ADB claims most local projects successful

ADB claims most local projects successful

The Asian Development Bank (ADB), a major lender to Indonesia,
has provided a total of US$19.35 billion loans to finance 269
projects since 1968. However, last week, several local non-
governmental organizations (NGO) released a report that said 70
percent of the projects funded by the Bank were "unsuccessful".
The Bank's country director in Indonesia David Green responded on
Monday to the criticism in an interview with selected journalists
including The Jakarta Post's reporter Tony Hotland.

Question: What are your comments over the NGOs' statement that 70
percent of your projects in Indonesia were "unsuccessful"?
Answer: The evaluation of the activities we finance does not show
that the projects are unsuccessful. The work suggests that there
are problems. Our evaluation done by an independent office within
the ADB, which is what the NGO was using, say there are problems
and some projects are not successful, but the majority of the
projects are successful. The NGO says that 70 percent of our
projects are not effective, not sustainable. We don't feel that
it's true. They have not given a good balance.
Why?

The NGOs say that the sustainability is very important. It is
true, it is one of our five criteria. But sustainability must
also be weighed against the other things. Even in projects where
we have concerns about sustainability, most of these projects are
rated successful because the benefits are large enough.

Even if they are not being sustained as well as we hoped,
their benefits are large enough to far outweigh the cost. It is
clear that sustainability is important, it is only one of a
number of equally important aspects that must be considered when
you consider a project.
What are all the criteria?

We take five different criteria. First, relevance. Does the
project really aim for goals that meet the government's
priorities for development? Second is efficacy. It relates to
whether or not you met your objectives. Third, efficiency. How
well you met the goal with your resources. Did we pay too much?
We look at the cost of the projects related especially to the
benefits that we get out of it.

Fourth, sustainability. You are looking at a project at one
point in time, but any project has benefits that come over time
and costs that come over time.

Fifth, are we transferring knowledge? ADB does not want to be
forever providing assistance to its partner countries. We want to
provide capacity building so at some point everything is done by
the country.

At the end of the project, we do a project completion report.
It tries to look at how the project looks at the very end of the
disbursement of our funds. But then we wait three years, and then
we come back and do an evaluation. It is conducted by an
independent office. These people don't report to us, the
management -- only to the board of directors. Indonesia sits on
the board.
Why has sustainability become an issue now?

The reason that the NGO reports talk about sustainability a
lot is because in the period of time of these projects, Indonesia
has had a very difficult set of problems. In the mid 1980s, there
was the oil price collapse. In the late 1990s, there was the
economic crisis. In both periods of time, the government budget
shrank much more than anyone thought.

It is, unfortunately, extremely normal that the government
often cuts back on maintenance and operation expenses. This
worries us because this reduces the benefits for development
investment.
So, you admit there is a sustainability problem in ADB projects
in Indonesia?

Yes, it seems that maintenance and operation expenditures are
not being met by the government. For instance, road or irrigation
facility rehabilitation and school (maintenance). There is an
immediate return if you make some changes, some investment, (if
you) rebuild the schools, keep them from leaking, get new books,
put some computers in the classrooms.

But if you don't repair the school building, at some point, in
a few years, those benefits disappear. The project may still be
worthwhile, it still may provide more benefits than cost. But a
little money each year to maintain it might make the benefits
even greater and more worthwhile.
What do you expect the government to do?

Over the last four years since the financial crisis, it's been
difficult for the government to maintain the kind of expenditures
that it would want to for the investment that has been made. We
expect that it will improve. We're walking away from the crisis.
You are stronger and you should increasingly be able to do the
kinds of things that provide sustainability.