Bangladesh - Country Assistance Program Evaluation

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ASIAN DEVELOPMENT BANK Independent Evaluation Department

COUNTRY ASSISTANCE PROGRAM EVALUATION

FOR

BANGLADESH

In this electronic file, the report is followed by Management’s response, and the Board of Directors’ Development Effectiveness Committee (DEC) Chair’s summary of a discussion of the report by DEC.

Evaluation Report

Reference Number: CAP:BAN 2009-37 Country Assistance Program Evaluation October 2009

Bangladesh Country Assistance Program Evaluation

Independent Evaluation Department

CURRENCY EQUIVALENTS (as of 15 October 2009) Currency Unit Tk1.00 $1.00 – = = Taka (Tk) $.014 Tk69.06

ABBREVIATIONS

ADTA ACC ADB ADF ANR CAPE CSP DRM EIRR GDP GGP IMF LCG LGED MDG MOF NGO OCR ODA PBA RETA SAARC SARD SASEC SDP SME SOE SWAp TA WSS

– – – – – – – – – – – – – – – – – – – – – – – – – – – – – –

advisory technical assistance Anti-Corruption Commission Asian Development Bank Asian Development Fund agriculture and natural resources country assistance program evaluation Country Strategy and Program disaster risk management economic internal rate of return gross domestic product good governance program International Monetary Fund Local Consultative Group Local Government Engineering Department Millennium Development Goal Ministry of Finance non-government organization ordinary capital resources official development assistance performance-based allocation regional technical assistance South Asian Association for Regional Cooperation South Asia Regional Department South Asia Subregional Economic Cooperation sector development program small- and medium-sized enterprise state-owned enterprise sector-wide approach technical assistance water supply and sanitation
NOTES

(i) (ii)

The fiscal year (FY) of the Government of Bangladesh ends on 30 June. FY before a calendar year denotes the year in which the fiscal year ends, e.g., FY2000 ends on 30 June 2000. In this report, "$" refers to US dollars.

Key Words
adb, asian development bank, bangladesh, country assistance, program evaluation, energy, transport, agriculture and natural resources, disaster risk management, governance reform, performance evaluation, aid coordination, aid effectiveness, portfolio performance.

Director General Director Team leader Team members

H. S. Rao, Independent Evaluation Department R. B. Adhikari, Independent Evaluation Division 1, IED D. Dole, Senior Evaluation Specialist, Independent Evaluation Division 1, IED E. L. P. Araneta, Principal Evaluation Specialist, Independent Evaluation Division 1, IED N. Gamo, Evaluation Officer, Independent Evaluation Division 1, IED I. Garganta, Senior Operations Evaluation Assistant, Independent Evaluation Division 1, IED B. Palacios, Senior Evaluation Officer, Independent Evaluation Division 1, IED P. Perera, Senior Evaluation Specialist, Independent Evaluation Division 1, IED S. Shrestha, Evaluation Specialist, Independent Evaluation Division 1, IED Independent Evaluation Department, CE-22

In preparing any evaluation report, or by making any designation of or reference to a particular territory or geographic area in this document, the Independent Evaluation Department does not intend to make any judgments as to the legal or other status of any territory or area.

CONTENTS Page EXECUTIVE SUMMARY I. II. INTRODUCTION COUNTRY CONTEXT A. Constraints to Growth and Development in Bangladesh B. The Government's Development Priorities Relative to the Binding Constraints C. The Role of the Development Partners ADB’S COUNTRY STRATEGIES AND PROGRAM A. ADB's Country Strategies B. Programming and Portfolio Indicators TOP-DOWN ASSESSMENT A. Country Positioning B. ADB's Performance C. ADB's Contribution to Development D. Overall Top-Down Ratings BOTTOM-UP ASSESSMENT A. Energy B. Education C. Disaster Risk Management D. Transport E. Agriculture and Natural Resources F. Urban Development, Water Supply, and Sanitation G. Law, Economic Management, and Public Policy H. Overall Bottom-Up Ratings OVERALL ASSESSMENT, FINDINGS, LESSONS, AND RECOMMENDATIONS A. Overall assessment B. Findings C. Lessons D. Recommendations i 1 2 2 6 8 12 12 16 26 26 29 33 36 36 37 38 39 41 42 43 45 46 47 47 47 49 50

III.

IV.

V.

VI.

APPENDIXES 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. Recommendations from the 2003 CAPE Evaluation Approach and Methodology Socioeconomic Data on Bangladesh The Government of Bangladesh's Budget Deficit Details of Country Strategies Resources and Costs of Preparing the 2005 CSP Client/Stakeholders and Staff Survey ADB's Portfolio in Bangladesh, 1999–2008 Disaster Risk Management Transport Sector Agriculture and Natural Resources Law, Economic Management, and Public Policy Suggested Actions from the Country Assistance Program Evaluation for Bangladesh, with Baselines 58 62 63 68 73 87 90 98 110 127 137 154 175

Attachments:

Management Response DEC Chair Summary

The guidelines formally adopted by the Independent Evaluation Department (IED) on avoiding conflict of interest in its independent evaluations were observed in the preparation of this report. Daud Ahmad, Ashraf Dewan, Md. Mainul Hoque, Md. Nazrul Islam, David John Moffat, Abdus Sattar, Klaus Schonfeld, and Mohammad Yunus were the consultants. To the knowledge of the management of IED, there were no conflicts of interest of the persons preparing, reviewing, or approving this report.

EXECUTIVE SUMMARY Background and Country Context The Asian Development Bank (ADB) has been supporting the development of Bangladesh since 1973, following the country's independence in 1971. From 1973 through the end of 2008, ADB approved 183 loans totaling $10 billion for 163 projects and programs in Bangladesh. ADB's support has covered many sectors since 1973, but has focused mostly on energy, transport, agriculture and natural resources (ANR), and education. At the end of 2008, ADB's portfolio of active loans totaled $3.7 billion, financing 37 projects and programs over 10 sectors. The first country assistance program evaluation (CAPE), published in 2003, covered ADB's support for Bangladesh from 1986 (the first year that ADB issued a country strategy for Bangladesh) to the end of 2001. This second CAPE discusses ADB's support from 1999 to the end of 2008, with focus on the 2005 country strategy, and covers 24 completed and 37 ongoing projects and programs. The evaluation follows ADB's Guidelines for the Preparation of Country Assistance Program Evaluation Reports. Where the two CAPEs overlap in 1999 to 2001, this CAPE focuses on issues that could not be fully evaluated at the time of the first one. Bangladesh is one of the world's poorest countries, but its economy has been growing fast, and the poverty rate has been falling. In 1999 about half of the country was poor, but the poverty rate has since fallen by up to 10 percentage points. Per capita gross domestic product (GDP) was below $400 in 1999, but real per capita GDP grew annually by 4.5% from 1999 to 2008. The global financial crisis and economic slowdown that started in 2007 had not affected Bangladesh by the end of 2008, but the country's GDP growth was expected to fall slightly in 2009. Progress has been good, but Bangladesh's economy could grow even faster with better infrastructure, education, health care, governance, and disaster risk management. The Government recognizes these constraints to growth, and since 1999 has been investing in urban and rural infrastructure, opening access to education and health care, starting reforms to strengthen governance, and strengthening management of risks from natural disasters. Bangladesh is one of the world's largest recipients of official development assistance, with the Government's development partners financing half of annual development spending. ADB has been the second largest source of financing, and one of the lead financiers in energy, water supply and sanitation, agriculture and natural resources, education, and transport. Key Findings Strategic positioning. ADB's 2005 country strategy largely continued the sector focus of the 1999 strategy. That was an appropriate choice, given that the sectors were among the Government's top priorities, and that the 2003 CAPE had not found any major problems in ADB's program. The 2005 strategy, like the 1999 strategy, pledged to cut the number of subsectors ADB would support, provided that doing so would not compromise ADB's previous contributions in those subsectors. It introduced issues related to governance, private sector, project preparation, implementation, and results. The 2005 strategy was consistent with ADB's long-term strategic framework (2001-2015). Furthermore, it departed from convention and included a sub-strategy on "disaster mitigation", recognizing and responding to the country's clear needs for support in that area.

ii The 2005 country strategy was developed in an innovative "joint approach" with three other development partners, in an effort to raise efficiency and develop synergies across the programs. A separate evaluation of that joint approach (initiated by evaluation units of the four partners) found that, although the joint approach had not delivered on all of its potential, it clarified the division of labor among the partners, and strengthened leadership in sectors. The sector-wide approach supporting primary education is another example of ADB's success in working with the Government and other development partners to contribute to the country's development. In another strategic partnership, in 2007 ADB led the Government and three other development partners in forming a partnership to support water supply and sanitation. ADB's performance. ADB's program has been generally consistent with the country strategies and the Government's priorities. The top four sectors in ADB's program have been energy, transport, education, and agriculture and natural resources (ANR), sectors which were identified in ADB's country strategies, and which are also the Government's top priorities. Programming under the 1999 strategy met its aim to cut the number of subsectors. Programming under the 2005 strategy, however, has continued supporting some subsectors (e.g., crop diversification, livestock development, rural livelihood development) that the strategy aimed to cut, apparently because ADB felt other development partners were not prepared to step in to replace ADB's support. Although the 2005 strategy pledged to focus on fewer sectors, ADB's financing of projects and programs has broadened slightly. ADB added a sector it had not supported in recent programming (law, economic management, and public policy), while continuing to support all previous sectors. A major reason for this addition was to support governance reform at the request of the Government. ADB's sector focus is at least as good as its other partners in the joint approach. ADB's program responded well to the country's needs and the Government's priorities, especially for disaster risk management and emergency support. From 1999 to 2008, ADB's support for disaster risk management (DRM) amounted to 15% of ADB's financing, making DRM a de facto major part of ADB's program, comparable in size with ADB's programs in education and ANR. Despite its size and importance, however, ADB has not fully mainstreamed DRM in its program, with DRM not fully addressed in some projects. ADB administered its portfolio in a difficult environment. All projects in Bangladesh proceed slower than expected, including those financed by the Government and by ADB. ADB's disbursements, however, are lower than those of other major development partners, and are regularly below the ADB average. ADB's portfolio in Bangladesh has $1.88 billion un-contracted and $2.13 billion un-disbursed balances. The success rate of completed projects and programs from 1973 to 2008 (58.1%) is lower than the ADB average (63.7%), but the rate has improved over time, from 57% in the 1980s to 79% for projects and programs closed during this CAPE period. ADB's contributions to long-term development results. The results framework in ADB's 2005 country strategy included monitoring indicators and targets to meet by 2008; in late 2009 ADB issued a revised set of monitoring indicators in its mid-term review of the 2005 country strategy. Only 26% of the original indicators had met their targets by 2009, and only 39% of the revised indicators had hit their targets by the time of the mid-term review. Most progress was in governance, energy, and transport.

iii The CAPE evaluated contributions to long-term development in seven key areas of ADB's support. ADB's strongest contributions were in energy, disaster risk management, and urban development and water supply and sanitation. In energy, ADB contributed substantially to sector reforms. In DRM, ADB introduced effective and efficient technologies, while in urban development and water supply and sanitation, ADB helped improve urban public health. The contributions to long-term development results were rated as substantial in four of the key areas, and modest in the other three. Performance of Key Sectors/Areas The CAPE considered seven key sectors or areas of ADB's program: (i) energy; (ii) education; (iii) transport; (iv) disaster risk management; (v) agriculture and natural resources; (vi) urban development, water supply and sanitation (UD-WSS); and vii) law, economic management, and public policy. These areas cover 90% or more of ADB's financing for projects and programs in Bangladesh, and 80% or more of advisory technical assistance (ADTA). Energy. ADB's largest program by sector is in energy. A separate energy sector assistance program evaluation prepared for this CAPE found that ADB's energy program has been successful. Bangladesh's energy sector has many problems, but ADB has stayed involved in a conservative but still productive way, and has maintained a strong relationship with the Government. Developing energy supplies and power generation remains one of the country's most important needs, and ADB is in a good position to help the Government expand and develop the sector in the future through further reforms, including tariff reforms and restructuring enterprises. Transport. ADB's second largest program, that in transport, is also important to the country and the Government. ADB's program, rated only partly successful, has been struggling to overcome Bangladesh's systemic challenges to developing and implementing projects. Transport projects, like most projects in Bangladesh, suffer delays. The delays are partly caused by systemic problems, and partly by ADB's approach to project design and its business process. The development partners have provided comparatively less support to the transport sector, despite the importance of transport to the country and to the Government, making transport perhaps the best opportunity for expanding support to Bangladesh. As the leader among the development partners in the transport sector, ADB is in a good position to help the Government strengthen its implementation capability and expand transport in the future. Education. ADB's third largest program, that in education, has been rated successful. A separate education sector assistance program evaluation prepared for this CAPE found that ADB effectively led the sector-wide approach in support of primary education, another example of effective partnership in ADB's program. That ongoing program has so far strengthened government ownership and leadership, improved coordination among the development partners, and is opening access to education. There is, however, room for improvement. For example, the partly successful rating of the country’s achievement of development results indicates that, while major project-level outcomes like higher enrollment and access have largely been achieved, they have not been sufficient to raise adult literacy. Disaster risk management and emergency support. Although ADB did not have a formal program in DRM, the large amount of ADB's financing justified an evaluation of ADB's support. Two parts of ADB's DRM program stand out. An ADB-financed project introduced a technology for controlling riverbank erosion; the technology has proven more effective and less expensive than previously used methods, and can be replicated across the country. An ADTA

iv project helped develop an early warning system for floods, with potential to cut the loss of life from floods. ADB's program was limited, however, by the application of quick-fixes in flood rehabilitation, and by DRM not being fully mainstreamed into ADB's program. The program overall is rated only partly successful. Agriculture and natural resources. ADB's fourth largest program by sector, that in ANR, has a long history in Bangladesh, and until 1985 took over half of ADB's financing. The size of the program has steadily fallen, and recently the program received only 14% of ADB's financing. ADB's program in ANR has been limited by problems in project design, delays and other implementation problems, and concerns about the likelihood of continued maintenance. Out of 15 projects reviewed, 7 were rated successful. ADB's program in ANR is rated only partly successful, based on the mixed performance results. Urban development, water supply and sanitation. Urban development, water supply and sanitation have been a growing part of ADB's program in Bangladesh. A separate sector assistance program evaluation prepared for this CAPE found that ADB's program has had a substantial impact in opening access to safe water and sanitation, and strengthening urban governance. The sustainability of ADB's program has suffered, though, because tariffs have not risen and needed reforms have not taken place. Overall, ADB's program in urban development, water supply and sanitation is rated only partly successful. Law, economic management, and public policy. Only a small share of ADB's financing for projects and programs has gone to law, economic management, and public policy, but the sector has received the largest share (30%) of ADB's ADTA. The then caretaker Government requested ADB's support for governance reforms, to which ADB responded with a program loan for good governance. Reforms supported by the program loan made progress under the caretaker Government, and although the elected Government has continued most of the reforms, some key reforms have started to falter. ADB's technical assistance program has suffered from a similar lack of continued commitment, and as is common in Bangladesh, has experienced delays. As a result, ADB's program in law, economic management, and public policy is rated only partly successful. Assessment Top-down assessment. ADB's strategic positioning was highly relevant to the country's needs, the Government's priorities, and ADB's own strategies. The strategy was developed through a partnership that has strengthened coordination and leadership among the Government's four main development partners. ADB's programming largely followed through on the course set in the strategies, and although sector focus has broadened slightly, ADB's focus in recent programming is adequate. Although disbursement improved in 2008, ADB's disbursements are low compared with the ADB average. ADB's performance is rated substantial. ADB's contributions to long term development results were modest, judging by progress in the monitoring indicators for the results framework, and by contributions to long term development results in seven areas of ADB's program. Stakeholders' perceptions of ADB's performance is positive. The overall top-down assessment is successful. Bottom-up assessment. The overall bottom-up performance (covering seven parts) is rated partly successful. ADB's programs for energy and education are rated successful, but those two sectors account for less than half of ADB's financing. The other five parts have been rated partly successful due to shortfalls (actual as well as anticipated) in achieving intended

v objectives, implementation delays, concerns regarding efficiency, and issues related to sustainability of outputs and outcomes. Overall assessment. Combining the top-down and bottom-up performance, this CAPE rates the overall performance of ADB assistance to Bangladesh as successful, with scope for improvement in several areas. Findings Bangladesh has systemic problems with project implementation, but ADB's procedures for disbursement and project implementation contribute to slow implementation. The large un-contracted ($1.8 billion) and un-disbursed ($2.13 billion) balances indicate challenges in project implementation, but those are partly symptoms of systemic problems in Bangladesh. All projects proceed slower than expected in Bangladesh, including projects financed by the Government and by other development partners. ADB's disbursements are slower than for other development partners, possibly indicating inefficiency in ADB's disbursement procedures. ADB's procedures for project development and design also contribute to slow implementation, especially in the transport sector (Appendix 10). Better project implementation could further boost the country's development. Slow implementation is a well-known problem in Bangladesh, and ADB has been working with the Government and other development partners to find solutions. The persistent problems with project implementation call for redoubled efforts, and a continuing search for long-term solutions. ADB's relationships with the other development partners have strengthened ADB's program and contributions to development. ADB's strategic partnerships include the joint approach to the country strategies (2005), and the partnership to support water supply and sanitation (2007). The joint approach to the country strategies has not delivered on all its potential, but it helped lead the way through a challenging time, strengthened the division of labor among the four partners, and is paving the way for a broad partnership in a new joint approach to supporting development in Bangladesh. A partnership to support water supply and sanitation has potential to produce some results, stimulating the Government to start longneeded reforms. ADB's project-level partnerships include the sector-wide approach (SWAp) to supporting primary education, and the project to design the Padma Bridge. The ongoing SWAp for education strengthened Government ownership and leadership, improved coordination among the development partners, and seems to be opening access to education. The estimated cost of the Padma Bridge ($2.4 billion) may be too high for ADB to finance alone, so ADB's relationships with other development partners will be vital to financing and building one of Bangladesh's most important future development projects. ADB could make a stronger and clearer contribution to long-term development results. ADB contributed modestly to development results, judging by the low rate of achievement in the results framework (26% of targets hit; Table 16); by sector evaluations (three of seven judged as modest contributions); and by the modest perceptions of ADB's nonfinancial value-added (Appendix 7). ADB has significant potential to contribute to development, though, judging by its contributions in the energy sector (promoting reforms), disaster risk management (erosion mitigation and flood warning systems), and water supply and sanitation (improving urban public health). ADB could clarify and better document its contributions through a realistic results framework, concerted efforts to strengthen the Government's capabilities in project implementation, and a strategy and program to contribute knowledge to development.

