The fight for cash to meet the ADB development goals
The ADB is seeking a big increase in donations to its soft loans and grants agency, the Asian Development Fund (ADF), to help it meet the UN Millennium Development Goals by 2015. Sources at the bank say they want more than $11 billion for the ADF 10, the fund replenishment that will finance its activities until 2012.
But its fundraising efforts have been hindered by a perception that Asian countries are not donating enough, and that aid is better channelled through other international institutions such as the World Bank. Fund officials are also worried that international concern over African poverty will divert money from development efforts in Asia.
The World Bank and the IMF warned in a report in early April that most countries will fail to meet the development goals without more aid from the international community. “If we don’t meet these goals in Asia, we won’t meet them worldwide,” ADB managing director Rajat Nag tells Emerging Markets. “Although Asia is well ahead on the income poverty criterion, on many of the social indicators we are not doing well.
“Our pitch to ADF donors has been that Asia still needs a very significant amount of concessionary lending, and therefore a significant replenishment is warranted.”
But Nag admits that there is a different perception in some western capitals, where Africa is seen to be in greatest need of help.”Taxpayers of non-regional countries think of Asia as the glitzy towers of Mumbai or Jakarta, and in terms of China and India where they read stories of 10% growth rates,” he says. “Our challenge is to say those successes are real, but there is also the other Asia”, an area which he says contains the largest proportion of the world’s poor.
“We are asking donors to make a significant increase in their contributions for ADF 10 as it will be the last replenishment of the fund in time to meet the Millennium Development Goals,” ADB president Haruhiko Kuroda tells Emerging Markets. “I am confident that donors will be generous and provide a substantial increase in assistance for the poorest countries,” he adds, declining to specify the amount being sought.
“The question is whether ADF 10 should be $11 billion or $11.5 billion,” a European executive director at ADB tells Emerging Markets. He raised concerns over what he called ADB’s “project quality” and “the way the bank responds to criticism”. According to other sources, the bank’s own shareholders have questioned whether it is the best institution to try to meet the millennium goals. It is seen as being in competition with the World Bank and numerous bilateral aid agencies.
“We have to prove that the ADB should be the partner of choice [in Asia]” says Nag. “What we are arguing is – look at the results on the ground. If Asia has done well economically, and it has, then the ADB’s support must have had some impact on economical growth-related products such as infrastructure.
The ADB’s project performance has improved significantly in recent years, making it an effective instrument of Asian development, Nag adds.—A.R.