Reinventing ADB
A 30th anniversary is the right time for reckoning by a multilateral development bank such as the Manila-based Asian Development Bank which happens to serve the most economically dynamic region in the world. And that was precisely the main agenda of the ADB's 30th annual meeting in Fukuoka, Japan, which ended yesterday.
As Asia's economic landscape has evolved, so too has the role of the bank which has been playing a pivotal role in the region's economic transformation. ADB's President Mitsuo Sato has highlighted new strategic initiatives designed to enable the bank to retain its relevance and usefulness to the region's development in the next century.
The bank made the right decision by redesigning the focus of its policies and programs to enhancing the private sector's role, strengthening the capacity of member countries to take prudent macroeconomic policies, especially a conducive investment environment, and allocating more resources to other sectors such as human resource development (education, health, population) and the environments.
The economic conditions in most countries in the region three decades ago dictated the bank to focus its lendings and development aid (concessional loans) on the development of physical infrastructures. But as most member countries have advanced to higher planes of development and have implemented economic reform measures, their private sectors have assumed a greater role in economic development. Governments in many countries are moving out of particular sectors as their private sectors move in.
Sato said the bank should change itself from being a mere provider of aid to being a catalyst in attracting private investment to its member countries. Indeed, as foreign capital flows to the region increase and the source of its soft loans dwindles as a result of budget constraints in its donor members, the ADB's role in providing aid has become diluted.
Among ADB's new roles will be to help companies in the region gain better access to the money and capital markets. ADB, riding on the back of its reputation, lending experiences in the region and the increasing capacity of its private sector lending arm, is able to act as a catalyst to international investors to pick out viable private investment ventures. Past experiences prove that ADB's participation in a private investment project has paved the way for the investors to gain loans from the international market.
Another important role, as cited by Sato, is assisting governments to create a conducive environment needed to attract private sector investments. This includes policy dialogs with governments which in the past have been part of the process of loan or aid negotiations with borrowers. Though such policy dialogs have not always been well accepted by sovereign borrowers they have proven their great contribution to helping countries improve their macroeconomic management and sectoral policies. The recent establishment of a think tank, called the ADB Institute, will surely enhance the bank's capacity in studying development issues which are of the greatest concern to the region. The think tank will enable the bank to broaden its function to that of a development institution capable of reforming policies and institutions.
Of more importance, is that ADB can now put more resources to research and studies, and improve its strategy analyses to comprehend the social and economic complexities in specific countries. This will enhance the ADB's capacity to design comprehensive country strategies which take into account the political realities in the target countries.