Development Effectiveness Review Report

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1 Development Effectiveness Review 2011 Report

2 Development Effectiveness Review 2011 Report

3 2012 Asian Development Bank All rights reserved. Published Printed in the Philippines ISBN (Print), (PDF) Publication Stock No. RPS Cataloging-In-Publication Data Asian Development Bank. Development Effectiveness Review 2011 Report. Mandaluyong City, Philippines: Asian Development Bank, Development. 2. Development effectiveness. 3. Asia and the Pacific. 4. Asian Development Bank. I. Asian Development Bank. Every effort has been made to ensure the accuracy of the data used in this publication. Variations in data in ADB publications often result from different publication dates, although differences may also come from source and interpretation of data. ADB does not accept responsibility for any consequence of their use. By making any designation of or reference to a particular territory or geographic area, or by using the term country in this document, ADB does not intend to make any judgments as to the legal or other status of any territory or area. ADB encourages printing or copying information exclusively for personal and noncommercial use with proper acknowledgment of ADB. Users are restricted from reselling, redistributing, or creating derivative works for commercial purposes without the express, written consent of ADB. Note In this report, $ refers to US dollars. 6 ADB Avenue, Mandaluyong City 1550 Metro Manila, Philippines Tel Fax For orders, please contact: Department of External Relations Fax adbpub@adb.org

4 Contents Abbreviations v Executive Summary 1 Introduction 7 Level 1: Development Progress in the Region 9 Poverty and Human Development Outcomes 9 Other Development Outcomes 14 Level 2: Adb s Core Outputs and Outcomes 19 ADB s Core Sector Outputs 19 ADB s Contribution to Development Outcomes 24 ADB s Development Impact at the Country Level 36 Level 3: ADB s Operational Effectiveness 39 Has the Quality of ADB s Completed Operations Improved? 39 Have the Quality at Entry and Portfolio Performance of ADB s Operations Improved? 45 How Successful is ADB at Transferring and Mobilizing Development Finance? 47 Is ADB Improving Its Strategic Focus and Selectivity? 49 Is ADB Managing Knowledge Better? 54 Is ADB Forming Better Partnerships? 55 Level 4: ADB s Organizational Effectiveness 59 Is ADB Aligning Its Human Resources to Increase Operational Effectiveness? 59 Is ADB s Budget Adequate to Support Operational Effectiveness? 61 Are ADB s Business Processes and Practices More Efficient? 63 Actions 67 Actions under Implementation 67 Priority Actions for Conclusion 69 iii

5 Appendixes 1. ADB Performance Scorecard List of ADB Countries Changes to Data Asia and Pacific Development Outcomes ADB Sector Outputs Outcomes of Operations Completed in Country Partnership Strategies at Completion Sovereign and Nonsovereign Operations at and after Completion Technical Assistance Projects at Completion Sovereign Operations during Implementation Disbursements Cofinancing Strategic Focus in Operations Partnerships Human Resources Business Processes and Practices 144

6 Abbreviations ADB ADF ASEAN CAPE CO 2 CoP CPS CSO DEfR DMC DVA FCAS GDP IAE IED km Lao PDR MAKE MDG MfDR OCR PBA PCR PRC PVR QAE SMEs TA XARR Asian Development Bank Asian Development Fund Association of Southeast Asian Nations country assistance program evaluation carbon dioxide community of practice country partnership strategy civil society organization development effectiveness review developing member country direct value-added fragile and conflict-affected situation gross domestic product internal administrative expenses Independent Evaluation Department kilometer Lao People s Democratic Republic Most Admired Knowledge Enterprise Millennium Development Goal managing for development results ordinary capital resources program-based approach project completion report People s Republic of China PCR validation report quality at entry small and medium-sized enterprises technical assistance extended annual review report v

7 Children in the Tondo neighborhood in the Philippines study by the light of energy-efficient compact fluorescent lamps supplied under the Philippine Energy Efficiency Project.

8 Executive Summary The Asian Development Bank (ADB) has completed the 2011 Development Effectiveness Review (DEfR), its fifth annual corporate performance assessment. The review evaluated ADB s progress against the Strategy 2020 results framework, and highlighted performance trends and needed Management actions. The DEfR reviewed progress in Asia and the Pacific toward key development objectives (Level 1). It further assessed ADB s performance in delivering core sector outputs and outcomes (Level 2), and improving operational and organizational effectiveness (levels 3 and 4). Summary Performance Scorecard 2011 ADB Countries ADF Countries Development Context for ADB Operations: Asia and Pacific Development Outcomes (Level 1) Poverty and Human Development Outcomes mixed poor Other Development Outcomes good good ADB Performance ADB Operations ADF Operations Core Outputs and Outcomes (Level 2) Output Delivery good mixed Outcome Achievement poor poor Operational Effectiveness (Level 3) Quality of Completed Operations poor poor Quality at Entry and Portfolio Performance good good Finance Transfer and Mobilization good good Financing for Strategy 2020 Priorities good good Gender Mainstreaming good good Knowledge Management a good good Partnerships good good Organizational Effectiveness (Level 4) Human Resources a good good Budget Adequacy a poor poor Business Processes and Practices good good ADB = Asian Development Bank, ADF = Asian Development Fund. Good: Two-thirds or more of key performance indicators (KPIs) in the group are on track or above target. Mixed: Less than two-thirds but more than half of KPIs in the group are on track or above target, or half of KPIs are off track (red) and the other half exceed desired progress or are above target (green). Poor: Half or less than half of KPIs in the group are on track or above target. a Indicators in this category assess ADB-wide performance only. Note: Gender Mainstreaming is a KPI within the composite indicator Financing for Strategy 2020 Priorities. Source: ADB Strategy and Policy Department. 1

9 Development Effectiveness Review 2011 The DEfR found that ADB had achieved most of its operational and organizational effectiveness targets. ADB improved the quality of its ongoing operations, and earned good ratings for its two previously weak performance areas: support for gender mainstreaming in operations and finance mobilization. However, the review confirmed that the quality of ADB s recently completed operations including their delivery of core sector outcomes remained considerably below target despite improvements from the previous year. Furthermore, project delays and cancellations lowered the outputs to be delivered during from Asian Development Fund (ADF) operations. Management is concerned about these findings and has instructed staff to implement fully the corrective actions adopted in A summary of the performance of ADB as a whole and the ADF as a subset is presented in the summary performance scorecard table. At Level 1 (Asia and Pacific development outcomes), rapid economic growth in Asia and the Pacific continued to reduce poverty and improve social outcomes. Gains were seen in indicators such as gender parity in education and rural water supply, but progress remained slow in many areas, particularly in the poorer ADF countries. Substantial gaps remain in country attainment of the Millennium Development Goals, and overall regional trends underline the need to accelerate efforts to achieve the globally agreed upon targets by At Level 2 (outputs and outcomes), 2011 data show that ADB as a whole remains on track to deliver a substantial proportion of programmed core sector outputs by For ADF operations, the expected output achievement of several indicators is lower than the originally programmed outputs due to project delays, restructuring, and cancellations. This finding underlines the importance of ongoing initiatives to improve project performance. The assessment of outcomes shows that ADB s performance improved considerably but remained below the 80% target. The main reason for this is the low rating given to Pakistan s restructured and closed projects. While restructuring dampened outcome achievement in the short term, it enabled financial and human resources to be allocated to more promising projects. This improved portfolio performance in Pakistan, and in the medium to long term is expected to strengthen ADB s overall outcomes performance. ADB delivered more successful projects (Level 3 operational effectiveness), as shown by the rise for the second consecutive year in the proportion of recently completed sovereign operations rated successful. Nevertheless, the 3-year average success rate remained off track at 68%. As with core sector outcomes, performance was largely influenced by portfolio restructuring in Pakistan. ADB s success rate for recently completed nonsovereign operations improved slightly compared with the revised 2010 figure but fell short of the 80% target. A higher percentage (78%) of recently completed technical assistance (TA) projects were rated successful, putting the 80% target within reach for ADB as a whole. TA performance in ADF countries also improved, although it remained off track. ADB will ensure that the 2008 TA reforms are sustained, and will initiate a review of the impact of these measures in The Independent Evaluation Department evaluated the completed country strategies and programs for seven countries: four were rated successful and the remaining three partly successful. The strategic positioning and program relevance of almost all of the country strategies and programs were considered satisfactory. The main reasons for the partly successful ratings related to country assistance program delivery and sustainability. This highlights the need for continued implementation of actions to improve project performance. The performance of sovereign operations during implementation improved sharply, with 2

10 Executive Summary 91% of ADB and 89% of ADF operations rated satisfactory. This may be attributable to ADB s continued efforts to strengthen project design and implementation. ADB continued to achieve the target for project start-up time. ADB greatly expanded cofinancing for ADB and ADF operations. The increase was sufficient to raise the performance of ADF operations from off track to on track. ADB continued to transfer funds rapidly to both ADB and ADF operations. ADB continued to allocate a greater proportion of its financing to Strategy 2020 s five core areas of specialization. These areas now account for 96% of ADB s financing. While this confirms ADB s continuing strong focus on core areas of operations, the consequences of a sharp decline in support for other operational areas may need to be examined and adjustments considered. ADB s performance in promoting environmental sustainability, gender mainstreaming, private sector development, and regional cooperation and integration exceeded targets. The impressive performance in gender mainstreaming, which surpassed targets for the first time, reflects ADB s successful implementation of actions since Staff perceptions of knowledge management at ADB continued to improve, surpassing the 2012 target for the second consecutive year. ADB also received wider external recognition of its progress in knowledge management in 2011 when it won the Asian Most Admired Knowledge Enterprise Award and was named a finalist for the global award. To reinforce this progress, ADB consolidated its knowledge departments under one vice-presidency and plans to develop strategic directions for knowledge management. ADB also made excellent progress on partnering with civil society organizations and conducting country partnership strategy and portfolio review missions jointly with other development partners. ADB s organizational effectiveness (Level 4) improved further in ADB allocated more staff to operations departments and resident missions, achieving the 2012 target. Considerable progress was also made toward gender balance at ADB. Sizable increases in ADB s internal administrative expenses budget for 2011 and 2010 helped reverse the declining trend in budget adequacy indicators, and ADB stretched these funds further by prioritizing activities and implementing efficiency measures. Average processing time was longer than in the previous year for sovereign operations. Most of these operations had not yet benefited from the 2010 streamlined business processes. ADB Management is concerned about this finding and has instructed staff to implement fully and expeditiously the 2010 streamlined business processes. ADB is investigating key processing bottlenecks to define appropriate actions. ADB delegated the administration of 40% of its projects to resident missions, and all resident missions led country programming, portfolio review, and economic work. In addition to deploying more staff to resident missions, ADB strengthened their capacity through extended special missions to train and support staff in procurement work. To sharpen its results focus, ADB refined its corporate results framework and DEfR scorecard in early 2011 and is now undertaking a full review of the framework. Results-based work plans were implemented at all levels of the organization to ensure that staff work plans are closely aligned to Strategy 2020 goals. ADB continued to consolidate country, sector, and project results management and also continued to help developing member countries strengthen the results focus of their public sector management systems. A review by the Independent Evaluation Department found that ADB needs to make greater efforts to achieve progress in these areas in order to transform itself into a fully results-based organization. Since 2010, Management has intensified efforts to improve project implementation and outcomes and is monitoring actions to ensure their timely implementation. All operations departments have identified measures to remove their performance 3

11 Development Effectiveness Review 2011 weaknesses and are monitoring these measures regularly through their results-based work plans. To consolidate improvements and further advance ADB s performance, ADB will implement expeditiously the initiatives defined by the project implementation working group in 2010 and the ADB-wide and departmental action plans to improve project outcomes adopted in 2011; involve more systematically sector experts (including communities of practice) to ensure quality at entry and quality during implementation of multisector projects; initiate a review of the TA reforms adopted in 2008 to assess their impact on TA performance and identify further actions needed; continue to implement the 2010 streamlined business processes and adopt actions to improve its efficiency following further analysis on processing bottlenecks; continue to implement the revamped actions to achieve the gender balance targets under the Third Gender Action Program extension, ; identify better indicators to measure budget adequacy and efficiency for the upgraded results framework to be introduced in 2013, while continuing to implement efficiency measures to deliver quality operations within the budget; and further mainstream managing for development results at ADB by completing the review of the corporate results framework, improving the use of resultsbased work plans, sharpening the results focus of ADB-wide sector and thematic operational plans, consolidating country and project results management and reporting, and reinforcing support for developing member country capacity development on results-based public sector management. 4

12 Progress (toward achieving target) At or above target Key Performance Indicator Signals Signal Direction of Annual Change a On track (exceeded desired progress to attain target) On track but watch (met desired progress to attain target, but requires close monitoring) Off track (fell short of desired progress to attain target) Improved Stable Deteriorated Improved Stagnated Deteriorated Improved Stagnated Deteriorated a Improved or deteriorated if annual change is at least 3%; stable or stagnated if change is less than 3%. Source: Asian Development Bank Strategy and Policy Department. 5

13 A water supply project enables this school in Armenia to receive water for more hours of the day, improving students health and hygiene.

14 Introduction The 2011 Development Effectiveness Review (DEfR) is the fifth annual corporate performance report of the Asian Development Bank (ADB). The review assesses the progress ADB made in 2011 toward implementing its long-term strategic framework, Strategy 2020, detailing ADB s performance against the indicators and targets at the four levels of its corporate results framework (Figure 1). 1 Based on this assessment, the DEfR identifies the main challenges ADB faces and proposes remedial actions. The DEfR process is an important contributor to the culture shift at ADB toward the delivery of results. The 5-year history of the DEfR enables a firmer assessment of performance trends and challenges in ADB as a whole and the Asian Development Fund (ADF) as a subset. The longer perspective also increasingly allows Management to assess the impact of actions ADB has implemented to improve effectiveness. The comprehensive ADB performance scorecard for 2011 is in Appendix 1. 2 The 2011 DEfR is based on the ADB corporate results framework approved by the Board of Directors in 2008 and refined in The targets for levels 2 4 of the results framework expire in Therefore, ADB initiated a review Figure 1: Strategy 2020 Results Framework Level 1 What development progress is Asia and the Pacific making? Level 2 Is ADB contributing to development in the region? Level 3 Is ADB managing its operations effectively? Level 4 Is ADB managing itself efficiently? ADB = Asian Development Bank. Source: ADB Strategy and Policy Department. in January 2012 to determine new targets and refine the results framework to ensure its continued relevance as a corporate management tool. The revision process will consider lessons learned since 2008, emerging good practices, changes in ADB s operational context, and feedback from stakeholders. ADB intends to adopt the updated results framework in ADB Strategy 2020: The Long-Term Strategic Framework of the Asian Development Bank, Manila; and ADB ADB Results Framework. Manila (R166-08). The list of performance indicators, their definitions, and the methodology used to compile data are available at Framework/Results-Framework-Indicators.pdf The assessment of ADB generally covers (i) for Level 1, progress in all of ADB s developing member countries (DMCs); and (ii) for levels 2 4, ADB operations funded by ordinary capital resources and the ADF. The assessment of ADF generally covers (i) for Level 1, progress in ADF countries (a subgroup of ADB DMCs that have access to ADF, including blend countries with access to both ordinary capital resources and the ADF); and (ii) for levels 2 4, the ADF-funded operations. The classification of ADB DMCs used in this report is given in Appendix 2. Progress assessments generally exclude operations financed from ADB s Countercyclical Support Facility, which was established in 2009 to help DMCs respond to the global economic crisis, because these operations were outside ADB s regular operations. 7

15 A worker checks machinery at the Lahendong 2 geothermal power plant in Sulawesi, a subproject of the ADB-financed Renewable Energy Development Project in Indonesia.

16 Level 1 Development Progress in the Region ADB monitors development outcomes in Asia and the Pacific to track progress and help shape ADB s operational strategy. 3 This section examines the region s performance in achieving the objectives of poverty reduction and human development, and other regional outcomes (growth, regional cooperation and integration, basic infrastructure, finance, governance, and the environment). The 2011 DEfR draws on the most recent data available on the indicators, which range from 2008 to XX Poverty and Human Development Outcomes ADB mixed ADF poor The region s rapid economic expansion continued to reduce poverty and improve some social outcomes, often dramatically. However, wide gaps in country attainment remain (Table 1 and Appendix 1, Tables A1.1 and A1.2, and Appendix 4, Tables A4.1 A4.3). Overall, regional trends in poverty and human development remain unchanged since the last DEfR, Table 1: Poverty and Human Development in Asia and the Pacific (Level 1) Indicator Population living on less than $1.25 (PPP) per day (%) Primary education completion rate, both sexes (%) Ratio of girls to boys in: Asian Development Bank Countries Asian Development Fund Countries Asian Development Fund- Only Countries Latest Target Latest Target Latest Target Primary education Secondary education Tertiary education Women in nonagricultural wage employment (%) Increase Increase Increase continued on next page 3 As ADB is a small player in a large, dynamic region, overall progress at this level cannot be attributed to ADB s performance. 9

17 Development Effectiveness Review 2011 Table 1 continued Indicator Under-5 child mortality (per 1,000 live births) Women (aged 15 and above) living with HIV (number, million) Asian Development Bank Countries Asian Development Fund Countries Asian Development Fund- Only Countries Latest Target Latest Target Latest Target a b 1.72 Reverse 0.14 b 0.30 Reverse 0.07 b 0.06 Reverse Population with sustainable access to improved water source (%): Urban c Rural c Population with sustainable access to improved sanitation (%): Urban c Rural c PPP = purchasing power parity. Note: For latest values, bold font signifies that the indicator is on track to achieve the internationally agreed target for Targets are calculated by ADB for its country groups based on 1990 official figures or earliest available data thereafter. ADB countries include all of its developing member countries. Asian Development Fund (ADF) countries are a subset of ADB countries that have access to the ADF (including blend countries with access to both ordinary capital resources and the ADF). ADF-only countries are a subset of ADB countries that have access only to the ADF. ADB, ADF, and ADF-only country lists are based on country classification during its eighth replenishment period (Appendix 2). Data have been revised to include new country data on poverty and development made available in (Appendix 3, Table A3.1). a 2010 data. b 2001 data used for baseline. c 2008 data. Sources: Regional aggregates are prepared by the ADB Strategy and Policy Department using country data from the United Nations Economic and Social Commission for Asia and the Pacific (UNESCAP) Statistics Division as part of the partnership between ADB, the United Nations Development Programme, and UNESCAP on the Millennium Development Goals. Estimates are weighted averages of actual country values or imputed country values wherever data are missing for the year required; population data used as weights are from the United Nations Population Division, World Population Prospects: The 2010 Revision. New York for population data (accessed 4 October 2011); HIV data are from the Joint United Nations Programme on HIV/AIDS (UNAIDS) Report on the Global AIDS Epidemic Geneva. underlining the urgency of accelerating efforts to achieve the Millennium Development Goals (MDGs) human development targets by Figure 2 shows that the region has made considerable progress toward the MDGs since 1990 their baseline year and illustrates the progress required to reach the 2015 targets for the selected indicators. 4 While the targets for income poverty, gender parity in primary and secondary education, and access to clean water in rural areas have been met, targets for primary education completion, child mortality, access to clean water in urban areas, and access to improved sanitation in rural and urban areas are proving more difficult to achieve. Only half of key performance indicators for poverty and human development outcomes are on track or above target, therefore the region s 10 4 The DEfR assesses progress at Level 1 against data from 2005 the baseline year for Level 1 indicators.

