What is official cofinancing?
Flowing mainly from financing partnerships with multilateral and bilateral development assistance agencies, and public sector lending windows of export credit agencies, official cofinancing mobilizes grants and loans for projects supported by ADB and grants for ADB’s technical assistance operations. Such cofinancing is usually sourced from official development assistance. Official cofinancing focuses on strong partner and client coordination for easy access and efficiency in processing, low transaction costs, and harmonized and transparent mechanisms in reporting to financing partners on the development impact of their contributions.
ADB’s strategic and financial partnership management
Guided by Strategy 2030, ADB is in position to build stronger and more diversified partnerships from bilateral and multilateral partners, as well as expand current collaborations.
ADB's platform for managing its financial partnerships are driven by approaches focusing on comprehensive operational resource planning, one-stop shop approach to trust funds; one ADB approach to partners; and better access to financing partnerships data.
Official cofinancing arrangements
ADB offers a high degree of flexibility to its partners in terms of channeling official cofinancing to development projects and programs. We administer official cofinancing in several forms:
Grants or loans from partners may be earmarked for individual projects on a case-by-case basis. Project-specific cofinancing works especially well in the field, when donors are decentralized operationally and financially, from their headquarters.
Trust funds enable a partner to channel grants for a group of countries or specific focus areas, including disaster risk management, clean energy, private sector development, gender and development, good governance, information technology, poverty reduction, and regional trade. ADB fully administers the funds as Trustee or Sub-trustee. The main advantage is that a single agreement can cover a number of projects, reducing the need to negotiate on a case-by-case basis. Trust funds can involve one or more donors. See trust funds administered by ADB.
Framework cofinancing arrangements
Framework cofinancing arrangements allow partners to work with ADB more strategically. They are designed to support specific regional, country, or focus area programs under streamlined procedures. The predefined arrangements, coupled with an agreed financing envelope, provide a reliable and predictable basis for better, more targeted, and efficient services to developing member countries. ADB has standing cofinancing arrangements with these partners:
- Eurasian Development BankFramework Agreement with the Eurasian Development Bank
Total current commitment: $715 million
Approved for projects: $310 million for 3 projects
ADB and the Eurasian Development Bank (EDB) signed a framework cofinancing agreement in May 2013 during the 46th ADB Annual Meeting in Delhi, India. The agreement provides for EDB cofinancing of $715 million over 3 years (2013–2016). The agreement supports the agriculture, energy, public service, and transport sectors and covers four common member countries—Armenia, Kazakhstan, the Kyrgyz Republic, and Tajikistan. Although all projects under the framework agreement will be collaborative, EDB agreed that all projects to be cofinanced under the agreement will be subject to ADB policies on safeguards, anticorruption, and public communications, including ADB’s Integrity Principles and Guidelines. In September 2014, ADB and EDB agreed to amend their agreement to include other methods of cofinancing on a project-by-project basis. In 2015, EDB provided a $150 million additional cofinancing for a transport project in Central Asia.
- International Fund for Agricultural DevelopmentFramework Agreement with the International Fund for Agricultural Development
The International Fund for Agricultural Development and ADB signed two key agreements in 2013 and 2014: a memorandum of understanding (MOU) and a framework cofinancing agreement for 2014–2017. In the MOU signed in September 2013, the two institutions agreed to facilitate collaboration in matters of common interest and to establish necessary working arrangements to further their cooperation. The MOU supersedes the 1978 Cooperation Agreement.
The framework cofinancing agreement supplements the MOU and further details the financing partnership arrangements to improve coordination and ensure resources are available to support projects. It was signed in December 2014 and effective for a 3-year period from 2014 to 2017.
Eligible countries include Afghanistan, Armenia, Bangladesh, Bhutan, Cambodia, India, Indonesia, the Kyrgyz Republic, the Lao PDR, Myanmar, Nepal, Pakistan, Papua New Guinea, the Philippines, Samoa, Sri Lanka, Timor-Leste, Uzbekistan, and Viet Nam.
- Islamic Development BankIslamic Development Bank Agreement
Total current commitment: $2.5 billion
Approved for projects: $931.9 million for 10 projects
In 2008, the Islamic Development Bank (IDB) and ADB signed a framework cofinancing agreement to develop a strong institutional partnership. The agreement was the first for programmatic cofinancing between ADB and another multilateral development bank. As a result, IDB earmarked $2 billion in cofinancing for a shared pipeline of projects from 2009 to 2011.
