health, Sustainable Development Goals (SDGs), high quality infrastructure, and universal health coverage. To pursue these international initiatives, the functions of multilateral institutions such as ADB are crucial. In this context, I am pleased to report that we have achieved one year earlier in 2019, our commitment of doubling ADB’s climate finance for mitigation and adaptation. We had announced this target in the runup to the COP21 in 2015, ahead of others, and last year’s approval of climate finance amounted to $6.2 billion.

Fourth, we should enhance our cooperation with private sector, bilateral and multilateral development partners and civil society organizations. Our lending and equity investment to private companies will promote private sector involvement in meeting development objectives in developing member countries. It is also crucial to mobilize private sector resources by facilitating public-private partnerships. We can further strengthen our work with development partners and private sector through cofinancing and risk sharing.

Fifth, in order to fulfill our roles, we should keep recalling the first ADB President Takeshi Watanabe’s motto of “learning before teaching”. Our member governments are making serious efforts for development under various constraints. We must closely listen to views regarding countries’ situations, reflect these on planning our operations, and implement projects expeditiously while observing ADB’s standards.

4. My requests to staff

As I am now departing this institution, I would like to ask staff to remember three things.

First, focus on clarity and value addition. Without blurring by beautiful rhetoric, please make clear what is our objective in each of ADB’s operations and how we are working toward it. And please make sure that what you do has real value addition. In the context of our knowledge work, please aim at creating knowledge which has originality and global impact, without easily depending on the established external authority.

Second, show courage to change and a willingness to challenge. As Asia and the world are evolving, the needs of ADB’s developing member countries are also evolving and diversifying.  If we cannot reform ourselves, our relevance in the region will diminish. Especially, I urge managers in ADB to have the courage to change, to communicate well with colleagues, and to be open to new ideas. Likewise, I want younger staff to keep the willingness to challenge the status quo and express their ideas freely.

Third, take pride and be humble. ADB is such a unique organization in the region which has functions of both implementing projects and offering knowledge, and promoting friendship and cooperation between countries. Please have a strong sense of pride to work here and contribute to development of the region. At the same time, I want you to have a sense of humbleness. Please always be reminded that ADB is supported through the contribution of taxpayers in our member countries and that ADB is working first and foremost for poor people in the region.

5. Toward the future

Our region has the great potential to promote further development. But we cannot be complacent. There remain persistent poverty, large gender gap, and other challenges such as climate change, urbanization and aging. ADB has the mission to help countries tackle these challenges.   

I am happy that my presidency is succeeded by Mr. Masatsugu Asakawa who has long experiences in international finance and development. I myself have worked with him on multiple occasions and have trust in him. Please continue to pursue our mission as “One ADB” under his leadership.  

Here, I want to express my sincere gratitude to our host country the Philippines. It is fortunate that ADB headquarters is in Manila. We benefit from diligent, kind and capable Filipino staff. I appreciate Secretary Dominguez to have offered many precious advices to me.  It is very encouraging to see how collaboration between the Philippine government and ADB has been strengthened significantly in the recent years.   

I thank my wife Asako and two sons who have lived in Manila with me. They always supported and encouraged me. I would like to thank the ADB Spouses’ Association for providing great help to Asako and for nurturing the sense of community at ADB.   

Finally, I would like to express my heartfelt gratitude, again, to governments of ADB member economies, Board members, management team, current and past advisors to me, and Sheila and Lynn who have cared for me with dedication.  I cannot praise enough the great work of fellow staff at the headquarters and field offices, and the tremendous support of their families. I would like to offer special thanks to Odon, who has always served good coffee and tea; the police officers, security staff and drivers, who have closely followed me wherever I go; staff engaged in facility and food services; and everyone else who has supported me during the past seven years.

I wish all the best to you and ADB. Thank you very much.