18 Level 1 Development Progress in the Region Figure 2: Progress since 1990 of Selected Millennium Development Goal Indicators toward 2015 Targets Income poverty Primary completion rate Gender parity, primary Gender parity, secondary Gender parity, tertiary Child mortality rate Access to clean water, urban Access to clean water, rural Access to improved sanitation, urban Progress from 1990 to 2005 Progress from 1990 to most recent data 2015 Forecast 2015 Target Access to improved sanitation, rural % Note: Figure shows the percentage progress achieved by selected indicators since the 1990 baseline relative to progress required to meet 2015 targets for the Millennium Development Goals. Source: Asian Development Bank Strategy and Policy Department. score is mixed. 5 ADF countries are also making insufficient progress in rural water supply and gender parity in tertiary education. With only one-third of indicators on track or above the MDG targets, progress for ADF countries as a group is rated poor. The performance of ADFonly countries is similar to ADB countries as a whole, with half of key performance indicators on track. 6 Income Poverty ADB ADF ADB and ADF countries achieved the 2015 income poverty target as early as ADF- only countries are on course to reach the target well before When the MDG target year is reached, the proportion of the population in ADB countries living on less than $1.25 a day is projected to be 18.6%, far surpassing the regional target of 27.4%. Despite this success, some countries have been left behind. In a quarter of countries in the region, at least 30% of the population was living in poverty in Growing income inequality continues to be a challenge for Asia and the Pacific. During , income inequality increased in 18 of the 28 countries for which data are available The score of the composite indicators is based on the percentage of off-track key performance indicators: The score is good (green) if two-thirds or more of key performance indicators are on track or above target; mixed (amber) if less than two-thirds but more than half of key performance indicators are on track or above target, or if half are off track and the other half exceeded desired progress or are above target; and poor (red) if half or less of key performance indicators are on track or above target. Appendix 4 provides the complete list of MDG indicators monitored by the partnership between ADB, the United Nations Economic and Social Commission for Asia and the Pacific, and the United Nations Development Programme, broken down into ADB, ADF, and ADF-only countries (Tables A4.1 A4.3). Poverty headcount ratios exceeded 30% in 6 of the 24 countries with data in 2009: Bangladesh, India, the Lao People s Democratic Republic (Lao PDR), Nepal, Timor-Leste, and Uzbekistan. 11

19 Development Effectiveness Review 2011 In seven Asian countries for which data has become available for 2008 and 2009, the global economic crisis had not at least by 2009 slowed the pace of poverty reduction seen in the pre-crisis years. 8 Most countries in the sample showed declines in the percentage of people living on less than $1.25 a day that were either similar to or larger than past trends would indicate. In Indonesia, for example, past trends would indicate 20.6% living on $1.25 a day, but 2009 data showed the figure was 18.7%. Quality of Primary Education Primary Completion Rate ADB off track ADF off track In 2009, about 94% of primary-age children in ADB countries were attending school a higher percentage than the developing regions of the world combined (89%). The net enrollment ratio increased by only 0.15 percentage points per year in compared with 0.32 percentage points per year in Despite the slowing progress, ADB countries as a group remain on track to meet the target of near-universal enrollment in primary education. One indicator used to gauge the quality of primary education is the percentage of children that complete the last grade of primary school. This increased steadily for ADB countries as a group; and in 2009, 94% of children in the region completed primary education. The completion rate for ADF countries was lower at 80% and for ADF-only countries at 68%. The biggest improvements in primary completion were in Bhutan (whose completion rate was among the lowest in 2005), Georgia, and India. However, the improvement was insufficient to enable the region as a whole, or the ADF and ADF-only countries, to achieve the target. Gender Equality Ratio of Girls to Boys in Primary Education ADB ADF on track Secondary Education ADB ADF on track Tertiary Education ADB on track ADF off track The region has already achieved gender parity based on enrollment in primary and secondary education, and is on track to achieve it in tertiary education by ADF and ADF-only countries are likely to match this performance only in primary and secondary education as gender disparity in tertiary education remains pronounced in these countries, partly because fewer girls than boys enroll in the earlier stages of education. In ADF countries, more than 50% of girls do not attend secondary school, compared with 45% of boys. 9 Women in Nonagricultural Wage Employment ADB on track ADF on track The proportion of women in nonagricultural wage employment is an indicator of women s empowerment and a reflection of their access to tertiary education opportunities. This indicator showed a slight increase in both ADB countries and ADF countries between 2005 and By 2015, women s participation in nonagricultural wage employment in the region is likely to reach only 33% far short of the average of 48.3% in developed countries in 2009, but nevertheless an increase on the 2005 figure. 10 Access to Health Under-5 Child Mortality ADB off track ADF off track Progress in reducing child mortality remained sluggish, mirroring the performance of the regional health MDGs. Although child mortality fell from 57 deaths per 1,000 live births in The seven countries for which data are newly available are Armenia, Azerbaijan, Georgia, Indonesia, the Lao PDR, Malaysia, and Viet Nam. ADB Gender Equality and Women s Empowerment. Discussion paper presented at the second ADF XI replenishment meeting, Dhaka, Bangladesh. 5 6 December United Nations The Millennium Development Goals Report New York. Statistical Appendix. 12

20 Level 1 Development Progress in the Region 2005 to 49 per 1,000 in 2010, the target of 29 per 1,000 in 2015 is out of reach. The 2012 regional MDG report identified several reasons for the slow progress, including (i) insufficient public spending on health; (ii) poorly performing public health services; and (iii) insufficient health personnel, basic infrastructure, and women s development. 11 Significant differences in access to and quality of such services have led to wide disparities between countries in child mortality reduction. Of the 13 countries with high under-5 mortality in 1990 (more than 100 deaths per 1,000 live births), 9 reduced their rates by 58% 85% by 2010, while 4 lowered theirs by only 29% 46% in the same period. Maternal mortality was also insufficient, despite a drop from 379 maternal death per 100,000 live births in 1990 to 187 per 100,000 in The presence of a trained birth attendant during delivery is crucial. In Asia and the Pacific, however, only 66% of births were attended by skilled health personnel, compared with 88% in Latin America and the Caribbean and 81% in Northern Africa in Women Living with HIV ADB off track ADF off track As the most recent data on women living with HIV is from 2009, this indicator has not been updated since the last DEfR. Sustainable Access to an Improved Water Source Urban Population ADB off track ADF off track Rural Population ADB ADF off track Although water supply coverage in urban areas continued to rise, the latest figures indicate only a marginal improvement of 0.3 percentage points for ADB countries and 0.1 percentage points for ADF countries compared with 2005 figures. The rate of progress in all three country groupings ADB, ADF, and ADF-only fell well short of that needed to achieve the 2015 MDG target for urban water supply. Figures for 2008 show that efforts to provide rural dwellers with access to clean water were more successful than similar interventions in urban areas. The 81.1% target for ADB countries was achieved in The most recent data show that 82% of the region s rural population has sustainable access to an improved water source. The growth in percentage coverage since 2005 was fastest in Afghanistan, Kiribati, Timor- Leste, and Viet Nam. ADF-only countries are also on track. However, the coverage rate in ADF countries is unlikely to reach the target despite improvements. Access to an improved water source in rural areas continues to lag behind service provision in towns and cities. However, 2008 data show that the gap had narrowed, and an urban dweller was 1.2 times more likely to use an improved drinking water source than a person living in a rural area. Sustainable Access to Improved Sanitation Urban ADB off track ADF off track Rural ADB off track ADF off track Despite the importance of sanitation and hygiene to good health, progress in providing improved sanitation remains unsatisfactory in all country groupings. The situation is particularly dismal in the region s rural areas where 6 in 10 people lack access to improved sanitation. Critical impediments to progress in sanitation are inadequate investment in the sector and poor technical and management capacities, especially at the local level. These factors are compounded by a lack of awareness of the link between improving access to sanitation and better public health. 11 ADB, United Nations Economic and Social Commission for Asia and the Pacific, and United Nations Development Programme Accelerating Equitable Achievement of the MDGs: Closing Gaps in Health and Nutrition Outcomes. Bangkok. 13

21 Development Effectiveness Review 2011 XX Other Development Outcomes ADB good ADF good The region appears to be recovering from the financial crisis, as shown by the significant annual growth in gross domestic product (GDP) per capita and the expansion in trade volumes and basic infrastructure particularly electricity and telecommunications. Governance and the climate for private sector participation also improved, and the rate of increase in carbon dioxide (CO 2 ) emissions slowed. With almost all indicators registering progress, ADB and ADF countries are both rated good (Table 2, and Appendix 1, Table A1.2). Growth ADB on track ADF on track ADB countries recorded a robust per capita GDP growth rate of 8.2% in 2010, up from 6.4% in the previous year, indicating a recovery from the global economic crisis. This average was again heavily influenced by strong figures from the People s Republic of China (PRC) (9.8%) and India (7.4%). ADF countries grew by 4.5% and ADF-only countries by 3.8%, showing improvement over 2010 figures. However, recent data suggest a moderation in growth in 2011 because of the sluggish pace of recovery in major industrial economies. 12 Regional Cooperation and Integration ADB on track ADF on track The region s trade volume declined (from $3.0 trillion in 2008 to $2.5 trillion in 2009) because of the global economic crisis, but then expanded to $3.5 trillion in ADB s developing member countries (DMCs) are trading more with Asia and the Pacific. The ratio of DMCs total trade with the region to their total trade with the world was 52% in 2010 slightly higher than the 2005 baseline of 51%. By comparison, the European Union had considerably more trade integration, at 65%, while Latin America and the Caribbean (20%) and sub-saharan Africa (13%) have much less. The trend toward greater intraregional trade with Asia and the Pacific continued at a faster pace for the weaker ADF and ADF-only countries. These countries trade mostly with close neighbors because of their less-developed production capacities and trade infrastructure. In 2010, the ratio of their total trade with the region to their total trade with the world rose to 62% for ADF countries (from 58% in 2009) and 68% for ADF-only countries (from 66% in 2009). Southeast Asia and the Pacific had the highest trade integration at about 70%, while Central Asia had the lowest at 31%. Access to Basic Infrastructure: Telecommunications ADB on track ADF on track Roads ADB on track ADF on track Electricity ADB on track ADF on track The expansion of basic infrastructure telecommunications, roads, and electricity underpins economic and social development, including the achievement of the MDGs. The region continued to increase access to telecommunications (aided by mobile telephony), and electricity rapidly. Access to telecommunications nearly doubled between 2006 and 2010, while the share of households with electricity rose from two-thirds to fourfifths. Progress was even faster in ADF and ADF-only countries. Access to roads increased more slowly, with 2 kilometers (km) more paved roads for every 10,000 people in 2008 compared with the baseline of 12 km per 10,000 people in The 44% increase in road access in the PRC had a large influence on this figure. Road access in ADF and ADF-only countries rose marginally. 12 ADB Asian Development Outlook 2011 Update: Preparing for Demographic Transition. September. Manila. 14

22 Level 1 Development Progress in the Region Table 2: Growth, Regional Cooperation and Integration, Infrastructure, Finance, Governance, and Environment in Asia and the Pacific (Level 1) Indicator Growth Gross domestic product per capita (at constant 2000 prices, $) Regional cooperation and integration Intraregional trade in total Asia and the Pacific trade (%) Access to basic infrastructure Telecommunications: fixed lines and mobile telephone subscribers (per 1,000 people) Baseline Values Year ADB ADF Latest Values ADF- Only Year ADB ADF ADF- Only , , Roads: paved roads for every 10, people (km) Electricity: household electrification rate (%) Finance Banking assets to gross domestic product (%) Governance Cost to start business (% of gross national income per capita) Time to start business (days) Governance and public sector management assessment from country performance assessments Environment Carbon dioxide emissions (tons per capita) ADB = Asian Development Bank, ADF = Asian Development Fund, km = kilometer. Notes: 1. For ADB and ADF latest values, bold font signifies that the indicator is on track to achieve the 2015 target. 2. ADB countries include all of ADB s developing member countries. ADF countries are a subset of ADB countries that have access to the ADF (including blend countries with access to both ordinary capital resources and the ADF). ADF-only countries are a subset of ADB countries that have access only to the ADF. ADB, ADF, and ADF-only country lists are based on country classification during its eighth replenishment period (Appendix 2). 3. Intraregional trade as a share of total trade in Asia and the Pacific is computed as the ratio of the total trade of the country grouping with Asia and the Pacific to the country grouping s total trade with the world. The higher the share, the more integrated the country grouping is with Asia and the Pacific. Total trade is the sum of exports and imports. 4. Data have been revised to include new country data on other development indicators made available in (Appendix 3, Table A3.2). 5. The regions CO 2 emissions are comparable to those Latin America and the Caribbean at 2.9 tons per capita, and remains substantially lower than the 11.2 tons per capita for the developed world, 8.0 tons for Europe, and 17.9 tons for the United States. Sources: World Bank, World Development Indicators online database for gross domestic product per capita, access to telecommunications, paved roads, and carbon dioxide emissions (accessed 6 January 2012); International Finance Corporation and the World Bank, Doing Business online database for cost and time to start business (accessed 18 January 2012); International Monetary Fund, Direction of Trade Statistics CD-ROM (issued in December 2011) for intraregional trade; United Nations Population Division, World Population Prospects: The 2010 Revision, New York for population data (accessed October 2011); Organisation for Economic Co-operation and Development, and International Energy Agency, World Energy Outlook Paris for electrification (accessed January 2012); ADB Office of Regional Economic Integration for finance; and ADB country performance assessment ratings for governance and public sector management assessment. 15

23 Development Effectiveness Review 2011 Finance ADB on track ADF on track The share of banking assets to GDP increased by 11 percentage points during for the region as a whole and for ADF-only countries, while ADF countries registered more modest increases. Despite these improvements, access by households in Asia to financial services remained low. Data obtained from Financial Access reveal that ADB countries on average had in 2010 about 668 commercial bank accounts per 1,000 adults while ADF countries had 423. Both country groups fell far behind Latin America and the Caribbean (with 1,015 accounts) and even further behind the more developed economies within the region such as Singapore (2,236) and outside the region such as the United States (2,022). South Asia and sub-saharan Africa had the lowest share of households with access to banking globally. Among the factors identified for low access to finance are low household incomes, insufficient legal environment for lending and protection of deposits, inadequate competition, and lack of basic infrastructure such as electricity and telecommunications. 13 Governance Cost to Start a Business ADB on track ADF on track Time to Start a Business ADB on track ADF on track Governance and Public Sector Management Assessment ADF on track After initial rapid improvements in facilitating formal business start-ups in the years since 2004 the earliest data assessed by the DEfR the pace of reduction in both cost and time to start a business slowed. The average cost of starting a business declined to 24.6% of gross national income per capita in 2011 from 25.1% in 2010 and 30.5% in 2009, while the average time needed to start a business decreased to 33 days from 35 in 2010 and 39 in Slower progress in these indicators is to be expected, because at a certain level further improvements are harder to achieve and require more difficult actions. However, some countries with low costs of entry have been able to reduce these costs far more than the average, which indicates that the potential for improvement remains. 15 Marginal improvements have also continued in governance and public sector management indicators, both in ADF and ADF-only countries. 16 Average ratings for both country groups were 3.6 out of a possible 6. ADF countries were rated highest on quality of budget and financial management, and efficiency of revenue mobilization; they were weakest in transparency, accountability, and corruption in the public sector. Environment A clear trend in CO 2 emissions is evident from the 4-year data set and additional data preceding the DEfR baseline year: The growth in per capita CO 2 emissions for ADB countries as a whole slowed from about 7% in 2006 to Financial Access The State of Financial Inclusion Through the Crisis. Washington, DC: World Bank. Regional aggregates were computed by the ADB Strategy and Policy Department using country data from the report. In 2011, the cost of starting a business was 14.7% of gross national income per capita in the Republic of Korea and less than 1% in Singapore. The average time to start a business was 14 days in the Republic of Korea and 3 days in Singapore. In Latin America and the Caribbean, the cost of starting a business was 37.3% of gross national income, and it took an average of 54 days. Kazakhstan, the Kyrgyz Republic, and Thailand are examples of countries where the average cost of entry is 6% of gross national income per capita. The indicator is based on individual country assessments conducted by ADB covering (i) property rights and rule-based governance; (ii) transparency, accountability, and corruption in the public sector; (iii) quality of public administration; (iv) quality of budgetary and financial management; and (v) efficiency of revenue mobilization. 16

24 less than 4% in 2008 (Figure 3). 17 The slower growth in emissions is a combined effect of the economic slowdown and efficiency gains in the power sector. This is particularly influenced by the PRC where smaller, less efficient coal-fired power plants were replaced with larger, more efficient plants. The PRC has also started to gradually diversify its power supply away from coal and toward renewable energy sources. At 3.0 tons per capita, the region s CO 2 emissions remain substantially lower than the 11.2 tons per capita for the developed world, and are comparable to those of Latin America and the Caribbean. 18 % Figure 3: Declining Growth in Carbon Dioxide Emissions Source: World Bank The delinking of CO 2 emissions from economic growth has only been possible in developed economies through structural changes (a greater share of economic activity taken up by the service and knowledge sectors, and improved technology). Developing economies that strive for inclusive growth by establishing physical and social infrastructure will be unable to lower CO 2 emissions while maintaining rapid economic growth. The existing international agreement on climate change recognizes this limitation, but it contains no details on the type of support to be provided by the Annex 1 countries (i.e., the industrialized countries listed in the Kyoto Protocol), and in turn the amount of CO 2 emissions that is justifiable for continued economic growth. Without this information, there is little basis for evaluating progress of the CO 2 emissions indicator. United Nations The Millennium Development Goals Report Statistical Appendix. In 2008, average CO 2 emissions per capita were 8.0 tons for Europe and 17.9 tons for the United States. 17

25 An ADB-funded suspension bridge links two villages on either side of a river in Sri Lanka, saving villagers time and money and making their lives easier.

