Asian Development Bank
This section draws from the websites of
Background
The Asian Development Bank (ADB) is a multilateral development finance institution with the mission to reduce poverty and improve the quality of life of the people in the Asia Pacific region. It was established in 1966 and has its headquarters in Manila, Philippines. The ADB works with governments, the private sector, NGOs, development agencies, community-based organisations and foundations.
The ADB provides loans, equity investments, grants and technical assistance for the planning and execution of development projects and programs; it assists in coordinating development policies and plans. Most of ADB’s lending goes into the public sector and to governments, but it also provides direct assistance to private enterprises of developing countries through equity investments, guarantees, and loans.
In 2008 the ADB adopted a long-term strategic framework, called “Strategy 2020”, which lays out three complementary strategic agendas: inclusive growth, environmentally sustainable growth, and regional integration.
Although the ADB claims to operate in the interest of Asia’s poorest citizens, civil society groups have long been concerned about the ADB’s role in promoting sustainable and equitable growth in the region. There is an own “NGO Forum on ADB”, working on the Bank. It is an Asian-led network of civil society organizations (CSOs), based in Asia and the Pacific region. Its vision “is democratic governance and equitable social, gender and environmental justice enjoyed/flourishing through Asia and the Pacific region” and its mission is to “enhance the capacities of Civil Society Organizations and movements in Asia Pacific to amplify their struggles against ADB policies, projects and programs that threaten people’s lives, the environment and their communities” with the ultimate goal to “make the ADB responsible and accountable for the impacts of its projects and policies” (source: NGO Forum on ADB).
At the High-Level Forum on Aid Effectiveness in Accra in September 2008 civil society groups questioned the benefits resulting from the operations of the Asian Development Bank (ADB).
“ADB loans do result in reducing and reproducing poverty at the same time," said Isagani Serrano of the Philippine Rural Reconstruction Movement. “An ADB-funded coal power plant that creates jobs and provides electricity for some also uproots local communities and destroys ecosystems and sources of livelihood. This pattern of poverty-creation happens even in projects explicitly intended to uplift the poor."
Civil society organizations across the region have heavily criticized the ADB’s Long-Term Strategic Framework (Strategy 2020) for its corporate bias and abandonment of the poor. (source: GMANews.TV)
Structure
The ADB is owned and financed by its 67 members, of which 48 are from the Asia and Pacific region and 19 are from other parts of the globe. The largest shareholders are Japan and the United States, followed by China and India. See members and shares on the ADB website.
Each member country has a representative serving on the Board of Governors. This body is the highest decision making body of the ADB and meets formally once a year at the Annual Meeting. It elects the ADB President, who conducts the business of ADB under the board’s direction. Mr. Haruhiko Kuroda from Japan is the recent president, following the unwritten rule that the ADB president is always Japanese, the president of the World Bank is always an US-citizen and the president of the IMF is always from Europe. Mr. Kuroda was elected in November 2004 and re-elected in November 2006 for a five-year term.
The Board of Governors elects as well the 12 members of the Board of Executive Directors (ED). Only the US, Japan and the People’s Republic of China have their own ED. All other shareholder countries share representation on the Board. See members on the ADB website.
On concerns and complaints citizens of ADB member countries should contact their ED or Alternate ED, as the Board should be responsive and accountable to the citizens of the countries they represent.
As the ADB is responsible for a region with an enormous variety, it adopted an organisational structure to reflect this diversity. The structure identifies five regions within the ADB’s lending sphere, designed to group countries with similar characteristics in the following areas: geographic proximity; similarities in culture, economic systems, and social organization; stage of development; operational convenience; scope for sub-regional cooperation and linkages within existing sub-regional groups; and least disruption to ADB operations. Each region has a regional management team and country teams reporting to the regional heads.