In November 2011, IDB and ADB renewed their agreement to enhance the existing cooperation. Under the new agreement, IDB earmarked $2.5 billion to cofinance a joint pipeline covering projects in agriculture, education, energy, health, regional cooperation, private sector development, transport, and urban services from 2012 to 2014. In September 2014, ADB and IDB extended their agreement until 2017 under the same terms and coverage. Common member countries eligible for cofinancing under the agreement are Islamic countries, including Afghanistan, Azerbaijan, Bangladesh, Indonesia, Kazakhstan, the Kyrgyz Republic, the Maldives, Pakistan, Tajikistan, Turkmenistan, and Uzbekistan.
As of end 2015, IDB has provided $931.9 million in loan cofinancing for ten projects consisting of $865.3 million for eight sovereign projects and $66.6 million for two nonsovereign projects. ADB and IDB collaborated on an energy project in Bangladesh, and a housing for integrated rural development project in Uzbekistan in 2015.
- Nordic Development FundNordic Development Fund Arrangement
Approved for projects: $43.7 million for 16 projects
In January 2011, ADB and the Nordic Development Fund (NDF) signed a memorandum of understanding for institutional cooperation and cofinancing of programs and projects. Under this arrangement, the NDF supports pilot projects on climate change mitigation and adaptation, particularly in areas of common interest in the energy, infrastructure, and natural resources sectors. The following ADB DMCs are the current focus of NDF activities: Bangladesh, Cambodia, the Lao PDR, Nepal, Sri Lanka, and Viet Nam.
- OPEC Fund for International DevelopmentOPEC Fund for International Development Agreement
Total current commitment: $600 million
Approved for projects: $175.3 million for 8 projects
OFID and ADB formalized a memorandum of understanding in 2011 to enhance collaboration between the two institutions. Subsequently, a framework cofinancing agreement was signed in April 2012, earmarking at least $600 million in cofinancing through 2015.
OFID and ADB renewed their cooperation in August 2016 by signing a framework cofinancing agreement, committing at least $600 million in cofinancing through 2021 to support projects in renewable energy and energy efficiency, transport, agriculture, water supply and sanitation, education, and health.
OFID aims to fund projects in the following priority ADB DMCs: Armenia, Azerbaijan, Bangladesh, Bhutan, Cambodia, India, Kazakhstan, the Kyrgyz Republic, the Lao PDR, the Maldives, Mongolia, Nepal, Papua New Guinea, the Philippines, Samoa, Solomon Islands, Sri Lanka, Tajikistan, Tonga, Turkmenistan, and Uzbekistan.
- Abu DhabiAbu Dhabi Fund for Development Arrangement
Approved for projects: $60 million for 2 projects
Aimed at increasing cooperation, the Abu Dhabi Fund for Development (ADFD) and ADB signed their first memorandum of understanding (MOU) in February 2012. The arrangement provides a general framework within which both institutions develop and undertake collaborative work to pursue common objectives more strategically and effectively. Education, energy, finance, health, regional initiatives, trade, transport, and the urban services sectors were identified as priority areas of cooperation. All of ADB's developing member countries (DMCs) are eligible for ADFD cofinancing. As of the end of 2015, a total of $60 million for two projects have been provided by ADFD under the agreement.
- People's Republic of ChinaAgreement with the China Eximbank
Approved for projects: $75.6 million for 1 project
In May 2009, the Export-Import Bank of China (China Eximbank, a state bank in the PRC) and ADB signed a framework cofinancing agreement to deepen their institutional partnership along the lines of programmatic cofinancing. The agreement, built on a memorandum of understanding signed in 2006, aimed at simplifying access to financing for infrastructure projects by governments, subsovereign borrowers, and private entities.
In 2012, the two organizations conducted a joint retreat in Beijing to deepen mutual understanding of cofinancing operations. The first cofinancing approved under the agreement was a $75.6 million loan in 2013. All of ADB’s DMCs eligible for ordinary capital resources are qualified for cofinancing under the agreement.
- FranceFramework Agreement with Agence Française de Développement
Total current commitment: $1.3 billion
Approved for projects: $946.4 million for 12 projects
Agence Française de Développement (AFD) and ADB signed two key agreements in 2010: a partnership framework agreement for 2010–2016 and a framework cofinancing agreement for 2010–2013. In the partnership framework agreement, the two institutions agreed to enhance institutional, research, and knowledge cooperation, and to pursue 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.
The framework cofinancing agreement further detailed financing partnership arrangements to ensure effective and efficient cofinancing operations. It included an indicative cofinancing amount of $600 million for loans and grants over a 3-year period from 2010 to 2013. AFD provided a total of $432 million for eight projects under the agreement.