26 Level 2 Adb s Core Outputs and Outcomes In pursuing its vision of an Asia and Pacific free of poverty, ADB employs its limited resources in its areas of comparative strength the core areas of infrastructure, environment, regional cooperation and integration, finance sector development, and education, as identified by Strategy ADB also operates on a limited scale in other areas, including health, agriculture and natural resources, and public sector management, in partnership with other organizations. ADB operations are designed to support the three complementary development agendas of inclusive economic growth, environmentally sustainable growth, and regional integration. Level 2 assesses two aspects of ADB operations: (i) ADB s achievement of core sector outputs targeted for delivery in , and (ii) the contribution of recently completed operations sovereign and nonsovereign to their intended outcomes. 19 Progress in these two areas determines the Level 2 scores. In 2021 addition, Level 2 reports the outputs delivered during and outputs expected for delivery during from projects approved during to assess the recent trends in outputs delivered and planned by ADB. It also examines ADB s performance in promoting the Strategy 2020 priority themes of gender equity, good governance and capacity development, environmental sustainability, private sector development, and regional cooperation and integration. Recently completed technical assistance (TA) projects are assessed for their contribution to sector and thematic outcomes. Finally, it reviews ADB s contribution to development impacts, including inclusive growth, at the country level based on country assistance program evaluation conducted in XX ADB s Core Sector Outputs ADB good ADF mixed In 2011, ADB made progress in delivering programmed core sector outputs for ADB operations; however, for ADF operations, the output achievement by 2012 is likely to be substantially lower for several of the indicators. With 16 of 19 output indicators expected to achieve the target of 85%, the 2011 DEfR rates ADB s performance good (Table 3). For ADF operations, 10 of the 18 output indicators are expected to achieve the target, therefore ADF s performance is rated mixed In this report, operations is used as a collective term for the various types of ADB assistance financed by ADB s ordinary capital or ADF resources, excluding assistance funded by technical assistance (TA) grants, which are referred to as TA projects. ADB s contribution to country development outcomes and impacts is also described in the development effectiveness country brief series. ADB completed an additional 8 country briefs in 2011, bringing the total to 22. As one of the 19 indicators (expressways built or upgraded) has no programmed outputs from ADF operations, the total number of indicators for ADF operations is

27 Development Effectiveness Review Table 3: Progress in Achieving ADB Output Targets for (Level 2) Programmed for a Delivered in or before 2011 (%) (A) Delivery Expected in 2012 (%) (B) Total Delivered and Expected by End 2012 (%) (A + B) Delivery Expected After 2012 (%) Sectors and Core Sector Outputs Education Classrooms built or upgraded (number) 67, Teachers trained (number) 1,257, Students benefiting from school improvement programs or direct support (number) 25,481, Energy Installed energy generation capacity (MW equivalent) 15, Transmission lines installed or upgraded (km) 6, Distribution lines installed or upgraded (km) 68, New households connected to electricity (number) 1,028, Greenhouse gas emission reduction (tco 2 -equiv/yr) 10,808, Finance Microfinance accounts opened or end borrowers reached (number) 2,431, SME loan accounts opened or end borrowers reached (number) 482, Transport Expressways built or upgraded (km) 1, National highways and provincial, district, and rural roads built or upgraded (km) b 39, Railways constructed and/or upgraded (km) 3, Beneficiaries from road projects (number) b 194,615, Water Water supply pipe installed or upgraded: length of network (km) 15, New households served with water supply (number) 4,574, Wastewater treatment capacity added (m 3 /day) 4,480, New households served with sanitation (number) 6,460, Land improved through irrigation services, drainage, and flood management (ha) 3,223, ADB = Asian Development Bank, ha = hectare, km = kilometer, m 3 = cubic meter, MW = megawatt, SMEs = small and medium-sized enterprises, tco 2 equiv/yr = tons of carbon dioxide equivalent per year. Notes: 1. Numbers may not sum precisely because of rounding. 2. Bold font signifies that the indicator is expected to achieve at least 85% of its target outputs by the end of By 2011, nonsovereign projects achieved 100% of programmed SME loans (7,014), transmission lines (1,150 km), and greenhouse gas emission reduction (3,478,580 tco 2 equiv/year). They achieved 83% of the programmed distribution lines installed or upgraded (48,000 km) by 2011 and 58% of installed energy generation capacity (11,146 MW). The remaining outputs will be delivered in or after a ADB financed about 35% of the total cost of operations that programmed these outputs. b Of the total target, 59% (about 22,000 km) represents the distance to be covered by rural roads. About 26% of anticipated road beneficiaries are expected to benefit from rural roads. Sources: ADB reports and recommendations of the President approved in for programmed outputs; project completion reports, extended annual review reports, and estimates from operations departments for targets delivered and expected.

28 Level 2 ADB s Core Outputs and Outcomes Achievement of Output Targets The DEfR monitors ADB s achievement of programmed outputs by tracking a set of 272 sovereign and nonsovereign operations approved during that intended to deliver core sector outputs specified in the results framework. It was assumed that these projects would be completed within 6 years and therefore that their core sector outputs would be delivered by The 2011 DEfR introduced a number of improvements to ensure greater accuracy in the measurement of outputs (Appendix 3). In addition, it applied a target of 85% for output achievement by 2012 for each indicator, and it excluded outputs expected to be delivered after 2012 from the assessment of output achievement to capture the timeliness of output delivery. 22 Applying these refinements, all of the indicators for education, energy, and finance are on track for ADB as a whole, showing good performance in delivering their programmed outputs. Most of the indicators for transport and water are also on track. The three off-track indicators (railways constructed and/or upgraded, wastewater treatment capacity added, and households served with sanitation) experienced delays but are expected to deliver a substantial proportion of their programmed outputs after (Appendix 1, Table A1.3). For ADF operations, good progress was made on all five education and finance indicators, two energy indicators (transmission and distribution lines installed or upgraded), two water indicators (water supply pipes installed or upgraded and land improved through irrigation services, drainage, and flood management), and one transport indicator (road beneficiaries). The remaining eight indicators are unlikely to meet their targets by 2012 (Appendix 1, Table A1.4). Of these, three (greenhouse gas emission reduction; national highways and provincial, district, and rural roads built or upgraded; and railways constructed and/or upgraded) experienced slippage in output delivery but are expected to deliver a large proportion of the programmed outputs over a longer period of time. The five other indicators (installed energy generation capacity, new households connected to electricity, households connected to water supply, wastewater treatment capacity added, and households served with new sanitation connections) saw substantial reductions in their outputs due to project cancellations, and major changes in project scope following slow project implementation, cost overruns, and limited counterpart funding. 24 The 2011 DEfR output achievement findings for ADF operations confirm the need to implement fully the actions introduced in to improve project implementation and outcomes. These actions are discussed further on pp Output Trends This section provides an overview of the composition of delivered and programmed outputs of ADB and ADF operations. It describes the direction of change in delivered and programmed outputs in the core sectors of operation, and therefore indicates how the mix and level of outputs is changing over time. This enables ADB to quantify and assess its current and future contribution to core sector outputs The refinements to the methodology include (i) application of a cap of 100% achievement of targets for all indicators at the project level to prevent overachieving indicators from biasing the overall results; (ii) counting only outputs delivered and expected to be delivered during to capture the timeliness of output delivery, and excluding outputs expected in 2013 and beyond; (iii) adjusting the target for rating output delivery to 85% from 100% on account of the more stringent assessment parameters; and (iv) excluding the outputs of six operations with original completion dates in 2013 and beyond. Details are in Appendix 3. Overall, these refinements made the rating more stringent. Operations departments assessed the delivered outputs based on project completion reports (PCRs) when available, or staff estimates if the projects were physically completed but the PCRs had not yet been prepared. Expected outputs for ongoing projects were based on staff estimates. Delivery of core sector outputs will extend beyond 2012 in 36 of 272 ADB projects (13.2%). Delivery of core sector outputs will extend beyond 2012 in 19 of 147 ADF projects (12.9%). 21

29 Development Effectiveness Review 2011 Delivered ADB Outputs Compared with delivered outputs reported in , more outputs were delivered in for 14 of 19 core sector output indicators (Appendix 5, Table A5.1). 25 Notable increases were seen in education: teachers trained; energy: distribution lines installed or upgraded; finance: microfinance accounts opened and small and medium-sized enterprise (SME) loan accounts opened; transport: national highways and provincial, district, and rural roads built or upgraded; and beneficiaries from road projects; and water: all five indicators. ADB supported the electrification of 3.9 million new households by installing or upgrading 109,000 km of electricity transmission and distribution lines during Road construction or upgrading provided better transport access to 450 million people in Asia and the Pacific. ADB projects provided better access to clean water for 9.8 million more households. Irrigation, drainage, and flood management programs improved 20.6 million hectares of land. Delivered outputs dropped considerably for railways constructed or upgraded, greenhouse gas emissions reduced, classrooms built or upgraded, and students benefitting from school improvement programs. For railways, the decline was caused by fewer operations and/or smaller projects. For greenhouse gas emissions reduction, projects that delivered this outcome during the previous period moved out of the pool of projects. The lower education figures reflected the smaller number of large, sector-wide projects. 26 Programmed ADB Outputs Outputs programmed for are based on operations approved in All were approved after ADB s adoption of Strategy 2020 and its results framework, therefore the assessment showed a marked increase in outputs in ADB s core sectors compared with the previous periods. Compared with programmed outputs reported in , outputs are expected to increase for 14 of 19 indicators. Significant increases are seen in education: classrooms built or upgraded and students benefitting from school improvement programs; energy: energy generation capacity installed, distribution lines installed or upgraded, new households connected to electricity, and greenhouse gas emissions reduced; finance: microfinance accounts opened; transport: national highways and provincial, district, and rural roads built or upgraded; railways constructed and/or upgraded; and beneficiaries of road projects; and water: water supply pipes installed or upgraded, and new households served with water supply; wastewater treatment capacity added; and land improved through irrigation, drainage, and flood management. About 32 million students are expected to benefit from new classrooms and other school improvement programs, while 6.2 million households will be connected to electricity, million people will benefit from road projects, and 8.3 million more households will be served with a water supply (Appendix 5, Table A5.1). In the same period, significantly fewer outputs were programmed for teachers trained, Most of the ADB operations that delivered the core sector outputs reported in were approved before the adoption of Strategy 2020 (i.e., in the late 1990s to 2007). In earlier years, including the baseline year, there were sector-wide projects for which ADB had claimed the outputs for the entire sector. Thus, ADB is unlikely to match the baseline in years without sector-wide projects. 22

30 Level 2 ADB s Core Outputs and Outcomes transmission lines installed or upgraded, expressways built or upgraded, and new households served with sanitation. The notable decline in programmed outputs for expressways is because of a reduction in ADB s involvement in major expressway projects in key client countries, while in other indicators reductions reflect minor variations from the baseline. Delivered and Programmed ADF Outputs For ADF operations, delivered outputs in grew for 13 of the 19 indicators (Appendix 5, Table A5.2). ADF resources enabled the installation of an additional 25 megawatts of energy generation capacity. The installation or upgrading of 26,000 km of transmission and distribution lines helped electrify 1.3 million more households in ADF countries. Road projects benefited million people; and almost 2 million households were provided with a clean water supply. Notable declines compared with the previous 4-year period were seen in classrooms built or upgraded, students benefitting from school improvement programs, greenhouse gas emissions reduced, and expressways built or upgraded. The reasons for these declines mirror those identified for ADB outputs (p. 22). Outputs programmed for grew for 14 of 19 indicators. They were substantially higher for classrooms built or upgraded; students benefitting from school improvement programs; greenhouse gas emissions reduced; new households connected to electricity; number of road project beneficiaries; new household served with water supply and sanitation; and land improved through irrigation services, drainage, and flood management. Lower outputs are planned for teachers trained, transmission lines installed or upgraded, and railways constructed and/or upgraded. New Output Indicators for Energy, Transport, and Education With the target year of the results framework approaching, ADB began to review the framework s structure and constituent indicators in early The new results framework, which will be adopted in 2013, is likely to include several new indicators to improve the measurement of sector outputs and outcomes. The ADB communities of practice (CoPs) for energy and transport have proposed five new indicators and are gathering data to determine appropriate baselines (Table 4). Table 4: Programmed Outputs Using New Energy and Transport Indicators Sectors and Indicators Energy Additional installed capacity using renewable energy (megawatt) ,481 1, Energy saved (terawatt-hour equivalent) a Transport Movement of people and goods on roads built or upgraded (average daily vehicle-kilometer) (million) Movement of people and goods on railways built or upgraded (average daily converted ton-kilometer) (million) Urban rail- and bus-based mass transit systems built or upgraded (kilometer) Note: Data on programmed outputs are from reports and recommendations of the President issued since a This indicator was renamed from electricity saved (gigawatt-hours equivalent) as stated in the 2010 Development Effectiveness Review. This was done to broaden its scope. Source: Estimates by Asian Development Bank energy and transport communities of practice. 23

31 Development Effectiveness Review 2011 The proposed indicators for energy (additional installed capacity using renewable energy, and energy saved) and sustainable transport (urban rail- and bus-based mass transit systems built or upgraded) are intended to capture the increased emphasis on environmental sustainability in ADB s energy and transport operations. The data gathered so far indicate an increasing trend toward providing additional energy generation capacity through renewable sources. The other two indicators movement of people and goods on roads and railways built or upgraded are intended to replace or complement existing transport indicators on road beneficiaries, and provide a consistent measure of the use of the infrastructure built. The education CoP is developing new indicators that will focus more on people rather than infrastructure and will introduce learning and quality standards. Work has begun to develop a consistent estimation methodology and gather information for (i) educational institutions brought under new or improved quality standards, and (ii) students brought under learning standards and learning assessment. XX ADB s Contribution to Development Outcomes ADB poor ADF poor The analysis of outcomes of ADB operations draws on 76 project and program completion reports (PCRs) of sovereign operations and 14 PCRs of nonsovereign operations called extended annual review reports (XARRs) issued in 2011 (Appendix 6, Table A6.1). The operations reviewed in the 2011 PCRs and XARRs were approved during and had a median approval year of 2004; 80% were approved in These operations included 121 components (94 for core sectors and 27 for other sectors) as some operations contained multiple components. The outcome assessment shows that, although performance improved from the previous year, some operations did not deliver fully their intended core sector outcomes. Since outcomes achievement remained substantially below the target of 80%, performance is rated poor. Because of sampling differences, success in delivering outputs cannot be directly linked to outcome achievement (Box 1). Box 1: Comparing Outputs and Outcomes The success in delivering core sector outputs cannot be directly related to the effectiveness rate of core sector outcomes for the following reasons: (i) The project samples are different in two ways: First, operations used to assess outputs were approved during (the baseline year for level 2 outputs), whereas operations used to assess outcome achievement were approved during Second, the output analysis includes all projects approved during that are physically complete or have project completion reports for delivered outputs, whereas the outcome analysis only assesses operations with project completion reports and extended annual review reports issued in The output analysis also includes expected outputs for ongoing projects that will be delivered in and after As a result, only 26 operations were common to both samples. (ii) Output assessments do not capture program loans, but outcome assessments include these operations. (iii) The output assessment captures the quantity of physical outputs delivered or expected to be delivered, and the number of people benefiting or expected to benefit, whereas the outcome assessment looks at quantity, quality, cost efficiency, and sustainability of services or outputs delivered and their contribution to specific sector outcomes. Source: Asian Development Bank Strategy and Policy Department. 24

32 Level 2 ADB s Core Outputs and Outcomes The 2010 DEfR scorecard reported the same outcomes rating. Since then, ADB has taken many actions to improve implementation and outcome achievement, in addition to those taken since 2004 as part of the reform agenda. The high percentage of ongoing projects that are rated satisfactory (91%) suggests that these actions are improving project performance (p. 45). Achievement of Outcomes in ADB s Core Sectors of Operation ADB off track ADF off track ADB s performance in achieving core sector outcomes improved, rising to 71% in 2011 from 61% in 2010 for ADB overall and to 63% from 59% for ADF operations. The 3-year average figures were 70% for ADB and 66% for ADF (Appendix 6, Table A6.2). Factors Influencing the Effectiveness Ratings Analysis of the 3-year average effectiveness ratings shows that ADB performance is influenced by specific country and sector circumstances, as well as the expertise used to design and manage projects. Country. Effectiveness ratings of individual countries can be influenced by a host of issues, including capacity, policy environment, and portfolio restructuring. For instance, the Pakistan effectiveness rating (18% during ) is considerably lower than the ADB average mainly because of the country s decision to spring clean or restructure its entire ADB portfolio. This lowered ADB s overall outcome performance because of the large number of Pakistan operations. 27 For example, ADB s core sector effectiveness rates would increase from 70% to 79% if Pakistan s restructured portfolio were removed from calculations. However, from Pakistan s perspective, portfolio restructuring has been beneficial because it has enabled resources to be allocated toward more promising projects, and has thus improved portfolio performance. 28 The short-term cost of using this management tool is more than compensated for by stronger future effectiveness ratings and development impact (Box 2). Box 2: Portfolio Restructuring is Good Practice Portfolio restructuring is a proactive portfolio management tool and an important component of effective country portfolio performance measures. Restructuring may be precipitated by changes in country circumstances and development priorities, and deficiencies in project design and implementation. It typically involves the closure of projects before their expected completion date. This leads to substantial cancellations, which temporarily depress project ratings but allow more financial and human resources to be focused on bringing the remaining projects in the portfolio to a successful conclusion. The Asian Development Bank conducted portfolio restructuring exercises in the People s Republic of China and the Philippines in , Indonesia in 2004, Pakistan in 2004 and , India in 2005, Bangladesh in 2007, and Sri Lanka and Viet Nam in Portfolio restructuring has typically resulted in country portfolios showing above-average performance in subsequent years. Since the peak of portfolio restructuring in 2007, most countries review their portfolios regularly as part of the annual country portfolio review mission. Therefore the need for major cancellations has been much reduced. Source: Asian Development Bank Central Operations and Services Office and Strategy and Policy Department Thirty-eight (16%) of 237 core components reviewed in belonged to Pakistan. Currently, 89% (16 of 18) of ADB projects being implemented in Pakistan are rated satisfactory. 25

33 Development Effectiveness Review 2011 Sector. There have been marked differences in the effectiveness ratings of different sectors (Figure 4). During , transport was ADB s best performing sector, averaging 80% effectiveness, while education at 58% and water at 61% were the weakest (Appendix 6, Table A6.2). The lower performance in the water sector remains the case even without the restructured Pakistan portfolio. The performance of water sector operations is discussed in pp % Figure 4: Effectiveness Rates in Core Sectors, ADB Energy Transport Water Finance Education Total and ICT ADB without Restructured Pakistan portfolio ADB = Asian Development Bank, ICT = information and communication technology. Source: ADB project completion reports and extended annual review reports issued in , and Strategy and Policy Department. Expertise. Similar to last year s DEfR, the 2011 DEfR found that individual sector components included under multisector projects were less effective than the same components processed as stand-alone sector projects (Figure 5). For example, a transmission line component in a multisector project did not show the same level of success as a stand-alone transmission line project. This may be attributable to the lower levels of time and expertise that ADB and its counterpart agencies dedicated to processing and implementing sector components in multisector projects. However, this does not necessarily indicate that ADB should discourage multisector projects, which, when managed effectively, can bring significant synergic Energy Transport and ICT Water Finance Education In stand-alone sector projects In multisector projects % Figure 5: Effectiveness Rates of Core Sector Components, ICT = information and communication technology. Source: Asian Development Bank project completion reports and extended annual review reports issued in , and Strategy and Policy Department. development impacts. The main challenge is to ensure due diligence and sound project administration, particularly for multisector projects. ADB s operations departments and the sector CoPs have already begun to strengthen peer reviews of project quality at entry and ensure adequate involvement of sector experts in project implementation. 29 Outcome Achievement in Core Sectors Energy. The effectiveness rate of energy components increased to 75% in 2011 from 67% in 2010 (Appendix 6, Table A6.2). Their 3-year average ( ) was 71%, largely influenced by the poorer performance of components in multisector projects. 29 The energy outcomes achieved in 2011 included (i) more households connected to power or energy resources, (ii) higher quality of energy supply, and (iii) development of sustainable sources of energy. The construction of transmission and distribution lines helped provide power to more than 411,000 new households in Bangladesh, the Lao PDR, and Nepal. In Nepal, the Rural Electrification, Distribution, and Transmission Project helped increase the 29 In 2011, there were 12 energy components; 9 in the core sector (6 sovereign and 3 nonsovereign operations) and 3 in multisector operations. 26

