The 2006 Annual Report on Loan and Technical Assistance Portfolio Performance contained a special chapter on design and monitoring frameworks to once again examine their quality and to track changes. The trends in the overall quality of the frameworks prepared at the project design stage and approved each year since 2000 are illustrated below.
Design and Monitoring Frameworks Rated Satisfactory or Better Overall
The significant improvements in design and monitoring framework quality can be plausibly attributed to action plan improvements instigated by evaluation studies. Nevertheless, despite these achievements, too many advisory and regional technical assistance frameworks remain substandard. Past evaluation studies have consistently documented the disappointing performance of ADB’s knowledge products and services. One of the contributing factors appears to be poor planning—particularly at the impact and outcome levels. It should not be surprising, therefore, that a lack of clarity in formulating higher-level project objectives is associated with poor results. OED will continue to monitor the quality of frameworks. The Central Operations Services Office has developed, published, and distributed guidelines for preparing frameworks and has continued to provide training in the understanding and use of this core results-management tool.
In a brief on managing for development results prepared for the DEC in November 2005, the Strategy and Policy Department noted that the Central Operations Services Office had set interim performance targets for framework quality. The goal was to have at least 80% of the frameworks prepared for loan projects and programs, and at least 50% of the frame-works prepared for advisory and regional TA activities rated satisfactory or better during 2005 and in subsequent years. The 2006 Annual Report on Loan and Technical Assistance Portfolio Performance shows that those targets were achieved in 2005. However, the ultimate target in the short to medium term must be to have all of the frameworks prepared during the project design phase, for all projects, rated satisfactory or better. ADB is also reaching out from headquarters. Since September 2005, 283 staff from executing agencies in 17 DMCs and 45 staff members from resident missions have attended workshops on project design and management. Ninety-five facilitators from 12 DMCs have participated in related training. Officials from 19 DMCs participated in the Third International Roundtable on Managing for Development Results held in Ha Noi, Viet Nam, in February 2007.
a Available: www.adb.org/documents/ses/reg/sst-oth-2003-29/ses-ppms.pdf
Box 16: Promoting Portfolio Performancea
The 2006 Annual Report on Loan and Technical Assistance Portfolio Performance identified several problems: (i) a stagnation in OCR loan approvals; (ii) persistent delays in project implementation; (iii) a growing problem with year-end bunching for loan and TA approvals, as well as project, program, and TA completion reports; (iv) a steady decline in OCR project loan disbursements during the previous decade; (v) difficulty in meeting the conditions for program loan tranche releases; (vi) lending concentrated in a few DMCs; (vii) in response to falling interest rates, a few large borrowers prepaid their older and relatively expensive OCR loans; (viii) negative net resource transfers from ADB to DMCs; (ix) a fall in OCR income of 43% during 2001–2004; and (x) weaknesses in portfolio management—20% of ongoing loans and 75% of ongoing TA activities went without a review mission during 2004. The report concluded that these broad trends all supported the contention that ADB’s traditional lending products and systems no longer met many of the needs of its key clients. Unless ADB could address these issues by developing new products and procedures to meet the DMCs’ development needs, ADB would be threatened with losing relevance as the premier development institution in Asia and the Pacific.
The DEC agreed that the strategic questions raised by the report were of fundamental importance to ADB’s continued relevance to the region and that the significance of the issues was enhanced by the independence of the analysis. The DEC agreed with ADB Management that, while some of OED’s recommendations were quite sensible, taken together they were not sufficient to deal with the portfolio problems diagnosed in the report. The DEC requested ADB’s Management to prepare a comprehensive action plan to address the key strategic issues analyzed in the report.
The resulting action plan was prepared in November 2005. Among others things, it included actions designed to (i) enhance project administration efficiency, (ii) improve TA portfolio management, (iii) improve planning and timing of Board consideration of loans, (iv) improve sector selectivity, (v) strengthen project monitoring and evaluation, and (vi) increase and improve the OCR portfolio. The action plan incorporated initiatives being undertaken by ADB in its reform agenda, including the innovation and efficiency initiative, the strategy for enhancing ADB support to middle-income countries and borrowers from OCR, and managing for development results at ADB. OED will continue to monitor the implementation of the action plan.
a Available: www.adb.org/documents/reports/portfolio_performance/2006/rpe-oth-2006-10.pdf
Box 17: Improving Country Partnership Strategies
Country partnership strategies have become the key instrument to set priorities for ADB’s operations in a country. Thus, country assistance program evaluations currently have the clearest, most direct, and most systematic influence on ADB’s operations. Experience in 2005 and 2006 suggests that their influence on the formulation of new strategies has been mainstreamed. The Board does not normally discuss a country partnership strategy until after the DEC has considered the corresponding country assistance program evaluation and informed the full Board of the DEC’s views based on the findings. Lessons from country assistance program evaluations fall in 10 areas:
• Future assistance should be prioritized based on selectivity and focus, with successful ADB performance in a sector as one key criterion.
• Country partnership strategies should be results based—the lack of monitorable indicators made it difficult to evaluate past strategies.
• Success has been greatest when ADB maintains a long-term involvement in a sector and combines programs for capacity building with investment support.
• Projects and programs using relatively simple designs that are rooted in local conditions are more likely to succeed than complex interventions.
• Steps must be taken to strengthen the impact of TA used to support policy reform, capacity building, and institutional strengthening.
• ADB should deepen its relationships with broader society, as this enhances ownership and often helps to achieve better development results.
• ADB should intensify its coordination with development partners and stakeholders.
• Governance, including the need to control corruption, should be explicitly addressed in country partnership strategies, and not just as a crosscutting theme.
• The understanding of corruption and the risks that it has for ADB’s operations remains superficial in country partnership strategies.
• Failure of project designs to recognize and address institutional weaknesses in implementing agencies early on leads to weak project performance.
Examples of recent country assistance program evaluations that have influenced the subsequent country partnership strategies include those for Bhutan, Cambodia, Indonesia, Lao People’s Democratic Republic, Philippines, and Uzbekistan.
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