Welcoming Remarks by ADB President Takehiko Nakao at the Fourth Forum on Successful Project Design and Implementation on 23 October 2018 at ADB headquarters in Manila, Philippines
Good morning. Welcome to the Fourth Forum on Successful Project Design and Implementation. This is a capacity building program for representatives from executing agencies (EAs) and implementing agencies (IAs).
I am pleased that we have 102 participants from 37 ADB member countries here today. The program provides an excellent opportunity for ADB to strengthen our collaboration with executing and implementing agencies on the design, implementation, and monitoring of projects to ensure high development impact.
This forum was started in 2013. The program this year is especially important as it takes place as ADB begins to implement Strategy 2030, which sets the future direction for our efforts to respond to the region’s changing needs.
The demands of ADB’s developing member countries are becoming ever more sophisticated and they span different sectors and themes. Our members value ADB as a comprehensive provider of finance, knowledge, partnerships, and project development.
In line with our aspirations under Strategy 2030, ADB needs to provide new and innovative solutions. It is here that our strong partnerships with EAs and IAs, working hand-in-hand with ADB staff, are critical to meeting the development needs of Asia and the Pacific.
Scaling up ADB operations
Demand for ADB assistance is growing. The merger of ADB’s Asian Development Fund lending operations with the Ordinary Capital Resources balance sheet has allowed us to deliver higher levels of assistance to our developing member countries. Using our new performance measure of commitments, loans and grants reached $20.1 billion in 2017, a 52% increase from $13.3 billion in 2016 and a record high. Of this, private sector operations commitments increased from $1.8 billion in 2016 to $2.3 billion in 2017, the highest level to date.
As the region works to meet global commitments such as the Sustainable Development Goals, the related Financing for Development agenda, the Paris Agreement on climate change, and the Sendai Framework for Disaster Risk Reduction, I expect ADB’s sovereign and nonsovereign commitments over the next three years to reach $61.8 billion across 428 projects.
Strengthening institutional capacity in developing member countries
Implementing good projects with meaningful development impacts requires strong institutional capacity and good governance. Strategy 2030 states that ADB will “continue to help executing and implementing agencies strengthen their capacity to plan, design, finance, and implement ADB projects, including the application of advanced technology, reduction of life-cycle costs, assurance of the financial viability of investments, and the maintenance of infrastructure assets.”
I would like to highlight six areas in which ADB is collaborating with EAs and IAs to deliver successful projects.
First is ensuring speed and efficiency in project delivery. One often mentioned complaint to ADB is the lengthy time to prepare and implement projects. We have been making serious efforts to rationalize our procedures including through a 10-point procurement reform action plan adopted in 2014, and far reaching reforms to our procurement framework that we are currently rolling out. These will support quality and advanced technology solutions, as well as faster procurement. ADB should always strive to reduce red tape and speed up internal procedures. At the same time, the speed to deliver projects also depends on quick actions by governments, EAs, and IAs.
Project readiness is critical to help ensure the speedy implementation of projects. Our recently launched Project Readiness Financing Facility is funding project preparation and design activities in a faster and more responsive manner. Under this facility, project preparation activities below $15 million can be approved by Management (instead of the ADB Board). In addition, our new Small Expenditure Financing Facility is financing activities not exceeding $15 million, such as consulting services, pilot testing, and rehabilitation.
These facilities complement existing mechanisms, such as advance contracting and retroactive financing. I encourage you to utilize these new facilities and existing mechanisms in your ongoing and future projects to enhance project readiness, thus contributing to faster implementation and timely completion.
Second is incorporating climate change mitigation and adaptation, disaster risk, and environmental considerations in our project design, implementation, and monitoring. Under Strategy 2030, 75% of the number of ADB’s committed operations will support climate change mitigation and adaptation by 2030.
