ADB Needs to Strengthen Project Sustainability to Enhance Performance

New Delhi: The Asian Development Bank (ADB) needs to address issues causing weak sustainability of its projects to improve performance, says the 2020 Annual Evaluation Review (AER) conducted by ADB’s Independent Evaluation Department (IED).

The AER, IED’s flagship report, reviews the operational performance and results of ADB. It provides a synthesis of the evaluations prepared by IED in the preceding year, updates performance trends, and offers lessons and recommendations to guide ongoing and future operations. This year’s special theme is the robustness and credibility of ADB’s project self-evaluation system, which plays a vital role in tracking ADB’s performance and results, supporting decision making and learning, and in meeting the new agenda set in its Strategy 2030.

AER 2020 notes a decline in the performance of public sector projects in all regions, except East Asia where strong project performance in the People’s Republic of China improved. The drop in the success rate of public sector operations was mainly due to weak project sustainability. Sector-wise, the decline in project performance was driven mainly by weakened performance in the transport, education, and finance sectors. ADB’s performance in water and other urban infrastructure and services improved during the period, although marginally.

Performance of private sector operations continued to decline in 2019, especially against the development criteria, which mirrors overall project performance. However, the business success of private sector projects improved last year. In addition, all financial institution projects performed well and accomplished most of their targets, with these financial institutions meeting their business objectives and improving their financial performance.

“ADB needs to continue to bolster its efforts to address the issues causing weak sustainability of project outcomes,” said the IED Director General Marvin Taylor-Dormond. “As for the private sector operations, greater attention to achieving development results is the key to improving performance.”

This year, the AER conveys some key reflections on the use of ADB’s lending modalities, based on a series of recent thematic and corporate evaluations. The multitranche financing facility, as well as policy- and results-based lending have contributed to improvements in processing efficiency and mobilizing cofinancing resources. While ADB’s various financing modalities are well-suited to supporting Strategy 2030’s agenda, greater synergy between project and policy operations, organizational strengthening, and improved staff incentives and training on the use of the modalities are needed to fully harness their benefits.

Regarding ADB’s project self-evaluation system, the AER found its architecture to be robust, credible, and useful for accountability and learning. However, weaknesses particularly concerning data reliability, data management, institutional capacity, and guidance in the use of the system need further and sustained attention moving forward. A comprehensive monitoring system for private sector operations is also not fully in place.

“Overall, further attention to project monitoring, including dedicated resources and stronger incentives to enhance data reliability and management, will support ADB to better track development outcomes,” said IED Director Nathan Subramaniam. “Stronger incentives are needed to produce objective self-evaluations and systematically capture tacit knowledge throughout the project cycle, which is vital for institutional learning.”

The report recommends ADB to prioritize further efforts and resources to ensure a rigorous monitoring and evaluation system throughout the project cycle and enhance the current monitoring and evaluation system for private sector operations, including both development and financial indicators. On operational performance, the report recommends ADB to ramp up efforts to address project sustainability and continue to improve management’s action plans on IED’s recommendations.