The regions are:
East and Central Asia: Azerbaijan, China, People's Republic of Kazakhstan, Kyrgyz Republic, Mongolia, Tajikistan, Turkmenistan, Uzbekistan
Mekong: Cambodia, Lao People's Democratic Republic, Myanmar, Thailand, Viet Nam
The Pacific: Cook Islands, Fiji Islands, Kiribati, Marshall Islands, Micronesia, Federated States of, Nauru, Palau, Papua New Guinea, Samoa, Solomon Islands, Timor-Leste, Tonga, Tuvalu, Vanuatu
South Asia: Afghanistan, Bangladesh, Bhutan, India, Maldives, Nepal, Pakistan, Sri Lanka
Southeast Asia: Indonesia, Malaysia, Philippines, Singapore
Lending
The ADB presents the following numbers for its 2007 lending:
- US $ 10.1 billion approved for 96 loans for 82 projects
- US $ 79.8 million approved for 5 equity investments
- US $ 376.0 million approved for 4 guarantees
- US $ 425.0 million approved for 2 syndication operations
- US $ 672.7 million approved for 39 grants
- US $ 243.4 million approved for 242 technical assistance activities
- US $ 4.0 billion approved for 7 multitranche financing facilities
- US $ 6.8 billion disbursed during 2007, up from $5.7 billion in 2006
The lending increased of 37% compared to 2006. The transport and communications sector got the biggest portion of loans with 39% or 3,9 billion US$. In its annual report 2007 the ADB points out the fact that “analysis and consultations showed that the nature of poverty is changing and that more attention should be given to ensuring that economic growth is inclusive.” (Source: ADB website)
In the Central Asian and Caucasian countries most of ADB’s lending goes towards the agriculture and infrastructure sectors. CEE Bankwatch, being active in the region, warns that these projects have large environmental impacts, while the public has limited access to project information, and affected, local communities are often informed about projects at the wrong time during their preparation. In this region, ADB supports the Central Asia Regional Economic Cooperation (CAREC) Program (including Azerbaijan, Kazakhstan, Kyrgyz Republic, Mongolia, Tajikistan, Uzbekistan and the Xinjiang Uygur Autonomous Region of the People’s Republic of China), which works for regional cooperation on trade policy, transport, and energy, intending huge investments in energy and transport projects.
For East Asia the ADB highlights its efforts to lower the carbon intensity of energy development in China by promoting renewable energy and energy efficiency projects in Gansu and Guangdong provinces and its support for policy discussions with the Chinese Government on sustainable development and environmental management through three loans and six technical assistances.
In the Pacific region ADB financed traditionally projects in the area of transport, power, water and sewerage, education, health and public administration. However it now supports more capacity building, public policy analysis and reform, and improved development processes.
ADB’s lending for South Asia in 2007 showed significantly more new lending in the power, education, rural and urban infrastructure, and financial sectors compared to previous years. In this region ADB had intended to finance the highly contagious Phulbari Coal Power project, which involves extraction of coal using open pit mining method and the construction of a 500-MW power plant. Due to widespread concerns and fierce NGO campaigning, the ADB refrained from financing Phulbari. More on Phulbari can be found on the NGO Forum on ADB.
In Southeast Asia ADB lent nearly 72% more in 2007 than in 2006. This is mainly due to the largest project loan in ADB’s history ($1.1 billion). This loan is for the Kunming–Hai Phong Transport Corridor–Noi Bai–Lao Cai Highway to Viet Nam. The aim of the corridor is to improve connectivity in the Greater Mekong Subregion (GMS).
Policies and strategies
The ADB Safeguard Policies are intended to account for potential social and environmental risks in Bank-funded projects. Their stated objective is to avoid, minimize or mitigate adverse environmental impacts, social costs to third parties or marginalization of vulnerable groups that may result from development projects. Safeguard policies prescribe "do no harm" requirements that must be met for all ADB projects. The Bank has three safeguard policies:
Involuntary Resettlement:
This policy was adopted in order to avoid involuntary resettlement where feasible and minimise resettlement where displacement is unavoidable, this means exploring all viable project options. Where resettlement is unavoidable, the policy is as well about compensation and assistance for relocation.
