Making a bigger difference in the poorest and most vulnerable countries
ADB reforms and new resources provide an opportunity to make incremental progress on development work in Asia’s low-income countries.
Asia and the Pacific’s low-income countries have recently enjoyed moderate economic growth, made tangible progress on poverty reduction, and kept income inequality largely in check. However, they still have relatively high proportions of poor people, have struggled to meet the non-income Millennium Development Goals, and remain highly vulnerable to shocks – in particular climate-related disasters.
Renewed and more effective development efforts—including by the region’s major development partners—are urgently needed to narrow the gap, as noted in a recent ADB Independent Evaluation study.
Development projects financed by ADB’s concessional Asian Development Fund (ADF) have for many years underperformed in these countries. Over the past decade, the aggregate success rate for these projects was 62%. Performance has improved, with the rate now ranging in the upper 60s based on a three-year moving average. This is still a long way from ADB’s 80% target success rate, but provides some optimism.
Bangladesh, Viet Nam, Pakistan, Nepal, and Cambodia were the top recipients of ADF loan resources, while Afghanistan, Tajikistan, and Nepal received the most in grants. Pacific island countries received the least in absolute terms, but the most on a per capita basis.
Health, social protection, transport, and multi-sector projects had the highest success rates over the decade, although their shares of total operations vary widely. Meanwhile, agriculture and natural resources, energy, industry and trade, and public sector management projects have shown the most improvement over time.
The highest rated projects—many of which were in agriculture and natural resources—made good contributions to inclusive growth and environmental sustainability. This prompts the important question of whether some of the successful projects might feasibly be replicated. ADB needs a more systematic way of doing this.
ADB’s private sector operations in low-income countries also show encouraging results. While still limited in number and size, private sector deals have had a relatively high success rate of 77%, despite the more difficult business environments.
Altogether, this suggests that ADB can perform well in multiple areas and can move toward becoming a more versatile and dynamic development partner.
ADB’s ongoing institutional reforms and expanding resource base provide a platform for further progress. More intensified support for inclusive and environmentally sustainable growth and to respond effectively to climate change and disaster risks is more critical than ever.
ADB should ensure that its bread-and-butter infrastructure operations, where the bulk of resources will continue to flow, support more inclusive patterns of growth. Sector programs for transport, energy, and water related infrastructure need to better articulate how they will support inclusive growth, rather than presume that all investments will automatically help the poor.
Stronger support for the social sectors, safety net programs, and agriculture will be an important complement to infrastructure, while added emphasis on environmental public goods and transboundary issues, livable cities, sustainable transport, and environmental governance is imperative for environmentally sustainable growth and urbanization.
Several organizational improvements should help operational results, namely adopting a knowledge-first approach; building staff expertise in key areas; and strengthening project supervision where capacity is weakest.
Projects often fail due to a poor understanding of the underlying development problem, which leads to ill-informed project designs. A knowledge-first approach that emphasizes better diagnostic work can help sharpen interventions, such as how best to support inclusive growth in countries with high inequality, or how to strengthen the sustainability of infrastructure investments.
If ADB is to strengthen client engagement, scale up operations, sharpen knowledge work, and improve results across several strategic areas, then it must address its skill deficiencies. A critical mass of experts is essential to expanding and improving work in these areas. To broaden and deepen its support for inclusive and environmentally sustainable growth, ADB should expand its expertise in agriculture, health, and social protection as well as in key environmental fields, sustainable transport, and disaster risk management.
Finally, evaluation evidence shows that project supervision matters—especially in countries where capacity is weakest. Operationally, this translates into stronger country-based staffing and support, especially by staff with proven track records of success. This matters critically in fragile and conflict-affected situations.
While development in these countries will remain difficult, evaluation finds that incremental progress can be made. ADB reforms and new resources, coupled with renewed global commitments for sustainable development and tackling climate change, provide an opportunity to make a bigger difference in Asia’s poorest and most vulnerable countries.