vi Lessons A gradual, patient approach to reforms can be effective. ADB's experience in the energy sector shows that, in an environment with weak institutions, a gradual, patient approach to supporting reforms can limit risks to ADB-financed projects and maintain prospects for improvement. The evaluation of ADB's energy program showed that Bangladesh's energy sector has long needed major reforms; the sector has indeed been reforming, but only slowly. Despite the problems in the sector, ADB stayed involved in suitable ways without compromising its position or policies, and ADB has perhaps helped maintain progress. As a result, ADB has built a strong track record and relationship with the Government, and is in position to help the Government meet one of the country's top development challenges. Continued Government ownership and commitment is an important factor in the success of reform programs. ADB's experience with the governance program loan is an example of how political risks affect the pace of reforms (Appendix 12). The caretaker Government came to ADB for support in governance reforms. The caretaker Government was committed to those reforms, but the reform program extended beyond that government's term. The elected Government, while showing interest in reforms in some areas, is so far less committed to the program of the caretaker Government, and some key reforms supported by the governance program loan have started to falter. When future commitment is uncertain, a realistic, practical approach to reforms would be to, first, focus on reforms that can be solidly established within the Government's term; and second, beyond the Government's term, sow the seeds for future reforms, recognizing and accepting the reality and the risk that the efforts might falter. Streamlined and efficient procedures, focused on outputs and results rather than process, can make joint work with other organizations more effective. ADB's experience with the SWAp for primary education and the joint approach to the 2005 Country Strategy and Program shows the cost of maintaining ADB's bureaucratic procedures while working with other organizations. The SWAp achieved one of its aims in cutting coordination costs to government, but the result is higher costs to the development partners. The costs to development partners are high because they have not harmonized procedures and they each continue to follow their own bureaucratic practices, while still trying to work on a common basis. The joint approach to the 2005 country strategy faced a similar situation. ADB took an innovative approach to working with other development partners in developing the 2005 country strategy. Meanwhile, ADB still faced its standard, internal, bureaucratic requirements for producing the country strategy, regardless of whether those requirements were relevant to the joint approach. Following ADB's internal bureaucratic requirements while working with other organizations contributed to the high cost of producing the 2005 country strategy. Joint work is likely to vary with every partnership, and so cannot be standardized. When working with other organizations, ADB should identify essential internal procedures; but for the other procedures it should identify simpler, efficient steps, focusing on the output and results, not the process. Recommendations Maintain the current sector focus of financing projects and programs. ADB's recent programming is already in line with the targets for financing the five "core areas" of "Strategy 2020" (Appendix 5, Table A5.5). The sectors ADB has been supporting are still important to Bangladesh's development (Table 6), and stakeholders support ADB's continuing involvement (Appendix 7). The evaluation also found that, although ADB's sector focus has broadened in

vii recent programming, it is as good as or better than its partners in the joint approach to the country strategy (Table 9). Continue strengthening the Government's capabilities in designing and implementing projects and programs, through a systematic approach working with other development partners. ADB's work to improve project implementation has included efforts focused on ADB-financed projects, like meeting deadlines for specific projects, and efforts to solve the root causes of problems, like reforming government processes. ADB should continue working with other development partners, through joint portfolio reviews and through its leadership in the Local Consultative Group (Bangladesh's consortium of development partners), on solving the root causes of problems with project implementation. A joint long-term plan for organizational reform and development in Bangladesh could help coordinate and orient the efforts of all development partners towards the common goal of strengthening the Government's capabilities. Strengthen project implementation and expand the transport program. Lack of transport infrastructure is one of the country's binding constraints to growth, and expanding transport is one of the Government's top development priorities (Table 2). Among the Government's priority sectors, the transport sector had the lowest share of projects financed by the development partners (Table 5), so there seems be an opportunity for expanding support for transport. Bangladesh's transport sector, however, suffers from the same or even worse problems with project implementation as other sectors. There is no point in developing and financing more transport projects if existing projects are not progressing and implementation problems continue unsolved. In the Local Consultative Group, ADB leads subgroups on transportation and on project implementation, and so is in an ideal position to work with the Government and other development partners to strengthen implementation in the transport sector. ADB should take a gradual, patient approach to improving project implementation, working steadily and closely with the Government along the way. When implementation starts to improve, ADB will be in a better position to raise its financing for transport projects. The systemic problems with implementation must be solved before ADB's own implementation improves, but ADB is partly to blame for some of the delays. Transport projects especially have been delayed because detailed design usually starts long after ADB approves a loan, and is usually financed by the loan itself. The Padma Bridge design project is an exception to the usual pattern, and shows that changes are possible even within ADB's current bureaucratic procedures. ADB should review its own processes for project preparation, and change processes as needed to ensure that projects are "shovel-ready" by the time ADB approves a loan. Continue supporting projects in agricultural production and rural infrastructure, and strengthen links between rural infrastructure and agriculture to contribute to poverty reduction and social inclusiveness. Although "Strategy 2020" focuses ADB's support for agriculture on rural infrastructure and microfinance, the strategy also gives ADB the freedom to "operate on a limited scale in other areas where its presence is needed." ADB has a small program in production-related projects, amounting to less than 2% of financing from 1999 to 2008. Lack of agricultural diversification is one of the country's binding constraints to growth, and agricultural and rural development is one of the Government's top priorities and the keys to reducing rural poverty. ADB has a long track record of supporting agriculture in Bangladesh, with the ongoing "Northwest Crop Diversification Project" the fifth in a series of projects going

viii back 20 years. Although ADB's recent projects in ANR have been less successful than those in other sectors, half of the eight ongoing projects are rated likely successful, and the rest may also be successful if their implementation improves. Rural infrastructure (i.e., rural roads, infrastructure for irrigation, drainage and erosion mitigation, and marketing infrastructure) is ADB's main support for agriculture, as consistent with "Strategy 2020". ADB can indirectly support agricultural production through rural infrastructure, provided infrastructure projects are part of a comprehensive Government strategy for agricultural and rural development. ADB is the major financier in the Government's portfolio of aid-financed ANR projects. ADB is thus in a good position to work with other development partners to ensure ADB-financed rural infrastructure projects are contributing to poverty reduction and social inclusiveness through agricultural development. Work with the Government to further reform and develop the energy sector, including reform of energy pricing. As shown in the separately-published energy sector evaluation, the Government's current practice of under-pricing natural gas is inefficient and unsustainable. Misconceptions about the socioeconomic impacts of price reform and other issues are preventing reforms. ADB could support a comprehensive energy pricing study to understand the links among natural gas pricing and electricity pricing, industrial competitiveness, the fiscal impacts of price reforms, impacts on consumer welfare, and energy efficiency improvements. The findings of the study would contribute to ADB's future program in the energy sector, including policy advice investment and project design. Continue supporting urban development and water supply and sanitation. Bangladesh's urban population is growing fast, while only 20% of present WSS investment needs are being covered by the Government and development partners. The financing needs are particularly high in urban sanitation and drainage. The separately-published evaluation of urban development and water supply and sanitation recommended ADB to pay particular attention to technical assistance and economic, sector and thematic work in a number of areas, and to consider complementarity and compatibility with financing conditions of urban infrastructure promoted by other development partners. Expand support for private sector development. Under "Strategy 2020," ADB's support for private sector development should account for half of ADB's work by 2020. The target applies to all of ADB, not to each country, but a major program like the one ADB has in Bangladesh should contribute significantly to ADB's private sector work. From 2005 to 2008, ADB did not approve any private sector financing in Bangladesh, despite ADB's efforts to finance private sector power projects. Support for private sector development was only 12% of public sector financing. One reason for the lack of private sector financing is the weak investment climate in Bangladesh. ADB had opportunities, for example, to replicate its success in financing the successful Meghnaghat Power project, but ADB took the right approach in being patient, and avoiding further private investments until conditions improve. Conditions in Bangladesh thus call for more ADB support for private sector development, helping to build the environment where ADB can later expand its private sector financing. In the medium-term at least, ADB's program in Bangladesh can contribute to the ADB-wide target for private sector work by focusing on private sector development. Continue mainstreaming gender, building on the success so far. A study of gender in ADB's program in Bangladesh found that half of projects had gender as a theme or had mainstreamed gender issues, compared to about third of projects for ADB overall. ADB should

ix continue mainstreaming gender in projects and programs in Bangladesh to ensure higher participation of women in projects, more equitable access to training and public services, and higher income, greater financial security, and more livelihood opportunities for women. Continue regional cooperation and integration efforts, especially in energy. Bangladesh has serious power shortages, and investment in power generation has not been able to keep up with rising demand. ADB should continue efforts under its regional cooperation and integration programs to help the country tap hydropower sources in neighboring countries. ADB could facilitate agreements for cross-border transmission lines, and help finalize commercial and technical arrangements for regional power trading. Progress in regional cooperation may also be expected in ongoing efforts to integrate regional transport, led by prominent national projects like the bridge over the Padma River. Make a clear commitment to DRM in Bangladesh, start tracking the program, and mainstream DRM in all relevant projects. ADB has a major program in DRM and emergency support in Bangladesh, judging by the share of ADB's program that has financed disasterrelated spending (15% from 1999 to 2008). ADB has not tracked DRM in project financing (until 2009), and has not presented its work in DRM in a way consistent with its real status in the program. ADB's program in DRM is rated partly successful, but has a sound basis and with focused efforts could be a strong program. Climate change will raise Bangladesh's vulnerability to typhoons and flooding, and so strengthening DRM will become even more important to Bangladesh in the future. ADB should make a clear and strong commitment to DRM in Bangladesh, start tracking and monitoring its program, and ensure that all projects it finances are disaster-resistant, building on lessons learned from its current program. Work with the Government and development partners to develop a joint strategy for analytical work and a program to contribute knowledge to Bangladesh's development. ADB has both the opportunity and the mandate to contribute knowledge to Bangladesh's development. The evaluation of the education program, for example, found a need for a comprehensive analysis of education in Bangladesh. Such analysis is relevant to the Government for planning educational development, and to the development partners for planning their support. The evaluation of urban development and water supply and sanitation likewise found a need for more economic and sector work. ADB's 2005 country strategy has much information, and in interviews for this evaluation, people familiar with the document thought it was a useful reference, showing the need and demand for information about Bangladesh's development. "Strategy 2020" calls for research and knowledge to be an important part of ADB's work in every country, with "knowledge solutions" one of the strategy's five drivers of change. ADB's next country strategy should therefore consider how ADB will contribute knowledge to Bangladesh's development. To promote efficiency and specialization, ADB should consider the efforts and comparative advantages of others. The joint approach to the 2005 country strategy may provide a good model for ADB and others to work together in developing a joint strategy for analytical work. Continue supporting governance reforms and anticorruption initiatives. Weak governance is one of the country's binding constraints to growth, while promoting good governance is one of ADB's "five drivers of change" under "Strategy 2020". Building on its initiatives thus far, ADB should pursue policy dialogue and continue supporting further governance reforms and anti-corruption initiatives of the Government. Learning from past experience, though, ADB should take a patient, gradual approach, tailor reforms to likely

x government commitment, recognize the risks to success, and maintain realistic expectations for progress. Develop a results framework relevant to programming and specific to ADB so that ADB can be held accountable for delivering results. ADB's results framework in the 2005 country strategy had 54 monitoring indicators and targets to hit in 3 years. Less than a third of the targets were hit, however, even a year after the expected date (Table 16). None of the targeted results were specific to ADB; nor were they under ADB's control, so it is not realistic to hold ADB accountable for failing to meet them. Under Strategy 2020, accountability is one of ADB's corporate-wide core values. The results framework in ADB's next country strategy should clearly show what ADB can be held accountable for delivering. The following recommendations are put forward for ADB Management to consider in preparing and implementing the next country partnership strategy and program for Bangladesh. Details on sector-level recommendations are provided in respective sector reports circulated separately (education, urban and water supply and sanitation, and energy), in Box 1, and in Appendices 9–12. Suggested baselines for monitoring are presented in Appendix 13.
Recommendation 1. Maintain the current sector focus of financing projects and programs for infrastructure development, education, and governance to support private sector-led higher economic growth and poverty reduction (paras. 221, 222): (i) Build on success in the main sectors like energy and education (paras. 221, 230). (ii) Focus on fewer subsectors based on past performance and future prospects (para. 222) (iii) Strengthen and expand the transport sector program, with better project implementation (paras. 223–226) (iv) Continue supporting agriculture and rural infrastructure projects which have a successful track record and high potential for contributing to poverty reduction and social inclusiveness (paras. 227–228) (v) Build on the current program in Disaster Risk Management and Emergency Support (paras. 234-236) (vi) Continue supporting urban development, water supply and sanitation (para. 229) Responsibility South Asia Regional Department (SARD) Timing During the new country strategy and program (CPS) formulation and its implementation

xi
Recommendation 2. Help strengthen the Government's capabilities in designing and implementing projects and programs though a systematic approach working with other development partners to improve project implementation (paras. 223, 225). 3. Continue supporting governance reforms and anticorruption initiatives and gender mainstreaming (paras. 233,238) 4. Develop a results framework relevant to programming and specific to ADB so that ADB can be held accountable for delivering results. (paras. 244-248) Responsibility SARD Timing During the new CPS formulation and its implementation

SARD

During the new CPS formulation and its implementation During the new CPS formulation and its implementation

SARD

H. Satish Rao Director General Independent Evaluation Department

I.

INTRODUCTION

1. The previous evaluation. The first Country Assistance Program Evaluation (CAPE) for Bangladesh was published in 2003, covering 1986 to 2001.1 This second CAPE builds on the 2003 study, evaluating the work of the Asian Development Bank (ADB) in Bangladesh from 1999 to 2008. The two CAPEs overlap in 1999 to 2001, but in the overlapping years this second evaluation covers only projects and other issues that could not be fully evaluated in the 2003 CAPE. 2. Table 1 lists the main recommendations from the 2003 CAPE, and briefly indicates ADB's response (see Appendix 1 for details). A review of ADB's 2005 Country Strategy and Program (CSP)2 shows that the strategy included strategic points relevant to almost all of the recommendations from the 2003 CAPE. Of the 14 recommendations, only 2 are not included in the country strategy.3 The program from 2003 to 2008 was consistent with 8 of the 14 recommendations. The program was not consistent with five recommendations that were included in the strategy, and was consistent with one recommendation not included in the strategy. Only one recommendation (more support for "champion organizations") was not included in the strategy and also was not found in the program. 3. Method of evaluation. This evaluation (Appendix 2) follows ADB's CAPE guidelines,4 covering ADB's general strategy and performance (top-down evaluation), and strategy and performance in the main areas that ADB was supporting (bottom-up evaluation). The evaluation used the following sources of information: (i) data on development projects in Bangladesh, from the Government of Bangladesh (hereafter, the "Government"), ADB, and other sources; ii) ADB's policies, country strategies, reports on projects, and other relevant documents; iii) personal interviews and workshops with officials from the Government, ADB, and other development partners;5 iv) workshops with and perception surveys of non-government organizations (NGOs) and other stakeholders in Bangladesh; v) project site visits; and vi) other evaluation reports. 4. The top-down assessment, discussed in section IV, judges ADB's general directions relative to the country's needs and the Government's priorities, and how well ADB has followed its strategy and delivered results. The evidence for the top-down assessment is summarized in section II, which briefly describes the country context, and section III, which describes ADB's country strategies and the resulting program. The bottom-up assessments, discussed in section V, take the choice of sector as given, and assess relevance, effectiveness, efficiency, sustainability, and impact. The bottom-up assessments are based on separately-published sector assistance program evaluations, and on evaluations done for this CAPE. 5. Ratings for the top-down and bottom-up assessments are combined in section VI to give the overall ratings for ADB's country assistance program from 1999 to 2008. Section VI also

1 2 3

4 5

ADB. 2003. Country Assistance Program Evaluation for Bangladesh. Manila. ADB. 2005. Country Strategy and Program (2006-2010): Bangladesh. Manila. Between 1999 and 2008 ADB used three different names for its country strategies: "Country Operational Strategy;" "Country Strategy and Program"; and "Country Partnership Strategy." To avoid confusion over the name, this report uses the term "country strategy" to refer to any of those three types of strategies. ADB. 2006. Guidelines for the Preparation of Country Assistance Program Evaluation Reports. Manila. This report follows the practice of the Bangladesh Government and uses the term "development partners" to refer to ADB, the World Bank, the United Nations, and other multilateral and bilateral aid agencies.

2

discusses key findings from the evaluation, lessons identified, recommendations for the next country strategy and future program, and their implementation.6 Table 1: Recommendations from the 2003 CAPE and ADB's Response
Recommendationa Consider new approaches to delivering social services to the poor Mainstream environmental considerations Consider technical assistance in sectors where there is no significant lending Explore private sector involvement in social services Consider more use of programmatic approaches Increase support for SME development Focus on fewer sectors Convince the Government to strengthen local authorities, especially in raising revenue Devote more resources to supporting microenterprises across all sectors Consider non-sector-specific technical assistance to pursue pro-women institutional reform Optimize the role of nongovernment organizations Mitigate arsenic contamination in groundwater Increase support for recurrent spending in health and education Increase support to "champion" organizations Strategyb + + + + + + + + + + + + 0 0 Programc + + + + + + + 0 0 0 0 0 + 0

Note: A "+" indicates strategy or program was consistent with recommendation, and a "0" indicates that it was not. a ADB. 2003. Country Assistance Program Evaluation for Bangladesh. b IED's review of the 2005 Country Strategy and Program. c Appendix 1. Source: CAPE Team's assessments.

II.

COUNTRY CONTEXT

6. ADB's work in Bangladesh must be evaluated in the context of the country's constraints to growth and development, the Government's priorities, and the work of the Government's other development partners. Under the "Paris Declaration on Aid Effectiveness", ADB is committed to "respect partner country leadership"7 and "increasing alignment of aid with partner countries’ priorities."8 Aid following the Government's lead and aligned with the Government's priorities can help relieve a country's binding constraints to growth only if the Government is itself focused on relieving those constraints. 7. The following briefly reviews, in part A, Bangladesh's constraints to growth and development between 1999 and 2008, and in part B of this section compares those constraints to the Government's development priorities. The review finds that the Government has been focused on relieving binding constraints related to infrastructure, labor, and agriculture. ADB, as one of many development partners working in Bangladesh, can be most effective only if its support for Bangladesh is well coordinated with that of others. Part C reviews the role of the Government's development partners in Bangladesh, including the country's needs and the financing supplied from 1999 to 2008. ADB has been a major financier in many sectors, including those most important to the country and the Government. A. Constraints to Growth and Development in Bangladesh

8. Bangladesh has been and remains one of the world's poorest countries. In 1999, the first year covered by this evaluation, per capita gross domestic product (GDP) was less than $400 at
6 7 8

See Appendix 2 for a detailed description of the method of evaluation. Joint Progress Toward Enhanced Aid Effectiveness High Level Forum. 2005. Paris Declaration on Aid Effectiveness, para. 15. Joint Progress Toward Enhanced Aid Effectiveness High Level Forum. 2005. Paris Declaration on Aid Effectiveness, para. 3.

