5 ways to achieve better performing institutions in ADB developing member countries
ADB is preparing a new long-term strategy to improve governance and public sector management in its developing member countries until 2030.
Last month, we prepared a paper on positioning ADB’s approach to public sector management and institutional performance. The paper aims to inform the preparation of ADB’s new long-term strategy for engaging with developing member countries until 2030. It also looks at the Sustainable Development Goals (SDGs), which have a strong call to action on governance and institutional development. The way governments perform will determine the achievement of all SDGs as well as other global development agendas like the Paris Agreement on climate change and the Addis Ababa Action Agenda on financing for development.
Governance and institutions matter for development and inclusive growth in Asia and the Pacific. There is evidence to suggest that countries with sound policies and regulations, an effective public service, and able to control corruption have grown more quickly than others. ADB’s Country Performance Assessment exercise shows that governance is gradually improving in the region, but significant challenges remain.
With public sector management investments totaling $16.8 billion over the last decade, ADB is a major financier and partner for countries in Asia and the Pacific to advance public sector reforms and broader institutional development. As our developing member countries undergo deep changes to respond to complex development challenges, so too does ADB need to make changes in how we support these countries.
So what does the paper say about ADB’s future approaches?
First, we should integrate the three strands of our work—public sector reforms, governance, and capacity development—recognizing each as a means to achieve the common goal of better performing institutions in developing member countries. An integrated approach needs to build on our existing action plans for mainstreaming governance and capacity development in sector operations, but aim to eventually replace them so that ADB has a single operational strategy.
Second, we need to deliver holistic solutions to our developing member countries by aligning our support for upstream public sector policies and reforms with downstream institutional development in priority sectors. ADB offers a range of institutional support and services, including knowledge sharing, technical advisory support, innovative solutions, collaborative partnerships and networks, and institutional assessments. They need to be delivered through carefully tailored approaches to the country situation and readiness for change of developing member country stakeholders, and aim to add specific value. This requires long-term, strategically guided efforts in low-capacity and fragile environments, often focusing on core state functions. In some settings, policy, regulatory, and institutional reforms can be complex, contested, and hard to achieve. Where better capacities exist, we can offer to broker regional networks and make cutting-edge knowledge and innovations available.
Third, it’s time to develop a stronger results-orientation in operations on institutional issues. This requires a framework for ADB to systematically capture and monitor the results of our support. In practice, when operations support public sector and institutional development, we aim to contribute to results at one or more of three broad levels of attention: (i) project-level, to enhance project readiness and implementation; (ii) sector-level, to support sector-wide policy and institutional reforms; and (iii) cross-sector level, to respond to complex and emerging cross-sector—and cross-border—development challenges.
Fourth, we must mainstream institutional support in operations with a focus on quality. Achieving a sufficient level of operational quality requires making diagnosis, dialogue, design, and delivery—the “4Ds” of quality institutional support—explicit in institutional performance. The goal is to make operational choices about levels and intensity of our support explicit and consequential, with demands on rigor under the quality dimensions tailored to the level of ambition of our support. However, we also need to be selective in our support, recognizing that the nature of and context of reform and change can in some situations limit what external actors can do.
Fifth, boosting our capacity to provide specialized support to developing countries is key. We must learn from and scale up emerging good practices in developing member countries, and beyond, under a coordinated “One ADB” effort. Here the role of resident missions is crucial, as ADB’s physical presence in a given country makes us sensitive to the drivers of reform and change and responsive to the country’s needs.
Governance and institutional reform are challenging areas to work in. ADB’s long experience and deep knowledge of countries in Asia and the Pacific, our strong track record in sector operations and sector-level reforms, and our provision of both public and private sector lending and support under one roof make us uniquely placed to make a major contribution to strengthening institutional performance in developing member countries. ADB cannot do this alone, however, so we must embrace partnerships – both in knowledge and financing.