34 Level 2 ADB s Core Outputs and Outcomes national electrification rate from 15% in 1999 to 56% in The wider access to a power supply helped small industries and improved people s lives in rural areas. In the projects rated less effective, the main reasons given for low outcome achievement were poor project design and inadequate institutional management capacities. Transport and communication. Transport and communication components in 2011 had the highest annual effectiveness rate (85%) and the highest 3-year average effectiveness rate (80%) among the five core sectors. 31 Transport outcomes achieved in 2011 included greater access to markets and basic social services, improved quality and efficiency of transport systems, and sustainability through better administrative capacity and adequate budgeting for operation and maintenance. Data indicate that new and/or improved roads in Cambodia, the People s Republic of China (PRC), India, and the Kyrgyz Republic reduced vehicle operating costs by 28% and travel time by about 47%. 32 These benefits contributed to more trade and investment in the project areas and better accessibility of the rural poor to markets, growth centers, jobs, and basic social services such as schools and hospitals. The Western Yunnan Roads Development Project in the PRC helped increase the volume of imports and exports by 28% during The project facilitated trade and investments between the PRC and Myanmar, and increased per capita gross domestic product (GDP) by 11% in the project area over the same period. Water. Similar to last year s rating, the annual effectiveness rate of water operations was low at 53% in The 3-year average effectiveness rate ( ) was 61%. Water components rated effective (i) increased access to and quality of water supply; (ii) provided sustainable access to sanitation services; and (iii) improved irrigation, drainage, and flood management infrastructure services. The improved water supply and sanitation facilities benefitted more than 30 million people in the PRC, India, Uzbekistan, and Viet Nam. Women and children particularly gained from the reduction in waterborne diseases brought about by the better health and living conditions in project areas. In water components that were rated less effective, a sequence of compounding negative factors eroded effectiveness. This usually began with poor due diligence, such as poor technical design and insufficient budget, and subsequently extended to limited ownership and inadequate technical and management capacity of the implementing agencies, and serious start-up delays resulting from poor due diligence. The steep escalation of raw material costs led to fewer outputs than expected, and hence failure to achieve the expected outcomes. ADB recognizes the severity of these challenges and has introduced stronger measures to improve the quality of design and implementation (Box 3). Finance. The effectiveness rate of finance components improved markedly to 78% in 2011 from 61% in 2010, 35 raising the 3-year average to 71%. Finance operations extended about 800,000 microfinance loans to ADB Project Completion Report: Rural Electrification, Distribution, and Transmission Project in Nepal. Manila. In 2011, there were 27 transport components: 20 in the core sectors and 7 in other sectors. Data are for 14 components, where PCR estimates are available. ADB Project Completion Report: Western Yunnan Roads Development Project in the People s Republic of China. Manila. The DEfR reviewed 19 sovereign water components, 13 in core sector operations (water and other municipal infrastructure and services, and agriculture and natural resources operations) and 6 in multisector operations. A total of 27 finance sector components were reviewed in 2011, of which 16 are sovereign and 11 are nonsovereign (21 in the core sector; 7 outside the sector: 2 agriculture and natural resources, 2 industry and trade, 2 water and other municipal infrastructure and services, and 1 multisector operation). 27

35 Development Effectiveness Review 2011 Box 3: Improving Water Operations Effectiveness In recent years, the Asian Development Bank (ADB) has strengthened quality-at-entry design reviews and assessment of project readiness filters, and implemented more detailed and timely monitoring during implementation. While the impacts of these measures can only be judged later when projects are completed and their performance evaluated, the strong performance of ongoing portfolio of water sector operations suggests that ADB is making good progress. However, to sustain improvements, project management practices need to be further improved. Led by its Water Community of Practice, ADB has initiated actions to help regional departments, including resident missions, improve performance in the sector. These include (i) continued peer review of projects at key design stages, with more in-depth review and assistance with project design in developing member countries with a record of poor project effectiveness; (ii) more capacity building and awareness for project teams on project design, target setting, and assessment of risks and assumptions to improve the defining of expected project outcomes; (iii) development of water project case studies for inclusion in ADB project management training; (iv) increased review of mission implementation reports and project performance reports to detect signs of underperformance early on; and (v) development of leading indicators to help predict final performance. These actions are integral to successful implementation of ADB s new water operational plan, , adopted in The community of practice will monitor the impact of improved quality-at-entry processes on project performance. Source: ADB Water Community of Practice. SMEs, farmers, and other beneficiaries in Bangladesh, Indonesia, Papua New Guinea, and Uzbekistan. The Second Financial Sector Program in Cambodia supported the efficient issuance and better management of government securities, and strengthened anti-money-laundering activities through the establishment of a financial intelligence unit to monitor suspicious transactions. 36 Nonsovereign finance operations in Azerbaijan, the PRC, India, and Kazakhstan also helped develop capital markets and promoted anti-money-laundering initiatives through the adoption of transparent banking transaction procedures. Finance components that were rated less effective were constrained by inadequate policy and regulatory frameworks, poor market conditions, and limited government ownership. Education. The effectiveness of education 36 components in 2011 was 44% the lowest of all the sectors, down from 57% in The 3-year average effectiveness rate ( ) was 58%, which was largely due to the low effectiveness rate of Pakistan components. When these components are excluded, the 3-year performance for education jumps to 79%. Of the components rated effective in 2011, the main outcomes achieved included greater access to quality education, including higher quality teachers. In Nepal, through the Secondary Education Support Project, ADB constructed 800 additional secondary school classrooms, benefiting 30,000 students; while the Teacher Education Project trained about 115,000 in-service teachers. 38 More than 31,000 students benefited from scholarship grants in the country. In the Lao PDR, ADB helped reduce repetition rates to 14% in ADB Project Completion Report: Second Financial Sector Program in Cambodia. Manila. Of the nine components, seven were in the core sector and two were in multisector operations. ADB Project Completion Report: Secondary Education Support Project in Nepal. Manila; and ADB Project Completion Report: Teacher Education Project in Nepal. Manila. 28

36 Level 2 ADB s Core Outputs and Outcomes from 18% in 2005 and increased primary education attendance rates to 79% from 72% in the same period. The components rated less effective suffered from a number of problems including inadequate project design, weak management capacities, and insufficient project supervision. A technical education and vocational training project that was rated less effective had complex and ambitious design that led to large cost overruns, and weak implementing agencies that lacked the knowledge and skills to ensure the sustainability of the investment. Supervision was affected by the high turnover of project officers and the heightened security risk of the project area. Sustainability of outcomes. The PCRs reviewed found that 85% of effective core components in 2011 were likely to sustain their outcomes. All effective components in energy and education, 91% of transport components, and 80% of water components were rated likely to be sustainable. Finance components had the lowest likelihood of sustainability, at 71%. The 100% rating for sustainability of energy outcomes was underpinned by the use of high quality equipment and technology, the steady supply of and demand for services, reasonable tariffs, and the availability of adequate operations and maintenance funds. For education components, strong government commitment to improving access to and quality of education, including capacity development of teachers, reinforced sustainability. Reasons for lower sustainability included insufficient government funds and human capacities for transport components, and an inadequate tariff regime for water components. The sustainability of the two effective finance components is likely to be reduced by the weak capacity of microfinance institutions to attain operational and financial viability, and the lack of market-friendly policies to encourage commercial lending. Achievement in Other Sectors ADB s achievement of other sector outcomes improved slightly to 74% in 2011 from 72% in 2010, giving a 3-year average effectiveness of 68%. Of the 121 components reviewed in 2011, 22% all sovereign were in other sectors, including agriculture and natural resources, health, public sector management, and industry and trade. Agriculture. Seven of eight agriculture components (88%) reviewed in 2011 were rated effective, a significant improvement from 68% in 2010 and 56% in The 3-year effectiveness rate was 67%. Through its agricultural operations, ADB supported the production, processing, and marketing of high-value crops in Bangladesh and Indonesia; livestock in Nepal; and fisheries in Sri Lanka. In Indonesia, ADB s earthquake and tsunami emergency support provided agricultural and fishery inputs and machinery, and rehabilitated more than 26,000 hectares of damaged farmlands and fishponds, restoring livelihoods to 23,000 farmers and fishers. Health. Two of three health components (67%) reviewed in 2011 were rated effective compared with 75% in 2010, 39 matching the 3-year average. The health components rated effective increased access to improved quality health services. For example, an HIV/ AIDS prevention and capacity development project in the Pacific helped reduce new cases of HIV infection by establishing testing and counseling for HIV, training health workers, and providing laboratory equipment. ADB also supported primary health care in Indonesia by improving human capacity, and constructing and equipping health facilities. One multisector health component that was rated less effective did not achieve its intended outcomes because of the lack of a sector strategy for managing devolved social services and the weak capacity of local governments. 39 Two of the three health components were in the sector and one was in a multisector operation. 29

37 Development Effectiveness Review 2011 Industry and trade. Three of the four industry and trade components (75%) in 2011 were rated effective, 40 compared with one of two components (50%) in 2010, producing a 3-year average effectiveness rate of 67%. The components rated effective helped increase access to improved business development services and developed SMEs. For example, a new enterprise registration system in the Lao PDR eliminated cumbersome procedures, substantially reducing the number of days needed to register an enterprise and lowering costs by 35%. Public sector management. In 2011, 8 of 11 public sector management components (73%) were rated effective in 2011, lower than the 2010 rate of 77%. 41 The 3-year effectiveness rate was 71%. The main outcomes achieved by the components rated effective included increased access to more efficient public services, improved public financial management, development of legal and policy frameworks, and the provision of crisis response funds (for Indonesia, the Philippines, and Viet Nam). The three components rated less effective encountered problems related to poor government ownership, complex program designs and targets, and weak implementing agency capacity. Achievement of Thematic Outcomes of ADB Operations ADB contributes to thematic outcomes through its projects, programs, and TA operations. 42 In 2011, projects and programs targeted the priority themes in line with the 3-year average, except for environmental sustainability and regional cooperation and integration (Table 5, and Appendix 6, Tables A6.3 and A6.4). 43 The effectiveness of achieving thematic outcomes in 2011 improved slightly for all priority themes except for gender equity and regional cooperation and integration. 44 Overall, the projects and programs reviewed in 2011 were marginally less targeted on thematic issues, but modestly more effective in achieving thematic outcomes. TA projects reviewed in 2011 were more focused on key thematic outcomes and more effective in achieving the intended outcomes than those reviewed in 2010 (Appendix 6, Table A6.5). 45 In 2011, 96% of TA projects targeted capacity development, compared with 65% in 2010 (Appendix 6, Table A6.5). The effectiveness rate for capacity development was 90% in 2011, an increase of 14 percentage points from The same pattern of increased focus and effectiveness was evident for governance. In TA projects, declining thematic outcomes were seen only in gender equity. Contribution to Environmental Sustainability Table 6 presents the types of environmental targets and results in sovereign infrastructure components energy, transport, and water (for ADF operations, see Appendix 6, Table A6.7). Of the 55 infrastructure components reviewed in 2011, the percentage of those targeting environmental outcomes dropped to 53%, considerably lower than the 3-year average of 71%. The average effectiveness rating of 83% was 3 percentage points higher than the 3-year average. This indicates significantly reduced targeting, but slightly All industry and trade components were in the sector. Ten public sector management components were in the sector and one was a multisector operation. Thematic outcomes refer to outcomes delivered in ADB s priority areas of capacity development, environment, gender, governance, private sector development, and regional cooperation and integration. Strategy 2020 identifies gender equity, good governance and capacity development, and private sector development as drivers of change. Components were reviewed in terms of their contribution to these four themes and the two thematic core operational areas: environmental sustainability and regional cooperation and integration. The lowered effectiveness rating for gender could be partly a result of the more rigorous assessment of gender equity achievement in Starting 2011, the assessment was screened by gender specialists to ensure quality. A total of 135 TA completion reports were reviewed (excluding project preparatory TA). They were approved during and had a median approval year of

38 Level 2 ADB s Core Outputs and Outcomes Theme Table 5: Thematic Outcomes in ADB Sovereign Components, (%) Components Targeting Specific Outcome a Components Effective in Achieving Target Components Targeting Specific Outcome Components Effective in Achieving Target Environmental sustainability Regional cooperation and integration Gender equity Governance Capacity development Private sector development ADB = Asian Development Bank. a All 62 components reviewed in 2009 were in core sectors only. Components targeting environmentally sustainable growth refer to infrastructure sector (energy, transport, and water). Sources: Asian Development Bank project completion reports issued in , and Strategy and Policy Department. Table 6: Environmental Outcomes in ADB Sovereign Infrastructure Components, (%) Environment Results CO 2 emissions reduced Clean energy supported Environment improved Environmental management improved Environmental awareness improved Sector Energy, transport Energy Water Components Targeting Specific Outcome Components Effective in Achieving Target Components Targeting Specific Outcome Components Effective in Achieving Target All All Total ADB = Asian Development Bank, CO 2 = carbon dioxide. Note: Components may have one or more environmental target and achievement. Sources: Asian Development Bank project completion reports issued in , and Strategy and Policy Department. 31

39 Development Effectiveness Review 2011 improved effectiveness of environmental outcomes in ADB operations. The reduction of CO 2 and other air pollutants was the objective of 17% of components. All of them were in the energy and transport sectors, and 83% of the components were rated effective in achieving their results. In Bangladesh, the Dhaka Clean Fuel Project improved air quality significantly in the capital through the reduction of CO 2, nitrogen oxides, sulfur oxides, and suspended particulate matter. 46 In the PRC, the Gansu Heihe Rural Hydropower Development Investment Program supported the use of clean and renewable energy from hydropower, providing affordable and reliable electricity to rural consumers. 47 The reduction of effluents and sludge was the aim of 74% of components, and 57% noted satisfactory progress. In India, the hygienic wastewater management and disposal system developed under the Rajasthan Urban Infrastructure Development Project helped improve the living conditions of about 1,400 households in slum areas. 48 In the PRC, the Wuhan Wastewater Management Project introduced more efficient sludge dewatering technologies to treat concentrated sludge, benefiting 9 million residents in Wuhan and in the downstream areas of the Yangtze River. 49 Most of the less effective water projects suffered from inadequate project design and an increase in civil works costs by the time of project implementation, preventing them from delivering planned levels of facilities and services, and associated environmental outcomes. About 44% of infrastructure components included improving environmental management as an intended outcome (compared with 60% in 2009 and 46% in 2010), and about twothirds were rated effective lower than last year s rating. Many of these components aimed to improve the capacities and management of implementing agencies in corporate governance, spatial planning, and strategic environmental assessment and monitoring. Only 18% targeted improving environmental awareness as an intended outcome, and only half of these were rated effective also lower than in previous years. Efforts to raise environmental awareness in many components rated less effective reached fewer beneficiaries than originally intended, typically due to the reduced scope of campaigns. For many other components rated less effective, the PCRs contained insufficient information to determine whether the environmental outcome was achieved. Only 19% of TA projects targeted environmental sustainability as an intended outcome, and 92% were rated effective. In the Caucasus region and Central Asia, TA operations helped generate awareness of the benefits of introducing sound solid waste management practices. In South Asia, they fostered knowledge sharing on hazardous waste management, scaling up of energy technologies, promoting green urban development, and promoting mainstreaming of climate change resilience; and in the Pacific islands they piloted innovative technologies and developed major energy conservation measures. Several TA projects in the PRC led to policy innovations to address water pollution from nonpoint sources, developed shallow-ground geo-energy technologies and other energy conservation programs, drew up guidelines on river basin water resources allocation and flood and drought management, and established regional supervision centers to improve environmental law enforcement ADB Project Completion Report: Dhaka Clean Fuel Project in Bangladesh. Manila. ADB Project Completion Report: Gansu Heihe Rural Hydropower Development Investment Program in the People s Republic of China. Manila. ADB Project Completion Report: Rajasthan Urban Infrastructure Development Project in India. Manila. ADB Project Completion Report: Wuhan Wastewater Management Project in the People s Republic of China. Manila. 32

40 Level 2 ADB s Core Outputs and Outcomes Contribution to Regional Cooperation and Integration Of the sovereign operation components reviewed in 2011, 12% targeted regional cooperation and integration outcomes, and 54% reported satisfactory results. ADB supported improvements in cross-country transport networks that increased interregional trade and investments in Azerbaijan, the PRC, and Nepal. A finance project in Afghanistan helped establish an agreement with India and Pakistan on cross-border financial supervision. Improved regional cooperation under the Mekong Tourism Development Project promoted tourism and increased public revenues in the Greater Mekong Subregion, particularly in Cambodia and Viet Nam. 50 A regional health project in the Pacific helped reduce new HIV/AIDS infections through awareness programs and capacity development of health workers. The remaining 46% of components rated less effective all in transport and communication did not achieve satisfactory results because of DMCs limited coordination capacity and inadequate funding for operation and maintenance of the transport networks. ADB s TA projects also contributed to regional integration by strengthening the capacity of regional and subregional institutions. For example, they supported the ASEAN Secretariat, South Asia Subregional Economic Cooperation, the Pacific Financial Technical Assistance Center, and the Pacific Association of Supreme Audit Institutions. Outputs included the regional transport blueprints for South Asia and a plan for an integrated Greater Mekong Subregion railway network. A TA project to identify agriculture and natural resources research priorities in Asia and the Pacific resulted in the signing of the Asia and the Pacific Regional Food Security Partnership Framework between ADB, the Food and Agriculture Organization of the United Nations, and the International Fund for Agricultural Development. Contribution to Gender Equity Two-thirds of all sovereign components reviewed in 2011 were in projects with explicit gender targets. 51 The gender-related targets included (i) less gender disparity in education and human capacity development, (ii) more nonagricultural jobs for women, and (iii) increased representation of women in decision making. Of components with targets, 40% reported satisfactory results. Low effectiveness rates were caused by a lack of sex-disaggregated data (e.g., the number of women representatives in decisionmaking committees or the number of females included in capacity development training programs) on some gender design measures, which hampered assessment of outcomes; unavailability of information on the progress of some gender action plans; and failure to implement gender-related activities. Such problems were typically associated with projects classified as having some gender benefits. These were not usually accompanied by project gender action plans, and therefore lacked regular reporting on gender equality results in PCRs. The effectiveness rates were higher for projects classified as having a gender equity theme or effective gender mainstreaming, and those with gender action plans. Nevertheless, the low effectiveness rates highlight the need for greater attention to implementing gender-targeted activities supported by adequate resources and regular monitoring. Under the Northwest Crop Diversification Project in Bangladesh one of the successful projects more than 150,000 women farmers benefited from access to extension services, new technologies, skills training, and microcredit to ADB Project Completion Report: Tourism Development Project in the Greater Mekong Subregion. Manila. Projects were classified as category I (gender equity), category II (effective gender mainstreaming), and category III (some gender benefits) during project appraisal. 33