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market exchange rates9; its per capita GDP at purchasing power parity was $1483, well below the average of $2280 for South Asia, and ranking Bangladesh in the bottom fifth across all countries.10 About half of the population had incomes below the poverty line,11 and according to the United Nations Development Programme, Bangladesh had a low level of human development, with a Human Development Index of 0.47.12 9. The country's poverty rate is still high, but Bangladesh has made steady and significant progress in income growth, poverty reduction, and human development. From 1999 to 2008, per capita GDP in constant prices grew annually by 4.5%,13 continuing a trend of high growth that started in 1990. By 2005 (the latest year data are available), per capita GDP at purchasing power parity had risen to $2053.14 Bangladesh's recent per capita GDP growth is comparable with the best ever achieved by the economy of the United Kingdom (UK), which averaged 4.2% in only one decade since 1830.15 If average income continues to grow annually by 3.5%, Bangladesh would become a middle income country after 2020.16 The variability of economic growth in Bangladesh has fallen since 1990, and Bangladesh is one of the few countries in the world where growth has been positive every year since 1990.17 The international economic slowdown had not affected Bangladesh by the end of 2008, but growth was expected to fall slightly in 2009.18 10. By 2005 (the latest year that data are available), Bangladesh's poverty rate had fallen to 40%,19 the country's human development had risen by 16% (to 0.547), and Bangladesh had joined the ranks of countries with "medium" human development.20 Bangladesh has already met the Millennium Development Goal (MDG) for parity in educating girls and boys, and is on track to meet the goals for reducing poverty, child mortality, and maternal mortality. The country is making progress on the other MDGs, and can reach them with sustained effort.21 Appendix 3 gives the socioeconomic data on Bangladesh. 11. Despite the economy's high growth rates, some believe that economic growth in Bangladesh could have been even higher.22 Annual per capita real GDP growth of 4.5% is high by historical and global standards, but lower than recent growth in East Asia. Between 1999 and 2008, economic growth in Bangladesh faced several constraints. 12. Bottlenecks in infrastructure, brought on by lack of investment and demand management. Power generation has been especially lacking, with 75% of firms citing lack of supply as a serious constraint, putting power supply at the top of the list of binding constraints.23 As of 2007, Bangladesh needed to invest an estimated $1.5 billion annually in power

9 10 11 12 13 14 15 16 17 18 19 20 21 22 23

CAPE Team's calculations based on Bangladesh Economic Review 2008, Statistical Appendices 1.1 and 47. United Nations Development Programme. 2001. Human Development Report, pages 142-143. New York. World Bank. 2003. Poverty in Bangladesh: Building on Progress, page ii. Washington DC. UNDP. 2001. Human Development Report, pages 142-143. New York. CAPE Team's calculations based on Bangladesh Economic Review 2008, Statistical Appendix 1.1. UNDP. 2008. Human Development Report 2007/2008, page 231. New York. Available: http://www.measuringworth.org. Web page accessed on 2 June 2009. World Bank. 2007. Bangladesh: Strategy for Sustained Growth. Washington DC. Footnote 16, page 6. ADB. 2009. Asian Development Outlook. Manila. ADB. 2008. Key Indicators for Asia and the Pacific, page 62. Manila. Footnote 14. UNDP. 2009. Millennium Development Goals: Bangladesh Progress at a Glance. Available: http://www.undp.org.bd/mdgs/MDGs%20Score%20card.pdf. Web page accessed 8 September 2009. Footnote 16. World Bank. 2003. Improving the Investment Climate in Bangladesh, page 8. Washington DC.

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generation, but pricing and other reforms were needed first to secure the investments.24 The country's ports have been inefficient and congested, seriously constraining trade. As of 2003 (the latest year data are available), only 9.5% of Bangladesh's roads were paved, the lowest rate in South Asia.25 Bangladesh's urbanization is low at only about 25%, and public services for current urban residents are poor. 13. Limitations in the labor force, failing to capitalize on the country's abundant workforce. By official estimates, the country's unemployment rate was only 4% to 4.5% between 1999 and 2008, but unofficial estimates have put the rate as high as 25%.26 Only about a quarter of women were in the labor force, about half the rate in more advanced economies.27 The adult literacy rate has been steady at 40% for women, and 53% for men.28 Workers average only 4 years of education, and only about 1% have any vocational training.29 Bangladesh has had a critical shortage of health workers, and the number of nurses per 1,000 population and the ratio of nurses to doctors are among the lowest in the world.30 The shortage of health workers compounds the country's serious health problems. Bangladesh was ranked fifth out of 22 countries with the highest rates of tuberculosis, and malaria is endemic in parts of the country, with an estimated 10 million people at high risk of infection.31 Almost half of the country's children were underweight, and a third had stunted growth.32 The rate of low birthweight babies and neonatal mortality was high, driven by high rates of malnutrition and anemia among pregnant women. 14. Heavy reliance on crops, raising risks and failing to exploit comparative advantages in other agricultural products. Crops made up about 60% of agricultural GDP, with rice and wheat as the most important crops. Despite the focus on grains, rice yields have been much lower than those in East Asia (though higher than in South Asia), and wheat yields have been among the lowest in all of Asia. Although poultry production has been growing, there was virtually no growth in livestock from the 1980s through 2008. The country has a natural advantage in inland aquaculture, but the industry's growth has been constrained by inefficiency, lack of suitable storage and other infrastructure, and poor quality. Population growth and urbanization have put high and growing pressure on the land, raising the need for higher agricultural productivity.33 15. Vulnerability to natural disasters and global economic changes, compounded by high poverty rates, and high population density. Bangladesh faces many natural hazards, including cyclones, floods, droughts, tornadoes, and earthquakes. It is also one of the world's most densely populated countries, ranking as the world's seventh largest country by population, but 94th by area. The combination of natural hazards, high population density, and a high poverty rate means that millions of people are vulnerable to natural disasters. The high poverty rate also means that millions of people are vulnerable to global economic changes, like the rise in food prices that hit the world in 2008. Recent disasters that have struck Bangladesh include
24 25 26 27 28 29 30 31 32 33

Footnote 16, page 30. Footnote 19, page 214. ADB. 2002. Asian Development Outlook, page 83. Manila. Bangladesh Bureau of Statistics. 2005. Key findings of Labour force Survey 2005-06. Available: http://www.bbs.gov.bd/dataindex/labour_%20force05-06.pdf. Web page accessed 8 September 2009. Footnote 14, page 328. Footnote 16, page 36. World Health Organization. 2006. World Health Report. Geneva. WHO. 2007. Country Cooperation Strategy 2008-2013 page x. Geneva. Footnote 19, page 66. This paragraph based on World Bank. 2007. Bangladesh: Strategy for Sustained Growth, Chapter 2. Washington DC.

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Cyclone Sidr (2007), which took 3200 lives, injured 40,000, and caused an estimated $1.6 billion (0.6% of GDP) damage to homes and crops. Two floods, a cyclone, and a tsunami hit Bangladesh in 2008, and caused an estimated $2.8 billion in damages (4% of GDP).34 16. Weak investment climate, affected by political uncertainty and weak governance. More than half of firms in Bangladesh have reported that corruption in the country is a major barrier, compared with a quarter of firms in other countries in the region, and about 30% world wide. Corruption ranked second (behind power generation) among the country's constraints to private sector growth.35 Less than 10% of firms in Bangladesh have reported confidence in the judicial system, compared with about half of firms in other countries in the region and worldwide.36 Bangladesh ranked last in Transparency International's "Corruption Perception Index" from 2001 (the first year Bangladesh was included) until 2005; in 2008 Bangladesh ranked 147 out of 180 countries.37 National elections have been contentious, with losing parties refusing to accept the results and destabilizing government.38 Elections scheduled for 22 January, 2007, were postponed amidst violence, emergency law was declared, and a caretaker government presided until elections were finally held on 29 December, 2008.39 The Government has made progress in reforming public financial management systems, but major reforms are still needed.40 17. Barriers to international trade, caused by protective levies, inefficient systems, and insufficient capacity at borders. Despite recent tariff reforms, Bangladesh's average protection levels have been the highest in the region and among the highest in the world.41 About 40% of firms (compared with about 25% in the region, and about 15% worldwide) report that customs and trade regulations have been a major obstacle.42 The country's main port, Chittagong, has been among the world's most inefficient container ports, ranking 72 out of 75.43 Container dwelling times were 50% higher than for other ports in the region, and handling costs were at least double the cost in other regional ports.44 The country's garment exports could have grown an estimated 30% by relieving capacity constraints at the port. 18. Immature financial markets, held back by political interference. Like most developing countries, Bangladesh's financial sector has been dominated by banks, limiting the potential of the financial sector to mobilize and allocate resources. The country's stock market is small (21% of GDP), and there are few insurance companies and pension funds. The financial system has responded well to the Government's recent reforms, but non-performing loans in state-owned banks have been high, and many private commercial banks have been weak. The

34 35 36 37 38 39 40 41 42 43 44

Cyclone Aila struck southwestern Bangladesh on 27 May 2009, killing 190 people, injuring more than 7000, and damaging 613,000 houses and 323,000 acres of crops. Footnote 23, page 8. Footnote 23, page 70. The number of countries included in the index grew over time, starting from 91 in 2001. Available: http://www.transparency.org/. Muhammad Mustafizur Rahaman. 2007. "Origins and Pitfalls of Confrontational Politics in Bangladesh." South Asian Survey 14: 101-115. An elected government took office on 6 January 2009. The following month 50 people were killed in a mutiny by border guards. World Bank. 2007. Bangladesh Public Sector Accounting and Auditing: A Comparison to International Standards. Dhaka. World Bank. 2004. Trade Policies in South Asia: An Overview. Washington DC. Footnote 23, page 64. World Economic Forum. 2001. Global Competitiveness Report 2001-2002. Geneva. ADB. 2004. Report and recommendation of the President to the Board of Directors for a Proposed Loan to Bangladesh for the Chittagong Port Trade Facilitation Project. Manila.

6

global financial crisis had not affected Bangladesh by the end of 2008, probably because the country's financial sector lacks ties to international credit markets.45 B. The Government's Development Priorities Relative to the Binding Constraints

19. The Government's plans. One way to identify the Government's development priorities is through the Government's official development plans. The Government has issued development plans since 1973, after the country became independent in 1971. Before 2003, the Government had issued a series of 5-year plans, the most recent of which (the fifth) was issued in 1997.46 Poverty reduction strategies replaced the 5-year plans after the most recent expired in 2002. In 2003 the Government issued A National Strategy for Economic Growth, Poverty Reduction and Social Development,47 which the World Bank and International Monetary Fund (IMF) considered an "Interim Poverty Reduction Strategy Paper". In 2005 the Government issued a National Strategy for Accelerated Poverty Reduction,48 which met the World Bank's and IMF's conditions for a Poverty Reduction Strategy Paper. 20. Bangladesh's poverty reduction strategies are the plans relevant to this evaluation. The poverty reduction strategies did not, however, indicate any priorities, and so this evaluation cannot effectively use them to judge what was important to Government. For example, the 2003 poverty reduction strategy included 10 "goals or targets" for social development;49 16 "major goal posts" (some overlapping with the 10 "goals or targets");50 and 21 strategic goals with 123 agenda points under 4 strategic pillars;51 but no concrete plan for achieving those things with limited resources. The 2005 poverty reduction strategy recognized that "the struggle against poverty will never succeed if it continues to be an encyclopedic wish list hopelessly bereft of any sense of strategic priority", but then listed an eight-point strategic agenda that is explicitly not a "sequence of priorities,"52 and included 127 pages of detailed but un-prioritized policy matrices and monitoring and evaluation indicators. The strategy acknowledged that "prioritization of projects is also needed", but estimated the cost of only three small programs as "an indicative exercise."53 21. The Annual Development Programme. The Government's priorities for public investment show up more clearly in its Annual Development Programme, a yearly list of development projects and spending. Table 2 shows annual development spending by sector54 from 1999 to 2008, sorted by the share of total spending per sector. The share of spending per sector may also fail to represent the Government's priorities, if development partners significantly influenced investment decisions;55 the development partners financed over half of

45 46 47 48 49 50 51 52 53 54

55

Bangladesh Bank. 2009. Financial Sector Review. Volume IV Number 1. Dhaka. Available: http://www.sdnbd.org/sdi/metadata/fifth5-yesr-plan/Fifth%20five%20year%20plan.htm. Ministry of Finance. Economic Relations Division. 2003. A National Strategy for Economic Growth, Poverty Reduction and Social Development. Dhaka. Planning Commission. General Economics Division. 2005. Unlocking the Potential: National Strategy for Accelerated Poverty Reduction. Dhaka. Footnote 47 Footnote 47, page 25. Footnote 47, page 58-70. Footnote 48. Footnote 48, page 195. The sector classification in the table is that used by the Government. Otherwise, this evaluation uses ADB's sector and thematic classifications that applied from 2004 to 2008; ADB. 2004. Updating Sector and Theme Classification at the Asian Development Bank. Manila. ADB issued a new project classification system starting in 2009. ADB. 2009. Staff Instructions for the Revised Project Classification System. Manila. The text in this footnote was deleted, but the footnote was kept to preserve numbering.

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annual development spending in Bangladesh from 1999 to 2008 (Part C).56 Only two projects worth $267 million57 are listed as not being in the Annual Development Programme, though, so the development partners did not have an overt influence on the Government's investment decisions. Table 2: Distribution of Annual Development Spending by Sector (%)
Sector Transport & Communication Energy Education and Labor Rural Development Health Water Supply & Housing Agriculture Water Resources Industry Public Administration Other 1999 21 17 14 10 8 5 5 7 1 1 12 2000 21 17 13 12 8 7 5 7 2 1 8 2001 23 15 13 12 7 7 5 6 3 1 8 2002 26 15 14 11 8 7 4 5 2 1 7 2003 23 20 16 11 7 6 4 5 1 0 6 2004 20 22 13 14 8 6 4 4 3 1 5 2005 22 21 11 13 7 7 3 5 3 1 6 2006 17 2 14 16 10 2 5 3 16 1 14 2007 17 15 16 17 10 7 6 2 1 2 7 2008 13 15 16 15 11 7 7 4 1 3 8 Total 20 15 14 14 9 6 5 4 4 1 8

Note: The sector definitions are those of the Bangladesh Government. The largest share each year is in boldface. Source: CAPE Team's calculations based on Bangladesh Economic Review. 2008. Appendix 19: Sector-wise Revised ADP Expenditure. Available at http://www.mof.gov.bd; Economic Relations Division, Ministry of Finance. 2009. Flow of External Resources into Bangladesh. Table-16: Annual Development Programme. Available at http://www.erd.gov.bd.

22. Judging by the distribution of spending in the Annual Development Programme, the Government's top three priorities were to relieve the first three binding constraints: (i) (ii) (iii) Relieving the bottlenecks in infrastructure: transport, energy, rural development, and water supply and housing took 55% of the Government's development spending from 1999 to 2008. Developing and maintaining the labor force: education and health took a combined 23% of development spending. Developing agriculture: spending on agriculture and rural development (also included in point i above) took 19% of development spending.

23. The Government invested a total of about 5% of GDP from 1999 to 2008. Nominal public investment spending has been rising, but at a slower rate than GDP, so public investment as a share of GDP has been falling, from about 6% of GDP in 1999 to about 5% in 2008. 24. Investments in disaster risk management (DRM) are likely to be spread over various sectors, and are not specifically identified in the Annual Development Programme. The Ministry of Food and Disaster Management has received about 5% of the budget across all ministries, so DRM seems important to the Government.58 25. Governance does not necessarily need major investment spending, and so the Annual Development Programme would not reliably show the Government's interest in governance. About 1.5% of the annual budget has been allocated to the Supreme Court; the Anti-Corruption

56

57 58

For a breakdown of annual investment spending per sector and per financier, see Economic Relations Division, Ministry of Finance. 2009. Flow of External Resources into Bangladesh; Table-16: Annual Development Programme. Available: http://www.erd.gov.bd. The Social Investment Programme and the Second Poverty Alleviation Microfinance Project, each financed by the World Bank. CAPE Team's calculations based on Bangladesh National Budget 2008-2009.

8

Commission; the Ministry of Law, Justice and Parliamentary Affairs; and governance-related projects. 59 26. Relieving Bangladesh's binding constraints to growth also involves reforms. Table 3 lists the binding constraints to growth in part A, along with some reform efforts.60 The table shows that support for the Government's reform efforts would have been relevant to helping relieve Bangladesh's binding constraints to growth, especially the first three. The Government has taken the least action in trade and financial sector reforms, and so those seem to be the Government's lowest priorities. Table 3: Bangladesh's Binding Constraints to Growth versus Reforms
Binding Constraint i. Bottlenecks in infrastructure Reform Initiatives Power Sector Reforms (1994; still driving reforms through 2008) National Policy for Safe Water Supply and Sanitation (1998) Bangladesh Energy Regulatory Commission (2004) National Land Transport Policy (2004) National Sanitation Strategy (2005) Integrated Multi-Modal Transport Policy (2008) Education for All (1992; 2003) Health and Population Sector Programme (1998) National Health Policy (2000) Health, Nutrition and Population Sector Programme (2003) Bangladesh Population Policy (2004) Non-Formal Education Policy (2007) National Agriculture Policy (1999) National Water Plan (1999) National Water Management Plan (2004) Actionable Policy Brief (2004) Livestock Policy and Action Plan (2005) Comprehensive Disaster Management Programme (2003) National Plan for Disaster Management (draft 2007) Supreme Court decision to separate judiciary and executive (Masdar vs Hossain 2000) Anti-Corruption Commission (2004) Legislation for the World Trade Organization Agreement on Customs Valuation (2000) Product Labeling Policy (2004) Some banking reforms since 2001

ii.

Limitations in the labor force

iii. Low agricultural diversity

iv. Vulnerability to disasters v. Weak governance

vi. Trade barriers vii. Low financial development

Source: CAPE Team's analysis, except for point vii, which is based on World Bank. 2007. Bangladesh: Strategy for Growth and Development. Page 137.

C.

The Role of the Development Partners

27. Financing. From 2003 to 2007, Bangladesh was among the top 10% of countries receiving official development assistance (ODA).61 Although Bangladesh received a lot of ODA in total, by other measures it has received relatively little. Bangladesh is in the bottom 20% of ODA per person,62 even though it is in the bottom 20% of countries by average income. Foreign financing to Bangladesh has been falling as a percent of GDP, from 3.2% of GDP 1999 to 2.4%
59 60 61

62

Footnote 58. Table 3 aims only to roughly gauge the Government's reform priorities, and is not a comprehensive list of reforms. CAPE Team's calculations based on Organization of Economic Cooperation and Development. 2008. Statistical Annex of the 2009 Development Co-operation Report. Table 25: ODA Receipts and Selected Indicators for Developing Countries and Territories. CAPE Team's calculations based on Organization of Economic Cooperation and Development. 2008. Statistical Annex of the 2009 Development Co-operation Report. Table 25: ODA Receipts and Selected Indicators for Developing Countries and Territories.

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in 2008.63 Foreign financing as a percentage of annual development spending, however, rose in 2007 and 2008, to a 10-year high of 84% in 2008.64 In 2008, the Government's development partners were financing 61% of the Government's portfolio of ongoing development projects.65 28. Needs for financing. The development partners help finance the Government's budget deficit at much better terms than the Government can get on the market (Appendix 4 gives a review of the budget deficit and sources of financing). The tax effort (tax revenue to GDP ratio) has been only around 8% in recent years. From 1999 to 2008, the Government's budget deficit varied from about 4% to about 6% of GDP, with foreign financing covering about half of the deficit. Foreign grants comprised of the bulk of financing in 1999, but grants have gradually fallen, replaced almost equally with foreign loans. Among the Government's sources of credit, the highest interest rate was 12.5%. 29. ADB has been one of the Government's biggest financiers. From 1999 through 2008, ADB committed an average of $409 million annually to Bangladesh (grants and loans), and disbursed an average of $256 million annually. Among the more than 30 development partners working in Bangladesh, ADB's commitments and disbursements ranked second, behind only the World Bank's, and followed by Japan ($196 million committed, $175 million disbursed), the United Nations organizations ($125 million and $108 million), and the United Kingdom ($112 million and $76 million).66 30. Needs for project finance and technical assistance. The Government's high cost of borrowing establishes only the case for budget support. The case for project finance, technical assistance, and other types of support depends on the Government's need for help in designing and implementing projects and programs. ADB, like the other development partners, has reviewed the Government's capabilities and identified problems in implementing projects (see section III.B). The United Kingdom, for example, provides general budget support in some countries but not in Bangladesh, recognizing limitations in the Government's financial management systems and controls.67 A broad strategy for organizational development and reform in Bangladesh would strengthen the justification for project finance and technical assistance, and better aim such support towards long-term change. 31. Distribution of foreign financing across sectors. Table 4 shows Bangladesh's portfolio of ongoing foreign-financed projects and programs (all projects and programs being implemented as of June 2009), by sector and by financier. The last column in the table shows that the largest share of sector-specific financing is going to the energy sector (18% of all foreign financing), followed by education (13%) and several other sectors with comparable shares. Each sector has three or four significant financiers (shares in double digits), except for the financial sector which is dominated by the World Bank. The bottom row of the table shows that ADB is the largest financier in the Government's ongoing portfolio (31% of the portfolio),

63 64 65 66

67

CAPE Team's calculations based on Bangladesh Economic Review. 2008. Statistical Appendix. Footnote 63. CAPE Team's calculation based on the database of the Implement, Monitoring, and Evaluation Division of the Ministry of Planning. CAPE Team's calculations based on Economic Relations Division, Ministry of Finance. 2009. Flow of External Resources into Bangladesh. Available: http://www.erd.gov.bd. Table-2.3: Pledge, Commitment & Disbursement of Aid by Aid Group Sources (1998/99 - 2007/08). Web page accessed on 12 August 2009. Department for International Development. Bangladesh Interim Country Assistance Plan, July 2007 to March 2009. Dhaka. p. 15.

