ADF has Reached the Most Vulnerable Developing Member Countries, but More Resources are Needed for Key Thematic Priorities

MANILA  — The Asian Development Fund (ADF), which provides grants to the Asian Development Bank’s (ADB) poorest and most vulnerable developing member countries, has enabled the bank to target small island developing states, countries dealing with fragility and conflict, and provide timely response to crises. However, more concessional resources are needed for key thematic priorities such as climate change adaptation and transformative gender agenda—areas where governments tend to underinvest, a report from ADB’s Independent Evaluation Department (IED) said.

As climate change, geopolitical tensions, and diseases have strained the financial capacities of developing member countries, there is a pressing need for ADF grants to support their recovery efforts and long-term development plans. More attention is needed in supporting the design, implementation, evaluation, and learning from transformative investments related to the ADF thematic priorities of enhancing climate resilience and adaptation and improving gender outcomes.

“ADB has used concessional resources well and has reached the most vulnerable developing member countries at risk of debt distress,” said IED Director General Emmanuel Jimenez. “However, there is an opportunity to enhance ADF’s impact in several ways. Closing the monitoring and evaluation system gaps that limit the measurement of ADF outcomes and leveraging policy-based lending by reevaluating the cap for policy-based grants are some ways in which the ADF platform can be improved.”

This evaluation examines the performance of ADF 12 and the first 2 years of ADF 13. The report says that while the overall performance remains unchanged in the periods of 2011–2016 and 2017–2022, performance has declined among small island developing states (SIDS) and countries in fragile and conflict-affected situations (FCAS). IED assesses the performance of ADF operations every 4 years and provides lessons and recommendations for improving its development effectiveness and informing the next replenishment.

“Despite initial setbacks during the pandemic, ADF thematic pool was regarded by DMCs as a well-designed arrangement that incentivized special attention to projects focusing on DRR-CCA, gender equality, and RCI,” said evaluation team leader Nassreena Baddiri. “However, resources available for disaster risk reduction and climate change adaptation within the thematic pool may not be sufficient in providing concessional financing to meet the needs of developing member countries at the necessary scale. Similarly, additional resources are essential to advance the Sustainable Development Goal 5 transformative gender agenda in the absence of equivalent funding sources.”

The report highlighted that in concessional assistance countries, particularly FCAS and SIDS, technical assistance remains an important tool for strengthening capacity in critical areas.