Indigenous Peoples:
The policy works to ensure that interventions affecting indigenous peoples are
- consistent with the needs and aspirations of affected peoples
- compatible in substance and structure with affected peoples' cultural, social, and economic institutions
- conceived, planned, and implemented with the informed participation of affected communities.
Environment:
The ADB explains that the policy has been prepared to address five main challenges:
- the need for environmental interventions to reduce poverty
- the need to mainstream environmental considerations into economic growth and development planning
- the need to maintain regional and global life support systems
- the need to work in partnership with others
- the need to further strengthen the processes and procedures for addressing environmental concerns in ADB’s own operations.
The Safeguards were updated in 2005. A new update is planned recently. According to the Bank the update will
- articulate ADB's safeguard requirements to improve their clarity, coherence, and consistency
- balance a front-loaded procedural approach with one focused more on results during implementation
- make policy implementation more adaptable in practice to match an evolving range of ADB's lending products and innovative financing schemes
- work toward greater harmonization with safeguard practices across multilateral finance institutions and tailor safeguard approaches to different clients with different capacities
- improve internal processes and resource allocation
(Source: ADB website)
The Bank did lead a round of consultation on the first draft of the Safeguard Policy Statement and intends to launch a second draft of the statement during the third quarter of 2008, followed by a second round of consultation and eventually reaching a final draft policy paper by 2009.
Another important review taking place at the ADB, the result of which will be a new strategy to guide ADB energy sector operations. According to the NGO Forum on ADB the new energy strategy might be released in the third quarter of 2008. They report back from a meeting with members of the ADB energy team who said the energy strategy maintains the position of the ADB in a number of core energy issues as follows:
- No financing of nuclear. The ADB primarily thinks there’s enough bilateral financing of nuclear projects that they have no role in this sector. It was not mentioned however that they are not funding nuclear projects for environmental or massive economic subsidy issues.
- The Bank’s position on bio-fuels has been described as “constructive ambiguity.” ADB will support further studies on this sector as there’s not much information about which crop should be best utilized for energy source, etc. The Bank considering these concerns seriously – food security, energy balance of crops, and environmental impacts such as land use.
- The ADB endorsed the Extractive Industries Transparency Initiative (EITI) last January. Also, the Bank would support activities on gas given its low-carbon rate compared to other fossils. Bank support for oil project would be in limited terms even if area has proven reserves because of the large private sector role in this sector. On coal extractives, it will maintain captive use/mine-mouth only policy.
- The energy strategy will use key indicators such as the $1-billion annual clean energy facility (ACEF), which civil society groups had a big role in creating. Assuming quality projects, this represents over 17% of the previous typical annual spending (not just the energy sector) of the ADB or at least 10% of the same assuming this year's $10-b lending. In both cases, 17% or 10% are far higher proportions than what the supposed leader – the World Bank – should be allocating annually.
An overview of all policies and strategies can be found on the ADB website.
Corruption
In its own words, the ADB has an Anticorruption policy that requires its staff and those parties doing activities financed by ADB to adhere to highest financial and ethical standards- In case of allegations, the Office of the Auditor General is the initial point of contact. They screen and investigate fraud or corruption. The Integrity Division is ADB's independent investigative unit.
To improve its performance in the implementation of the governance and anticorruption policies in sectors where ADB operates, the Bank launched a Second Governance and Anticorruption Action Plan.
Moreover, ADB seeks to support governments' efforts toward effective and transparent systems for public service, anti-bribery and business integrity, through its governance work and active involvement in the ADB/OECD Anti-Corruption Initiative for Asia-Pacific (source: ADB website).
Complaints
The ADB has a Compliance Review Panel, which is an independent forum established by ADB’s Board of Directors to carry out the compliance review phase of the ADB Accountability Mechanism. It has 3 members and is supported by a secretariat.
People who are directly, materially and adversely affected by an ADB-assisted project during formulation, processing, or implementation can file a request for compliance review for CRP to investigate violations of ADB's operational policies and procedures. Source: Compliance Review Panel. This website provides as well information on how to file a request.
Civil Society working on the ADB