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just ahead of the World Bank (30%), even though ADB's commitments and disbursements are smaller than the World Bank's.68 Table 4: Distribution of Financing by Sector and Source (%), for the Government's Portfolio of Ongoing Foreign-financed Projects and Programs, June 2009
Sector Energy Education Multisector Health ANR Transport Finance WSS Public Policy Industry By sourcea ADB 62 28 37 3 38 21 0 40 21 20 31 World Bank 15 33 26 26 32 25 93 27 32 30 UK 6 16 17 10 11 7 26 8 10 Japan 11 2 15 27 22 30 9 UN 2 4 17 1 3 0 10 16 0 5 EU 13 13 12 11 5 USA 1 36 1 3 5 Others 4 4 5 4 4 16 0 1 2 31 5 By Sectorb 18 13 12 12 10 10 7 7 7 3 100

Note: The largest financier per sector is in boldface. A "0" means the value is positive but less than 0.5%; a "-" means the value in the cell is exactly 0. a Share per source is the sum of commitments per organization divided by total commitments, not the sum of the shares in the cells above. b Share per sector is the sum of all commitments per sector, divided by total commitments, not the sum of the shares in the cells to the left. Source: CAPE Team's calculations based on Economic Relations Division, Bangladesh Ministry of Finance. Query on Projects and Programmes, Ongoing Projects. Available: http://www.erd.gov.bd/erd/ vprojectsquery.php. Web page accessed on 22 June 2009.

32. ADB is by far the largest financier in the energy sector, financing 62% of all foreignfinanced energy projects, and the majority of all energy financing (53%; Table 5 shows that foreign sources are financing 86% of energy projects). ADB is also the lead financier in agriculture and natural resources (ANR); water supply and sanitation (WSS); and multisector projects, many of which are in urban development (including water supply and sanitation). ADB is the second or third largest financier in four other sectors: education; transport; law, economic management, and public policy (hereafter, "public policy"); and industry. Health and finance are the only sectors where ADB is not a major financier. 33. Financing from the development partners has been generally consistent with the Government's priorities, judging by the distribution of financing for ongoing projects and programs. The distribution of financing across sectors, shown in the last column of Table 4, roughly corresponds to the distribution of the Government's annual investment spending from 1999 to 2008, shown in the last column of Table 2. This correspondence is consistent with either the development partners following the Government's lead and priorities, or the development partners driving the Government's investment spending.

68

There is more ADB financing in the ongoing portfolio probably because the World Bank does more program loans, which disburse faster and so do not last as long in the portfolio. The average age of ADB's projects and programs in the ongoing portfolio is 4.4 years, compared to 4.1 years for the World Bank's. Among projects in the ongoing portfolio, the World Bank is the largest financier because the World Bank's projects take longer; see Table 12.

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Table 5: Share (%) of Foreign Financing per Sector, and Sector Shares in the Annual Development Programme, March 2008
Sector Transport ANR Other Education Energy Health WSS Industry Public Policy Finance Aid Financed 40% 48% 41% 45% 86% 97% 62% 37% 83% 100% Share of Ongoing Projects 17% 15% 12% 13% 20% 14% 4% 2% 2% 1% Aid/Share Ongoing 2.3 3.2 3.4 3.5 4.2 6.8 15.5 18.5 41.5 100.0

ANR = agriculture and natural resources, WSS = water supply and sanitation. Source: CAPE Team's calculations using data on ongoing projects from the database of the Implementation and Monitoring Division, Ministry of Planning; the database is updated as of March 2008.

34. The best opportunity for expanding project financing appears to be in the transport sector. Table 5 shows the share of foreign-financed projects in each sector, and the distribution of investment across sectors, for the Government's portfolio of ongoing projects (excluding programs). It shows that the development partners are financing only 40% of ongoing transport projects, while transport projects make up 17% of all ongoing projects. As shown in Table 4, the transport sector has been receiving only 10% of all financing from the development partners. The lower financing for transport could be because the Government has less need for support in designing and implementing transport projects, or because of unique aspects of transport projects that make them less attractive to the development partners. If the latter, then given some changes, there is an opportunity for one or more of the development partners to boost support for the transport sector in Bangladesh. 35. Other opportunities for more project financing are in ANR and education. The Government is still the largest financier in those sectors, and those sectors are important judging by their shares of financing (15% and 12%, respectively) in the Government's portfolio. The least favorable opportunity for more project financing is in WSS. Foreign financing is already dominant in WSS (62% of ongoing projects), and that sector seems less important to the Government (4% of projects in the portfolio). Industry, public policy, and finance are also not good candidates for project financing, but those sectors are usually financed with program loans instead. 36. Organization of the development partners. The Government coordinates the development partners through the Local Consultative Group (LCG). Members of the LCG comprise the Secretary of the Economics Relations Division of the Ministry of Finance; 11 multilateral organizations; and bilateral aid organizations from 16 countries. The LCG is organized into an Executive Committee, and 26 subgroups on various topics. The Government co-chairs the Executive Committee, and but is involved in only some of the subgroups. ADB is a permanent member of the Executive Committee, and co-chairs the Committee on a rotating basis with the World Bank and the United Nations. As of July 2009, ADB leads the subgroups on energy, transportation, and project implementation, and is also active in several subgroups, including those for ANR, governance, and education.69 37. The development partners have some choice over the projects they can finance in Bangladesh, and so have some influence in the Government's investment decisions. Under the
69

Available: http://www.lcgbangladesh.org. List of Subgroup Chairs updated 23 July 2009.

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Government's official guidelines for processing development projects,70 projects originate from the executing agencies or line ministries. The first step in obtaining foreign financing for a project is for a ministry to approach the Economic Relations Division. The Economic Relations Division then consults with the development partners to try to find a sponsor. If an agency wants to support the project, the project follows the Government's standard procedures for processing all development projects (foreign-financed or not). The Government also welcomes the development partners to propose projects.71 If the Government approves then the project follows the Government's standard procedures. ADB holds an annual "country programming mission" to formalize ADB's program, and regularly consults with executing agencies and other government agencies on programming issues. III. ADB’S COUNTRY STRATEGIES AND PROGRAM

38. This section reviews ADB's country strategies and program from 1999 to 2008, focusing on issues relevant to the top-down evaluation in section IV. The review of ADB's country strategies, in part A, covers two country strategies: the 1999 Country Operational Strategy;72 and the 2005 Country Strategy and Program.73 The 2003 CAPE evaluated the 1999 strategy,74 so the review in part A focuses on the 2005 strategy. Table A5.1 in Appendix 5 outlines each strategy. A. ADB's Country Strategies

39. ADB's choices in a country depend on the context in which ADB works, and the internal and external constraints that ADB faces. A country strategy to guide those choices must clearly recognize the context, constraints, and identify the real choices facing ADB. The following briefly reviews the choices and constraints ADB faced in developing the 2005 country strategy, and how the strategy responded. 40. ADB's strategic choices. In 2005, ADB was not facing any major choices about its program in Bangladesh. ADB was already involved in all sectors in the Government's Annual Development Programme (see Table 2 and Table 6), so there were no new sectors to consider. The 2003 CAPE called for more ADB support for health and education and, except for a vague recommendation to focus on "fewer sectors,"75 did not call for ADB to leave any sectors, and did not find any problems that called for major changes. 41. ADB was thus realistically faced with continuing its current program. The three main, practical choices were (i) how to add value to the current program; (ii) how to work with other development partners; and (iii) how to deal with the Government's unknown but predictable requests for disaster-related support. In developing a strategy to guide those choices, ADB

70 71

72 73 74 75

Ministry of Planning. Planning Division. 2004. Public Sector Development Project Preparation, Processing, Approval, and Amendment System. English translation by Canadian High Commission. 2005. Dhaka. From interviews with staff of the Planning Commission. The proposed reform of Bangladesh Krishi Bank is one example from ADB. H.D. Seibel. 2007. Institutional and Financial Review of Bangladesh Krishi Bank. Manila. See Table A4.6. ADB. 1999. Country Operational Strategy: Bangladesh. Manila. ADB also issued updates of its country strategy in 2002, 2003, and 2004, but those updates did not change the 1999 strategy. Footnote 2. Footnote 1. Footnote 1. The 2003 CAPE did not name any sectors that ADB should exit to sharpen focus. It suggested ADB could exit two sub-sectors (railways and capital markets), but also said ADB could continue in those sub-sectors "if such lending contributes significantly to pro-poor growth and poverty reduction".

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faced at least two constraints: (i) ADB's commitments under the Paris Declaration; and (ii) ADB's bureaucratic requirements for producing a country strategy and program. 42. Strategy for sector focus. The 2005 country strategy did not emphasize the choice of sectors, perhaps recognizing that was not a pertinent choice. The sectors it listed for ADB's support were the same as those in the 1999 country strategy (see Appendix 5 for the list of sectors). The strategy pledged that ADB would "focus on fewer sectors,"76 but did not say how it would be done. The strategy also pledged to drop eight subsectors (Appendix 5, Table A5.1), but said ADB would do so only if other development partners were prepared to step in, and if the results of previous or ongoing projects would not be compromised. The 1999 country strategy, in contrast, was specific about sector selection and focus, pledging to cut the number of subsectors from 30 to 15, listing 8 principles for selecting sub-sectors, and the 15 sub-sectors that ADB would support. 43. Strategy for strengthening the program. Given that the sector focus would largely continue, one of ADB's strategic choices in 2005 was how to strengthen the existing program. The 2005 strategy had a sub-strategy on "Improving Implementation,"77 and included several points relevant to strengthening the given program, including choosing the type of loan to fit the project; delegating more projects to the resident mission; and designing projects that are better prepared for implementation (Appendix 5, Table A5.1, lists the relevant strategic points). ADB's 1999 country strategy also included several points relevant to strengthening the program. 44. Strategic partnerships. Given the many development partners in Bangladesh, another of ADB's choices in 2005 was how to work with other organizations. Responding to that choice, in 2005 ADB joined the World Bank, Department for International Development (DFID) of the United Kingdom, and the Japanese Government in developing a common approach to their country strategies. The four partners came together at a time of friction among the development partners and the Government, and produced an agreement that maintained engagement with the Government, and support for Bangladesh's development.78 45. The partnership aimed to cut costs, raise efficiency, and strengthen effectiveness by developing synergies among the programs of the four partners. The partnership produced a pledge to work together; a set of "partnership principles" (Appendix 5, Table A5.2); a division of labor represented in a joint results framework;79 and four separate country strategies.80 46. ADB has also built other strategic partnerships since 2005. In 2007, ADB led the formation of a partnership with the Government, the World Bank, and the governments of Denmark, Japan, and Republic of Korea, in water supply and sanitation. One outcome of that agreement so far was that, sensing the chance for more support, government agencies in the water sector implemented long-delayed reforms.

76 77 78 79 80

Footnote 2. Footnote 2, page 20. Manila. "Message from Donor's Washington Meeting". February 26, 2005. Available: http://dakbangla.blogspot.com/ 2005/02/bangladesh-message-from-donors.html World Bank. 2006. Bangladesh Country Assistance Strategy (2006-2009). Dhaka. The 2005 country strategy was not a formal joint strategy like ADB has done, for example, in Kyrgyzstan. This report uses the term "joint approach" to refer to the four partners' collaborative work on their individual country strategies.

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47. Disaster risk management81 and emergency support. Another choice facing ADB in 2005 was how to deal with the Government's unknown but predictable future requests for disaster-related and emergency support. ADB has a close relationship with the Bangladesh Government, a commendable achievement and valuable asset. That relationship, however, means the Government is likely to turn to ADB for help as a "trusted partner," and ADB has shown it is likely to respond (see section IV). For example, experience shows that Bangladesh regularly suffers from natural disasters; that the Government typically turns to ADB for emergency support; and that ADB responds. Given the forces of nature and ADB's relationship with the Government, emergency support to Bangladesh was inevitable. 48. The 2005 country strategy recognized that situation, and included a sub-strategy for "Disaster Mitigation."82 Among other things, the "Disaster Mitigation" strategy recognized the leading role of the United Nations, the importance of working with other development partners, and the relevance of disaster preparedness. The strategy pledged that "disaster-risk considerations will be mainstreamed".83 The 1999 strategy, in contrast, did not mention natural disasters. (See section V, and Appendix 9 for further discussion of ADB's approach to disaster risk management in Bangladesh.) 49. Paris Declaration. Table A5.3, Appendix 5, lists some of ADB's commitments under the Paris Declaration that are relevant to a country strategy, and briefly indicates ADB's response in the 2005 country strategy.84 The strategy recognized ADB's commitments,85 and included relevant points. One commitment is to "rationalize activities" and make them cost-effective. The main limitation in the strategy's response is in making the strategy itself cost effective, although the cost of the strategy was probably beyond the control of the country team. 50. ADB's policies. ADB also faced internal constraints from its own policies. ADB's 2001 Medium-Term Strategy86 called on country strategies to carry out ADB's 2001 long-term strategy.87 ADB's business processes at the time emphasized "the centrality of the CSP in ADB operations," and dictated the format and contents of the document reporting the strategy.88 51. The 2005 country strategy fully responded to the internal requirements, presenting the country strategy closely following the 2001 long-term strategy. Table A5.1, Appendix 5 outlines the 2005 country strategy following ADB's 2001 long-term strategy, highlighting the strategic points in the document. The same table also outlines the 1999 country strategy following the 2001 long-term strategy; the 1999 strategy was not subject to the 2001 long-term strategy, but is shown following the same outline for ease of comparison.

81

82 83 84 85 86 87 88

"Disaster Risk Management" is the term used in ADB's Disaster and Emergency Assistance Policy, and so is the term used in this report. ADB. 2004. Disaster and Emergency Assistance Policy. In ADB's current thematic classification system, DRM is a sub-theme under the "Social Protection" theme. ADB. 2009. Staff Instructions for the Revised Project Classification System. The previous classification applies to this evaluation, but the previous system did not include anything related to DRM. Until 2009, ADB did not track financing of DRM in its formal project classification system. Footnote 48. Footnote 48, page 18. The list of commitments is based on the CAPE Team's interpretation of the Paris Declaration, and so is not official. Footnote 48, page 29. ADB. 2001. Medium-Term Strategy (2001-2005). Manila. ADB. 2001. Moving the Poverty Reduction Agenda Forward In Asia And The Pacific: The Long–Term Strategic Framework Of The Asian Development Bank (2001-2015). Manila. ADB. 2001. Business Processes for the Reorganized ADB. Appendix 1 and Appendix 3. Manila.

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52. The 2005 country strategy (and also the 1999 strategy) covered all of the "Core Strategic Areas" and the "Crosscutting Strategic Themes" of ADB's 2001 long-term strategy. Compared with the 1999 strategy, the 2005 strategy has much more on private sector issues, governance, project preparation and implementation, and results monitoring. The 2005 strategy included results frameworks as required by ADB's "Enhanced Poverty Reduction Strategy."89 The 1999 and 2005 country strategies have detailed gender strategies, as required by ADB's gender policy90 and business processes. 53. Meeting the requirements of ADB's business processes resulted in a long and detailed report. The 2005 CSP has 212 pages including appendices; the 1999 strategy, in contrast, has 39 pages including appendices (the 1999 report excludes the program, which was reported separately). The outline of the 2005 strategy in Appendix 5 includes around 130 strategic points (excluding sector-related points), about double the number in the 1999 strategy. ADB's strategic reports are the longest of all of the main development partners (see Table A5.4, Appendix 5); for example, an update of ADB's 1999 country strategy91 (164 pages) is longer than the World Bank's Country Assistance Strategy for 2006 to 200992 (142 pages). The 2005 country strategy for Bangladesh was not unusually long for ADB, though; ADB's strategies for other countries have been longer with 300 pages.93 54. Cost of producing the strategy. Appendix 6 gives rough estimates for the resources spent on processing the 2005 strategy, including staff time, and budget for travel and consultants.94 Processing the 2005 strategy took place over 2.5 years and used about 5 personyears of staff and consultants, with total cost of possibly $1.3 million. The staff time includes professional staff and national officers, but excludes administrative staff and staff in support departments, and so the staff time and actual cost of the 2005 strategy could be underestimated. The cost of the strategy was probably driven by ADB's bureaucratic requirements95 and by the difficulty of meeting those requirements while following a joint approach. 55. The CSP as a knowledge product. ADB's 2005 CSP is apparently a useful source of information. The evaluation interviewed Government officials and staff from the development partners about a variety of topics, including the usefulness of the report. Among those who had read the CSP,96 half said it was useful as a reference on Bangladesh, and on ADB. Some ADB staff also reported that it was useful as a reference, and recommended it to others outside ADB.

89 90 91 92 93 94

95

96

ADB. 2004. Enhancing the Fight Against Poverty In Asia And The Pacific: The Poverty Reduction Strategy of the Asian Development Bank. Manila. ADB. 1998. Gender and Development. Manila. ADB. 2002. Bangladesh Country Strategy and Program Update (2003-2005). Manila. World Bank. 2006. Bangladesh Country Assistance Strategy (2006-2009). Manila. For example, ADB's CSP for the PRC (2004-2006) has 369 pages, and the CSP for Vietnam (2007-2010) has 294 pages. Staff time is that reported by members of the country team in interviews for this evaluation. Staff reported their time based on memory; ADB does not have a time-keeping system for tasks. Travel cost includes all travel for members of the country team during processing of the 2005 strategy. ADB's report on the business processes recognized that the requirements imposed on country strategies would raise their costs, but claimed that the requirements would save costs elsewhere. ADB. 2002. Business Processes for the Reorganized ADB. Manila. ADB estimated that the requirements would add 2.7 person-years to the staff time needed to produce country strategies and update them annually. Ibid. Page 29. A Government official said that with such a long report, ADB must have wanted no one to read it.

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B.

