Asia pacific governments need to build greater resilience into national plans: ADB

"The urgency for countries to adapt to the new environment is growing," concluded Independent Evaluation's 2016 Annual Evaluation Review (AER), a strong message given at the "Innovating for Economic and Environmental Sustainability in the Asia and Pacific Region" seminar held at ADB's 49th Annual Meeting in Frankfurt, Germany last month. ADB said that countries in Asia and the Pacific are already grappling with slower economic expansion and falling international trade and need to find new growth drivers while maximising the contributions of existing industries. It pointed out that the region's economic prospects are increasingly linked to the ability of the People's Republic of China (PRC) and India to address their economic, environmental and climate challenges. "Asia today is also more exposed to external shocks through the closer integration of global markets," stated ADB.hideOne panellist at the seminar said that external shocks, regardless of origin, quickly push vulnerable people below the poverty line and the poor even deeper into poverty. The AER highlighted the scale of this challenge. It said that latest data reveals that the number of people living in extreme poverty in the Asia Pacific region (based on a person living on less than $1.90 a day in 2011 purchasing power parity terms) at just over 450 million. "More than 1.3 billion people living on less than $3.10 a day are at high risk of falling back into poverty due to vulnerability to shocks and the proximity of their incomes to the poverty line. Meanwhile, inequality is rising in a number of the region's more populous countries, such as the PRC, India and Indonesia," stated ADB. The expert panel at the seminar agreed that countries must "vigorously" promote social inclusion and environmental sustainability, both involving private sector solutions, to ensure that Asia's economic growth does not peter out. The panel agreed with the AER's message that development gains can be eroded by the rising frequency and ferocity of natural disasters and the destruction of the natural environment. The benefits and costs of Asia's growth are becoming increasingly clear in its cities. The region already has 13 of the world's 23 megacities, and its urban population is expected to nearly double from 1.6 billion in 2010 to 3 billion by 2050. "These trends highlight the vital importance of addressing urban issues such as water supply, sanitation and, arguably most important of all, pollution," stated the AER. The expert panel concluded that, in the face of growing inequalities, the realities of continued environmental degradation and runaway climate change, the region's key challenge is to generate innovative ways of sustaining progress. ADB reported during its annual meeting that financing approvals for new operations reached a record high of $16.3bn in 2015, up 20% from 2014. Disbursements and co-financing also reached new highs last year, reported ADB. ADB said that it had also shortened its processing time for both sovereign and non-sovereign operations and cut internal administrative expenses by more than 10% per $1m disbursed. But the bank admitted that a number of performance concerns remain. The overall success rates for operations stand at 72%, still below its 80% target level. "Operational efficiency was weighed down by implementation delays, which averaged almost two years and affected 90% of sovereign projects. There was a decline in the disbursement ratio for sovereign projects, which was affected by low project readiness and slow procurement, among other reasons," stated ADB. "In terms of organisational effectiveness, the share of women among international staff fell from 34.5% in 2014 to 33.8% in 2015, while the overall staff engagement level also declined in 2015," added the bank. To help tackle these obstacles, ADB has implemented its Strategy 2020 mid-term review action plan since 2014. This includes 10-point procurement actions to speed up procurement, and faster approvals for small non-sovereign transactions. In December 2015 ADB approved new reforms in an attempt to boost project readiness, cut start-up and completion delays, and raise efficiency and overall success ratings. The measures included the encouragement of advance contracting and retroactive financing for contracts that are signed before loans are approved. ADB also simplified review requirements to quicken the pace of its sovereign project disbursements and is taking steps to further expand co-financing. Efforts are also being made to raise women's representation among international staff, improve staff perception and "optimise human resources", said the bank. "ADB's operations have consistently delivered results that have benefited millions of people in Asia and the Pacific," said Indu Bhushan, Director General of ADB's Strategy and Policy Department. "However, we cannot rest on our laurels. ADB will continue to undertake reforms to meet its remaining challenges and rise to new ones in order to better meet the needs of our developing member countries," he added. During the same meeting ADB president Takehiko Nakao said that the creation of quality jobs, development of the private sector and the need to combat climate change are critical for a vibrant and sustainable region. He also said that Asia-Pacific's long-term outlook is "strong" despite a slowdown in some economies this year. "Jobs empower people and reduce poverty in the most fundamental way," said Mr Nakao. "Employment opportunities, especially for our youth, are essential to make the economy vibrant and to promote social stability. We should also ensure a safe and decent work environment." Mr Nakao said that the private sector is Asia's "engine of growth". By driving innovation and creating opportunities, he said the private sector has become "the basis for Asia's vibrant future". In 2015, ADB directly provided $2.6bn in finance to private sector companies and projects, up 37% from 2014. "It ranged from supporting financial sector development, to delivering infrastructure, to providing critical social services through the private sector-all with a strong focus on poorer countries," he said. The ADB estimates that, for every dollar it provides, it mobilises at least $4 more in commercial financing. ADB is also promoting public-private partnerships by helping prepare bankable projects to attract private investment. The third area that Mr Nakao highlighted is climate change. "Climate action is fundamental to the region's sustainable development," he said. ADB has promised to double annual climate financing to $6bn by 2020. Partnerships with the private sector and other co-financiers are key to the delivery of the finance and new technologies needed, it said.

Asia pacific governments need to build greater resilience into national plans: ADB

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