Learning Curves

OED
August 2007

InclusiveDevelopmentand ConflictResolutioninSriLanka

SriLankaisamiddleincomedevelopingmembercountrywithhighsocialindicators.Itis ontracktoachievingmostMillenniumDevelopmentGoalsandranked93rdamong177 countriesinthehumandevelopmentindexin2006. SriLankassocialaccomplishmentshavenotbeenaccompaniedbysignificantpoverty reduction.Afterfouryearsofrelativepeace,armedcivilconflictresumedinJuly2006.

Background InSriLanka,theAsianDevelopmentBank(ADB) hasoperatedinachallengingcontextmarkedbycivil conflict,shiftsinpoliticalcoalitions,complexpolitical andsocialstructures,andchanginggovernment priorities. Civilwarhasharmedthepopulationandeconomy ofthecountry.Bythetimeaceasefirewasagreedtoin 2002,anestimated65,000liveshadbeenlostand 800,000peopledisplaced.Theeconomicconsequences ofcivilconflicthavealsocaused:(i)areductionin economicgrowthby23%annually,(ii)40%lessper capitaincomethanwhatcouldhavebeenachieved,and (iii)foregoneforeigninvestment.Despitethese difficulties,towhichnaturaldisasterssuchasdrought, floods,andtheIndianOceantsunamiof26December 2004canbeaddedaswellastheoilpricesincreasesof 20042006,theeconomyofSriLankahasremained resilientthankstotheliberalizationreformsthatbegan inthe1970sandtheopeningupofthetradeeconomy. CumulativeloanapprovalsfromADBamountto $3.7billionfor130loansofwhich$3.3billionfor90 loanswereapprovedinthelasttwentyyears.Lending hasbeensupportedby195advisoryandproject preparatorytechnicalassistanceapprovalstotaling $87.6million.Privatesectoroperationshaveonly comprised11transactionsfor$86.6million. In2006,theOperationsEvaluationDepartment undertookthefirstcountryassistanceprogram evaluationofADBscountrystrategiesandprograms forSriLanka,coveringtheperiod19862006butwith emphasisonthemorerecentdecade. 1 Itaimedtoassess
Operations Evaluation Department Asian Development Bank

theperformanceofADBsoperations,andidentify forwardlookinglessonsforanewcountrypartnership strategytobepreparedin2008.Towardthis,it evaluatedADBsoperationsintheagricultureand naturalresources,education,power,transport,and watersupplyandsanitationsectors.Itpreparedpapers onpolicybasedlending,governanceassistance,and operationsintheconflictaffectednorthandeast.It surveyedperceptionsofADBsSriLankaResident Mission. SummaryofFindings InkeepingwiththeGuidelinesforthePreparation ofCountryAssistanceProgramEvaluationReports, thestudyconductedbothbottomupandtopdown assessments.Thefirstevaluatedtheperformanceof ADBsassistanceprogramsusingthecriteriaof relevance,effectiveness,efficiency,sustainability,and impact.Thesecondtookabroadviewofthe positioningofADBsstrategies,contributionto developmentresults,andperformance. Thestudyfoundthat,inthelastdecade,ADBs countrystrategiesandprogramsforSriLankawere responsivetotheprincipalchallengeofpoverty reduction.Incoordinationwithdevelopmentpartners, theiroverallthrustandlongtermcontinuitygave coherencetoportfoliosinformedbyimplementation risks.Theiroverallpositioningatthetimetheywere preparedwasassessedsatisfactory.Thedevelopment contextalteredthereafter:thechangeofgovernmentof April2004,reversalineconomicpolicy,andresurgence ofcivilconflict,renderedthepositioningofthecountry