Programming and Portfolio Indicators

56. A country strategy can try to guide ADB's choices, but the choices are actually made in setting and carrying out ADB's program. The following describes ADB's sector focus and how ADB responded to its three main choices: i) strengthening the program; ii) working with other development partners; and iii) responding to the Government's requests for disaster and emergency support. The following also describes how ADB met its commitments under the Paris Declaration and ADB's 2001 long-term strategy, and how the program must adjust to follow ADB's current long-term strategy. 57. Sector focus in programming. ADB's programming under the 2005 strategy followed a pattern similar to that under the 1999 strategy. Table 6 shows ADB's financing for projects or programs under each country strategy, across sectors.97 (For a detailed list of ADB's program from 1999 to 2008, see Appendix 8). Under each strategy, ADB financed projects in eight sectors. ADB financed projects in 16 sub-sectors under the 1999 strategy, and 17 under the 2005 strategy, with 10 sub-sectors in common (using the 2009 classification system, there were 12 sub-sectors under the 1999 strategy, and 16 under the 2005 strategy). Under the 2005 strategy ADB added one new sector ("public policy"), and by the end of 2008 had not financed any project in "industry" (ADB is processing loan classified as "industry" to be approved in 2009.)98 Table 6: ADB's Financing in Bangladesh, 1999 to 2008 (Public Sector Loans, Investments, and ADB-administered Grants)
Sectora Energy Transport b Education ANR WSS Public Policy Health Industry Finance Total 1999 to 2004 $ million Share (%) 764.5 31 610.4 25 712.9 29 226.2 9 70.0 3 0.0 0 5.0 0 45.0 2 0.5 0 2,434.5 100 2005 to 2008 $ million Share (%) 825.0 34 413.6 17 173.5 7 338.4 14 304.5 12 235.0 10 155.8 6 0.0 0 3.0 0 2,448.8 100 $ million 1,589.5 1,024.0 886.4 564.6 374.5 235.0 160.8 45.0 3.5 4,883.3 Total Share (%) 33 21 18 12 8 5 3 1 0 100

ANR = agriculture and natural resources, WSS = water supply and sanitation. a Projects officially classified as "multisector" are broken down into their subprojects, and the sector classifications and totals of subprojects are used instead. Some projects not classified as "multisector" also had subprojects with different sector classifications; those subprojects are also separated from the main projects, and the subproject sector classifications and amounts are used. b Total for 1999 to 2004 includes $389 million in grants from the United Kingdom, European Union, Netherlands, Norway, Sweden, and Canada, administered by ADB. Source: CAPE Team's calculations based on ADB's database.

58. The shares across sectors differed between the two strategies, but the order of the shares per sector was similar. The first and second largest shares of financing went for energy and transport projects. Under the 1999 strategy, the third largest share of financing was for education; education financing, however, was dominated by a $389 million ADB-administered

97

98

ADB's 1999 Country Operational Strategy does not say what years it covers. The 2005 Country Strategy Program officially started in 2006, but the strategy process started in 2003, was approved in 2005, and the evaluation found evidence that the 2005 strategy was influencing ADB's programming in 2005; see Appendix 4. Therefore 2005 is taken as a dividing point in ADB's programming over 1999 to 2008. ADB. 2009. Proposed Loan to People's Republic of Bangladesh: Small and Medium Enterprise Development Project. Manila.

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grant in the sector-wide approach led by ADB,99 distorting the amount and share for education. A bigger change took place in the sub-sectors. Among the 17 subsectors financed under the 2005 country strategy, 10 were the same as in the 1999 strategy. 59. Compared with financing for projects and programs, ADB's financing for advisory technical assistance (ADTA) changed more under the 2005 country strategy. Table 7 shows ADTA by sector under each country strategy. Under the 1999 country strategy, ADB approved ADTA in 9 sectors and 17 sub-sectors. Under the 2005 strategy, through the end of 2008, ADB had financed ADTA in 7 sectors and 10 sub-sectors. The shares per sector changed significantly, with public policy replacing transport as the sector with the highest share, and there was much more financing for water supply and sanitation. Table 7: Advisory Technical Assistance to Bangladesh, 1999 to 2008
Sectora Public Policy Transport Energy WSS Finance ANR Education Health Industry Total 1999 to 2004 Share $ million (%) 3.40 20 4.29 25 3.34 19 0.47 3 2.86 17 0.55 3 0.50 3 1.17 7 0.72 4 17.29 100 2005 to 2008 $ million 4.75 2.42 2.25 3.39 0.00 1.20 1.24 0.45 0.00 15.71 Share (%) 30 15 14 22 0 8 8 3 0 100 Total $ million 8.15 6.71 5.59 3.86 2.86 1.75 1.74 1.62 0.72 33.00 Share (%) 25 20 17 12 9 5 5 5 2 100

ANR = agriculture and natural resources, WSS = water supply and sanitation. a Projects officially classified as "multisector" are broken down into their subprojects, and the sector classifications and totals of subprojects are used instead. Source: CAPE Team's calculations based on ADB's database.

60. Comparing the 1999 and 2005 country strategies, ADB's focus narrowed slightly for ADTA, and widened for projects and programs. Table 8 shows the focus as measured by a concentration index; the inverse of the concentration index gives the "effective number of sectors".100 The concentration of projects and programs fell from 0.26 under the 1999 strategy to 0.19 under the 2005 strategy, a loss of about 25%; the effective number of sectors grew from about four to about five. The concentration of ADTA rose from 0.17 to 0.20 between the 1999 and 2005 strategies, with the effective number of sectors falling from about 6 to about 5. Table 8: Concentration and Effective Number of Sectors, 1999 to 2008
Projects and Programs 1999 to 2004 2005 to 2008 0.26 0.19 3.9 5.1 ADTA 1999 to 2004 2005 to 2008 0.17 0.20 5.8 5.1

Concentration No. of sectors

Source: CAPE Team's calculations based on Table 5 and Table 6.

61. ADB is arguably the most focused among the four partners in the joint approach. Table 9 shows the concentration and effective number of sectors for the four partners, based on the

99 100

ADB. 2003. Report and Recommendation of the President to the Board of Directors on a Proposed Loan to Bangladesh on the Second Primary Education Development Program. Manila. Specifically, the Simpson concentration index, which is the sum of the squared shares. For example, the Simpson concentration index would equal 1.00 if the program focused on only one sector. See Lou Jost, "Entropy and diversity" OIKOS 113:2 (2006).

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Government's portfolio of ongoing projects.101 Japan has the highest concentration and lowest effective number of sectors, but ADB's focus is very close to Japan's. ADB's program is bigger than Japan's, so ADB could arguably have a wider focus. Table 9: Concentration and Effective Number of Sectors for the Government's Portfolio of Ongoing Foreign-financed Projects, June 2009
Concentration No. of sectors Japan 0.21 4.8 ADB 0.20 4.9 United Kingdom 0.16 6.3 World Bank 0.13 7.8

Source: CAPE Team's calculations based on Table 4.

62. Efforts to strengthen the program. ADB worked steadily from 1999 to 2008 to strengthen the program. Annual country portfolio review missions identified problems with project implementation, discussed those problems with the Government, and included action plans with efforts to solve priority problems. Some efforts focused on solving problems specific to ADB, like declaring effective certain loans that had become delayed; other efforts tried to deal with the root causes of delays, like reforming government processes. In 1999 ADB approved an advisory technical assistance project specifically for strengthening portfolio performance,102 followed by another in 2006 to strengthen the Government's monitoring and evaluation.103 63. Some problems with project implementation persisted from 1999 to 2008, while new ones appeared or rose in importance. The advisory TA approved in 1999 noted problems with government processes, recruiting consultants, procurement, and auditing; those were still "critical portfolio issues" in the portfolio review missions in 2008 and 2009. The 1999 advisory TA suffered some of the same problems with delays that it was trying to solve: the TA was signed 1.5 years after ADB approved it; consultants were first fielded 2.5 years after approval; and the TA was completed almost 7 years after approval.104 Later portfolio review also identified issues with resettlement, and collusion in bidding. 64. Slow progress in implementing projects is a systemic problem in Bangladesh, not unique to ADB-financed projects. Table 10 shows the average disbursement rate to percent elapsed time for all ongoing development projects in Bangladesh; the table also shows the average rate of physical progress to elapsed time.105 The average physical and financial progress is slow for all financiers, including the Government.

101

102 103 104 105

For the multisector projects of other aid agencies, the CAPE Team is not able to identify sector classifications for subprojects. For consistency across all four aid agencies, the multisector classification is kept and used in calculating the concentration index. ADB. 1999. Strengthening Project Portfolio Performance (TA 3336-BAN). Manila. ADB. 2006. Technical Assistance to Bangladesh for the Strengthening Results-Based Monitoring and Evaluation (TA 4880-BAN). Manila. ADB. 2007. Technical Assistance Completion Report: Strengthening Project Portfolio Performance (TA 3336BAN). Manila. The Government's database lists all projects, including investment projects and technical assistance; the database excludes programs. The Government tracks projects differently than ADB, so the Government's data and ADB's are not directly comparable.

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Table 10: Percent Physical and Financial Completion Relative to Percent Time Elapsed, Averaged Over all Projects in the Government's Portfolio (as of March 2009)
Physical Financial Government 0.61 0.58 Japan 0.51 0.50 Others 0.50 0.51 ADB 0.46 0.33 World Bank 0.33 0.28

Source: Implementation, Monitoring, and Evaluation Division, Ministry of Planning.

65. A statistical analysis shows that ADB's relative rate of physical progress is not significantly different from that of the Government; the lower rate of physical progress could be due to natural random variation in physical progress not related to ADB. Statistical analysis shows, however, that ADB's financial progress is significantly different from the Government's, even accounting for the sectors in which ADB finances projects. The gap between physical and financial progress is largest for ADB-financed projects, so there seems to be something unique about ADB's disbursement practices that result in lower disbursement rates. 66. The slow progress also shows up in low project completion rates and loan extensions. From 1999 to 2008 ADB approved 57 loans for 43 public sector projects and programs in Bangladesh. Among those 43 projects, 12 (28%) were expected to be completed by the end of 2008, but only 6 (14%) were actually completed. The average delay for the 6 completed projects was 1.3 years, and no project was completed on time; by the end of 2008, the 8 projects that were expected to be completed were delayed an average of 1.4 years (and counting). 67. ADB worked with the Government and other development partners in various ways to strengthen project implementation in Bangladesh. The development partners endorsed a joint statement on project implementation, presented by ADB at the Bangladesh Development Forum in 1999, leading to ADB's advisory TA on project implementation. The World Bank supported development of new procurement rules, adopted in 2003. ADB's annual portfolio review was held jointly with some development partners, including all four partners in the joint approach starting in 2005. ADB itself introduced "project readiness filters" in 2007, recently posted a specialist in procurement to the resident mission, and focused more efforts on monitoring ADBfinanced projects.106 68. One way for ADB to strengthen its program is to choose the type of loan to suit the project or program. Each of ADB's country strategies, for example, pledged to use more sector development program (SDP) loans. Table 11 shows the types of loans for public sector projects approved under each country strategy. Project loans are the most common type, but the percentage of project loans and amounts financed fell under the 2005 country strategy. Project loans were replaced mainly by SDP loans. Table 11: Types of Public Sector Loans to Bangladesh, 1999 to 2008
Type of loan Project SDP Sector Program Total 1999 to 2004 $ million Share (%) 1381.2 58 336.0 14 667.3 28 0.0 0 2384.5 100 2005 to 2008 $ million Share (%) 1090.8 45 780.0 32 428.0 17 150.0 6 2448.8 100 Total $ million Share (%) 2472.2 51 1116.0 23 1095.3 23 150.0 3 4833.3 100

Source: CAPE Team's calculations based on ADB's database. SDP = Sector Development Program Loan

106

Background papers or issues notes for the annual country portfolio review missions describe ADB's efforts to strengthen project implementation, including systematic efforts and efforts focusing on ADB-financed projects.

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69. Delegating loan administration to the resident mission could improve performance, since loans administered there have higher disbursement rates. For ongoing project loans, the average ratio of the disbursement rate to the percentage of time elapsed is 0.65 for loans administered at the resident mission, and 0.13 for loans administered at ADB headquarters (the ratio would be 1.00 if disbursement was constant and projects finished on time). On average project loans administered at the resident mission and at headquarters are behind schedule, but projects administered at headquarters are further behind.107 70. ADB has steadily delegated more loans to the resident mission. In 1999, the resident mission was responsible for administering 11 loans. From 1999 to 2008, an average of 2 more loans per year were delegated to the resident mission, bringing the total to 32 loans at the end of 2008. Despite more delegation, there is no sign of a significant rise in disbursement rates, or an improvement relative to the ADB average. As shown in Table 12, disbursement rates have varied year to year, for Bangladesh and for ADB as a whole. The difference between the disbursement rate for Bangladesh and the ADB average was larger in 2008 than in 1999.108 Table 12: Loan Disbursement Ratios for all ADB countries, and for Bangladesh
1999 All loans ADB average Bangladesh Project loans ADB average Bangladesh 22.2 21.8 17.6 22.6 2000 20.5 21.8 18.3 19.3 2001 20.5 17.3 19.4 17.3 2002 22.2 15.4 16.3 15.4 2003 20.2 15.8 17.1 15.8 2004 17.7 10.7 14.2 8.1 2005 20.7 13.3 14.6 10.8 2006 20.7 16.0 16.5 14.8 2007 17.7 13.3 17.4 10.2 2008 29.5 24.3 20.3 21.9

Source: ADB Central Operations Service Office database; ADB Controller's Department reports.

71. The percentage of loans delayed beyond the original deadline for loan effectiveness fell significantly between 1999 and 2008. For loans approved from 1999 to 2004, all loans were delayed beyond the deadline. The rate fell to 80% in 2005, 75% in 2006, and 33% in 2007, rising to 66% in 2008.109 A statistical analysis shows a significant change in the rate of delayed effectiveness across time, controlling for sector and type of loan. 72. Despite the slow progress in implementation, ADB's loans to Bangladesh have otherwise satisfactory performance, judging mainly by project completion reports. Of the closed loans approved after 1999, four have project completion reports; two were rated highly successful and two were rated successful. An extra 20 projects were completed related to 20 loans approved before 1999 but closed after 2001 (and so not covered in the previous CAPE), giving 24 completed projects between 2002 and 2008. Table 13 shows the ratings of those projects, by sector. Among the 24 ratings, 9 are based on independent evaluations or validations of project completion reports; the other 15 ratings are from project completion reports. Out of the 24 completed projects, 19 (79%) were successful or better.110 The only sector that stands out as

107 108

109 110

A statistical analysis of disbursement, controlling for time, type of loan, sector, and co-financing, shows that delegation to the resident mission has a positive and significant effect on disbursement. Although the averages for Bangladesh are mostly below the ADB average, the differences could be due to natural, random variation in the disbursement, or to factors unrelated to the country. A statistical analysis of ADB's disbursements across countries would be needed to conclude that disbursements to Bangladesh systematically differ from disbursements to other countries. The rates are per unique project and program, not per loan, to avoid double-counting when there are two loans (for example, ADF and OCR) for the same project or program. The ratings from project performance audit reports or project completion validation reports were used whenever they differed from the ratings in Project Completion Reports.

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performing weakly is ANR, where four out of seven completed projects were rated less than successful.111 73. At the end of 2008, 47 of the 57 loans approved between 1999 and 2008 were still ongoing; besides the six loans for completed projects, one loan had not been signed and was considered "at risk", while three had been signed but were not yet effective. The one loan at risk is for a regional project, delayed by other countries in signing the multilateral cooperation agreement.112 According to project performance reports, 5 loans (10.6%) were rated highly satisfactory in progress towards goals, while 42 (89.4%) were rated as satisfactory. Table 13: Ratings of Projects Completed 2002 to 2008
Sector Energy Transport Education ANR WSS Multisector Health Finance Total
a

Unsuccessful 2 2

Partly Successful 2 1 3

Successful 2 3 3 3 1 2 1 15

Highly Successful 2 2 4

ANR = agriculture and natural resources, WSS = water supply and sanitation. Source: Project Completion Report, Validation Reports, and Project Performance Audit Reports

74. Coordination efforts. In addition to strategic partnerships, ADB has built project-level partnerships. In 2003 ADB led a group of 10 other development partners in a sector-wide approach (SWAp) to supporting primary education in Bangladesh.113 The SWAp is still ongoing, and seems to have strengthened Government ownership, improved coordination among the partners, and helped open access to education. As of 2008, ADB is leading a group of three other development partners to first design and later build a bridge over the Padma River.114 The cost of the bridge, estimated at $2.4 billion, is beyond the scope for any single development partner, and so financing the construction of the bridge will require strong financing partnerships. 75. ADB is also active in the Local Consultative Group. The LCG's effectiveness has varied over time, but ADB has stayed involved and is one of the leaders of the LCG, serving in the Executive Committee, and leading three subgroups. 76. Financing for disaster risk management and emergency support. ADB's financing of disaster risk management (DRM) and emergency support rose significantly under the 2005 country strategy. As shown in Table 14, under the 1999 strategy 9% of ADB's financing went for DRM and emergency support.115 Under the 2005 strategy, 20% of financing went to DRM and emergency support. DRM therefore ranks as among the major areas of ADB's program, comparable with ADB's programs in transport and education.
111 112 113 114 115

A statistical analysis controlling for delays, sector experience, and other factors shows that ANR is the only statistically significant factor in predicting success or failure of a project. ADB. 2007. South Asia Subregional Economic Cooperation Information Highway Project–Bangladesh Component (Loan 2397). Manila. ADB. 2003. Report and Recommendation of the President to the Board of Directors on a Proposed Loan to Bangladesh for the Second Primary Education Development Program. Manila. ADB. 2007. Report and Recommendation of the President to the Board of Directors on a Proposed Loan to Bangladesh for the Padma Multipurpose Bridge Design Project. Manila. ADB. 1998. Report and Recommendation of the President to the Board of Directors on a Proposed Loan to Bangaldesh for Floor Damage Rehabilitaion. Manila.

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Table 14: Financing for Disaster Risk Management and Emergency Support, 1999 to 2008
Type of loan DRM-Specific DRM-Related Total 1999 to 2004 $ million Share (%) 187.0 8 26.6 1 308.9 9 2005 to 2008 $ million Share (%) 476.3 19 19.3 1 495.6 20 Total $ million Share (%) 663.3 15 45.9 1 709.2 15

Source: CAPE Team's calculations based on ADB's database.

77. Most of ADB's financing for DRM has been for projects specifically related to DRM, but about 1% has been for DRM-related subprojects of project that are otherwise not DRM. This evaluation found 10 projects that could have had DRM-related subprojects, based on lessons learned; among those 10, only 4 included relevant components. Similarly, the evaluation found 17 project preparatory technical assistance (PPTAs) and 6 advisory technical assistance (ADTAs) that could have included DRM issues based on their goals, but only 6 of the 17 PPTAs and 3 out of the 6 ADTAs included relevant components. (See section V.C and Appendix 9 for further discussion of DRM.) 78. Response to commitments under the Paris Declaration. ADB's program from 2005 to 2008 followed through on most of ADB's commitments in the Paris Declaration, and in the 2005 country strategy. Table A5.5 in Appendix 5 lists the commitments and ADB's response. For example, ADB committed to supporting the Government's priorities; the four sectors with the highest shares in the Annual Development Programme (Table 2) are also the top four in ADB's financing of projects and programs (Table 6).116 The two commitments where ADB and the other development partners have made little progress since 2005 are in building and strengthening country systems, and joint monitoring of results.117 The development partners have made some progress, however, in using the country's procurement systems. 79. Programming relative to ADB's 2001 long-term strategic framework. ADB-financed projects covered all parts of ADB's 2001 long-term strategy. Table 15 shows how loans approved from 1999 to 2008 were classified by "core strategic area" and "crosscutting theme."118 The lowest financing (17% of financing) is for "Inclusive Social Development, the highest (96%) is for "Capacity Development." Regional cooperation is also a relevant theme, but is pursued mainly through other means besides loans and so is not shown in the table.

