ADB projects in the Philippines rated below average

By Cai U. Ordinario, BusinessMirror

Posted at Jul 02 2013 07:51 AM | Updated as of Jul 02 2013 11:55 PM

MANILA -- The poverty-reduction projects of the Asian Development Bank (ADB) in the Philippines have been rated below average since the 1990s, according to a report released by the Independent Evaluation Department (IED) of the multilateral lender.

The Annual Evaluation Review report released by ADB on Monday showed that the Philippines, Pakistan, and a group of small Pacific islands were among the countries whose success ratings were below 50 percent. The Philippines’s rating was 48 percent, Pakistan’s, 43 percent and Pacific countries, 31 percent.

The ADB said the best-performing country portfolios have been in the China, Tajikistan and Vietnam, with 88 percent to 91 percent of operations completed since the 1990s rated successful.

“[This includes] all projects completed and evaluated since the 1990s. The Philippine portfolio has been restructured and current success rates are better. But overall, the decadal success rate is still low comparatively to many other countries,” Independent Evaluation Department Division 1 Director Walter Kolkma, who authored the report, said in an e-mail sent to the BusinessMirror.

The IED report also said the sustainability scores of various projects in the Philippines, Bangladesh, Pakistan, Papua New Guinea were below 55 percent, rendering such projects unsustainable.

The Philippines lagged behind its neighbors in Asean in terms of sustainability of projects, the report also said. Data showed that countries with sustainability scores of above 80 percent included Vietnam and Thailand, along with China and India.

In terms of safety nets, the IED report said the Conditional Cash-Transfer (CCT) Program in the Philippines costs much less than 1 percent of gross domestic product, yet reaches around 15 million people, including 6 million children.

The CCT succeeded in targeting the poor, compared to the long-standing rice subsidy, it said. The first impact evaluation showed the program increased preschool, elementary, and high-school enrollments among poor families and narrowed the enrollment gap between poor and nonpoor households.

Beneficiary households also spent more on health and education and brought their children to regular health monitoring. Pregnant mothers also received prenatal care for regular health monitoring.

“All of this helps reduce the vulnerability of the poor to shocks and increase their resilience, and helps the
Philippines to move closer to achieving key MDGs [Millennium Development Goals],” the report stated.

However, when it came to microfinance, these projects were less than effective in reducing risks and vulnerabilities for the extreme poor. The IED said the low score for results was due to the weak development of support institutions and infrastructure, the less-than-effective support for achieving institutional sustainability, and limited outreach to the poor.

Nonetheless, IED said microfinance efforts were still effective in Cambodia, Pakistan, the Philippines and Tajikistan, where notable improvements in the policy, legal and supervisory frameworks were still achieved.

These projects, ADB said, are crucial, given the turmoil on the world’s financial markets and a particularly destructive start to the monsoon season.

The IED said both threaten to worsen the impact on the region of prolonged weakness in the global economy. The report highlighted the growing risks and vulnerabilities that endanger the region’s hard-won socioeconomic gains and success in reducing poverty.

“Asia leads the world in the pace of growth, but governments need to be more conscious of the risks facing the region from economic, social and environmental factors,” Independent Evaluation Director General Vinod Thomas said in a statement.

“Emerging vulnerabilities point to a longer road than previously expected in eradicating extreme poverty in the region unless action is stepped up,” he said.

The ADB said the Philippine government’s CCT Program was ambitious program but is showing promising early results, reaching nearly 4 million households by March 2013 and targeting 5.2 million by 2015.

Microfinance programs also offer the potential for reducing poverty and promoting inclusive growth, but more so if linked to wider banking services than to credit alone, and if they are combined with social protection.

But the access of financial services to the poor remains a struggle, as evaluative evidence has borne out time and again. A survey of six countries in the region showed that fewer than 9 percent of microfinance borrowers lived on below $1.25 a day and fewer than 22 percent on $2 a day.

In the area of natural disasters, greater preparedness and better prevention works, such as river dikes and storm drains are another solution that needs to be scaled up. Despite crippling floods hitting Bangkok, Beijing, Jakarta and Manila in recent years, disaster preparedness in most of Asia’s developing countries remains disturbingly low.

Many of the poor, living in unplanned, low-lying areas in cities, are at highest risk. Thomas says systematic disaster-risk reduction measures still do not feature sufficiently in national development plans, even in some countries where disasters strike with regularity.

“We are increasingly hit by extreme floods and storms described as ‘once in a century.’ Imagine three of them with the rainfall intensity of, say, Tropical Cyclone Ketsana hitting an area in a single year—it’s no longer that far-fetched,” Thomas said, referring to the flooding that submerged large parts of Manila in 2009. “As with stress tests against financial calamities, it’s high time we did stress tests against natural hazards.”

The reasons vary among sectors and countries. But in infrastructure projects—an area in which development banks are highly active—budget constraints and the perception that climate proofing is expensive and a luxury, are often the main causes for lack of sustainability, next to a sometimes limited implementation capacity.