41 Development Effectiveness Review 2011 help households diversify into cash crops. 52 Access roads were improved and new markets were built with special facilities and selling spaces for women vendors. Women s income and assets, confidence, and family status grew, and domestic violence declined. The Secondary Education Support Project in Nepal removed barriers to girls school attendance by providing scholarships and safe accommodation, improving teaching, and modernizing the curriculum to make it more relevant to the job market. It also upgraded the skills of women teachers and provided rental allowances to help them find secure housing closer to school. As a result, girls enrollment in grades 6 10 rose from 40% in 2002 to 47% in 2008, and examination pass rates for girls increased from 74% to 84% in the same period. 53 TA projects also contributed to improving gender equity by improving women s capacities and strengthening the supporting policy environment. For example, a TA project in Pakistan helped to integrate the Gender Reform Action Plan into the annual development programs in Balochistan and Khyber Pakhtunkhwa. Under a TA project in Cambodia that promoted gender equity in local governance, the training and forums provided opportunities for women councilors to exchange views; acquire new skills; and improve their confidence in communication, advocacy, and the promotion of gender equity. Contribution to Governance and Capacity Development Governance and capacity development remained a high priority for ADB s recently completed sovereign operations and TA projects reviewed in Good governance was a theme in about 75% of all sovereign operations, and 73% achieved satisfactory results (Appendix 6, Table A6.3). These components focused on improving accountability, participation, predictability, and transparency by targeting financial management and procurement systems and combating corruption. 53 Of the sovereign operations that contributed to good governance in 2011, 17 were policybased loans with an average effectiveness rate of 76%. Finance operations had the highest effectiveness rate at 79%, followed by industry and trade with 71%, public sector management with 69%, and energy and multisector with 67%. Most of the 52 policy-based loans completed in targeted improving sector policies and frameworks (98%), institutions (98%), human resources (87%), private sector development (92%), service delivery (81%), public financial management (79%), and transparency and public disclosure (79%). Effectiveness in achieving these outcomes ranged from 69% to 80% (Figure 6). The highest effectiveness rate was achieved for promoting transparency and public disclosure, while the lower effectiveness rates were reported for developing human resources and improving service delivery (Appendix 6, Tables A6.9 to A6.11). Capacity development targets were included in 89% of the sovereign components, with an effectiveness rate of 72%. The targets were mostly related to strengthening institutions, improving organizational systems and procedures, and developing human resources through training. 54 ADB s focus on capacity development in its sovereign operations, for example, has helped improve the effectiveness and efficiency of state road management agencies in India, developed a teacher education strategy and action plan in the Lao ADB Project Completion Report: Northwest Crop Diversification Project in Bangladesh. Manila. These are the priority areas outlined in the Second Governance and Anticorruption Action Plan: ADB Second Governance and Anticorruption Action Plan. Manila. ADB Medium-Term Framework and Action Plan on Integrating Capacity Development Programs and Operations. Manila. 34

42 Level 2 ADB s Core Outputs and Outcomes Figure 6: Outcomes Achieved in Policy-Based Program Loans, % Transparency and public disclosure Institutions Sector policies Private sector development Public financial management Human resources Service delivery Source: Asian Development Bank Strategy and Policy Department. PDR, and reduced power transmission and distribution losses in Nepal. The Development Effectiveness Review (DEfR) found that 74% of TA projects also helped build government capacity in public sector management, including integrated planning and budgeting, public procurement, mainstreaming results-based approaches, financial management and accounting, modern tax administration, debt management, macroeconomic and fiscal monitoring and analysis, and project implementation and administration. ADB s TA support to Cambodia helped establish key financial infrastructure and strengthen institutions. This fueled growth in financial outreach, increasing access to credit to 9.3% of the population by the end of 2010 from 5.8% in Another TA project helped the Government of the Maldives update the base year for measuring real GDP, leading to more accurate economic growth estimates and statistical data, and stronger government planning capacity. Contribution to Private Sector Development In 2011, 55% of sovereign components promoted greater private sector development. These components had an effectiveness rate of 64%. 55 Most focused on removing policy barriers to private investments and developing public private partnerships for key infrastructure. For example, ADB supported the unbundling of the power transmission and distribution system in Bangladesh, encouraged service contracts for the operation and maintenance of the PRC s water supply and sanitation systems, and facilitated concessions in cargo-handling services in India s ports. The components rated less effective suffered from (i) implementing agencies inadequate capacities to utilize public private partnership arrangements, (ii) uncertain regulatory frameworks, and (iii) lack of vibrant private sector enterprises willing to undertake the delivery of key infrastructure and social services such as vocational skills training and health. TA is also an important tool for promoting private sector development, particularly for improving laws and institutional arrangements. For example, a TA project in Cambodia supported the restructuring of the country s railway system, which is now privately operated. A TA project in Pakistan led to the establishment of a government committee dedicated to removing constraints to private sector investment in infrastructure. 55 Nonsovereign components were not included in the outcome analysis, but all of the 14 nonsovereign components contributed to private sector development. 35

43 Development Effectiveness Review 2011 XX ADB s Development Impact at the Country Level While the analysis of outputs and outcomes in Level 2 is built on the performance of ADB s individual operations, their contribution to development impact such as more inclusive and environmentally sustainable growth can be best gauged at the country level by assessing the combined impact of ADB s projects, TA, and policy dialogue. 56 This section examines evaluations undertaken in 2011 of ADB s country strategies and programs in seven DMCs: the Maldives and Uzbekistan, based on country assistance program evaluations (CAPEs); and Indonesia, Kazakhstan, Solomon Islands, Sri Lanka, and Timor-Leste, based on country partnership strategy (CPS) final review validation reports prepared in lieu of full CAPEs. ADB s Independent Evaluation Department (IED) conducted all the evaluations and validations The Maldives The CAPE for the Maldives assessed the lengthy period of ADB s engagement from 1978 to The overall development impacts of ADB s country program were rated partly successful. Operations in energy, education, and transport and information and communication technology (ICT) were rated successful, whereas assistance in public sector management and tsunami emergency assistance was rated partly successful. For an island country such as the Maldives, the distance between its scattered islands poses a major challenge for inclusive growth. ADB played an important role in promoting more inclusive development by reducing the disparities between Malé and the outer islands. ADB helped meet the shortfall in electricity supply on Malé and expanded the power supply on several outer islands. The increase in power generating capacity and geographic coverage helped improve the quality of life across the country, enhance the environment for economic development, and increase energy efficiency. ADB also promoted interisland movement of passengers and cargo, increasing maritime safety and connectivity between Malé and the outer islands. While ADB s support for education has been limited, its assistance in the sector contributed to an improvement in postsecondary education standards and led, indirectly, to the establishment of the country s first university. This is expected to help fulfill the country s increasing need for skilled human resources. Uzbekistan ADB has supported Uzbekistan s development since 1998, following the country s independence in The CAPE assessed ADB s support during Overall, ADB s country assistance program was rated successful. Strategic positioning was rated satisfactory and its country program focusing on sustainable rural development, private sector development, regional cooperation, and human capital development of the poor was highly responsive to the government s priority of making growth more inclusive. ADB contributed to the country s development through its operations in transport, water, and education. Its transport program improved connectivity through two railway rehabilitation projects, which led to a considerable improvement in average passenger speeds from 55 km per hour before the rehabilitation to 80 km per hour after rehabilitation. ADB s Most of the completed country partnership strategies were formulated before Strategy 2020 when inclusive growth became an explicit part of ADB s strategic agenda. However, this exercise is still useful in assessing the extent to which ADB has supported the three strategic agendas of Strategy 2020 even before its adoption. ADB Country Assistance Program Evaluation: The Maldives. Manila. ADB Country Assistance Program Evaluation: Uzbekistan. Manila. An earlier CAPE, completed in 2006, covered ADB s support for Uzbekistan from 1996 to the end of 2004: ADB Country Assistance Program Evaluation: Uzbekistan. Manila. 36

44 Level 2 ADB s Core Outputs and Outcomes water supply and sanitation program in Uzbekistan helped 451,000 beneficiaries save 2 4 hours per day collecting water, while also lowering their spending on water. Better water quality contributed to a lower incidence of dysentery, which fell from 50 cases per year to 30 in one project town and from 8 cases per year to 6 in another town. Although ADB s operation in education is small, its focus on introducing a textbook rental scheme provided a solid basis for sustainable provision of affordable textbooks to students in basic education. The government and its development partners considered this ADB s most successful education intervention. Indonesia, Kazakhstan, Solomon Islands, Sri Lanka, and Timor-Leste The five CPS final validation reviews showed ADB s strong focus on inclusive growth. 59 Indonesia s CPS supported pro-poor sustainable economic growth and social development. ADB s most recent CPS for Kazakhstan recognized the weak links between the country s high growth rates (from its oil boom) and poverty reduction, and made inclusive growth through private sector development and human development (along with sustainable environmental management, and regional cooperation) the cornerstones of its country strategy. For Solomon Islands, the main strategic goal of ADB s assistance under its last CPS was to contribute to pro-poor economic growth led by the private sector by improving transport services and the business environment. Similarly, the CPS for Sri Lanka focused on strengthening the investment climate and achieving socially inclusive development. In Timor-Leste, the CPS included ADB s support for transport infrastructure as a means to strengthen connectivity and support social and economic development. The assessment of the development impacts was positive for Solomon Islands (rated likely to be satisfactory) and Sri Lanka (rated satisfactory). The validation report recognized that ADB assistance had contributed to the recent growth in Solomon Islands, particularly by providing strategic connectivity and improving the legal and regulatory environment for starting and running formal businesses. The validation report for Sri Lanka noted that the outputs of ADB operations have contributed to the country s good progress toward some MDGs, including increasing the percentage of the population with access to safe drinking water, and reducing maternal mortality and the incidence of poverty. The country strategies for Indonesia, Kazakhstan, and Timor-Leste were rated partly satisfactory in terms of their development impact. In Indonesia, ADB s program was oriented predominantly to policy-based loans that were undertaken in collaboration with several development partners. However, the benefits of these interventions were not evident at the time of CPS completion. The actual outcomes of ADB s program are expected to be felt once the new policy and institutional structures are fully established and the projects implemented under the CPS come to fruition. In Timor-Leste, ADB s assistance to the road and water sectors has contributed to some beneficial development outcomes, but they had less impact than expected. The development impacts were also assessed as likely to be limited in Kazakhstan, primarily because none of the four public sector projects planned for was delivered. However, the report drew attention to the positive results from ADB s ongoing projects: (i) road transport operations contributed to a 36% annual growth in trade between Kazakhstan and the Kyrgyz Republic, (ii) irrigation and drainage projects increased incomes and employment in the participating farm communities, and (iii) rural water facilities provided more access to safe drinking water and improved health in villages. 59 The periods covered by the review were for Indonesia, for Kazakhstan, for Solomon Islands, for Sri Lanka, and for Timor-Leste. 37

45 The Small Business Development Project in Samoa enabled local people to borrow start-up capital to open businesses.

46 Level 3 Adb s Operational Effectiveness ADB must closely monitor its operational effectiveness as this is fundamental to the delivery of its development agenda. ADB needs to assess the relevance and quality of its services to ensure that they deliver optimal value to clients. Is ADB doing the right things both at the country strategy and individual project levels and is it doing them well? Is it mobilizing sufficient finance and knowledge for developing member countries (DMCs) and sustaining strong partnerships to maximize impact? Is ADB continuing to focus its activities in areas of comparative strength, such as infrastructure and regional cooperation, while increasing support for cross-cutting themes, such as the environment and gender mainstreaming? This section reviews progress in these areas against 23 indicators in the ADB corporate results framework. XX Has the Quality of ADB s Completed Operations Improved? ADB poor ADF poor In assessing the quality of ADB s completed operations, five indicators are examined: evaluation ratings of completed CPSs, sovereign operations, nonsovereign operations, and TA projects; and perceptions of ADB s effectiveness in reducing poverty (Table 7). The data show a deterioration of the success rate of completed CPSs from last year s perfect score. The success rates of completed sovereign and nonsovereign operations improved, although both indicators still fell considerably short of the target. The quality of completed TA projects also improved. The perceptions result, which is surveyed every 3 years, is carried over from the 2009 survey. With only two of the five indicators on track, the aggregate score for ADB is poor. The ADF is also rated poor as o nly two of the four indicators are on track. Completed Country Partnership Strategies Rated Successful ADB off track ADF watch CPSs translate Strategy 2020 into operational programs of 3 4 years in ADB DMCs. IED assesses ADB s performance in designing and implementing CPSs through CAPEs. Starting in 2011, in the absence of a CAPE, IED validates the CPS final review together with a detailed supplementary self-evaluation, both of which are prepared by regional departments. Combining the ratings from two CAPEs and five CPS final review validation reports issued in 2011, the CPS success rate was 57% for ADB and 67% for ADF countries (Figure 7, and Appendix 7, Tables A7.1 and A7.2). Both figures are below the 2012 target of 70% In 2010, the CPS success rate of 100% for both ADB and ADF countries was based on the CAPE ratings for Bhutan and the Lao PDR. Due to the small sample size for this indicator, comparisons with previous years may not be meaningful. 39

47 Development Effectiveness Review 2011 Indicator Table 7: Quality of Completed Operations (Level 3) Baseline Year a Asian Development Bank Baseline Target Asian Development Fund Baseline Completed CPSs rated successful (%) Completed sovereign operations rated successful (%) b Completed nonsovereign operations rated successful (%) c Completed technical assistance projects rated successful (%) d 2012 Target average average average Positive perceptions of ADB effectiveness in reducing poverty (%) e Same as ADB ADB = Asian Development Bank, CPS = country partnership strategy. a For indicators with a 3-year average as the baseline, the figures represent the average for 2008, the average for 2009, the average for 2010, and the average for b Where available, project performance evaluation report (PPER) ratings are taken as the final rating. If a PPER was not prepared, an available project completion report (PCR) validation report rating is used. Otherwise, PCR ratings are used. Counting of projects rated successful in PCRs, PCR validation reports, and PPERs is based on their year of circulation. Baseline and later values may change when PPER and PCR validation report ratings differ from the original PCR ratings. c The figure for 2010 (and therefore the baseline) has been revised based on new data. d This excludes preparatory technical assistance; figures for previous years have been recalculated. e The ADB perceptions survey is conducted every 3 years. Sources: ADB Department of External Relations, and Strategy and Policy Department. Figure 7: Ratings of Country Assistance Program Evaluations and Country Partnership Strategy Final Review Validation Reports, 2011 Partly successful: Kazakhstan, the Maldives, and Timor-Leste (43%) Successful: Indonesia, Solomon Islands, Sri Lanka, and Uzbekistan (57%) Sources: Asian Development Bank country assistance program evaluation studies and country strategy and program final review validation reports issued in

48 Level 3 Adb s Operational Effectiveness Of the seven country strategies and programs assessed in 2011, six were considered satisfactory in terms of strategic positioning and program relevance, but only two were as successful in each of three other evaluation criteria: efficiency in delivering the country program (Indonesia and Uzbekistan), sustainability (Indonesia and Solomon Islands), and impact (Solomon Islands and Sri Lanka). 61 The main reasons for the partly successful ratings of the CPSs related to program delivery and sustainability, such as delays in project implementation, limited capacity of national agencies to implement projects and deliver services, slow introduction or implementation of reforms due to political challenges, and inadequate funding for operation and maintenance. ADB has taken action to improve CPS quality at entry (QAE) and implementation through improvements in CPS business processes in 2006 and ADB is also improving country sector diagnostics by upgrading quality assurance mechanisms for sector assessments and road maps, and by reviewing the quality of assessments and strategies for promoting inclusive growth in existing CPSs. The ongoing actions to improve project implementation and outcomes are expected to improve program delivery and sustainability, which were the weaker areas highlighted in the CAPEs and final review validation reports. Completed Sovereign Operations Rated Successful ADB off track ADF off track The success rate of completed sovereign operations continued to increase gradually, with the 3-year average ( ) success rate rising to 68% of ADB operations and 67% of ADF. The annual success rate also continued to increase steadily to 79% for ADB operations and 75% for ADF operations in 2011 (Figure 8, and Appendix 8, Tables A8.1 and A8.2). By country grouping, the 2011 annual success rates were 86% for countries with access only to ordinary capital resources, 75% for blend countries, 78% for ADF-only countries, and 82% for countries with fragile and conflictaffected situations (FCASs) (Appendix A8, Table A8.3). Despite these strong gains, the 3-year average remained well below the 2012 target of 80% and was therefore rated off track. The success rate was 69% for project loans, and 66% for policy-based loans. Success rates were derived from the project completion reports (PCRs), PCRs validation reports, and project performance evaluation reports of 228 operations completed during These operations were approved during (75% during ) and had a median completion year of Nine countries had 10 or more PCRs in Five of these exceeded the target of 80% of PCRs rated successful: the PRC (100% of 15 PCRs rated successful), Viet Nam (100% of 12), the Lao PDR (90% of 10), Cambodia (87% of 15), and Indonesia (86% of 14). The Philippines, Sri Lanka, and Uzbekistan had large portfolios and success rates of 60% 71% (Appendix 8, Table A8.4). Pakistan, which had 34 PCRs with an average success rate of 21%, was an exception. As discussed in the Level 2 outcome section (p. 25), Strategic positioning assesses the design quality of the CPS sector and country strategies by sector and overall; program relevance reviews the design quality of assistance programs by sector and overall; efficiency looks at resource utilization and portfolio performance and assistance programs by sector and overall; sustainability considers prospects for sustaining outputs and outcomes of assistance programs by sector and overall; and development impacts assess contributions of assistance programs to the country s achievement of development results. The success ratings of country strategies and programs for Indonesia, Solomon Islands, Sri Lanka, and Uzbekistan were based on CPSs processed from 2006 onward (and therefore are likely to have benefited from the improved business processes adopted in 2006). The ratings for Kazakhstan, the Maldives, and Timor-Leste were based on CPSs and other country planning documents that were mostly processed before