116

ADB should support the Government's priorities by following the Government's requests, subject to ADB's country strategy. The Government's requests for support from ADB do not have to match the Government's overall development priorities for the country. 117 For a thorough evaluation of implementation of the Paris Declaration, see Natural Resources Planners Ltd. 2008. Evaluation of the implementation of the Paris declaration: Case study at Country level Bangladesh. 118 ADB classifies loans without estimating the share of the loan that is relevant to the classification. The table therefore uses the total amount of the loan in estimating the share of financing per strategic area and theme. A more accurate classification would be based, for example, on subprojects, and would show lower shares per strategic area and theme.

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Table 15: Share of Financing and Share of Projects across Strategic Areas and Themes119
1999 to 2004 $ million Projects Core strategic area Sustainable Economic Growth Inclusive Social Development Good Governance Crosscutting theme Private Sector Development Environmental Sustainability a Gender and Development a Capacity Development 82% 15% 45% 52% 71% 65% 92% 52% 17% 30% 39% 65% 74% 91% 2005 to 2008 $ million Projects 72% 18% 43% 45% 59% 53% 100% 90% 30% 40% 35% 45% 65% 95% Total $ million Projects 76% 17% 44% 48% 65% 58% 96% 70% 23% 35% 37% 56% 70% 93%

Gender and Development, and Capacity Development are themes under ADB's 2004 classification system, but are not crosscutting themes under ADB's 2001 long-term strategy. Projects considered to have significant gender components were those classified by ADB's Regional and Sustainable Development Department as belonging to category 1 (Gender and Development Theme) and category 2 (Effective Gender Mainstreaming). Source: CAPE Team's calculations based on ADB's database.

a

80. ADB financed just three private sector initiatives from 1999 to 2008. ADB helped finance the construction of a power station that expanded the country's generating capacity by 10%.120 ADB's efforts to finance other power projects were thwarted by the Government's resistance to following the required tendering procedures. Another initiative helped expand the country’s leading telecommunications company, bridging the gap between supply and demand and helping create jobs, especially for the poor.121 The third initiative, an equity investment in a securities central depository, stemmed from a public sector loan, the Capital Market Development Program loan.122 Otherwise, ADB's support for private sector development through public sector lending focused on agribusiness; microfinance; contracting some public sector responsibilities (for example, road maintenance) to private sector firms; and supporting small- and medium-sized enterprises. 81. ADB mainstreamed gender issues in all projects in ANR, education, health, industry, finance, transport, and WSS. Energy projects are the only ones where gender issues were not mainstreamed; ADB-financed energy projects have been mostly electricity and gas production and generation, with little scope for gender issues. A report on gender issues in ADB's program in Bangladesh found that, from 1998 to 2007, 50% of projects included gender as a theme or mainstreamed gender issues, compared to 32% of projects in ADB overall.123 Based on ADB's gender assessments, reports, and interviews with staff, gender mainstreaming produced three results: (i) higher participation by women in projects, particularly through community-based organizations; (ii) more equitable access to resources, including skills training, technology, and government services; and (iii) higher income, greater financial security, and more livelihood options for women. Several factors contributed to gender mainstreaming: the rising number of loans that aim to cut gender disparities; raising gender issues in early stages of loan preparation; including gender action plans in projects, and allowing flexibility in carrying out

119

Themes are those in the 2004 classification system. Theme classifications of projects approved before 2004 were converted to the 2004 classification system. All thematic priorities that are significantly supported by a project (i.e., not only those listed in the RRPs) are included. 120 ADB. 2006. AES Meghnaghat Power (Private Sector Investment 7165). Manila. 121 ADB. 2004. Grameenphone Telecommunications Expansion (Private Sector Investment 7194). Manila. 122 ADB. 2006. Central Depository Bangladesh Limited (Private Sector Investment 7177). Manila. 123 ADB. 2009. Institutionalizing Gender Equity: The Experience of the Bangladesh Resident Mission. p. 7.

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those action plans; using TA grants to support gender mainstreaming; gender training; and appointing a gender specialist in the resident mission.124 82. ADB has a long history supporting regional cooperation and integration in South Asia, primarily through three levels: (i) the subregional level through the South Asia Subregional Economic Cooperation (SASEC) program; (ii) the regional level through the South Asian Association for Regional Cooperation (SAARC); and (iii) the interregional level through the Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation (BIMSTEC). ADB supported SAARC and BIMSTEC with policy and sector studies for the SAARC secretariat and BIMSTEC working group. Support for the SASEC program focused on prioritizing and implementing projects and programs that could yield immediate results. Activities under the SASEC program include bringing regional governments together in a common platform for discussion of key issues, and supporting background studies. 83. From 1999 to 2008, ADB approved several Regional TA (RETA) projects for SASEC. Two RETAs helped prepare the SASEC Information Highway Project, the only public sector loan to Bangladesh with a regional cooperation theme. Five other RETAs for SASEC, totaling $1.75 million, had various aims, including identifying barriers to trade, harmonizing customs procedures, and others. 84. ADB’s work through the SASEC program has been slow. Some of the RETAs were delayed for 2 to 3 years from problems in deciding dates for meetings, and slow responses. The loan agreement for the SASEC Information Highway Project, approved in December 2007, was signed only in March 2009, and the loan became effective in July 2009. Several SASEC projects programmed under the 2006 Regional CSP for South Asia have been postponed by 1 or 2 years because of the long consensus-building process within and among countries.125 85. Status of the results framework. ADB's results framework in the 2005 country strategy includes 54 monitoring indicators and targets allocated across the three pillars in the country strategy. Table 16 shows the monitoring indicators and their status as of August 2009 (Table A5.7 in Appendix 5 gives details). The monitoring indicators are outlined by pillar as in the results framework, and also by sector. By pillar, social development has the fewest indicators (14/54, or about 24%). By sector, the indicators are concentrated in energy (16) and transport (15), the top two sectors in ADB's financing of projects and programs (Table 6).

124

125

ADB included three indicators related to gender in the revised monitoring indicators for the results framework, but the indicators did not include baselines, and so it is not possible to judge progress. ADB. 2009. Bangladesh: Country Partnership Strategy Midterm Review 2006–2010. Manila. As of October 2009, ADB is drafting a completion report of its regional cooperation assistance programs in South Asia.

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Table 16: Status of Monitoring Indicators from the Results Framework of the 2005 Country Strategy and Program
Status Some No progress progress 3 1 13 17 6 7 1 2 1 0 0 17 3 2 4 9 2 3 2 0 2 0 0 9

Achieved By Pillar Sustainable Growth Social Development Good Governance Total By Sector Energy Transport Education WSS Public Policy Finance ANR Total 5 5 4 14 6 2 2 2 1 0 1 14

No data 8 6 0 14 2 3 1 3 0 4 1 14

Total 19 14 21 54 16 15 6 7 4 4 2 54

ANR = agriculture and natural resources, WSS = water supply and sanitation. Source: Table 5.7 in Appendix 5.

86. Out of 54 indicators, 14 (26%) hit their targets by 2009. Under the 2005 strategy ADB seems to have contributed the most to "Good Governance." Under that pillar of the country strategy, 17 of the 21 indicators have made progress towards their targets, but only 4 indicators have hit their targets. None of the sectors stand out as having made notable progress towards their targets by 2009. 87. ADB tracked progress on the results framework in its annual portfolio reviews, and issued a revised set of monitoring indicators in its mid-term review of the 2005 country strategy. The number of indicators rose from 54 to 74, with 29 (41%) achieved by the time of the midterm review. The revised indicators put much more emphasis on governance, raising the indicators under the Good Governance pillar to 40, and including 16 indicators related to ADB's governance theme. Table A5.8 in Appendix 5 shows the status of the revised indicators. 88. Recent programming versus "Strategy 2020". ADB introduced a new long-term strategy, called "Strategy 2020", in April, 2008.126 Although ADB's program under this evaluation was only briefly subject to the new strategy, comparing Strategy 2020 with ADB's recent program shows how the program will need to change in the future. 89. Table A5.5 in Appendix 5 lists some of the targets from "Strategy 2020" that are relevant to country programming.127 Although these targets apply to ADB overall and not necessarily to each country, a major ADB program like that in Bangladesh should at least come close to the targets. The table shows that ADB's financing in Bangladesh is already consistent with the targets for financing in the five "core areas", and for environmental management. 90. Strategy 2020 aims for co-financing to eventually exceed ADB's standalone financing. ADB's co-financing has been erratic, but in 2008 was $459 million versus approvals of $592 million. ADB's co-financing is likely to rise significantly if ADB's approves financing for the
126 127

ADB. 2008. Strategy 2020: The Long-Term Strategic Framework of the Asian Development Bank (2008-2020). Manila. The targets relevant to country programming are based on the CAPE Team's interpretation of "Strategy 2020", and so are not official.

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Padma Bridge. The bridge is estimated to cost $2.4 billion, and will likely to involve substantial co-financing from at least three other development partners. 91. Another target from Strategy 2020 is for ADB's knowledge products to be well-regarded. ADB's macroeconomic analysis and reporting on Bangladesh (the "Quarterly Economic Update", and country chapter in the Asian Development Outlook) have a high profile, and are well-regarded by the Government and development partners.128 ADB's 2005 country strategy has reportedly been a useful reference.129 The evaluation has no information on the perceived quality of ADB's other knowledge products. 92. The main gap between ADB's recent program and "Strategy 2020" is in ADB's support for the private sector. Strategy 2020 aims for half of ADB's work to be related to the private sector by 2020. From 2005 to 2008, ADB did not finance any private sector initiatives in Bangladesh (all three private sector initiatives covered in this evaluation were approved before 2005). From 2005 to 2008, four public sector loans included sub-projects related to private sector development, worth $296.1 million out of $2448 million public-sector approvals (12%).130 IV. TOP-DOWN ASSESSMENT

93. The top-down assessment has three parts: (i) ADB's strategic positioning in the country, including the strategy's relevance and focus; (ii) ADB's performance in following the strategy and carrying out the program; and (iii) ADB's contribution to long-term development results that followed from carrying out the program. The following discusses each part before presenting the overall top-down assessment. A. Country Positioning

94. Strategic relevance. ADB's country strategies have been highly relevant to Bangladesh's needs and the Government's priorities. ADB's strategies and program have been supporting the Government's priorities (compare Table 2, Table 4, Table 6, and Table A5.1 in Appendix 5). As shown in Table 2 and Table 3, the Government has been responding to the country's binding constraints to growth. ADB's support has therefore been relevant to the Government's priorities and the country's binding constraints. Each part of ADB's program was also evaluated as relevant (Appendices 9 to 12). 95. ADB's 2005 country strategy was highly relevant to ADB's policies and strategies, especially ADB's 2001 long-term strategy. As shown in Appendix 5, the 2005 strategy was presented closely following the framework in the 2001 long-term strategy, with detailed points covering the core strategic areas and crosscutting themes. The 1999 strategy was also close to ADB's 2001 long-term strategy. Therefore, ADB's country strategy from 2001 to 2005 also supported the long-term strategy. 96. The Government and other stakeholders in Bangladesh recognize the relevance of ADB's strategies. Appendix 8 shows how the Government and other stakeholders perceive
128

129 130

In interviews for this evaluation, staff of the World Bank's office in Bangladesh reported that the World Bank did not publish periodic macroeconomic reports on Bangladesh in part because ADB's reports were already covering the issue. A country strategy is not a "knowledge product", although the 2005 strategy has been used that way. See section III.A. The financing for private sector development is based on subprojects, and so the share of financing for private sector development is different from that shown in Table 15. See footnote 109.

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ADB's relevance (and other characteristics), from interviews and a survey done for this evaluation. The majority of the respondents across all categories rated ADB as relevant or highly relevant. The interviews included high level Government officials familiar with ADB, including the current and all available previous Joint Secretaries of the Economic Relations Division. All high-level Government officials rated ADB's support as relevant, with 86% rating it as highly relevant. 97. Sector selectivity. ADB's 2005 country strategy recognized the importance of sector selectivity, but did not have a clear strategy for sharpening sector focus. The strategy made a vague pledge to "focus on fewer sectors" and pledged to exit from eight subsectors, but did not explain the reasons why ADB should exit from them. 98. As a long and detailed strategy, the 2005 country strategy is inevitably less focused overall. The 2005 strategy includes many general (and so unfocused) points that are already covered under ADB's overall strategies and policies, like mainstreaming environmental concerns. Although the 2005 strategy includes many specific points (like a focus on the DhakaChittagong transport corridor), the general points dilute the specific ones. The large number of points covering each part of ADB's long-term strategic framework means that the country strategy is highly focused on ADB's overall strategy, but the country strategy is diverse and not as focused on Bangladesh. 99. Despite the broad spread of the country strategies, they remain highly focused on ADB's core competencies. ADB's core competencies closely match the needs of Bangladesh and the priorities of the Government—especially financing infrastructure—so it is hard to stray from ADB's expertise in Bangladesh. 100. Strategic continuity. The 2005 country strategy largely continued the direction of the 1999 country strategy. The two country strategies aimed to support the same sectors (Table A5.1, Appendix 5). That was a suitable choice of sectors for the 2005 country strategy, given that ADB had long experience in those sectors in Bangladesh, and the 2003 CAPE did not call for ADB to leave any sectors. 101. In each country strategy ADB aimed to discontinue support for some subsectors. Since continuity is naturally harder to maintain over subsectors, cutting subsectors can strengthen continuity (and focus) in the remaining subsectors. The subsectors to be cut were not among those subsectors where ADB had reasonable continuity (see part B), so the strategy of cutting subsectors would have strengthened continuity over the remaining subsectors. 102. Strategic partnerships. ADB's main strategic partnership was the "joint approach" to the 2005 country strategy. The joint approach apparently caused some resentment among the development partners that were excluded. In interviews for this evaluation, the management and staff of development partners not involved in the joint approach reported that the joint approach caused divisions among development partners, and that relationships were at least partly impaired. 103. The joint approach was evaluated separately from this CAPE.131 ADB made a major investment in the joint approach to the 2005 country strategy. Despite those efforts, the partnership started in the joint approach has not been very deep, apparently limited to
131

Fostvedt, Nils, Paul Thornton, and Walter Kolkma. 2009. "Donor Coordination and Harmonisation in Bangladesh". ADB, Manila.

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management and not extending to staff.132 Also, the partnership did not follow through in its pledge to jointly monitor results. Another partnership, in water and sanitation, looks promising, but should learn the lessons from the joint approach to the country strategy and ensure that staff participate fully in the partnership. 104. The joint approach to the country strategies has also led to other partnerships. In 2007 ADB led the formation of a partnership with the Government, the World Bank, and the governments of Denmark, Japan, and Republic of Korea, to support water supply and sanitation. In 2008 the four partners joined the Government and 11 other development partners in a "Joint Statement of Intent on Developing a Joint Cooperation Strategy for Bangladesh". The 16 partners are planning to produce a document explaining how they will work together from 2010. 105. Consistency between strategy and program. ADB has generally followed the points in the strategies related to programming loans and ADTA. Under the 1999 strategy, ADB financed projects and programs only in the sectors listed in the strategy (compare Table 6 and Table A5.1, Appendix 5). The 1999 strategy aimed to cut the number of subsectors to 15, but missed that goal by 1. The 2005 strategy aimed to quit eight specific subsectors, but quit only four of the eight. 106. ADB has been gradually shifting to using more sector development program loans, following the 1999 and 2005 country strategies. ADB should continue that trend, provided it is driven by realistic assessments of the capabilities of executing agencies and the suitability of SDP loans. Some of the rise in SDP loans, though, has come at the expense of sector loans, which can be used in similar situations. As shown in Table 11, project loans have been the most common loans since 1999. With project loans, ADB is more involved in developing and implementing projects. Project loans are therefore better where organizational capabilities are weaker, as is the case for many executing agencies in Bangladesh. ADB should consider using SDP and sector loans when executing agencies in Bangladesh get stronger. 107. The program seems to generally follow the country strategies, but comparing the strategy and program is not sufficient to judge consistency with the strategy. The strategy and program could be consistent if the strategy was merely describing an existing program or the Government's pre-determined agenda for ADB. Programming must also be judged through projects that could have been programmed but were not. 108. The evaluation found six requests from the Government for ADB support, listed in Table A5.6 in Appendix 5 (sometimes the Government's requests are informal; the six are the only written requests found on record). Two requests were not consistent with ADB's strategy, and ADB rejected them. Among the four requests consistent with ADB's strategy, (i) ADB accepted one and eventually approved a loan; (ii) ADB responded positively to one, but the Government has so far not followed up; (iii) after some discussions, the Government chose not to pursue one; and (iv) one request was funded instead by another development partner. 109. These six requests and ADB's replies show the relevance of ADB's country strategies, a healthy relationship between ADB and the Government, and consistency in applying the strategies. The fact that ADB rejected two requests shows that ADB maintains discretion over its program, and so a country strategy is potentially relevant to and useful in programming.

132

Footnote 132.

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Despite the rejections, Government officials interviewed for this evaluation expressed a high regard for ADB and appreciated ADB's responsiveness to the country's needs (see Appendix 8). 110. Overall rating for country positioning. ADB's country positioning is rated as "high". The strategies have been focused on helping to relieve Bangladesh's binding constraints to growth, and on serving the Government's priorities; coordinated across other development partners; closely aligned with ADB's overall strategies and policies; and consistent with ADB's core competencies. The 1999 country strategy was short, simple, and included specific principles for guiding operations. The 2005 strategy was thorough, detailed, and appreciated by Government and other development partners, but could have been better if it was simpler, easier to process, more specific to Bangladesh, and more focused on the actual choices facing ADB. Table 17 outlines the assessment of country positioning. Table 17: Summary of the Assessment of Country Positioning
Criterion Strategic Relevance Sector Selectivity Strategic Continuity Strategic Partnerships Strategy-Program Consistency
Source: CAPE Team's assessment

Assessment High. Consistent with Government's top priorities and ADB's strategies. High. Focused on ADB's core competencies, but subsector strategic choices could be clearer. High. Aimed to support key sectors and subsectors. High. Well coordinated across development partners. Substantial. Strategy clearly guided programming, except for subsectors. Overall assessment: High

B.

ADB's Performance

111. Responsiveness. ADB has been responsive to the country's needs and the Government's requests. The strategies are closely aligned with the country's needs and the Government's priorities, and programming has generally followed the strategies, especially for sectors. Although ADB did not accept all of the Government's requests, in each case ADB responded appropriately to the Government's requests, especially those that were outside ADB's strategy. 112. ADB has been most responsive to helping the Government cope with emergencies. In 2000, ADB approved a loan for flood damage rehabilitation. In 2005 and 2008 ADB approved emergency loans for disaster rehabilitation. Also in 2008, ADB approved an emergency loan related to food security.133 ADB approved those emergency loans within 1.5 to 3.5 months of agreeing to the Government's request, compared with at least eight months and sometimes several years for non-emergency loans.134 In 2002 and 2004, ADB approved two other loans related to floodplain management, and financed $75 million for disaster risk management through subprojects and savings from other loans. See Appendix 9 for details of ADB's support for disaster risk management. 113. Stakeholders recognize and appreciate ADB's responsiveness. In interviews and surveys for this evaluation, a majority (69%) recognized responsiveness to the country's
133

134

To help Bangladesh cope with the international economic slowdown, on 13 October, 2009, ADB approved a loan of $500 million under the countercyclical support facility (CSF) and three loans totaling $244 million under the public expenditure support facility (PESF) for Bangladesh. The approval date of a loan is certain, but starting time is less clear. Among non-emergency loans, the shortest processing time was for the Dhaka Clean Fuel Project, which appears to have entered the pipeline on 23 January 2002, and was approved on 26 November 2002. More typical is the Skills Development Project, which appears to have entered the pipeline on 1 July 2005, and was approved on 6 June 2008.

