Learning Curves

OED
September 2007

TheJapanFundforPoverty Reduction

TheJapanFundforPovertyReductionwassetupinMay2000toprovidegrantsfor innovativepovertyreductionactivitiesinADBsdevelopingmembercountries. GrantsfromtheFundarenotfortechnicalassistancebutfordirectreliefthatalsobuilds capacityforselfhelpandincomegeneration.TheyfinancesmallinvestmentslinkedtoADB loanstopilottestapproachesthatcanlaterbeexpandedintoloanprojectsandincorporated intoADBsoperations.ADBisthustogainopportunitiestoworkmoredirectlywith communitiesaswellasnongovernmentorganizationsandcivilsociety. AsofendDecember2006,90grantshadbeenapprovedin20countries.Howwellhavethey fared?Howcanfutureoperationsdelivermore?

Background GrantsfromtheJapanFundforPovertyReduction rangefrom$200,000to$2million.(Exceptionally, grantsupto$3millionorhigherforAfghanistan canbeconsidered.)Seedmoneyofupto$20,000can beprovidedtoassistAsianDevelopmentBank(ADB) staffindesigninggrants. BetweenMay2000andJune2006,Japancontributed $360milliontotheJapanFundforPovertyReduction. AsofendDecember2006,ithadapproved90grants worth$244million.Amongthesewereninegrants worth$98millionforAfghanistan,andninetotaling $20millionfortsunamiresponseprojectsinIndia, Indonesia,Maldives,andSriLanka. In2007,theOperationsEvaluationDepartmentof ADBconductedaSpecialEvaluationStudyonJapans Funds:JapanFundforPovertyReduction. 1 Thestudy checkedhowtheFundrelatestothestrategicobjectives setoutinADBsPovertyReductionStrategy(1999)and LongTermStrategicFramework,20012015as expressedintheMediumTermStrategy,20012005 andMediumTermStrategyII,20062008.Itfocused onprojectdesign,implementation,andperformance.It examinedtheproceduresintheOperationsManual andthesupportavailableforfundadministration. Projectswereassessedthroughcasestudiesafter deskreviews.Fieldworkentailedevaluationof19 projectsinCambodia,Indonesia,Mongolia,
Operations Evaluation Department Asian Development Bank

Philippines,andTajikistan,countriesthathave substantialportfoliosanddifferentgeopoliticalsystems. SummaryofFindings Followingthecriteriacommonlyusedfor evaluatingpublicsectoroperations,theprogramwas ratedrelevant,efficient,effective,andsustainable. Almostalltheprojectsevaluatedwererelevantor highlyrelevanttobothADBandnationalpoliciesatthe timeofdesignandatcompletion.Processefficiency wasmixed,ifoftenlimitedbyimplementationdelays, buteconomicefficiencythoughnotcalculatedislikely tohavebeenatleastadequateorevenhighformost projects,foranoverallratingofefficient.Theprojects mainlyachievedtheirintendedoutcomes,andmost wereratedeffectiveorhigher.Allprojectswererated sustainableorhigher,exceptfortwoearlyslumprojects inthePhilippinesandasocialinfrastructureprojectin Cambodia.Thestudyconcludedthat: TheFundgenerallyalignswithADBsstrategic objectives.Individualprojectsgenerallyalignwith countrypartnershipstrategiesandnationalpoverty reductionstrategies. TheFundhasgenerallymetspecificobjectives relatedtoinnovation.Theintentiontoexpand projectsintoloanprojectshasbeenmet,butoverall atlowerlevelsthanexpected.

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/

AllADBstaffinterviewedconsideredtheFunda valuableprogramthathasmadeADBbetterableto dealinapracticalwaywithpovertyrelated problems.Theyreportedstrongdemand,as reflectedinthesubstantialprojectpipeline. Ofthe17completedprojectsevaluated,23%were ratedhighlysuccessful,65%successful,and12% partlysuccessful.Theproportionofprojectsrated successfulorhigher(88%)compareswellwiththe successrateofADBsoverallloanprogram(65%of completedprojects). Evidenceofasounddesignwasnotastrongpoint ofmanyoftheprojectsevaluated.Yetmostachieved theirintendedoutcomes. Theadministrationofprojectsdoesnotfollow standardADBprocesses.Theprojectsrequire approvalbytheJapaneseembassyattheconcept stageandbytheGovernmentofJapanatthefinal designstage,inadditiontothenormalADB approvals. Thedesign,monitoring,andcompletionreport templatesarebasedonthosefortheJapanSocial DevelopmentFundoftheWorldBank,whichdiffer fromADBstandardtemplates.Thetemplatesfor monitoringgivelittleinformationaboutoutcomes andarenotintegratedwithADBsmonitoring systems. Projectscanbeimplementedinvariousways,allof whicharesuitableinappropriatecircumstances,but thecontributionofnongovernmentorganizationsis worthyofnote,particularlythewillingnessofsome tofundtemporarydeficitsfromownresources, addingflexibilitytoimplementation. TherelativesuccessoftheFundisduemainlyto (i)thesmallscaleandmanageabilityofprojects, (ii)therelevanceofprojectstotherealneedsofpoor communities,(iii)thecloseinvolvementand motivationofmostprojectofficers, (iv)implementationbynongovernment organizationsthatarehighlymotivatedandcloseto theircommunities,and(v)theconsequentreduction inrentseekingandbureaucraticinefficiency. ADBsOfficeofCofinancingOperationsiseffective butunderstaffed.FocalpointsinADBdepartments wouldhelpprogramdevelopmentandmanagement.

Recommendations Countrypartnershipstrategiesshouldincludea strategyforuseoftheFundifrelevant. FundsystemsshouldbemovedclosertoADBscore businesspractices. Grantsizerestrictionsshouldbereviewed.While thegrantsshouldremainsmallscale,thepossibility ofincreasingthemaximumsizeto$3million,or even$5million,shouldbeconsidered. Residentmissionsshouldbeinvolvedinproject designandwhereappropriatehaveresponsibility forprojectsupervision. Beneficiarytargetingiscriticalandneedsdetailed attentionduringprojectdesignandimplementation. Projectsshouldtargettheenterprisingpoor. Theuseofgrantsfordisasterrecoveryshouldbe reviewed.TheFundmaybesuitedtoaddressing localizeddisasters,notregionalemergencies. TheGovernmentofJapanmightreconsideritsrole inapprovalwithincreasedinputattheconceptand designstages. StaffintheOfficeofCofinancingOperationsshould beincreasedtoprovidemoreinputsindesign,and morefrequentmonitoringinthefield.Linkswith theRegionalandSustainableDevelopment Departmentshouldbedeveloped. Giventheinnovativeandpilotnatureofprojects andpotentialforexpansion,greateremphasis shouldbegiventolearningfromprojectsand disseminatingfindings. Feedback AtthetimeofpreparationoftheseLearningCurves, ADBManagementsResponseandtheChairs SummaryoftheDevelopmentEffectiveness CommitteeDiscussionswerenotavailablefor disclosuretothepublic.Thestudywascompletedin August2007. 1 ADB.2007.SpecialEvaluationStudyonJapansFunds: JapanFundforPovertyReduction.Manila.Available: http://www.adb.org/Documents/SES/REG/SESREG 200710/SESREG200710.pdf

Learning Curves available @ www.adb.org/evaluation/

Team Leader: Keith Leonard; Tel +63 2 632 4119; rkleonard@adb.org