ADB's Work on Governance and Development
ADB’s work on governance includes helping governments operate more efficiently and equitably, as well helping societies strengthen their capabilities to achieve their development goals. It supports the strengthening of government institutions from within, while assisting them in the improving the delivery of their services to the public.
Governance as public sector management. ADB focuses on 7 areas: public expenditure and fiscal management; economic affairs management; public administration; reforms of state-owned enterprises; decentralization; law and the judiciary; and social protection. Between 2013-2015, ADB invested $4.1 million in loans and grants to improve how governments in Asia are managed.
Governance as capacity development. In 2015, about 80% of ADB projects included some degree of capacity development, defined as developing the skills, experience, technical and management capacity of an organization.
ADB also supports countries in addressing issues such as corruption, e-governance, information and communications technology, decentralization, and others.
Because of the broad scope of work needed in the area of governance, ADB prioritizes its work based on areas where it is most needed. This is done by assessing where the risk is greatest that development and social goals will not be met.
A commitment to good governance
In a region with historically diverse economic and political systems, an uneven pace of progress and a wide development gap among countries is to be expected. In Asia, however, successful development has taken place in countries of different political persuasions or economic policies. Their common denominator: good governance.
ADB recognized this early on and in 1995 became the first multilateral development bank to adopt a Governance Policy to help enhance governance quality in its member countries, while considering the uniqueness of each country’s governance institutions and cultures. The policy became the basic building block for a cluster of good governance policies, which now includes policies on procurement, law and policy reform, participation of civil society, and anticorruption. Good governance has since also been established as one of the three pillars of ADB’s Poverty Reduction Strategy.
More recently, ADB’s Strategy 2020, which reaffirms ADB’s mission of a poverty-free Asia-Pacific, identifies governance as a key driver of change.
ADB’s Governance Thematic Group takes the lead in promoting governance issues in ADB’s development work and coming up with initiatives that strengthen the plan’s implementation.
Governance Thematic Group
ADB’s Governance Thematic Group is the in-house network of experts on governance, public financial management, anticorruption, public sector management, e-governance, and institutional and capacity development.
The Governance Thematic Group plays a crucial role in promoting governance issues in ADB and delivering quality operations in developing countries in Asia through hands-on analytical and advisory support, peer review, and knowledge and innovative solutions.
The Governance Thematic Group is a network of about 200 ADB staff that fosters discussions and knowledge-sharing on governance and related issues and themes. The group runs a seminar series and other learning and development events showcasing operational experiences and lessons, and providing a forum for global thought leaders to discuss emerging trends, practices, and innovations. It also establishes partnerships and maintains links with like-minded organizations and networks.
The Governance Thematic Group is led by a technical advisor who heads a small Committee of directors, leading specialists, and senior staff, which acts as a think tank that provides advice on strategic directions in governance and public management related areas. A secretariat provides technical and administrative support.
ADB Governance Policies Timeline
ADB adopts Governance Policy.
ADB adopts Anticorruption Policy.
Anti-corruption Unit, now the Office of Anticorruption and Integrity, is established.
ADB establishes Accountability Mechanism.
Anticorruption Unit is upgraded to an Integrity Division with expanded functions.
Public Communications Policy is approved.
Governance and Capacity Development Committee supports the development of the Second Governance and Anticorruption Action Plan (GACAP II).
The Governance and Capacity Development Committee supports the development of ADB's first Capacity Development framework and action plan.
The Governance and Public Management CoP is established.
ADB revises and approves Public Communications Policy.
ADB approves revised Accountability Mechanism Policy.
- The Governance and Public Management CoP provides substantial inputs to the Implementation Review of the Second Governance and Anticorruption Action Plan (GACAP II).
- The Governance and Public Management CoP prepares Guidance Note on Political Economy Analysis.
Governance Thematic Group takes over the Governance and Public Management CoP.
Governance Issues in Asia and the Pacific
For Asia, embracing good governance to build economies that are socially inclusive and environmentally sound will be vital for achieving sustainable development. Despite the region’s success in producing fast-growing economies, many countries still face a host of governance issues, including poor public services, weak government institutions, and corruption.
With the region’s diverse political systems and institutional cultures, addressing these governance challenges becomes doubly difficult since it requires determining appropriate approaches or strategies applicable in particular country contexts. ADB assists countries in Asia and the Pacific to improve governance at national, local, and institutional levels.
ADB is working to reduce the burden that widespread, systemic corruption exacts upon the people of the region. In addition to detecting and preventing fraud and corruption in its projects, ADB also supports countries in combating corruption at national and local levels.