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development needs as one of ADB's strengths, with 86% of high-level Government officials rating responsiveness as one of ADB's strengths (see Appendix 8). 114. ADB could be more responsive if it worked more with executing agencies and ministries early in the Government's processing of development projects. As discussed in section II, the Government is open to development partners being involved early in the Government's process, even to the point of proposing their own projects. To be more responsive to the Government's needs while ensuring Government ownership, ADB could consult more frequently with executing agencies, ministries, and the Ministry of Planning on their needs, and work together to develop proposals for ADB financing. 115. Focus in programming. The 1999 strategy aimed to sharpen ADB's focus by cutting the number of subsectors in half. As mentioned in part III.B, programming under the 1999 strategy missed that goal by one subsector. The 2005 country strategy was less specific about focus, claiming only that ADB would "focus on fewer sectors." Programming under the 2005 strategy became more focused for ADTA, as ADB dropped two sectors and seven subsectors (Table 7). Financing projects and programs became less focused, however; ADB continued supporting the same total number of sectors, but ADB's concentration fell and effective number of sectors rose (Table 8). The 2005 strategy aimed to drop eight specific sub-sectors, but ADB has continued financing in four of those eight. Nevertheless, ADB's focus as measured by effective number of sectors is at least as good as that of its partners in the joint approach (Table 9). 116. Stakeholders in Bangladesh are satisfied with ADB's focus. In interviews and surveys for this evaluation (see Appendix 8), the majority across all categories (with one exception) thought there was no need for ADB to focus on fewer sectors, or drop any sectors; the only exception is the current and previous Country Directors at ADB's resident mission, all three of whom thought ADB should drop some sectors. Large majorities across all categories agreed that ADB had been working with the right levels of Government, and in the right areas of the country; all highlevel Government officials agreed. 117. Stakeholders are also generally satisfied with the sectors that ADB supports. The interviews and surveys asked which sectors ADB should support. The sectors with the top three ratings are energy (chosen by 81% of respondents), education (77%), and ANR (72%), which are among the top four sectors in ADB's recent program (Table 6). 118. After those three sectors, there is no clear consensus. The sector with the fourth highest rating was health, chosen by 46% of respondents, but only 14% of high level Government officials and 29% of development partners. Health has been only a small part of ADB's program (Table 6), already has four significant financiers (Table 4), and does not appear to be an area where more support is needed (Table 5). ADB's health program focused on public-private partnerships in urban primary health care, an innovative approach in an important subsector; an independent review of the ongoing program suggests the approach is effective, so continuing support focused on urban primary health may be justified. 135Only 38% overall chose transport as one of ADB's sectors, but 86% of high level Government officials and 86% of development partners chose that sector. Transport is the second ranked sector in ADB's recent program (Table 6), one of ADB's core competencies, the highest priority for the Government (Table 2),
135

Anne Austin, et al. 2009. Report of the Mid-term Review of the Independent Consultant Team, Loan 2172BAN(SF)/ADB Grant 0008-BAN/SIDA Grant 0009/DFID Grant 0010: Second Urban Primary Health Care Project. Manila.

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and a sector with potential for more support (Table 5). The argument for transport as one of ADB's sectors is much stronger than the argument for health. 119. Continuity in Programming. ADB has been able to maintain a regular pattern of financing for projects in four sectors: energy; ANR; transport; and education. In those sectors, the average length of time between approved financing is less than a year. ADB approved financing for water supply and sanitation projects in 2006 and 2007, so that a relatively new sector is starting to follow a similar pattern of regular approvals. ADB has not approved regular financing in public policy and in health; ADB has approved financing for just one project or program in each of those sectors. 120. It is harder to maintain continuity in subsectors, but ADB has provided regular financing for projects in roads and highways, and energy sector development. ADB has financed projects in those sub-sectors every year or two, on average. In 10 of the 23 subsectors ADB has supported since 1999, ADB has financed only one project. 121. ADB has been able to maintain a regular pattern of ADTA in governance, energy, and transport and communications. In those sectors, the average time between approved ADTA has been less than a year for public policy, and a bit longer than a year for the two others. ADB has provided less regular advice for WSS, ANR, education, and health. ADB seems to have stopped providing ADTA for finance, and for industry and trade. At the sub-sector level, ADB has provided regular ADTA only for energy sector development. 122. Coordination. ADB's project-level partnerships in education (the SWAp supporting primary education) and transport (Padma bridge design project) have strengthened ADB's program and contributed to Bangladesh's development. The ongoing SWAp for education strengthened Government ownership and leadership, improved coordination among the development partners, and seems to be opening access to education.136 The Padma Bridge has the potential to transform southwestern Bangladesh, but the estimated cost ($1.5 billion) is beyond the scope of ADB to finance it alone. ADB's relationships with other development partners will be vital to financing and building one of Bangladesh's most important future development projects. 123. Stakeholders in Bangladesh recognize and appreciate ADB's contributions to coordination. In interviews and surveys for this evaluation, a majority rated ADB's efforts in coordination as satisfactory or better. All high-level Government officials rated ADB's efforts as satisfactory or better, with a majority (57%) rating ADB's efforts as highly satisfactory. Among the development partners, 79% rated ADB's efforts as satisfactory or better, with 43% rating it as highly satisfactory. 124. The resident mission seems to be working effectively with other development partners in Bangladesh, but staff in headquarters can do better. Officials interviewed for this evaluation noted cases where staff from headquarters did not understand the work of other development partners and made inappropriate demands on them. Staff in headquarters need to ensure that they understand the work of other development partners in their sectors, and when in Bangladesh should seek out relevant agencies to keep them up-to-date on ADB's work.

136

ADB. 2008. Bangladesh Education Sector Assistance Program: What Worked Well and Why under the SectorWide Approach? Manila.

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125. Portfolio management. The success rate of ADB-financed projects indicates that ADB has been adequately managing its portfolio, despite the systemic problems of slow progress of projects in Bangladesh. All projects in Bangladesh proceed slower than expected, ADB's included. Despite the slow progress, 79% of the completed projects have been successful (Table 13), and the ongoing projects are expected to eventually meet their goals. ADB's success rate for completed projects is comparable with that of the World Bank, which reported a 58% success rate (15 of 26) on projects completed from 2002 to 2008.137 ADB had only one project at risk at the end of 2008, a regional project delayed by the other countries. The main limitation in ADB's portfolio management is disbursement, which is lower than the ADB average (Table 12), and lower compared with physical progress than for projects financed by the Government or other development partners. 126. Although the portfolio is performing adequately on average, parts of the portfolio are doing less well. Land acquisition, procurement, and co-financing have been persistent problems for transport projects (Appendix 10). ADB and the Government are aware of these problems, but the evaluation found little progress on solving them. Another problem is start-up delays from projects not being "shovel-ready." These start-up delays are caused by ADB's approach to project design, where detailed design starts long after a loan is approved, usually financed by the loan itself. Instead, the detailed design should be ready close to the time a loan is approved (see Appendix 10 for further discussion of implementation issues in transport projects). 127. ADB can strengthen its program by delegating more authority to the resident mission, and improving coordination among headquarters and other development partners working in Bangladesh. In interviews and surveys for this evaluation, a majority thought that the resident mission needed more authority; 57% of high level Government officials and 71% of development partners agreed (Appendix 7). The local offices of other development partners have more control over decision making and resources than does ADB's resident mission in Bangladesh. The relatively weak position of ADB's resident mission hinders its efficiency and responsiveness. In interviews and a workshop held to discuss preliminary findings of this CAPE, Government officials said that more delegation of authority to the resident mission would strengthen project implementation. The resident mission would need more resources to go along with the higher delegation, including more staff with a suitable mix of skills. 128. Overall rating. ADB's performance is substantial. Programming has generally followed the country strategies, although the focus of financing at the sector and sub-sector levels has broadened slightly. When the Government has specifically requested ADB's support, ADB has responded appropriately, based on its strategy and the country's needs. ADB has been especially responsive in emergency assistance, although that is not an area of its highest competencies. ADB has maintained continuity in its most important sectors, and has used suitable types of loans. ADB implements projects in a challenging environment, where all projects are delayed, but ADB's project implementation could be better, especially for disbursements and for transport projects. Table 19 outlines the ratings for ADB's performance.

137

Based on the CAPE Team's analysis of the World Bank's completion reports. The World Bank reported ratings on 26 projects completed in Bangladesh from 2002 to 2008, with 15 projects rated successful or better. There is no statistically significant difference between ADB's success rate and the World Bank's.

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Table 18: Summary of the Assessment of ADB's Performance
Criterion Responsiveness Focus in programming Continuity in programming Coordination Portfolio management Assessment High: Quick response to requests for emergency loans Substantial: Sector focus broadened slightly for projects and programs, but focus at least as good as that of other partners. High: Maintained support for main sectors and subsectors. Substantial: Effective partnerships in two major projects Substantial: Good success rate (79%) but slow disbursements, albeit in a difficult environment. Overall assessment: Substantial

C.

ADB's Contribution to Long-term Development Results

129. Completed projects. ADB's PCRs and evaluations of completed projects do not assess contributions to development, but some of their findings are indicative of positive contributions. The average economic internal rate of return of completed projects is at least 21%, and 77% of the projects were judged effective or highly effective.138 130. Progress on results. ADB adopted managing for development results in 2004,139 and required country strategies to have results frameworks in 2005.140 The 1999 country strategy was not subject to managing for development results, and did not describe what results would follow from ADB's work. The following briefly focuses on ADB's monitoring indicators from the 2005 strategy (Table A5.7, Appendix 5). 131. Judging by the monitoring indicators from the 2005 country strategy (Table 16), ADB has made only a modest contribution to results. Overall only 14 out of the 54 indicators (26%) have hit their targets. The targets for the indicators were set for the mid-term review in 2008 (not for the end of the strategy in 2010). The mid-term review was postponed from 2008 to 2009 because the caretaker Government was still in charge in 2008, and so the indicators had an extra year to hit their targets. 132. The targets that were hit are spread evenly over the strategy's three strategic pillars of sustained growth, inclusive development, and good governance. Among the targets not yet hit, the most progress was in those targets under the strategy's good governance pillar, accounting for 76% (13 of 17) of the indicators with some progress. Among the targets under good governance, most of those hit or with some progress are in the energy and transport sector. Those two sectors also stand out as the sectors with the most progress. Thus, judging by the monitoring indicators in the 2005 country strategy, ADB's contributions were generally in governance, energy, and transport. 133. Similar conclusions follow from the revised monitoring indicators in the mid-term review of the 2005 country strategy. Among the revised indicators, 39% had hit their targets (29 of 74 indicators), and most of the success was in governance.

138

139 140

CAPE Team's calculations based on project completion reports, validation reports, or project performance evaluation reports. IED's reports were used whenever available. The economic internal rate of return is an average weighted by loan size, using the minimum rate whenever a loan financed multiple subprojects. ADF IX Tokyo meetings in December 2003, the Lisbon meetings in March 2004, and the ADF IX Donors’ Report in June 2004 (sections III, IV [Table 1], and VI [c]). ADB. 2004. Enhancing the Fight Against Poverty In Asia And The Pacific: The Poverty Reduction Strategy of the Asian Development Bank. Manila.

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134. It is not realistic or reasonable, however, to judge ADB's contributions by progress on the monitoring indicators. The original and revised monitoring indicators suffer from three main flaws. First, up to half of the indicators are in areas where ADB has no authority, as in "promulgation of a new highway code". Second, at least a quarter of the indicators are in areas where realistically ADB has limited influence, as in "improved adult literacy rate from 50% to 60%." Third, at least a quarter of the indicators are vague, as in "reduced vulnerability to floods". Many of the monitoring indicators suffer all three flaws. For almost all indicators, the Government, not ADB, deserves credit for the indicators that hit their targets, and (if they are the Government's targets) should be held accountable for those that did not. 135. A better approach would have been to develop monitoring indicators that are specific to ADB. The Government (possibly with ADB's support) should develop specific plans for meeting each target, and clearly identify the tasks where it needs ADB's support. ADB could then program and be held accountable for those tasks, but without taking credit or blame for the targets themselves. 136. Contributions from sector programs. This evaluation also covered seven parts of ADB's program, discussed in section V (one part, Disaster Risk Management, is not a sector). Those evaluations also considered ADB's contributions to development. Four programs were judged substantial: (i) energy; (ii) disaster risk management; (iii) urban development, water supply and sanitation; and iv) transport. The contributions in the three other programs were judged modest: (i) agriculture and natural resources; (ii) education; and (iii) public policy. No clear assessment of contributions emerges from the seven evaluations, and ADB's contributions can be described as modest to substantial. 137. ADB contributed substantially to governance in the energy sector. ADB helped the government develop and carry out reforms to cut power losses from theft and corruption, reduce political interference, and strengthen accountability. With the support of other development partners, ADB helped set up the Bangladesh Energy Regulatory Commission. ADB also helped create strong corporate governance in newly-created energy enterprises, ensuring they were operated on commercial lines, with sound practices for procurement and anti-corruption. 138. ADB's contributions in disaster risk management were from introducing cost-effective new technologies to control riverbank erosion, and supporting the development of an early warning system for flooding. The geo-textile revetments introduced in an ADB-financed project have proven more effective than other technologies in controlling bank erosion, and at a fraction of the cost. ADB could make a high contribution to development by promoting the adoption of the technology across Bangladesh (and in other countries). The flood warning system supported by ADB should have a high impact by cutting the death rate from floods. 139. ADB's support for urban water supply and sanitation contributed substantially to improved public health. ADB continued its program in WSS in secondary cities, took on a new and crucial role in Dhaka, and played a key role in starting a comprehensive WSS program among other development partners. In transport, ADB has been steadily working with the government and other development partners on policy reforms, and contributed substantially to the National Land Transport Policy and the Road Master Plan. 140. ADB's contributions in the other sectors are promising but limited. The caretaker Government invited ADB to support crucial reforms in anti-corruption and in separating the judiciary from the executive. Those reforms have major potential, but have started to falter early

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in the term of the elected government. Promoting private sector participation has been an important feature of ADB's work in ANR, but poor implementation has constrained progress. 141. Value added. ADB has made a significant financial contribution to development in Bangladesh through loans and grants. From 1999 to 2008, ADB's annual commitments have averaged 0.9% of the country's GDP, varying from 0.5% of GDP (in 2004) to 1.8% (in 2003). ADB's financial commitments are second only to the World Bank's. The value-added of ADB's financing is high, with ADB's lending terms far better than what the Government can get on the market (Appendix 4). 142. A good example of ADB's non-financial value added is introducing geotextile revetments to control riverbank erosion (Appendix 9).141 That innovation has been successful in the project where it was introduced, and has the potential for replication across the country; considering the importance of floodplain management in Bangladesh and the risks posed from flooding and riverbank erosion, the geo-textile revetments should eventually have a high impact. ADB should use the project as a showcase to promote adoption of the technology, and work to introduce and disseminate innovations in all projects. 143. The Government and other development partners recognize the value of ADB's financing, but do not perceive a strong value of ADB's non-financial contributions. In interviews and surveys for this evaluation, the majority across all respondents recognized lending on attractive terms as one of ADB's areas of value added; 86% of high-level Government officials recognized that area of ADB's value added. A majority recognized ADB's value added in providing expert advice, but only 43% of high-level Government officials recognized that. Less than half of the respondents recognized ADB's value added in contributing knowledge, and improving implementation, with only 29% and 14% of high level Government officials recognizing those areas. ADB's macroeconomic reporting, however, has a wide audience and is well regarded. 144. Contributions to ADB's strategies and themes. ADB's program in Bangladesh has covered all of the core strategic areas and crosscutting themes of ADB's 2001 long-term strategy (Table 14). Each area and theme has received a significant share of financing and of projects, except possibly "Inclusive Social Development" (17% of financing and 23% of projects). ADB has been active in regional cooperation, although the SASEC program has been slow. 145. The main limitation in ADB's contributions to themes is in ADB's private sector work, based on the amount of private sector work compared to the targets in Strategy 2020. ADB approved just three private sector initiatives between 1999 and 2004, and none from 2005 to 2008. ADB tried to finance other private sector power projects, but took the right approach in avoiding further investment and waiting for the Government to adopt the proper tendering procedures. Judging by the loans with a private sector theme, 48% of ADB's public sector financing has been related to private sector development (Table 14). Judging, however, by the financing for subprojects clearly related to private sector development, only 12% of ADB's public sector financing has supported private sector development (Table A5.5 in Appendix 5). ADB will need to expand its private sector work in Bangladesh to be consistent with ADB's current longterm strategy.

141

ADB. 2003. Report and Recommendation of the President to the Board of Directors for a Proposed Loan to Bangladesh for the Jamuna-Meghna River Erosion Mitigation. Manila.

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146. The large difference between the percent of financing classified as private sector development (48%) and actual sub-projects relevant to private sector development (12%) suggests that ADB's project classification system is not giving an accurate view of ADB's thematic work. Loan documents could indicate the share of financing relevant to each theme, rather than merely listing all applicable themes. 147. Overall ratings. Although ADB-financed projects have a high success rate, the low completion rate from 1999 to 2008 means that ADB's contributions during that time are modest. By the standards of the results framework in the 2005 country strategy, ADB has likewise made only modest contributions to development in Bangladesh. Overall, ADB's contributions to development results in Bangladesh from 1999 to 2008 are rated modest. Table 19 outlines the assessment of ADB's contributions to results. Table 19: Summary of the Assessment of ADB's Contributions to Results
Criterion Results indicators Contributions from sector programs Value-added Contributions to strategies and themes Assessment Modest: 26% of results indicators hit targets Modest to substantial: Four parts rated modest, three parts rated substantial Modest: High financial value-added, but modest nonfinancial Substantial: Covered all areas, although support for private sector development was low Overall assessment: Modest

D.

Overall Top-Down Ratings

148. ADB's strategic positioning was highly relevant to Bangladesh's needs and the Government's priorities, and ADB's performance from 1999 to 2008 was substantial. Judging by the slow progress of projects and the results monitoring framework in the 2005 country strategy, ADB has made only modest contributions to Bangladesh's development, but has likely made significant contributions in ways not included in the results framework. The top-down assessment is successful overall, as shown in Table 20. Table 20: Top-down Assessment of ADB's Strategy and Program in Bangladesh
Criteria Country positioning ADB's performance Contribution to results Overall Assessment High Substantial Modest Successful

V.

BOTTOM-UP ASSESSMENT

149. The bottom-up assessment covers ADB's work in seven areas: (i) energy; (ii) education; (iii) DRM; (iv) transport; (v) ANR; (vi) urban development, water supply, and sanitation; and (vii) law, economic policy, and public policy. The evaluation covered 24 completed and 37 ongoing projects and programs. The following summarizes the evaluation in each of the seven areas, and then presents the combined bottom-up evaluation. See Appendices 9 to 12 and the sector assessments for Energy, Education, and Urban and Water Supply circulated separately for a detailed discussion of the bottom-up evaluations.

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A.