Climate change and natural disasters affect a large number of people in Asia. We are now seeing more frequent natural disasters, especially in small island developing states in the Pacific. To strengthen resilience to natural disasters, we must assist in climate and disaster-proofing infrastructure, and in developing disaster management capacity. For instance, in Tuvalu, ADB provided a grant to support climate resilient maritime infrastructure in the outer islands. One element of the project is to construct a boat harbor that can withstand predicted sea level rises and the intensity of cyclones.
Climate mitigation is also a critical part of ADB’s work. In Sri Lanka, for example, ADB is providing $200 million for a 100 MW wind power generation project, the first ever large-scale wind power project in the country. The experience from this innovative project has reinforced the government’s plans to develop more renewable power, in collaboration with the private sector.
Third is ADB’s commitment to accelerate progress in gender equality. ADB will do this through targeted operations to empower women and girls in such areas as education, health, financial inclusion, and job creation. We will also promote gender mainstreaming that directly narrows gender gaps and brings benefits to women and girls. For example, a community road project can provide women with access to income-generating opportunities by including a capacity building component in the project to help women improve their skills.
In Strategy 2030, at least 75% of the number of ADB’s committed sovereign and nonsovereign operations by 2030 will include project designs that directly improve the lives of women and girls. When we design and implement projects and programs—regardless of whether they are in the social sector, energy, transport, or urban—we must always consider ways to include gender elements. In a recently approved power grid project in Bangladesh, women staff of the power company were given scholarships to develop their skills further as engineers.
Fourth is the adoption of innovative ideas and advanced technologies. There are increasing opportunities to use new technologies such as artificial intelligence, big data, robotics, and satellites. Many innovative companies are applying new technologies in finance, education, health, agri-business, urban development, transport, and energy. ADB-supported projects should be a model for incorporating new technologies which can be replicated.
For example, in the Philippines, ADB provided technical assistance and grant funds for a solar-diesel mini-grid on Cobrador Island. This pilot project provides 24-hour access to electricity while also reducing dependence on fossil fuels. It has demonstrated a solution that can be applied in other remote islands and rural areas.
Fifth is the role of sound financial management in ADB’s sovereign operations. Robust financial management throughout the project cycle, from concept to implementation, contributes to efficient project delivery and accountability and sustainability.
Financial management has two components: First is the design stage. We should ensure realistic project cost estimates and financing plans, including provisions for future operations and maintenance costs. Financial reporting and auditing arrangements also need to be specified at the design stage. Second is the project implementation stage. Here the focus is on the timely receipt of audited financial reports to provide assurance that funds are being used as intended. Despite the importance of financial management, the recent internal audit identified delays in the timely submission of audited project financial statements and some other issues.
This year we initiated a review of ADB’s financial management practices. We are now finalizing an action plan to strengthen ADB’s capacity as well as that of EAs and IAs in this important area. ADB will increase its number of staff dedicated to financial management and put in place additional training programs for those staff and EAs and IAs. We will also strengthen our engagement with national and regional audit institutions. We look forward to working with you on these reforms.
Sixth is aiming to increase the use of country systems in sovereign operations. This will help facilitate project implementation, cut transaction costs, improve country ownership, and strengthen institutions and systems in developing member countries. Since the strength of country systems vary among developing member countries, a context-specific approach will be used to ensure adherence to ADB standards. ADB is working with EAs and IAs to support the introduction of the use of country systems in procurement, and environmental and social safeguards.
Last year, under a $175-million loan to the Power Grid Corporation of India, ADB agreed that the state-owned utility’s own systems would be used, rather than ADB’s, to procure project-related goods and services and to safeguard communities and the natural environment. This was a first for ADB and it reflects our awareness of the changing needs of our developing member countries.
In concluding my welcoming remarks, I want to emphasize that successful project design and implementation with high development impact are the shared responsibility of ADB and the executing and implementing agencies.
Over the next three days, I trust that you share your rich experiences and expertise with peers, counterparts, and ADB staff. I count on our partnership to deliver Strategy 2030 on the ground. Thank you.