An amended and restated framework cofinancing agreement was signed in May 2013 during the 46th ADB Annual Meeting in Delhi, India. The amended agreement aims to reach $1.3 billion in cofinancing from each institution until 2016. Eligible countries include Afghanistan, Armenia, Azerbaijan, Bangladesh, Cambodia, the People's Republic of China (PRC), Georgia, India, Indonesia, Kazakhstan, the Lao People’s Democratic Republic (Lao PDR), Myanmar, Pakistan, the Philippines, Sri Lanka, Thailand, Uzbekistan, and Viet Nam. The amended and restated agreement so far has resulted in $946.4 million of cofinancing for 12 projects.
- GermanyKfW Arrangement
Total commitment: $2 billion
Approved for projects: $1.32 billion for 7 projects
On 2 July 2014, ADB and KfW signed a memorandum of understanding (MOU) for a $2 billion collaborative cofinancing to help promote development in Bangladesh, India, Indonesia, Mongolia, and Viet Nam. The identified sectors and areas of common interest are renewable energy and energy efficiency, urban infrastructure including urban mobility, climate and SME financing, vocational training, and regional integration. Following the signing of the MOU, ADB and KfW agreed to further explore cofinancing operations in Afghanistan, PRC, Myanmar, Nepal and Sri Lanka. ADB and KfW also agreed to strengthen cooperation in matters relating to harmonization of each institutions design and project implementation processes, joint knowledge management events and research, staff exchange, and retreats and trainings. This critical partnership helps ADB and its DMCs to scale-up and expand cofinancing operations in sectors of highest priority.
- Republic of KoreaRepublic of Korea Arrangement
Total current commitment: $600 million
Approved for projects: $379.5 million for 5 projects
The Ministry of Strategy and Finance of the Republic of Korea and ADB signed a memorandum of understanding on enhancements to cofinancing arrangements in 2008, and renewed it in 2011 and then in May 2015. The commitment amounts to $600 million for concessional cofinancing projects until 2017. The arrangement, implemented by the Export-Import Bank of Korea, was signed and renewed for clean energy, water supply and sanitation, waste treatment, agriculture, sustainable transport, vocational education and training, information and communication technology–based governance, finance, and education reform. Priority countries eligible under the current arrangement are Azerbaijan, Bangladesh, Cambodia, Indonesia, the Lao PDR, Mongolia, Nepal, Pakistan, the Philippines, Sri Lanka, Uzbekistan, and Viet Nam.
- KuwaitKuwait Fund Arrangement
Approved for projects: $17 million for 1 project
In 2015, ADB and the Kuwait Fund for Arab Economic Development (Kuwait Fund) signed a memorandum of understanding (MOU) on establishing cooperation arrangements during the 48th ADB Annual Meeting in Baku, Azerbaijan. The MOU marked a formal collaboration between the two institutions, envisioning to strengthen partnership at the institutional level and the programmatic cofinancing at the project level. Under the MOU, the two institutions also signed a project-specific arrangement. Kuwait Fund provided $17 million collaborative additional cofinancing for an agriculture project in Nepal.
Financing partnership facilities
These are operational mechanisms for strategic, long-term, multi-partner cooperation that link various forms of assistance in a coordinated manner for well-defined purposes. These may include trust funds, special funds, risk-sharing mechanisms, or knowledge sharing that financing partners agree upon to support a specific sector. See financing partnership facilities administered by ADB.
ADB helps developing member countries gain access to global funding initiatives managed by other multilateral banks, including the:
See Operational Procedures, paragraphs 23-26 of the Operations Manual: Financing Partnerships.
Preparatory steps and arrangements
ADB may actively solicit cofinancing, provide information on the feasibility and viability of a project, hold consultations with cofinanciers in the field and at headquarters from the early stages of the project processing cycle, and provide administrative services in respect of procurement, disbursement, and other matters as required by cofinanciers if their funds are untied.
ADB's work on strategic and financial partnerships is divided between the Strategic Partnerships Division (SPSP) of the Strategy, Policy and Partnerships Department and the Partners Funds Division (SDPF) of the Sustainable Development and Climate Change Department.
SPSP manages partnerships and establishes cofinancing relationships with partners, as well as lead the mobilization of external resources through project-specific cofinancing and broader cofinancing arrangement. It also functions as focal for formulating policies and strategies on cooperation, affiliations, and knowledge and financing partnerships.
SPDF administers single-donor trust funds, project-specific cofinancing, and global funding initiatives, including functioning as focal for reports submission, as required by the relevant agreements and the quality assurance processes. The division also manages the single repository of bank-wide cofinancing data, and prepares reports on financing partnerships.
ADB encourages prospective partners to identify cofinancing opportunities and to contact ADB early in the project processing cycle. In this way, partners can actively participate in project design and appraisal activities.
See all cofinancing contacts.