Corruption is the abuse of a public or private office for personal gain. It involves officials in the public and private sectors improperly and unlawfully enriching themselves and/or those close to them, or inducing others to do so.
ADB is reducing the burden that widespread, systemic corruption exacts upon the people of the region, by helping to strengthen key government institutions that advance transparency and accountability in developing member countries. These may include supreme audit agencies, procurement agencies, regulatory agencies, ombudsman offices, and the like. ADB also supports regional initiatives and research on advancing accountability and transparency in Asia and the Pacific region.
Read the publication A Practical Approach to Combating Corruption
Good corporate governance helps an organization achieve its objectives; poor corporate governance can speed its decline or demise. In Asia, many public institutions and state-owned enterprises can benefit from corporate governance practices that help foster sustainable development.
Governments across Asia and the Pacific have established policy, legal, and institutional frameworks to promote sustainable development. Most of ADB's developing member countries are also parties to major multilateral environmental agreements. However, even in cases where policy frameworks are sound, actual reforms and implementation often do not materialize due to limited institutional capacity, lack of technical expertise, insufficient funding, and fragmented institutional arrangements.
In developing Asia, ADB is helping countries promote green justice through knowledge sharing and capacity building. ADB's Environmental Justice Program is supporting several initiatives that aim to strengthen environmental regulatory frameworks and enforcement capacities of public institutions, including the judiciary, as well as promote regional cooperation.
Decentralization, as a reform measure, reconfigures power relationships between and among governance institutions. ADB supports countries in implementing decentralization reforms, such as in public services delivery, infrastructure development, and financial management.
Decentralization, as a reform measure, reconfigures power relationships between and among a country’s governance institutions for more effective and efficient public management. Over the last three decades, numerous countries of the Asia and Pacific region have engaged in decentralization and local government reforms due to regime transformation, state rebuilding in the aftermath of internal unrest and war, or to strengthen sub-national governments in order to improve their service delivery for citizens.
The international community has supported such reform initiatives by means of capacity development and advisory services, as well as training. Development partners have increasingly sought a common approach to decentralization reforms. In line with the global debate on aid effectiveness they have made visible efforts to harmonize their support amongst themselves and to align external support with the partner country’s strategies and systems.
ADB supports countries in implementing decentralization reforms, such as in public services delivery, infrastructure development, and financial management.
Domestic Resource Mobilization
The challenge for many governments in Asia is finding financial support for development projects, while managing debt and creating more opportunities for private sector investments. ADB supports countries in improving domestic resource mobilization for inclusive growth.
Public services delivery can be costly and require a steady source of financing. For many developing countries in Asia, one of the biggest challenges is how to pool more resources to improve public financial management and enhanced government capacity, while managing debt and creating more opportunities for private sector investments.
Domestic resource mobilization involves measures to support fiscal consolidation, improve revenue management, strengthen public expenditure management, enhance the generation of domestic savings, and increase private resource mobilization for investment opportunities, especially for micro, small, and medium-sized businesses. ADB supports client countries in improving domestic resource mobilization for inclusive growth.
Municipal Finance Matters: India Municipal Finance StudyConsultant’s reports describe activities by a consultant or group of consultants related to preparing a technical assistance project. This document dated February 2013 is provided for the ADB project 43214-012 in India.
Lao People's Democratic Republic: An Illustrative Fiscal Strategy Consistent with the Seventh National Socio-Economic Development PlanThis report discusses some of the technical issues involved in formulating a multi-annual fiscal strategy for the Lao People’s Democratic Republic.
Institutional Strengthening for Economic Management - Ministry of Finance and Treasury Internal Audit Project (August-October 2012): Consultant's Final ReportConsultants' reports describe activities by a consultant or group of consultants related to preparing a technical assistance project. This document dated October 2012 is provided for the ADB project 39658-013 in the Maldives.
Preparing the Integrated Urban Development Project: Final ReportConsultant’s reports describe activities by a consultant or group of consultants related to preparing a technical assistance project. This document dated August 2012 is provided for the ADB project 42161-012 in Nepal.
Support to Improve Portfolio Performance and Aid Effectiveness: Inception ReportConsultant’s reports describe activities by a consultant or group of consultants related to preparing a technical assistance project. This document dated June 2012 is provided for the ADB project 45280-001 in Viet Nam.
E-governance and Information and Communication Technology (ICT)
Information and communication technology can help improve the delivery of public services, allow greater public access to information, and play an important role in public administration reforms in many countries in Asia and the Pacific.
