NGO Asian Development Fund Briefing: ADB and Poverty Reduction

4 March 2004

By Bank Information Center (BIC)
NGO Forum on ADB
Environmental Defense
Centre for Organisation Research & Education (CORE)
Oxfam Community Aid Abroad

March 2004

Problem Statement

In 1999 the ADB defined poverty reduction as its overarching framework. Since then, new or revised policy, program and project documents refer to the achievement and implementation of poverty reduction. However, a closer look at ADB’s operations quickly shows that in reality the institution is still oriented towards economic growth rather than poverty reduction.

The on-going review of ADB’s Poverty Reduction Strategy approved in 1999 is still premised on the belief that poverty can be reduced through the trickle down effect of overall economic growth. ADB’s recently issued Progress Report on the Strategy and Review [note 1] attempts to illustrate that targeted interventions, i.e. projects designed to have direct benefit for the poor, are too cumbersome to implement and that they cannot be evaluated in quantifiable terms.

The preference for indirect project lending, such as infrastructure, economic reform or program and policy lending, is backed up by the claim that “during country consultations, almost all governments favored support from ADB for indirect interventions” [note 2]. Unfortunately, a look at ADB infrastructure projects shows that these projects are the ones most likely to cause adverse impacts. All projects that were brought to ADB’s Inspection Function [note 3] were infrastructure projects. Even if from the perspective of governments, infrastructure projects may seem desirable, from the perspective of communities without access to resources, they might actually not achieve the goal of poverty reduction, and often seem to lead to poverty reproduction instead.

This emphasis is evidence of the lack of involvement of the poor in project planning and implementation. ADB’s rhetoric pays homage to consultation and participation, but in reality, project “beneficiaries”, have very little say over projects that will affect their livelihoods and environments. ADB’s definition of participation refers to input-oriented methods, such as poverty mapping, and poverty-disaggregated monitoring indicators. What ADB’s definition does not include is the right of the poor to influence projects and programs. In fact, in its reaction to the World Commission on Dams report, ADB officially states that it does not accept the concept of free, prior and informed consent. This attitude leaves little room for meaningful participation. The problems that result from this lack of participation are evident even in ADB funded projects that targeted for poverty alleviation, as demonstrated in the following example.

Case Study - Cordillera Highland Agriculture Resource Management Project, Philippines

The Cordillera Highland Agriculture Resource Management Project in the Philippines is an example of a failed targeted project. The aim of this project was to increase the net income of the beneficiaries through sub-projects that in turn were to be identified by the beneficiaries. The loan was designed in such a way that the Department of Agriculture, as the Executing Agency, contracted out the actual project implementation to a consortium of NGOs. The task of these NGOs was to facilitate loan disbursements to the various administrative units (barangays) in the project area for the sub-project components identified by the barangays.

During project implementation, several flaws in the design became apparent. For one, the NGOs contracted were not prepared for this type of role. Due to rivalry among the NGOs and their lack of capacity, the project was delayed by about a year. Secondly, although the communities were supposed to identify the desired sub-projects, in most cases, the projects were chosen based on the Department of Agriculture’s preference. As a result, many communities now have individual projects that do not address their immediate needs. One such example is a reforestation project. The return from this project is long-term, both in terms of lumber production and in its function of watershed rehabilitation. It does not address the needs of a community with water shortage and low production of farm commodities. Other examples are the farm to market access roads. These roads do not help communities if they cannot produce sufficient commodities, and second, if the markets for their commodities do not exist.

Proposed Reforms

It is time for the ADB to take steps toward implementation of its pro-poor, participatory development rhetoric. We call on donors to promote the following reforms in the ADF negotiations process:

• Take steps toward embracing free, prior, informed consent as a basis for consultation and participation
• Improve its monitoring system by
  • moving away from input factors to results-oriented output indicators
  • Adopting a more holistic monitoring system that appropriately evaluates the adverse social and environmental impacts with the same rigor used to assess economic impacts. ADB’s benchmark for the social and environmental sustainability of projects is that the project beneficiaries be as well or better off as before the project. In order to determine whether this goal has been reached, project staff should conduct comprehensive surveys among the beneficiaries and the results should be integrated in measurements of poverty reduction, otherwise the overall data for monitoring poverty reduction will be skewed.
• Improve targeted lending so that the poor benefit in concrete ways as assessed by the monitoring system proposed above.
• Explicitly demonstrate how projects (especially large infrastructure) will contribute to poverty reduction and ensure that local poor communities directly benefit from the project
• Ensure that projects do not exacerbate inequity between beneficiaries and affectees
• Conduct an independent audit of ADF projects to report specifically on whether they are meeting ADF’s stated pro-poor emphasis.
• Since a large number of project affectees are those who are involuntarily displaced during project implementation, an independent portfolio-wide independent audit should be conducted to determine if displaced persons have had their standard of living restored or improved as stipulated in the ADB Resettlement Policy
• Indicate how CSPs and related ADB documents will be aligned with Poverty Reduction Strategy Papers (PRSPs).
• Clarify the status of the current review of the PRS and if still ongoing encourage and fund an independent assessment of the current Poverty reduction strategy as an input for the current review. Ensure this assessment is publicly available via the website and encourage feedback and discussion on its findings.
  

Notes

1. Review of ADB’s Poverty Reduction Strategy, Lessons and Issues, Progress Report 2003, http://www.adb.org/Poverty/review.asp
2. ibid.
3. The projects brought to the old Inspection Mechanism include the Korangi Wastewater Management Project, Pakistan, the Samut Prakarn Wastewater Management Project, Thailand, the Southern Development Transport Project, Sri Lanka and the current case of the Chashma Right Bank Irrigation Project in Pakistan. Only the Samut Prakarn and the Chashma requests were accepted, but the fact that affected communities raised a complaint in the other two cases clearly marks the projects as problematic.