6 ADB Avenue, Mandaluyong City, 1550 Metro Manila, Philippines Tel +63 2 632 4444; Fax +63 2 636 2444; evaluation@adb.org; www.adb.org/evaluation/

strategyandprogramfor20042008partly satisfactory. TheperformanceofADBssectorandthematic assistancetoSriLankawasratedpartlysuccessful overall.Thebetterperformingsectorswereeducation, transport(mainlyroads),andwatersupplyand sanitation,whichthestudyratedsuccessful.Sector assistancetoagricultureandnaturalresourcesand powerwasratedpartlysuccessful.ADBspolicy basedlendingoperationswereratedpartlysuccessful. Thematicassistancetogovernanceandconflictaffected areaswasanticipatedtoratepartlysuccessful. Generallyunderlyingpartlysuccessfulratingswere partialachievementofexpectedoutcomes,theexistence ofsustainabilityrisksthatmayunderminegains,and thelikelihoodthatimpactswillbemodestinthelong term. Trendsperdecaderevealthatportfolioperformance improvedovertime:theproportionofprojectsand programsratedsuccessfulorbetterincreasedfrom 43%inthe1970sto50%inthe1980sto62%inthe1990s. Overthestudyperiod,56%ofprojectsandprograms wereratedsuccessfulorbetter.Thestudyidentified enablersofanddeterrentstoportfolioperformanceand suggestedhowthelattermightbeimprovedfurther. Theperceptionsurveyshowedthat72%of respondentsbelievedthattheresidentmissionisan effectivedevelopmentpartnerthatrespondstothe countrysdevelopmentneeds;36%feltthatithas enoughdelegatedauthority;43%agreedthatit providesvaluablelessonsandpracticesfromother countries;and78%judgedthatitadequatelyconsiders thedevelopmentissuesandprioritiesofSriLanka. Informantinterviewsshowedthat38%ofgovernment officialsagreedthattheresidentmissioneffectively providesinputstodevelopmentpolicyformulationin thecountry;60%saidthatitsstaffmemberswork closelywithprojectdirectorstoresolveissuesandhelp reconciledifferencesbetweenADBandthe Government;and70%deemedthattheresidentmission providestimelyresponsestoinquiries. OverallRatingofADBsCountryAssistanceProgram
Item TopDownAssessment,Countrywide PositioningofCountryStrategiesinthe LastDecade ContributiontoDevelopment Impacts/Results(ProPoorGrowth, InclusiveSocialDevelopment,and GoodGovernance) Rating Satisfactory Modest

Item ADBPerformance(Basedonthe PerceptionSurvey) CountrywideRating BottomUpAssessment,SectorAssistance Program OverallRating

Rating Satisfactory Successful(onthe lowside) Partlysuccessful Partlysuccessful

Recommendations ADBshouldreviewitsdevelopmentassistanceto conflictaffectedareasinthenorthandeastfromthe perspectivesofconflictsensitivity. ADBshouldreviewthefocusofitsdevelopment assistance,particularlywithinsectorsthathave fallenshortofachievingsignificantresults(e.g., agriculture,power,policybasedprograms)butare extremelyimportantforpovertyreductionand economicgrowth. ADBshouldbepreparedtoremainengagedin policydialogueduringdifficulttimes,whenthe implementationofongoingprogramsisslowand mayevenstall. ADBshouldprovideassistancetoSriLankafor resultsbasedmonitoringanddevelopment evaluationtopromotedevelopmenteffectiveness. ADBshouldassesstheSriLankaResidentMissions rolesandfunctionsinordertostrengthenits capacityto(i)disseminatelessonsandgood practicesfromADBoperationsinothercountries,(ii) enhanceitsservicesinvariousareasofconcernas identifiedthroughtheperceptionsurvey,and(iii) providetimelydecisionsandtechnicalsupportto projectadministration. Feedback AtthetimeofpreparationoftheseLearningCurves, ADBManagementsResponseandtheChairs SummaryoftheDevelopmentEffectiveness CommitteeDiscussionswerenotyetavailablefor disclosuretothepublic.Thestudywascompletedin August2007. 1 ADB.2007.CountryAssistanceProgramEvaluationfor SriLanka:InclusiveDevelopmentandConflictResolution: MajorChallengesintheFuture.Manila.Available: http://www.adb.org/Documents/CAPES/SRI/IN174 07.pdf.

Learning Curves available @ www.adb.org/evaluation/ Team Leader: George Bestari; Tel +63 2 632 4133; evaluation@adb.org