Information and communication technology (ICT) can help improve the delivery of public services, allow greater public access to information, and play an important role in public administration reforms in many countries in Asia and the Pacific. E-governance refers to ICT-enabled reform measures to promote more efficient and cost-effective government, more convenient government services, and more government accountability to citizens.
E-government applications vary widely in the Asia-Pacific region, and can yield many benefits, including lower administrative costs, faster and more accurate response to requests and queries, direct access to transaction or customer accounts held in different parts of government, and the ability to harvest more data from operational systems, thus increasing the quality of feedback to managers and policymakers. ADB supports client countries in implementing e-governance reform strategies and systems in government institutions and national and local agencies.
Read the governance brief on E-government in Asia and the Pacific
Fragile and Conflict-Affected Situations (FCAS)
Many of the region’s poor and most vulnerable live in fragile, conflict-affected, and small island developing states (SIDS). These countries are uniquely susceptible to development challenges such as weak governance, economic and social disruption, geographic isolation, and insecurity. Public service delivery systems seldom function well, and the government's ability to guarantee the basic security of its people is often limited. Conflict and fragility not only impact countries where they occur, but also affect neighboring countries and the global community. The Asian Development Bank’s Strategy 2030 recognizes that fragile and conflict-affected situations (FCAS) and SIDS require special attention, given the risks they present and their larger need for institutional strengthening.
Tailored Approaches for FCAS and SIDS
The challenges facing FCAS and SIDS require long-term solutions, and building capable and legitimate institutions is critical. ADB’s support for fragile, conflict-affected, and small island developing member countries is guided by the FCAS and SIDS Approach (FSA). Consistent with the broader global dialogue on the peace-humanitarian nexus and aid effectiveness, the FSA prescribes tailored, context-sensitive approaches to doing business in FCAS and SIDS. The FSA supports the Sustainable Development Goals and has strong links with the seven operational priorities and the private sector operations plan of Strategy 2030.
Classifying Countries as FCAS
Since 2013, ADB has used a quantitative FCAS classification system harmonized with other multilateral development banks (MDBs). The classification of a country as FCAS qualifies it for additional funding under the Asian Development Fund 13 and the Technical Assistance Special Fund. This system is undergoing a review in 2021 with other MDBs for possible updating of the classification process.
ADB conducts a country performance assessment (CPA) using its country policy and institutional assessment questionnaire. Each country's performance is assessed based on the coherence of its macroeconomic and structural policies, quality of its governance and public sector management, degree to which its policies and institutions promote equity and inclusion, and performance of its portfolio of ongoing projects and programs.
A country is considered FCAS if it has an average rating of 3.2 or less based on the ADB CPA and the World Bank Group country policy and institutional assessment. A country is also considered FCAS if a United Nations and/or a regional peace-keeping or peace-building mission has been present during the previous 3 years.
2020 List of Countries Classified as FCAS
Based on 2020 CPAs, ADB’s approved list of 11 FCAS countries is as follows: Afghanistan, the Federated States of Micronesia, Kiribati, the Lao People’s Democratic Republic, the Marshall Islands, Myanmar, Nauru, Papua New Guinea, Solomon Islands, Timor-Leste, and Tuvalu. Vanuatu, while not officially listed, will remain under monitoring as its most recent score borders the threshold. The next fragile and conflict-affected country classification will take place in 2022 upon the completion of the annual CPA exercise.
For more information on the FCAS and SIDS Approach, visit the web page.
Improved local governance is crucial for transparent, accountable, efficient and effective delivery of public services at the local level. ADB supports client countries in implementing local governance reforms, such as in local government finance, accountability in public expenditure management and service delivery, policy and regulatory reforms, and institutional development.
Improved local governance is crucial for transparent, accountable, efficient and effective delivery of public services at the local level. Increasingly, decentralization has put the spotlight on local government performance in the delivery of development agendas. Multilateral financial institutions, including ADB, have opened doors to local government projects through subsovereign lending mechanisms.
ADB supports countries in implementing local governance reforms, such as in local government finance, accountability in public expenditure management and service delivery, policy and regulatory reforms, and institutional development.
- Document: Capacity Development in ADB Operations: Review of the Medium-Term Framework and Action Plan for Capacity Development
- Infographic: Asian Development Outlook 2013 Update - Asia's Governance Gap
- Infographic: Fighting Corruption in Asia - Good Governance Encourages Development
- Governance briefs
- ADBlog: governance and public management