49 Development Effectiveness Review 2011 Figure 8: Completed Sovereign Operations Rated Successful, Target: 80% % ADB Annual ADF Annual ADB 3-yr ave ADF 3-yr ave ADB = Asian Development Bank, ADF = Asian Development Fund, ave = average, yr = year. Source: ADB Strategy and Policy Department. the country embarked on a much-needed portfolio restructuring exercise, resulting in the closure of 58 projects since All of the projects for which PCRs were prepared in belonged to this pool, and therefore had low success rates. If PCRs of projects included under Pakistan s restructured portfolio were excluded, the success rate would be 77% for both ADB operations (9 percentage points higher) and ADF operations (10 percentage points higher). However, the restructuring of the Pakistan portfolio led to substantial loan charge reduction and a more focused and better performing portfolio. The good performance of Pakistan portfolio today suggests that their success rates at completion are likely to improve in the near future (footnote 28). PCR validation reports and project performance evaluation reports downgraded eight projects from successful to partly successful and upgraded one from partly successful to successful. As a result, the 3-year average success rates during fell by 1 3 percentage points per year (Appendix 3, Table A3.4). The main reasons identified for partly successful and unsuccessful ratings in PCRs were insufficient supervision by ADB during implementation, inappropriate project design, inadequate capacity of implementing agencies and institutional structures for implementation, and procurement-related problems. In 2010 and 2011, after the DEfR found low project success rates and outcome achievement, ADB adopted a series of actions to improve project QAE and during implementation. 63 These actions built on 63 ADB Good Implementation Practice: Report of the Project Implementation Working Group. Manila; and ADB Improving Project Outcomes. Manila (available at -outcomes). The actions aimed to (i) improve country sector diagnostics, (ii) reinforce QAE assurance, (iii) achieve total project readiness, (iv) improve oversight of project and portfolio performance, (v) promote efficient and professional procurement, and (vi) apply lessons more systematically. 42

50 Level 3 Adb s Operational Effectiveness initiatives ADB had undertaken since 2004 to improve project performance. 64 To achieve full project readiness for implementation before approval, regional departments are applying approval preconditions, including full technical design; completed safeguards action plans (including resettlement); confirmation of the availability of counterpart financing; and advance procurement of goods, works, and services. To underpin timely project implementation, regional departments are structuring projects into fewer but larger contracts, particularly for large infrastructure projects. To boost project supervision capacity in resident missions, many operations departments are deploying staff with project management skills to the field through more flexible posting arrangements. Country portfolio performance review missions are focusing increasingly on the status of output and outcome delivery, in addition to disbursements and contract awards. Completed Nonsovereign Operations Rated Successful ADB off track The 3-year average success rate of recently completed nonsovereign operations increased to 72% in 2011 from the revised baseline figure of 69% in The success rate was derived from 25 XARRs issued in for projects approved during (60% during , including 5 in energy and 20 in finance) (Appendix 8, Table A8.6). One energy project and six finance projects were rated partly successful or unsuccessful. Reasons for less-than-satisfactory performance include problems with business success and sustainability; profitability of ADB s investment; and the quality of ADB s work in terms of screening, appraisal, structuring, and monitoring and supervision of the project (Appendix 8, Tables A8.7 and A8.8). ADB anticipates that ongoing measures to improve project QAE will translate into stronger ratings at project completion. Introduced in 2009, these measures promote greater attention to (i) the formulation of the development objective and project rationale; (ii) the structure of the project team, acknowledging externally commissioned expertise; (iii) implementation arrangements, including realistic time schedules, supervision, monitoring, and reporting; and (iv) the presentation of issues in the report and recommendation of the President. Completed Technical Assistance Operations Rated Successful ADB watch ADF off track ADB reversed the downward trend in the 3-year average TA success rate. The success rate for TA operations increased to 78% for ADB and 76% for ADF (Figure 9 and Appendix 9). ADB is considered on track to achieve its target, although faster progress is needed for TA projects in ADF countries to earn the same rating. The positive impacts of the TA reform efforts launched in 2008 are expected to translate into higher success rates for TA projects currently being implemented. 66 TA trends for ADB s four country subsets diverged during The 3-year average success rate of TA projects improved for blend countries (from 62% to 68%) and declined slightly for ADF-only countries (from 68% to 66%). It remained stable at 83% for countries with access only to ordinary capital resources and 61% for countries designated as FCASs. The success rates were derived from 456 TA PCRs (excluding project preparatory TA projects) issued during The projects were approved during (more than In 2004, ADB embarked upon a reform agenda to increase its development effectiveness. ADB also adopted the Action Plan to Improve Loan and Technical Assistance Portfolio Performance in The figure for 2010 changed from 80% to 69% because IED downgraded two XARRs from successful to partly successful. ADB Increasing the Impact of the Asian Development Bank s Technical Assistance Program. Manila. 43

51 Development Effectiveness Review 2011 Figure 9: Completed Technical Assistance Projects Rated Successful, Target: 80% % ADB Annual ADF Annual ADB 3-yr ave ADF 3-yr ave ADB = Asian Development Bank, ADF = Asian Development Fund, ave = average, yr = year. Source: ADB Strategy and Policy Department. 70% during ), and had a median approval year of Where ratings were less than successful, the main reasons were (i) inadequate technical and management capacity of the executing agency; (ii) lack of progress with complementary actions or reforms; (iii) delays in consultant engagement; (iv) unforeseeable political, environmental, and technical factors; (v) inappropriate design; and (vi) insufficient ADB supervision during implementation. ADB continued to ensure that its TA portfolio is adequately managed by keeping the number of active TA projects (excluding project preparatory TA projects) within a manageable size. Regional departments have also adopted other quality assurance measures. For example, building on the success of the high-level tripartite portfolio review of the India TA portfolio, ADB is piloting the approach in other DMCs with large TA portfolios, such as Bangladesh. To minimize delays in TA project implementation, ADB also introduced an electronic consultant management system in October 2010 to improve the recruitment of consulting firms. As a result, the average time spent recruiting consulting firms dropped from 160 days in October 2010 to 99 days in July In 2012, ADB will initiate a review of the 2008 TA reforms to strengthen its approach further. Positive Perceptions of ADB Development Effectiveness in Reducing Poverty ADB watch As the next independent perceptions survey of ADB will be conducted in 2012, ADB s score on this indicator has not been updated. In the interim, ADB surveyed clients in Central and West Asia to better understand stakeholders perceptions of ADB s work. The survey includes respondents from government, the private sector, civil society and nongovernment organizations, the media, development partners, and academia. The results are expected in the second quarter of

52 Level 3 Adb s Operational Effectiveness XX Have the Quality at Entry and Portfolio Performance of ADB s Operations Improved? ADB good ADF good In evaluating quality at entry (QAE) and portfolio performance, five indicators are examined focusing on the QAE of CPSs and sovereign and nonsovereign projects, the performance of sovereign operations during implementation, and project start-up times (Table 8). While the three QAE indicators based on biennial surveys were not updated, the 2011 DEfR confirms the improved performance of sovereign operations during implementation. With all but one indicator achieving the 2012 targets, this category is rated good for both ADB and ADF operations. Quality at Entry Rated Satisfactory Country Partnership Strategies ADB ADF Sovereign Projects ADB ADF Nonsovereign Projects ADB off track The 2010 QAE assessment reported in the 2010 DEfR showed improvements in the QAE of CPSs and sovereign and nonsovereign projects relative to the 2008 QAE assessment. As the next assessment is due in 2012, ADB s scores on the QAE indicators are unchanged. ADB has identified the constraints to the QAE of nonsovereign projects and anticipates that the impact of the corrective measures put in place will be evident in the results of the 2012 assessment (p. 43). Project Performance during Implementation Rated Satisfactory ADB ADF A new, more stringent project performance rating system was introduced in January 2011, based on five key performance indicators: technical, financial management, safeguards, procurement, and disbursement. 67 Under this system, the proportion of ADB s projects rated satisfactory at implementation improved sharply from 75% in 2010 to 91% in 2011 for ADB operations and from 71% to 89% for ADF operations in the same period, easily surpassing the target of 80% (Table 8, and Appendix 10, Table A10.1). The comparable rates were 95% for OCR-only countries, 88% for blend countries, 91% for ADF-only, and 88% for countries designated as FCASs (Appendix 10, Table A10.2). At least 90% of ongoing projects performed well on the technical, financial, and safeguards criteria. Projects rated satisfactory achieved at least 74% of their projected disbursements and contract awards on average by the end of In contrast, projects classified as actual problem achieved only about 40% of their projected disbursements and contract awards by the end of Seven of the 10 sector categories had 20 or more ongoing projects: agriculture and natural resources, education, energy, health and social protection, transport, water and other municipal infrastructure and services, and multisector (Figure 10). The proportion of projects rated satisfactory at implementation in these seven sectors ranged from 86% to 98%. Two sectors had only 10 ongoing projects: industry and trade with a satisfactory rating of 80% and public sector management with a satisfactory rating of 70%. Finance, with 17 projects, had a satisfactory rating of 88% (Appendix 10, Tables A10.3 and A10.4). The momentum for good project implementation has been established at different levels of ADB: Quarterly operations review meetings, chaired by operations vice-presidents, monitor portfolio performance 67 The ratings for the five indicators are combined into a single project rating: on track, potential problem, or actual problem. Projects with the first two ratings are considered satisfactory, and projects rated actual problem are considered unsatisfactory. 45

53 Development Effectiveness Review 2011 Indicator Table 8: Quality at Entry and Portfolio Performance (Level 3) Baseline Year Asian Development Bank Baseline Target Asian Development Fund Baseline Quality at entry of CPSs rated satisfactory (%) a Quality at entry of sovereign projects rated satisfactory (%) a Quality at entry of nonsovereign projects rated satisfactory (%) a Performance of sovereign operations during implementation rated satisfactory (%) Average time from approval to first disbursement in sovereign operations (months) b c CPS = country partnership strategy. a Quality-at-entry assessments of CPSs and projects are conducted every 2 years. b Average time from approval to first disbursement of sovereign loans and Asian Development Fund grants approved in the previous 5 years (e.g., 2011 figure is based on average). c Excludes operations financed by the Countercyclical Support Facility. Sources: Asian Development Bank Central Operations Services Office, Independent Evaluation Department, and Strategy and Policy Department Target Figure 10: Project Performance Rated Satisfactory during Implementation, % Agriculture and Natural Resources Education Energy Health and Multisector Social Protection Transport and ICT Water and Other Municipal Infrastructure and Services ICT = information and communication technology. Sources: Asian Development Bank Central Operations Services Office, and Strategy and Policy Department. 46

54 Level 3 Adb s Operational Effectiveness to ensure that problems are identified and actions adopted promptly. Portfolio performance-related indicators and actions including department-level actions under the 2010 Good Project Implementation Action Plan have also been built into operations departments results-based work plans introduced in 2010 and are monitored regularly. In 2011, ADB Management took over from IED the preparation of the annual portfolio performance report, which allows Management to be more closely involved in the detailed analysis of portfolio performance and defining of remedial actions. Average Time from Approval to First Disbursement in Sovereign Operations ADB ADF Timely start-up of operations is of key importance to ensuring the implementation quality of ADB projects. Operations approved during took an average of 10 months from approval to first disbursement for both ADB and ADF, reaching the 2012 target for ADB operations (10 months) and surpassing the target for ADF operations (12 months). Nonsovereign projects took an average of 8.2 months from approval to first disbursement during the same period, compared with 8.6 months in the previous year. The average time from the effectivity date to the disbursement of the first 30% of project loans dropped by 40% from 37 months for older projects (with PCRs issued in 2011, 80% of which were approved during ) to 22 months for more recent projects (approved during and ongoing as of the end of 2010). This suggests that the timeliness of project start-up has improved. As part of the project implementation and outcomes action plans (footnote 63), ADB created the pilot $150 million project design facility to provide loan advances for detailed design before project approval. The use of comprehensive project readiness filters to ensure timely implementation has become increasingly mainstreamed in all regional departments. ADB is also reviewing the impact of the readiness filters on overall project performance to identify lessons and further improve their application. 68 X X How Successful is ADB at Transferring and Mobilizing Development Finance? ADB good ADF good In 2011, ADB operations totaled $21.7 billion: $14.2 billion financed by ADB and special funds and $7.5 billion by cofinancing partners. To examine ADB s role as a development financier, the results framework assesses transfer and mobilization through two indicators for the disbursement, covering sovereign and nonsovereign operations, and one indicator for cofinancing (Table 9). ADB continued to perform satisfactorily in mobilizing finance for its DMCs, despite a slight dip in the disbursement ratio for sovereign operations. Funds were transferred rapidly to both ADB and ADF operations, and cofinancing for ADB and ADF operations was greatly expanded. With all indicators on track to meet their targets, this category is rated good for both ADB and ADF. Disbursement Ratio for Sovereign Operations ADB watch ADF watch Although the 2011 disbursement ratio fell slightly to 22% for ADB operations and to 19% for ADF operations, ADB is on track to meet the 2012 target. The decrease reflects the larger number of new projects, which tend to have smaller disbursements in the first year, and the smaller weight of policy-based loans in the total available balance for disbursements (6% compared with 8% in 2010, 14% in 2009, 68 The results of this review are expected to be discussed in ADB s forthcoming 2011 annual portfolio performance report. 47

55 Development Effectiveness Review 2011 Table 9: Finance Transfer and Mobilization (Level 3) Asian Development Bank Baseline Baseline Indicator Year a Overall disbursement ratio for sovereign c 23 c 22 operations (%) b Overall disbursement ratio d for nonsovereign loans and equity (%) DVA cofinancing relative to ADB financing approved annually (%) average 2012 Target At least 23 At least 50 Asian Development Fund Baseline Target c 25 e ADB = Asian Development Bank, DVA = direct value-added. a For indicators with a 3-year average as the baseline, the figures represent the average for 2008, the average for 2009, the average for 2010, and the average for b The ratio of total disbursements in a given year to the net loan and Asian Development Fund grant amount available at the beginning of the year or period, plus loans and Asian Development Fund grants that have become effective during the year or period, less cancellations made during the year or period. c Excludes operations financed by the Countercyclical Support Facility. d The ratio of total disbursements in a given year to the net loan and equity investment amount available at the beginning of the year or period, plus loans and equity investments that have become effective during the year or period, less cancellations made during the year or period. e The ratio for 2010 was lowered by cancellations. Sources: ADB Controller s Department, and Office of Cofinancing Operations. and 18% in 2008). The policy-based loan disbursement ratio improved from 60% in 2010 to 64% in 2011, while the project disbursement ratio remained at 20%. Disbursement Ratio for Nonsovereign Operations ADB ADB s disbursement ratio for nonsovereign operations improved on its strong performance in 2010, rising to 52% of total available financing and exceeding the 2012 target of at least 50% (Appendix 11, Table A11.3). Cofinancing ADB ADF Direct value-added (DVA) cofinancing relative to ADB financing increased by 7 percentage points to 32% for ADB operations and by 17 percentage points to 30% for ADF operations compared with the previous 3-year period, exceeding the targets by a large margin (Figure 11). This is the first time since 2006 that the DVA cofinancing ratio for ADF operations has exceeded the 2012 target of 20%. In 2011, ADB mobilized $4.17 billion in DVA cofinancing, which included $3.28 billion from official sources (80%) and $0.89 billion from commercial sources (20%) (Appendix 12). 69 ADF operations received $1.51 billion of DVA 69 ADB clarified its DVA cofinancing calculation in 2011 to include Trade Finance Program DVA cofinancing and revised parallel loan DVA cofinancing. Using this approach, ADB s total DVA cofinancing will be $7.48 billion as a result of an increase in DVA cofinancing from commercial sources to $4.20 billion. The 2011 DEfR is continuing to use the original DVA cofinancing calculation to enable consistent trend analysis from the baseline year. 48

56 Level 3 Adb s Operational Effectiveness Figure 11: Direct Value-Added Cofinancing, % Target: 20% ADB ADF ADB = Asian Development Bank, ADF = Asian Development Fund. Source: ADB Strategy and Policy Department. cofinancing. The steep rise in DVA cofinancing for ADF operations was largely attributable to a record increase in grant cofinancing. Grant cofinancing of investment projects increased almost eightfold, from $127 million in 2010 to $971 million in Two ADF-funded sector-wide education operations received about $1 billion in DVA cofinancing: the Third Primary Education Development Project in Bangladesh ($736 million) and the School Sector Reform Program in Nepal ($265 million). 70 In preparing the Nepal program, ADB worked closely with eight other development partners and provided TA to the government to help formulate and structure the program. Building on the primary education program in Bangladesh, ADB led the design and structuring of the follow-on sector-wide intervention, adopting a results-based financing mechanism that links disbursements to implementation milestones. ADB provided TA to the government to prepare a macro plan for primary education, including a common policy and financing framework and a joint partnership agreement. Eight development partners provided cofinancing. ADB intensified its efforts to establish new framework cofinancing agreements and expand existing ones. In 2011, ADB signed two new agreements with the Nordic Development Fund and the OPEC Fund for International Development. In total, ADB has signed nine agreements with bilateral and multilateral financing partners for a cofinancing program of about $9 billion. XX Is ADB Improving Its Strategic Focus and Selectivity? ADB good ADF good The term strategic focus and selectivity refers to the proportion of financing allocated to 70 ADB Report and Recommendation of the President to the Board of Directors: Proposed Loan to Bangladesh for the Third Primary Education Development Project. Manila; and ADB Report and Recommendation of the President to the Board of Directors: Proposed Loan to Nepal for the School Sector Reform Program. Manila. 49

57 Development Effectiveness Review 2011 Strategy 2020 core operational areas, and the support given to four priority themes: private sector development, regional cooperation and integration, environmental sustainability, and gender mainstreaming. 71 Gender mainstreaming made notable progress over previous years. As a result, all indicators either exceeded their targets or were on track to achieve their targets (Table 10). This category is therefore rated good for both ADB and ADF. 72 Financing for Strategy 2020 Priorities ADB ADF Strategy 2020 called on ADB to maximize its results, efficiency, and impact by refocusing its operations on five core specializations that best support its agenda: infrastructure, finance sector development, education, environment, and regional cooperation and integration. 72 Strategy 2020 set the institutional goal of Table 10: Financing for Strategy 2020 Priorities (Level 3) Baseline Year a Indicator Financing for Strategy 2020 core operational areas (%) Projects supporting private sector development (%) Projects supporting 2004 regional 2006 cooperation and average integration (%) Projects supporting 2004 environmental 2006 sustainability (%) average Projects with gender 2004 mainstreaming (%) c 2006 average Asian Development Bank Baseline b Target Asian Development Fund Baseline Target average a For indicators with a 3-year average as the baseline, the figures represent the average for 2008, the average for 2009, the average for 2010, and the average for b Excludes operations financed by the Countercyclical Support Facility. c Includes projects identifying gender as a theme and other projects with effective gender mainstreaming. Sources: Asian Development Bank reports and recommendations of the President, Regional and Sustainable Development Department, and Strategy and Policy Department Two of the Strategy 2020 priority themes environmental sustainability and regional cooperation and integration are also core areas of operations according to ADB s strategy. The other core areas of operations are infrastructure, finance sector development, and education. ADB has adopted corporate operational plans to develop key sector and thematic operations further in line with ADB s strategic agendas. The plans developed so far cover energy, transport, water, education, finance, climate change, food security, and health. ADB is developing plans for environment, public private partnerships, social protection, and urban development. ADB monitors the plans using their results frameworks. 50

58 Level 3 Adb s Operational Effectiveness having 80% of ADB operations in its core operational areas by In 2011, the proportion of ADB operations supporting core areas increased to 96% in 2011 from 92% in 2010, and to 96% from 88% for ADF countries (Appendix 13). While this confirms ADB s continuing strong focus on core areas of operations, the consequences of a sharp decline in support for other operational areas may need to be examined and adjustments considered. The proportion of infrastructure approvals increased to 87% of total approvals in 2011 from 64% in Education sector approvals continued to increase from a low base in 2009 to 5% in 2011, supported by the new education sector operations plan. ADB s support for finance sector development declined sharply to 3% of total approvals in 2011 from 12% in 2009 and 14% in Experience has shown that the level of operations in some areas can be volatile. For example, ADB expects to approve about $1.25 billion worth of finance operations in 2012, representing about 9% of the total expected operations triple the 2011 percentage for the sector. ADB also approved $359 million in TA (327 projects) in 2011, 86% of which supported ADB s core operational areas. Water sector support was the highest at 21% of total TA financing, followed by transport and communication at 16%, energy with 15%, and finance sector development at 5%. Support for Private Sector Development ADB ADF watch ADB support for private sector development in declined to 36% from 38% in but remained above the 2012 target of 30%. ADF support for private sector development remained at 28%, slightly below the 2012 target. Of the 38 new projects approved in 2011 that supported private sector development, 23 were sovereign operations (including 14 funded by the ADF), 14 were nonsovereign, and 1 had both sovereign and nonsovereign components (Figure 12). Sovereign operations supporting private sector development included transport and communications projects, and financing Figure 12: Projects that Support Private Sector Development, 2011 Sovereign and nonsovereign 1 (3%) Nonsovereign operations 14 (37%) Sovereign operations 23 (60%) Source: Asian Development Bank Strategy and Policy Department. 51

59 Development Effectiveness Review 2011 for SMEs, power, roads, water supply, and urban services. ADB intends to scale up and strengthen its public private partnership activities in line with its public private partnership operational plan for currently under preparation. ADB s operations in this area will be based on four pillars: advocacy and capacity development, enabling environment, project development, and project finance. During , ADB will strengthen its institutional arrangement for public private partnership by refining its business processes, as well as its financial and human resource mobilization and deployment. Support for Regional Cooperation and Integration ADB ADF ADB continued to boost its support for regional cooperation and integration. In , 18% of ADB projects and 21% of ADF projects supported regional cooperation and integration both exceeding the target of 15%. ADB approved 21 projects supporting regional cooperation and integration in 2011 (including 8 ADF-funded operations). Four projects were in the energy sector and 17 were in transport and communication. These included transport network improvements in the Central Asia Regional Economic Cooperation region, such as (i) rehabilitation of Afghanistan s road and railway networks to provide links from Central Asia to markets to the south, east, and west; (ii) information and communication technology network connectivity linking Tonga to the rest of the world; and (iii) hydropower generation capacity to enable the Lao PDR to export electricity to Thailand. In 2011, ADB approved an equity contribution to the ASEAN Infrastructure Fund that will finance and catalyze public and private investment in priority infrastructure in Southeast Asia. ADB is contributing $50 million annually over 3 years, starting in 2012, and is administering the fund. To promote knowledge sharing on trade, ADB brought together more than 70 trade officials, ASEAN Secretariat officials, and ADB staff to learn and share experiences on the dynamics of trade and production networks and online trade policy tools. ADB also launched the Asian International Economists Network, an internetbased network of international economic policy experts from government, academia, research institutes, and the private sector. The network s goal is to strengthen institutional capacity on trade policy in Asia and the Pacific, and to expand cooperation among trade ministries, experts, and policy makers. Support for Environmental Sustainability ADB ADF In , 43% of ADB projects and 34% of ADF projects supported environmental sustainability. Environmental sustainability was a theme in 49% of the projects approved in 2011 and the primary classification for 20%. Projects included solar power generation and energy efficiency, water supply and water-based natural resources management, and urban sector development including urban services improvements. In 2011, ADB approved the Urban Services Improvement Investment Program to improve water supply and sanitation in Georgia, thereby easing the pressure of a growing population on the country s urban infrastructure. 73 The Ha Noi Metro Rail System Project (Line 3: Nhon Ha Noi Station section), also approved in 2011, will provide low-carbon public transport that reduces greenhouse gas emissions. 74 Of the 57 projects (including 18 ADF-funded operations) supporting environmental sustainability, 45 will help address climate change 19 through mitigation, 5 with ADB Report and Recommendation of the President to the Board of Directors: Proposed Loan to Georgia for the Urban Services Improvement Investment Program. Manila. ADB Report and Recommendation of the President to the Board of Directors: Proposed Loan to Viet Nam for the Ha Noi Metro Rail System Project. Manila. 52

60 Level 3 Adb s Operational Effectiveness Figure 13: Projects that Respond to Climate Change, 2011 Mitigation and Adaptation 21 (47%) Source: Asian Development Bank Strategy and Policy Department. adaptation measures, and 21 using both (Figure 13). Projects contributing to climate change mitigation, such as those involving energy efficiency and renewable energy, will help rein in greenhouse gas emissions. Energy projects include a solar power project in India, a wind power project in Pakistan, and a combined gas facility in Viet Nam. Projects promoting climate change adaptation will finance climate resilient infrastructure, support vulnerability mapping, and develop provincial government capacity to manage potential climate change impacts. Support for Gender Mainstreaming ADB ADF Adaptation 5 (11%) Mitigation 19 (42%) In , 41% of ADB operations and 53% of ADF operations incorporated gender mainstreaming, a sharp increase from the previous 3 year period and surpassing the 2012 targets (Figure 14). In 2011, 51% of ADB operations and 67% of ADF operations incorporated gender mainstreaming, a major improvement from 42% of ADB operations and 53% of ADF operations in Missed opportunities for gender mainstreaming were minimal. ADB will strengthen the review of all projects at entry to ensure consistent and rigorous application of the gender classification. Further progress was made in 2011 in incorporating gender mainstreaming in infrastructure, such as energy and transport, with 36% of energy projects and 39% of transport projects categorized as gender mainstreaming. This represents a significant increase from 11% of energy and 31% of transport projects in Gender mainstreaming in water supply and sanitation and municipal infrastructure projects also increased from 73% in 2010 to 89% in Education and health projects continued to perform consistently well in mainstreaming gender. The upward trends reflect the successful implementation of actions ADB has taken since 2009 when its poor performance in promoting this theme was highlighted in the 2008 Development Effectiveness Review (DEfR). ADB increased the number of gender specialists, introduced refined gender mainstreaming project category guidelines, expanded staff training on gender inclusive projects, and launched the pilot results delivery scheme. 75 These actions also led to better ownership and oversight by regional departments, and improved collaboration between gender specialists working on thematic and sector issues. To sustain progress on gender mainstreaming, ADB extended the Gender and Development Plan of Action to Responding to the findings of the 2008 DEfR, ADB Management introduced a pilot results delivery scheme in 2010 that links ordinary capital resources allocation to performance in cofinancing operations and support for education and gender mainstreaming. Under this scheme, an additional ordinary capital resources allocation of at least 2% of the original amount is awarded to regional departments achieving the targets for use in the following 2 years. 53

61 Development Effectiveness Review 2011 Figure 14: ADB Projects with Gender Mainstreaming, Target: 40% % Annual 3-year average Note: Performance against target is assessed using 3-year moving averages. Source: Asian Development Bank Regional and Sustainable Development Department. Indicator Baseline Year Table 11: Knowledge Management (Level 3) Asian Development Bank Baseline Target Asian Development Fund Baseline Target Annual MAKE survey assessment rating (%) Same as ADB ADB perceived externally as excellent source of knowledge on development issues (% strongly agreeing) a Same as ADB ADB = Asian Development Bank, MAKE = Most Admired Knowledge Enterprise. a Data obtained from ADB perceptions survey conducted every 3 years. No assessment for 2011; in 2010, ADB adopted a baseline and established target for Sources: ADB Department of External Relations, and Regional and Sustainable Development Department. Gender experts also participated in review missions to help regional departments strengthen the implementation of project gender action plans. ADB also continued to provide gender capacity development support to executing agencies through learning opportunities at country, subregional, and interregional levels. XX Is ADB Managing Knowledge Better? ADB good ADF good Progress on ADB s knowledge management is assessed through an indicator of internal perceptions of knowledge management at ADB and through an indicator of external perceptions of ADB as a source of knowledge on development issues (Table 11). As staff 54

62 Level 3 Adb s Operational Effectiveness perceptions of ADB s performance as a knowledge management institution continued to improve, this category is rated good. The 2012 stakeholder perceptions survey will assess the progress on external perceptions of ADB and the results will be reported in the 2012 DEfR. Staff Perceptions of Knowledge Management at ADB ADB ADB advanced the implementation of its Knowledge Management Action Plan, Staff perceptions of knowledge management at ADB continued to improve in 2011, surpassing the 2012 target of 60% for the second consecutive year. ADB s rating rose to 66% in 2011 from 62% in ADB s progress on knowledge management was recognized globally when it won the Asian Most Admired Knowledge Enterprise (MAKE) Award in 2011 and was named a finalist for the Global MAKE Award. The Knowledge Management Action Plan, which underpinned this achievement, sharpened the knowledge focus in ADB operations, empowered ADB s CoPs, strengthened ADB s external knowledge partnerships, and enhanced staff learning and skills development. To reinforce progress on knowledge management, ADB consolidated its knowledge departments the Economics and Research Department, the Office of Regional Economic Integration, the Regional and Sustainable Development Department, and the Office of Information Systems and Technology under one vice-presidency (Knowledge Management and Sustainable Development). Under this strengthened institutional arrangement, ADB envisages advancing further its strategic directions, business processes, operations, and resourcing of its knowledge management activities. It plans to develop a new action plan, review and improve the management of knowledge and product services programs, complete a special evaluation study on ADB s knowledge management, further strengthen the CoPs, and upgrade the information and communication technology system to support knowledge management across ADB. External Perception of ADB as a Source of Knowledge on Development Issues This indicator, introduced in 2011, measures clients perceptions of ADB s effectiveness in creating and sharing knowledge, complementing the MAKE survey of staff perceptions of ADB s knowledge management. The independent stakeholder perceptions survey is conducted every 3 years. This indicator will be assessed for the first time using the results of the upcoming 2012 perceptions survey. A baseline of 29% and a target of 40% were established for respondents strongly agreeing with the following statement: ADB is an excellent source of knowledge on development issues. XX Is ADB Forming Better Partnerships? ADB good ADF good ADB made excellent progress on partnering with civil society organizations (CSOs) and conducting country strategy and portfolio review missions jointly with other development partners. ADB also expanded its use of program-based approaches (PBAs) (Table 12). With all three indicators achieving their 2012 targets, this category is rated good for ADB and ADF. Participation of Civil Society Organizations in Sovereign Operations ADB ADF ADB further increased CSO participation in its 2011 sovereign operations. CSO participation rose to 91% from 79% in 2010 for ADB 76 The staff perception rating was based on the results of the seventh MAKE survey that ADB conducted in November The number of staff participating in the 2011 survey (813 staff) was 28% higher than the number of respondents (637 staff) to the 2010 survey. 55

63 Development Effectiveness Review 2011 Table 12: Partnerships (Level 3) Asian Development Bank Asian Development Fund Indicator Baseline Year Baseline Target Baseline Target Sovereign operations with CSO participation (%) a New program-based approaches approved a (number) CPS and CPR missions conducted jointly with at least one other development partner (% annually) CPR = country portfolio review, CPS = country partnership strategy, CSO = civil society organization. a Excludes operations financed by the Countercyclical Support Facility. Sources: Asian Development Bank Central Operations Services Office, Regional and Sustainable Development Department, regional departments, resident missions, and Strategy and Policy Department. operations, and to 96% from 81% in 2010 for ADF operations (Appendix 14, Tables A14.1 and A14.2). The strong performance was driven by greater staff capacity in the use of participatory approaches, more collaboration with CSOs in the preparation of social safeguards documents and in monitoring safeguards implementation, and increased awareness of the role of civil society among project implementers. ADB updated its staff guide to consultation and participation, 77 and published 10 civil society country briefs describing civil society s operations and engagement with ADB in the selected countries. ADB will revise its methodology to better monitor CSO participation at different stages of the project cycle and institutional capacity for CSO participation. Program-Based Approaches ADB ADF The use of PBAs implies a greater focus on country ownership, use of country systems, reliance on the DMC s budget framework, and coordination among development partners. ADB continued its strong support for PBAs, approving 51 operations using PBAs in 2011 including 10 in ADF-only countries and 24 operations using PBAs in its ADF operations (Appendix 14, Table A14.3). The number of projects supporting PBAs thus remained far above the 2012 targets. An example of a project using a PBA is the Rural Primary Health Services Delivery Project in Papua New Guinea, for which ADB approved financing of $20 million, to be implemented under the sector-wide approach that is currently in place for the country s health sector. 78 Another example is the Third Primary Education Development Project in Bangladesh, for which ADB approved a $320 million loan as part of ADB Strengthening Participation for Development Results. Manila. ADB Report and Recommendation of the President: Proposed Loan to Papua New Guinea for the Rural Primary Health Services Delivery Project. Manila. 56

64 Level 3 Adb s Operational Effectiveness a pool of financing from the Government of Bangladesh and nine development partners. Joint Country Partnership Strategies and Country Portfolio Review Missions ADB ADF The proportion of CPS and country portfolio review missions conducted jointly with other development partners continued to increase, again surpassing the 2012 target (60%) for ADB and ADF by a wide margin. It rose to 88% from 65% in 2010 for ADB operations, and to 88% from 74% in 2010 for ADF operations. ADB conducted 18 of 19 CPS review missions and 20 of 24 country portfolio review missions in close coordination with development partners. 79 Progress on Paris Declaration Commitments ADB reported on its performance during on the indicators defined by the 2005 Paris Declaration on Aid Effectiveness and its follow-up agreement, the 2008 Accra Agenda for Action. The average results of the three annual internal monitoring surveys met or exceeded the 2010 targets on five of the nine Paris Declaration indicators relevant to ADB operations: aligning aid with national priorities, coordinating TA, using public financial management systems, avoiding parallel project implementation units, and increasing joint missions. ADB also made good progress in the use of PBAs in its lending and in the conduct of country analytical work jointly with other stakeholders. ADB fell short of the 2010 targets for the use of country procurement systems; however, meeting this target depends largely on the quality of such systems and the potential for increasing fiduciary risk that their use in ADB-financed procurement entails. ADB also did poorly on the ninth indicator, aid predictability. ADB s aid predictability performance is constrained by (i) the occurrence of exogenous events, such as natural disasters and the global economic crisis, which necessitate an ADB response through demand-driven lending operations that cannot be anticipated; and (ii) the extent to which DMCs record aid disbursements in their public accounts. ADB s use of 3-year rolling pipelines makes its aid highly predictable; however, this information was not always captured in DMCs accounting systems. ADB played a significant role in ensuring that the perspectives of Asia and the Pacific were an important part of the agenda and outcomes of the Fourth High Level Forum on Aid Effectiveness, held 29 November 1 December 2011 in Busan, Republic of Korea. The forum reviewed progress made since the 2005 Paris Declaration and determined the direction of the future aid framework. ADB (i) promoted the need to make countries public sector management systems more results oriented, (ii) highlighted the role of aid in catalyzing private sector involvement, (iii) stressed the importance of strengthening country systems and institutions to improve development effectiveness, and (iv) supported discussions on the evolving role of DMCs in promoting mutual cooperation. The main outcome of the forum was the endorsement of the Busan Partnership for Effective Development Cooperation by all stakeholders, reiterating the commitments and actions set out in the Paris Declaration and the Accra Agenda for Action. ADB will work closely with the development community to agree on global indicators and processes for monitoring the Busan Partnership agreement. 79 ADB participated in joint CPS consultation missions in Bangladesh, Cambodia, the PRC, India, Indonesia, Kazakhstan, the Kyrgyz Republic, the Lao PDR, Malaysia, the Maldives, Mongolia, the Philippines, Solomon Islands, Sri Lanka, Timor- Leste, Turkmenistan, Uzbekistan, and Viet Nam. ADB held joint portfolio reviews in Afghanistan, Armenia, Azerbaijan, Bhutan, Cambodia, Georgia, India, Indonesia, Kazakhstan, the Kyrgyz Republic, the Lao PDR, Mongolia, Nepal, Pakistan, Papua New Guinea, the Philippines, Samoa, Tajikistan, Uzbekistan, and Viet Nam. 57

65 ADB is helping the Government of Bhutan expand technical and vocational training facilities throughout the country.

66 Level 4 ADB s Organizational Effectiveness ADB needs to manage its human resources carefully to maximize the talents of almost 3,000 staff at headquarters and in resident missions across the region. It must ensure that its limited funds are managed effectively and its business processes are efficient and flexible. This section reviews progress in these areas against the 13 indicators in the corporate results framework. XX Is ADB Aligning Its Human Resources to Increase Operational Effectiveness? ADB good To assess ADB s human resources management, the results framework uses four indicators to capture the adequacy of staffing in operations departments and resident missions, gender Indicator Budgeted international and national staff in operations departments (%) a Table 13: Human Resources (Level 4) Baseline Year average Asian Development Bank Baseline Target b 53 b 55 b 56 b 56 b Budgeted international and national staff b 47 b 48 b 48 b 48 b in resident missions (%) c 2006 average Representation of women international staff in total (%) d Staff engagement survey results (index) e a Operations departments refer to regional departments and the Private Sector Operations Department. b Figures are annual percentages, rather than 3-year rolling averages. c This represents the proportion of international and national staff positions in resident missions of those assigned to regional departments. d This indicator follows the targets of the Third Gender Action Program. e The staff engagement survey is conducted every 2 years. Source: Asian Development Bank Budget, Personnel and Management Systems Department. 59

67 Development Effectiveness Review 2011 balance at ADB, and staff motivation and satisfaction (Table 13). ADB achieved its 2012 target for staff resources in operations departments and resident missions. Considerable progress was made toward gender balance at ADB, although much faster progress is needed to meet the target. Staff motivation and satisfaction was not updated because the next biennial survey of staff engagement will be conducted in With most indicators performing satisfactorily, this category is rated good. Staff Resources in Operations Departments ADB Staff Resources in Resident Missions ADB The proportion of international and national staff located in operations departments increased in 2011, reaching the 2012 target (Appendix 15, Tables A15.1 and A15.2). The number of staff located in resident missions increased, although the proportion remained the same (48%), equaling the target. By the end of 2011, 56% of international and national staff positions (951 of 1,713) were in operations departments. Of the positions assigned to regional departments, 48% (409 positions) were in resident missions. The share of resident mission staff in regional departments is expected to climb further to 51% by 2012, exceeding the target of 48%. In 2011, ADB added 70 positions for international and national staff (67% of total new positions) in operations departments at headquarters and in resident missions. Of the 56 new positions in regional departments, 29 (52%) were assigned to resident missions. Including two safeguards specialists and five procurement specialists, 33 international staff were posted to resident missions. The procurement specialists were assigned to the resident missions in Bangladesh, the PRC, India, Pakistan, and Viet Nam to work with national procurement officers to improve their capacity and help to reduce procurement delays. As part of implementing Our People Strategy and the Human Resources Function Strategic Framework and Action Plan, ADB continued to improve the delivery of human resource services, and to accelerate the recruitment of experts. This resulted in a high level of recruitment, halving the international staff vacancy rate to 3.2% in 2011 from 6.4% in Gender Balance at ADB ADB off track The representation of women international staff improved by 2 percentage points to 31% in The proportion of women in new international staff appointments increased to 46% in 2011 from 36% in 2010 and 19% in 2008 (Appendix 15, Table A15.3). However, these improvements were insufficient to put ADB on track to meet the 2012 target of 35% women international staff. The representation of women international staff at entry levels (1 4) was 38% in 2011, below the target of 40% (Figure 15). At pipeline levels (5 6) it was 30%, also falling short of the target of 35%. Representation at senior levels (7 10) reached an all-time high of 23%, although it was still short of the target of 25% women international staff (Appendix 15, Table A15.3). The Third Gender Action Program extension, , seeks to increase the recruitment rate of women at all levels, and the retention rate of women international staff. 81 It introduced measures to hold managers accountable for achieving gender results, including a gender action agreement with specific performance indicators and targets, which heads of departments and offices and directors are required to sign annually ADB envisaged creating 500 new positions in its Work Program and Budget Framework, ADB added 410 positions in 2010 and ADB Updating the Third Gender Action Program (GAP III): GAP III Extension ( ). Manila. 60

68 Level 4 Adb s Organizational Effectiveness Figure 15: Gender Balance at ADB, % Entry levels Pipeline levels Senior levels All levels Target Actual ADB = Asian Development Bank. Source: ADB Budget, Personnel and Management Systems Department. and report on. ADB is also taking steps to retain more female staff through a mentoring program, workshops on gender inclusiveness for senior staff, and gender awareness briefings for all staff. ADB has adopted communication and change management plans promoting gender diversity within the institution, and is continuing to promote flexible work arrangements for all staff with the extension of the work-from-home pilot. Staff Engagement ADB The May 2010 staff engagement survey, which had shown improving staff engagement during , also identified areas for improvement. Department heads consulted staff and formulated follow-up actions in response to these findings. Progress on the action plans are monitored and reported to staff. Responding to the survey findings, ADB also launched a new rewards and recognition program to recognize individual and team achievements and behaviors that contribute significantly to Strategy 2020 goals. It adopted a new position classification system for national and administrative staff to recognize their substantive roles and clarify their career progression opportunities. In 2012, ADB will realign human resource management functions to enhance support to managers and departments, further streamline human resource services, and make greater use of internal expertise in staff training and development. In addition, special attention will be given to staff career development through programs for mentoring, rotation, and staff exchange. ADB plans to conduct a new staff engagement survey in XX Is ADB s Budget Adequate to Support Operational Effectiveness? ADB poor ADB s budget adequacy is assessed through four ratios measuring internal administrative expenses (IAE) related to project approvals, disbursements, 61

69 Development Effectiveness Review 2011 Indicator Internal administrative expenses per $1 million of project approval ($ 000) Internal administrative expenses per project approved ($ million in 2000 constant prices) Internal administrative expenses per $1 million disbursement ($ 000) Internal administrative expenses per project under implementation ($ 000 in 2000 constant prices) Table 14: Budget Adequacy (Level 4) Baseline Year a average average average average Asian Development Bank Baseline b Target Maintain Maintain b 50 Maintain Maintain or increase a For indicators with a 3-year average as the baseline, the figures represent the average for 2008, the average for 2009, the average for 2010, and the average for b Includes operations financed by the Countercyclical Support Facility. Source: Asian Development Bank Budget, Personnel and Management Systems Department. and implementation (Table 14). From 2010 to 2011, three budget adequacy indicators IAE per $1 million of project approval, IAE per $1 million disbursement, and IAE per project under implementation improved, two of them significantly; one indicator IAE per project approved was stable. As ADB s performance on all four indicators remained below the target of maintaining the baseline values, it is rated poor. IAE per $1 million of project approval ADB off track IAE per project approved ADB off track IAE per $1 million disbursement ADB off track IAE per project under implementation ADB off track The sizable increase in ADB s IAE budget for 2010 (13.1% over the 2009 level) and 2011 (12.9% over the 2010 level) provided under ADB s 3-year budget transformation plan, , helped reverse the declining trend in the indicators. 82 The additional resources enabled ADB to allocate more staff time to project processing and administration, thereby safeguarding and enhancing the quality of its expanded portfolio. Considering the expansion in the portfolio and the need to capture efficiency gains in the results framework indicators, ADB will review the indicators in 2012 and identify suitable new indicators and targets. Operational efficiency increased significantly during For example, the number of international staff per project approved declined from 8.6 in 2008 to 8.3 in ADB will take further steps to implement efficiency measures, apply work prioritization exercises, and optimize resource use. 82 The objectives of the 3-year budget transformation plan, , are to (i) address persistent human and financial resource gaps that have accumulated over several years as operations have expanded significantly, (ii) enhance the quality of ADB operations, (iii) expand ADB s knowledge services, and (iv) implement Strategy 2020 effectively. This entails large budget and staff increases during the 3-year period, after which ADB will revert to normal budget growth. 62

70 Level 4 Adb s Organizational Effectiveness XX Are ADB s Business Processes and Practices More Efficient? ADB good ADF good The business processes and practices indicators gauge ADB s responsiveness to its clients by reviewing the level of resident mission leadership in project administration, country programming, portfolio review, and economic work. As most indicators met or exceeded targets, the rating is good (Table 15). Project Processing Time ADB ADF Average processing time was longer for sovereign operations that became effective in 2011 compared with the previous 2 years. The preparation of ADB operations took 22 months, compared with 19 months in For ADF operations, the processing time was 19 months, compared with 16 months in Project processing required an average of 23 months, while policy-based loan processing took 16 months in 2011 (Appendix A16, Tables A16.1 and A16.2). One factor influencing the deterioration in this indicator may be that, compared to previous years, there were relatively fewer policy-based loans and supplementary loans which normally take less time to process in the operations that became effective in ADB Management is concerned about the reversal in the trend and has instructed staff to implement fully and expeditiously the 2010 streamlined business processes. ADB is also investigating key processing bottlenecks to define appropriate actions. Indicator Average sovereign operations processing time (months from fact finding to effectiveness) a Sovereign operations administered by resident missions (%) Resident missions leading country programming (%) Resident missions leading country portfolio review (%) Resident missions leading country economic work (%) Table 15: Business Processes and Practices (Level 4) Baseline Year Asian Development Bank Baseline Target Asian Development Fund Baseline Target b 19 b a Defined as the average time from loan or project preparatory technical assistance fact-finding to effectiveness; or the date on which the loan, grant, or guarantee agreement comes into force. The agreement becomes effective after its signing by all parties, upon the borrower s compliance with the effectiveness conditions. Excludes multitranche financing facility tranches not processed together with the facility. Supplementary loan approvals are computed from loan fact-finding to effectiveness. b Excludes operations financed by the Countercyclical Support Facility. Sources: Asian Development Bank Central Operations Services Office, regional departments, and Strategy and Policy Department. 63

71 Development Effectiveness Review 2011 Delegation of Project Administration to Resident Missions ADB watch ADF watch Resident Missions Leading Country Programming ADB ADF Portfolio Review ADB ADF Country Economic Work ADB ADF ADB delegated the administration of 40% of all ongoing projects and 41% of ongoing ADF projects to resident missions. 83 (Appendix 16, Table A16.3 shows the percentage by country group.) All resident missions led country programming, country portfolio review, and economic work in Several measures were taken to strengthen procurement in resident missions (Box 4). ADB continued to refine the working arrangements under its decentralization model. Taking advantage of its proximity to DMCs, ADB will (i) continue promoting effective field headquarters teamwork to offer the best services quickly to its government counterparts; (ii) complete its staff decentralization plan according to the Work Program and Budget Framework, , and with support from the recently approved budget for 2012; (iii) strengthen the supervision capacity of resident missions to facilitate project implementation; and (iv) upgrade ICT systems in resident missions to achieve full system integration with headquarters. Is ADB Managing Itself with More Focus on Development Results? ADB refined its corporate results framework and Development Effectiveness Review (DEfR) scorecard in early 2011 and began a full review of the framework to strengthen it further and update targets for levels 2 4. In 2011, ADB also implemented work plans that link the results achieved by each department, division, and individual staff member to Strategy 2020 priorities. To measure work plan results effectively, more service departments conducted internal client surveys to gauge staff satisfaction with their services. As recognition of the value of these work plans has spread, ADB has begun to compile good practices on preparing and using work plans. ADB will build on this to Box 4: Improving Procurement in Resident Missions Responding to the project implementation working group s finding that procurement needed to be strengthened to accelerate processing and reduce risk, the Asian Development Bank (ADB) expanded training of national procurement officers, sent ADB procurement specialists on extended missions to support resident mission staff on procurement implementation, and undertook special missions and review sessions to help resident missions address procurement implementation problems. These and other measures contributed to a 20% drop in noncompliance and accelerated processing with reduced procurement risk. In 2011, ADB staff piloted the Procurement Accreditation Skills Scheme, which offers two options: consultant recruitment and executing agency procurement oversight. The scheme will be rolled out for all ADB staff in Source: Asian Development Bank Central Operations Services Office. 83 This captures the proportion of projects that are administered by team leaders in resident missions. However, it does not include projects that are administered by staff who are located in the field but report to headquarters. Similarly, this indicator does not capture projects that are largely administered by resident missions under the joint oversight of country and sector directors. If both types of projects were included, the value of this indicator would rise considerably. 64

72 Level 4 Adb s Organizational Effectiveness improve the quality of the work plans and promote their use as a management tool. ADB continued to sharpen its results focus in planning and monitoring country strategies and operations by implementing new guidelines on country and sector results frameworks. A total of 252 staff were trained at headquarters on managing for development results (MfDR), and 37 directors attended special sessions on the Paris Declaration and MfDR for directors. In addition, two training programs were held in DMCs for resident mission staff, one for Central Asia and the other for the PRC and Mongolia. To demonstrate its contributions to development, ADB produced country development effectiveness briefs for eight countries. 84 It also continued to implement quality assurance mechanisms and develop staff capacity to improve the quality of project design and monitoring frameworks. The ADB-supported Asia Pacific CoP on MfDR continued to support DMCs efforts to improve the results orientation of their public sector management systems. In September 2011, the Asia Pacific CoP, together with its counterpart CoPs from Africa and South America, endorsed the Seoul Statement on Results. This statement concluded that an effective public sector, supported by appropriate management systems, reinforces a country s capacity to achieve development results, boosts accountability for doing so, and improves ownership of projects financed by development partners. The statement was shared at the Fourth High-Level Forum on Aid Effectiveness. The 2011 special evaluation study by the Independent Evaluation Department (IED) on ADB s MfDR agenda implementation concluded that ADB has achieved most of the intended results of the MfDR action plan. Overall, ADB was rated successful in mainstreaming MfDR. Despite this progress, transforming ADB into a fully results-focused organization requires continued refinement of business processes and tools, and strengthening of results-based performance management at all levels. Key actions ADB will undertake will include reviewing ADB s results framework in 2012 and adopting a stronger framework in early 2013; improving results-based work plans and their use to align staff behaviors more closely with Strategy 2020 goals; sharpening the results orientation of the ADB-wide sector and thematic operational plans by developing staff instructions for preparing and monitoring these plans, and ensuring that all such plans are accompanied by practical monitoring frameworks; consolidating country results management by promoting a more consistent application of the updated guidelines on country and sector results frameworks, and staff instructions on results monitoring during country portfolio reviews; and providing a more focused staff training program on results monitoring during the reviews; reinforcing project results management by (a) ensuring the effective use of eoperations the new project management information system to enable more systematic and comprehensive results monitoring; (b) continuing with regular and ondemand design and monitoring framework training for all departments, and revising the project completion report format to enable better measurement of project outcome achievement; and (c) continuing to mainstream impact evaluation across ADB; and reinforcing support for DMC capacity development on MfDR by better integrating MfDR in governance and sector assessments underpinning CPSs. 84 In 2011, ADB published development effectiveness country briefs for Azerbaijan, India, Kazakhstan, the Marshall Islands, Samoa, Tonga, Uzbekistan, and Viet Nam. 65

73 The expressway, constructed under the ADB-funded Xinjiang Regional Road Development Project, increases the flow of goods and passengers while reducing transport costs and travel times, and improving road safety.

74 Actions XX Actions under Implementation In 2011, ADB Management adopted an action plan to improve outcomes following the findings of the 2010 DEfR. 85 The plan reiterated the need to intensify efforts to carry out the recommendations of the project implementation working group approved in December 2010 and the 2010 streamlined business processes to ensure project success. Key actions being implemented under the plan aim to (i) improve country diagnosis to ensure the relevance of ADB s country strategy; (ii) reinforce QAE assurance mechanisms for projects; (iii) promote total project readiness; (iv) strengthen project and portfolio supervision, supported by the new portfolio performance report system for timely identification and resolution of issues; and (v) mainstream the use of country and sector results frameworks in managing country programs. Each regional department also developed its own action plan to address region-specific challenges. ADB continued to implement other initiatives to further improve its performance, responding to commitments made in previous DEfRs. These initiatives are having the desired impact, as demonstrated by the steady improvement in cofinancing mobilization, support for gender mainstreaming through operations, staff perceptions of knowledge management, gender balance at ADB, and allocation of staff to operations including resident missions. In 2011, ADB mobilized additional investments by proactively identifying cofinancing opportunities and concluding strategic partnerships with organizations that share ADB s priorities; expanded gender mainstreaming in operations through application of refined gender mainstreaming project category guidelines, and continued staff training on how to better incorporate gender mainstreaming in project design and implementation; strengthened its resident missions by adding more staff, including four deputy country director positions, and reinforcing project supervision capacity; improved human resources management by adding more staff, accelerating recruitment, and improving staff incentives; improved the gender balance at ADB through proactive recruitment and retention measures, and greater senior staff accountability for achieving targets; and maximized efficiency gains by streamlining business processes, strengthening ICT systems, improving institutional procurement, and undertaking other costsaving measures. XX Priority Actions for 2012 ADB will continue to implement the actions listed above. Following the findings of this report, Management will emphasize measures on project performance, timely project processing, gender balance at ADB, budget efficiency, and MfDR (Table 16). 85 ADB Improving Project Outcomes. Manila. 67

75 Development Effectiveness Review 2011 Actions Table 16: Priority Actions for 2012 Improve project outcomes Continue to implement the initiatives defined by the project implementation working group in 2010, and the ADB-wide and departmental action plans to improve project outcomes adopted in Ensure timely delivery of outputs through regular monitoring. Involve more systematically sector experts (including CoPs) to ensure quality at entry and quality during implementation of multisector projects. Initiate a review of the TA reforms adopted in 2008 to assess their impact on TA performance and identify further actions needed. Ensure timely project processing Continue implementing the 2010 streamlined business processes. Investigate issues that slowed processing time, and adopt further actions needed. Improve gender balance at ADB Continue to implement the revamped actions to achieve the gender balance targets under the Third Gender Action Program extension, Pages Discussing Actions Increase budget efficiency 62 Further expand efficiency measures to deliver quality operations within the budget. 26 Responsibility Operations departments, BPMSD, COSO, CTL, OGC, OREI, RSDD, CoPs (SPD to coordinate) Operations departments, CoPs 44 All departments and offices managing TA projects (SPD to coordinate) Time Frame Ongoing 2012 onward Ongoing 63 Operations departments, COSO All departments and offices (BPMSD to coordinate) All departments and offices (BPMSD to coordinate) Identify better indicators to measure budget adequacy and efficiency for the upgraded results framework to be introduced in BPMSD, SPD 2012 Further mainstream MfDR at ADB 65 Complete the review of the corporate results framework. All departments and offices (SPD to 2012 coordinate) Improve the use of results-based work plans. All departments and offices (SPD to coordinate) 2012 Sharpen the results focus of ADB-wide sector and thematic operational plans. Consolidate country and project results management and reporting. Operations departments (SPD to coordinate Operations departments (SPD and COSO to coordinate) Reinforce support for DMC capacity development on MfDR. Regional departments (SPD to coordinate) Ongoing Ongoing 2012 Ongoing Ongoing ADB = Asian Development Bank; BPMSD = Budget, Personnel and Management Systems Department; CoP = community of practice; COSO = Central Operations Services Office; CTL = Controller s Department; DMC = developing member country; MfDR = managing for development results; OGC = Office of the General Counsel; OREI = Office of Regional Economic Integration; RSDD = Regional and Sustainable Development Department; SPD = Strategy and Policy Department; TA = technical assistance. Source: ADB Strategy and Policy Department.

76 Conclusion Asia s rapid economic expansion has reduced poverty and improved social outcomes, although progress has been highly uneven. While some MDGs have been achieved, progress is lagging in other areas, particularly in the poorer ADF countries. Renewed efforts by the DMCs and development partners, including ADB, are needed to achieve these globally agreed upon human development targets. In 2011, ADB continued to improve its operational and organizational effectiveness, suggesting that the range of actions introduced since 2009 to strengthen development effectiveness may be achieving the intended results. The quality of ongoing operations improved, more operations promoted gender equity, and cofinancing increased significantly, particularly in ADF operations. The 2011 DEfR identified continuing weaknesses in important performance areas. Although the quality of ADB s recently completed operations including their delivery of core sector outcomes improved, it remained considerably below target. Progress in delivering several ADF core sector outputs slowed largely due to project implementation delays, restructuring, and cancellations. These findings confirm the urgency of fully implementing actions introduced in to improve project implementation and outcomes. ADB Management will therefore intensify efforts to mainstream the implementation of these measures to engender better development outcomes. 69

77 ADB s Rural Infrastructure Sector Project helped farmers to increase agricultural productivity and reduce poverty in the Viet Nam countryside.

78 Appendixes 71

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