Energy142

150. Context. Bangladesh's power sector has a history of poor performance. Common problems include electricity pilferage with collusion from utility employees, failure to collect electricity bills, low staff morale, lack of staff incentives for better performance, chronic power shortages due to delay in making urgent investments in power generation plants, and frequent power outages due to lack of maintenance. Poor cost recovery has discouraged urgently needed investments. The gas sector has done better, due to the commercial orientation of public sector entities responsible for production and distribution. But those entities have lacked the financial and technical capabilities to expand production to meet the rising demand. 151. Steady reforms have partly overcome the history of poor performance. Reforms have improved the commercial performance of the power sector, by cutting power distribution losses, improving bill collection, attracting private investments to the power generation sector during 1998–2002, and stabilizing the transmission system. The electrification rate has increased from about 20% in 1998 to over 40% by 2008. Power shortages have risen, though, due to lack of adequate investment in power generation since 2001. The gas sector has attracted private sector investment for upstream gas production and doubled production capacity since 1999, but the country is again facing gas shortages due to the fast rising demand for gas. 152. The Government's priorities, policies, and plans. The Government has been focusing on institutional reforms in the power sector, including establishing corporate entities for distribution, transmission, and generation, introducing transparent processes for soliciting private investments in power generation, and expanding the franchise areas of rural electricity cooperatives to promote rural electrification. In the gas sector, the Government has focused on attracting private investment in gas field development, improving network coverage, raising the efficiency of national gas companies, and promoting gas as a transport fuel. 153. ADB's program. ADB is clearly the leading development partner in the energy sector, providing 52% of energy financing in Bangladesh (Table 4 and Table 5), and leading the LCG subgroup on energy. ADB has advised the Government in all aspects of power sector reforms, including organizational reforms, promoting private sector investments, and financing investments. From 1999 to 2008, ADB approved 14 public sector loans to the energy sector, worth $1,414.5 million, and 1 nonsovereign loan of $50 million. Almost 80% of ADB's financing went to the power sector ($906.4 million of ordinary capital resources [OCR] and $200.2 million of Asian Development Fund [ADF]) through nine loans, with two loans to the gas sector ($255.2 million of OCR, $47.2 million of ADF, and a $5.0 million grant). ADB also approved nine ADTAs worth $6.24 million. 154. Assessment. ADB's program has been highly relevant to Bangladesh’s energy sector needs. ADB has consistently supported reforms encouraging energy sector entities to operate on commercial lines, and provided financing to the new companies as executing agencies. Change has been gradual, with successive loans and TA taking the program forward in a logical and consistent way, with focus on the highest priorities. 155. ADB's resources have generally been used effectively. Although several projects have had long delays, overall effectiveness has not suffered. ADB-financed projects and ADTAs have produced the expected physical outputs and reforms. Service delivery in the power and gas sectors has expanded, as measured by output and number of customers.
142

ADB. 2009. Bangladesh Energy Sector Assistance Program Evaluation. Manila.

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156. The resources provided by ADB have resulted in efficient energy use. Completed projects have high economic rates of return, and intended project outputs have been achieved within the cost estimates, and although with long delays. The new corporate entities set up under ADB assistance have better managerial efficiencies and lower cost of service delivery. The Meghnanghat Power Project supported by ADB is one of the most efficient and costeffective power plants in Asia. However, ADB-financed projects and TA also have raised the efficiency of the power and gas distribution network through cutting technical losses and pilferage, and strengthening cost recovery. Because of the shortage of base-load capacity, ADB-financed peaking power plants are likely to be used initially as base load power plants, inefficiently using scarce gas—a necessary sacrifice considering the need to serve demand. 157. The projects and reforms supported by ADB are technically and operationally sustainable. One of the program's major benefits is showing that projects and programs can be run well when they are in the right framework. The future sustainability of the gas sector, however, depends on raising tariffs enough to maintain needed investments in new gas fields. Higher gas prices would hurt the sustainability of the power sector unless power tariffs are also raised. 158. ADB's program has had a high impact on reforms and sector performance. ADB's policy advice, TA, and financing have helped transform the poorly-performing power sector into several well-managed and profitable companies. One of ADB's loans (Dhaka Clean Fuel) played a key role in introducing gas as a transport fuel. ADB-financed power and gas projects have made power and gas more readily available in several parts of the country. The lack of investments in power generation, however, has prevented the realization of the full benefits of improved power distribution and transmission. 159. ADB's energy program is rated highly relevant, effective, efficient, likely sustainable, and has high impact. The overall rating is successful (Table 21). B. Education143

160. Context. Access to education in Bangladesh has been steadily improving, albeit from a low base. By the late 1990s, gross enrolments in primary education had reached 90%. Enrolments in secondary education were only 35%, but were up by 50% over the previous decade. Previously boys outnumbered girls in primary and secondary education, but enrolments are now about equal in primary education, and girls outnumber boys in secondary education. The quality of education has also improved, but remains low. The adult literacy rate has likewise improved, but was still low at 54% (2007). 161. The Government's priorities, policies, and plans. Education is one of the Government's top development priorities. From 1999 to 2008, education had one of the highest shares in the annual budget for development spending. The focus was on basic education (through grade 8, plus non-formal education). Through its "Education for All" initiative, adopted as national action plan in 2003, the Government is aiming for full literacy by 2015. The Government aimed to raise the quality of education by improving community participation, delivery, management, finance, and assessment.

143

ADB. 2008. Bangladesh Sector Assistance Program Evaluation: What Worked and What Didn't Under the SectorWide Approach. Manila. That sector evaluation covered 1989 to 2007, while this CAPE covers 1999 to 2008. This CAPE therefore covers ADB's education program from 1999, and excludes the program from 1989 to 1998.

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162. ADB's program. Between 1999 and 2008, ADB financed five education projects or programs, worth $886.4 million. Four of the projects or programs were in basic or non-formal education, and the fifth was in education sector development. The projects or programs aimed to raise the quality of basic education and strengthen institutions by providing new facilities, equipment, textbooks, and teaching aids; improving teacher training and recruitment; and revising curricula. The program in education sector development aimed to strengthen technical and vocational education and training. ADB also approved two ADTAs worth $1.25 million. One ADTA, rated successful after completion, helped the Government prepare for the second primary education development program. The other ADTA, still ongoing, aims to strengthen government agencies responsible for madrasah education. 163. Assessment. ADB’s support for the education sector is relevant to the Government’s education strategies and plans, and consistent with ADB’s sector strategies and priorities. Most of ADB's support has gone to basic education, which is the Government's top priority for education. 164. ADB's program will likely be effective at delivering the intended outputs and outcomes, especially those related to equitable access to education. The program, however, is less likely to significantly raise the quality of education and strengthen institutions. 165. All of ADB's education projects and programs are efficient, running well within or below estimated costs. Two projects, however, have had delays in recruiting and deploying consultants, and have had problems in staffing and financial management. However, one of the projects is back on track, delayed by just a few months. 166. An ample budget from the Government and the continuing support of other development partners will help ensure the likely sustainability of ADB's education program. Although the institutional aspect of sustainability has not been fully achieved, it is being addressed by ongoing assistance. 167. As one of the lead development partners in the sector, ADB has had a substantial impact in helping the Government achieve its goals, including the MDGs of achieving universal primary education and gender equality. The impact could be higher if there were faster progress on goals related to the quality of education, and institutional strengthening. 168. ADB support for education in Bangladesh is rated relevant, effective, efficient, likely sustainable, and has substantial impact. The program is rated successful (Table 21). C. Disaster Risk Management

169. Context. Bangladesh faces many natural hazards, including cyclones, floods, droughts, tornadoes, and earthquakes (Appendix 9). It is also one of the world's most densely populated countries, ranking as the world's seventh largest country by population but 94th by area. The combination of natural hazards, high population density, and a high poverty rate means that many millions of people are unusually exposed to natural disasters. For example, in 2007 Cyclone Sidr took 3,200 lives, injured 40,000 persons, and caused an estimated $1.6 billion in damages (including 564,000 destroyed houses and 885,000 that were damaged). 170. The Government's priorities, policies, and plans. Following devastating floods in 1988 and a cyclone in 1991, the Government has adopted a comprehensive approach to disaster risk management, including identifying and mitigating hazards, community

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preparedness, and integrated response. Relief and recovery are now planned within an all-risk management framework, strengthening at-risk communities and lowering their vulnerability. In line with the shift from relief and response to disaster risk management, the Government has developed a National Plan for Disaster Management, with five parts: (i) risk identification and assessment; (ii) emergency preparedness; (iii) institutional capacity building; (iv) risk mitigation investments; and (v), catastrophe risk financing, including risk insurance. 171. ADB's program. ADB's support for disaster risk management was formally guided by the 2005 country strategy, which includes a "disaster mitigation" sub-strategy, and by ADB's Disaster and Emergency Assistance Policy of 2004. Despite the strategies, through the end of 2008 ADB did not recognize disaster risk management in its project classification system, and so does not have a formal program in disaster risk management. 172. Nevertheless, ADB has responded well to the Government’s requests for disasterrelated aid. From 1999 to 2008, ADB approved six disaster-related loans, worth $663 million. ADB also approved financing for another 10 projects in which disaster-related components should have been included. This evaluation found disaster-related components in four of the projects, worth an estimated $46 million. Another $30 million was transferred from other projects for disaster-related expenses. Combining all identified disaster-related financing gives a total of $740 million, or 15% of ADB's total project and program financing. Disaster risk management ranks ahead of ANR as the fourth largest part of ADB's financing in Bangladesh from 1999 to 2008. Two other DRM loans totaling $120 million were approved before 1999 but closed after 2002, and so are also covered under this CAPE. ADB has a de facto major program in disaster management, but the program has been ad hoc and not formally recognized by ADB or by others. 173. Assessment. ADB’s support has been relevant in helping the Government manage disasters. Support for preventing riverbank erosion and for building early warning systems have helped the Government in its policy shift from response to preparedness. Because ADB does not have a formal program for disaster risk management, though, its response has been ad hoc, limiting the potential relevance. 174. ADB has been less effective in contributing to DRM objectives, mainly due to the lack of explicit consideration of DRM issues in 6 out of 10 projects where DRM issues were relevant. ADB's financing for rehabilitation has achieved mixed results, partly due to the application of quick fixes, and partly due to poor execution and lack of funds for maintenance. Otherwise, ADB's contributions to DRM-specific projects have been effective. Four DRM-specific projects with loans that closed after 2002 were rated effective or highly effective, while two ongoing projects are on-track to being at least effective. Other projects related to disaster risk management are progressing well towards their goals. 175. ADB's support for disaster risk management has been efficient, judging by the success rates and rates of return on completed projects. The erosion mitigation technology has proven more efficacious than other technologies and at lower cost, and the projects using that technology are also likely to be rated successful with high rates of return. 176. ADB's support for preventing riverbank erosion and strengthening early warning systems is likely to be sustainable, especially since both initiatives seem to have strong support from the Government. ADB's program has not, however, helped strengthen institutional capacity for policy design and reforms.

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177. Given the hazards in Bangladesh and the importance of disaster preparedness, ADB's support for preventing riverbank erosion and strengthening early warning systems has a substantial impact. Support for emergency response and reconstruction, by the emergency nature of the tasks, has only limited impacts. 178. ADB's support for disaster risk management is rated relevant, less effective, efficient, likely sustainable, and is likely to have substantial impact. The overall rating is partly successful (Table 21). D. Transport

179. Context. Bangladesh has a variety of transport options, including roads, railways, sea, and inland waterways (Appendix 10). Bangladesh's road network, currently the main mode of transport, has high density compared with that in other countries in the region, but is congested and not well managed. Railways and inland waterways have good potential, but are not adequately developed. Railways in particular have lost a large part of their market share. Bangladesh's ports are inefficient, and need a stronger market orientation to raise efficiency; there has been some movement in that direction. 180. Government's priorities, policies, and plans. The transport sector figures prominently in the Government's Fifth Five-Year Plan (1997-2004) and Poverty Reduction Paper Strategy (2006–2010). Key targets under these plans include expanding strategic corridors; improving existing roads; improving capacity, efficiency, and governance of transport agencies; and increasing private sector participation in the sector. One of the more important transport sector policies of the government is the National Land Transport Policy (NLTP). Among other things, the NLTP aims to introduce long-term network planning, develop a road maintenance fund, and transform Bangladesh Railways into a corporate entity with more autonomy. Another is the Integrated Multi-Modal Transport Policy, which covers all modes of transport and which aims to develop a transport system that serves people's needs at fair prices, and to improve Bangladesh's international competitiveness by raising transport efficiency. 181. ADB’s program. ADB plays a prominent role in the transport sector in Bangladesh. As of the end of 2008, ADB is the second largest financier in the Government's ongoing transport projects. ADB's assistance to the sector during the CAPE period consisted of 11 loans in 9 projects worth $693 million, eight PPTAs worth $5.3 million (five of which resulted in loans), and seven ADTAs worth $5.8 million. In addition, four projects in other sectors had significant transport components worth $355 million. Most of ADB's transport financing is for roads, which is the top priority for the Government. 182. Assessment. ADB's support for the transport sector is highly relevant to the country’s needs and the Government's priorities (compare Table 2 and Table 6). ADB's program is effective because it achieved most of its main objectives in the sector. The program was assessed less efficient because even though two of the three completed projects had high economic internal rates of returns (EIRR), the other completed and ongoing projects were significantly delayed. Sustainability is less likely due mainly to the lack of funds to maintain the transport infrastructures. The actual and expected impacts of ADB's assistance are considered substantial. 183. ADB's transport program is highly relevant, effective, less efficient, less likely sustainable, and has substantial impact. It is rated partly successful (Table 21).

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E.

Agriculture and Natural Resources

184. Context. In 2007 and 2008, the ANR sector contributed about 21% to Bangladesh's GDP growth, down by about 5% over the past decade. Although ANR is no longer a major driver of the country's growth, it still has strong links with the rest of the economy. Over 75% of the population and close to 85% of the poor live in rural areas; hence, the rural economy is important for poverty reduction and food security. ANR is critical for women as about 30% of rural families are headed by women and many of the families are extremely poor. There is little scope for bringing new land under cultivation, and so growth in the sector must come through intensification and diversification, lifting farm incomes and providing on- and off-farm jobs (Appendix 11). Such growth faces major constraints. Opportunities for improving irrigation face technical difficulties and unsustainable management and maintenance systems. Diversified production needs better rural infrastructure, technology, and institutions. Institutions are weak, and clear roles for government are lacking. 185. The Government's priorities, policies, and plans. The Government's development plans aim to reduce poverty, and have given high priority to agriculture. An important element of the national development plans and the National Strategy for Accelerated Poverty Reduction is to mainstream gender. The Government’s sector policy has been to improve institutions and develop diversified agribusiness, while the strategy has featured intensifying cereal crops, diversifying to high value agriculture, and linking the sector to non-farm job opportunities. Development plans have also included efforts to develop infrastructure for marketing, transport, and storage, and to expand irrigation coverage, with better water management. Improved water resource management is based on shifting management and maintenance to users. 186. ADB's program. From 1999 to 2008, ADB's lending and grants to ANR were $565 million, about 12% of the total (including subprojects of projects not formally classified as ANR). ADB's program in ANR included eight loans, two ADTAs, and one grant-financed project. All loans are included in this evaluation, with two projects close to completion. Five of the eight projects have completed mid-term reviews. The reviews rated all projects satisfactory on impact and outcome, and on implementation progress; a livestock project was rated highly successful on implementation progress. The project performance ratings indicated that the projects without mid-term reviews were also doing satisfactorily or better. 187. Assessment. The projects were relevant to meeting the challenges and opportunities in ANR, and were aligned with the country’s development goals. The projects included actions that protected and built on previous projects, or filled niches where other development partners were not active. There were, however, problems in project design that limited the relevance of the program. Effectiveness was assessed through eight outcomes targeted by the projects, six of which made good progress. Efficiency was qualitatively assessed; considering delays and other implementation problems, most are unlikely to reach the targeted rates of returns. Sustainability is compromised by concerns on the likelihood of continued maintenance. Significant impacts are likely on producing high value crops, increasing livestock production, and developing microenterprises. All projects included gender issues, and are helping to raise the welfare of women. In infrastructure projects, impact is limited by lack of direct support to production. As shown in Table 13, three of seven completed projects were rated successful, and the rest less than successful. Four out of eight ongoing projects were rated as likely to be successful, and the rest less successful. ADB's program in ANR is rated as relevant, effective, less efficient, likely sustainable, and likely to have modest impact. The overall rating is partly successful (Table 21).

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F.

Urban Development, Water Supply, and Sanitation144

188. Urban development. Bangladesh’s urbanization is low compared with that in other Asian countries, but Bangladesh still has a large urban population, estimated at around 38 million in 2005. Urban population growth is about double the overall population growth. If this trend continues, half of the country's population will be urban by 2030. Dhaka is one of the fastest growing mega-cities in the world, with an annual growth rate of 9% from 1999 to 2005. Many villages in Bangladesh have likewise grown into towns, and major urban centers have risen rapidly. This growth has brought shortages of basic urban infrastructure and housing. Over six million of the urban population have no access to drinking water from an improved source, although coverage has been growing. Other problems include poor sanitation and drainage, garbage, air pollution, lack of capacity in transport, poor traffic management, and deteriorating law and order. 189. Water supply. Bangladesh has ample surface water, but much of the water is turbid and polluted. Groundwater has been the major source of drinking water. Tube wells have ensured basic levels of drinking water, but many of the poor still have no access close to their homes. Arsenic contamination of wells, discovered in 1993, has complicated the situation and caused health problems. Up to a quarter of all wells in Bangladesh are contaminated. A recent study suggests that the bacteriologically and chemically safe coverage may be as low as 59%. 190. Sanitation. Sanitation coverage in Bangladesh has been rising recently, but is still low. Less than half of the population has a hygienic latrine, a quarter continue using unhygienic hanging latrines, and about a third have no facilities. Hygiene practices are poor, with less than half of the population washing their hands with soap after defecating. About a third of the shallow tube wells were contaminated with bacteria, mainly due to poor maintenance of the surroundings. Child mortality was 76 per 1,000 live births in 2003, with maybe a quarter caused by lack of adequate sanitation and hygiene. Even in urban areas, sanitation is unsatisfactory. While many homes have septic tanks and sanitary latrines, much of the sludge is discharged through open drains into rivers. Dhaka has only one primary sewage treatment plant, and it can serve only a small part of the city. Bangladesh had no sanitary landfills in 1999; most garbage was dumped under unsanitary conditions, some of it in rivers. 191. The Government's priorities, policies, and plans. The Government does not have a national strategy for urban development, but does have strategies and plans for WSS. In 1998 the Government approved its National Policy for Safe Water Supply and Sanitation. That policy stressed user participation, devolution of WSS management to local government and community-based organizations, and involvement of NGOs and the private sector in WSS. In 2004 the Government approved its Sector Development Framework, and in 2005 the National Sanitation Strategy and the Pro-Poor Strategy. The Pro-Poor Strategy called for subsidizing half the cost of drinking water for the poorest of the poor. In 2004 the Government approved a National Policy for Arsenic Mitigation. 192. The 2004 Sector Development Framework has ambitious time-bound targets for improving WSS. The framework aims for full coverage of basic WSS services in towns and rural areas by 2015, a far more ambitious goal than the MDG of merely halving the population without
144

ADB. 2009. Sector Assistance Program Evaluation of Bangladesh Urban Sector and Water Supply, and Sanitation. Manila. Sector evaluations include top-down and bottom-up evaluations, but the CAPE has its own top-down evaluation, and so uses only the bottom-up assessment from this sector evaluation. The sector evaluation rated the sector program as successful overall, but the bottom-up assessment was partly successful, the same as reported in the CAPE.

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safe WSS. Reaching the Government's goal requires a 12% annual increase in coverage, a challenging task since the people without coverage are the poorest and least able to pay. The target for piped water supply in urban areas is 70% by 2010 (presently at 20%), and 90% by 2015. 193. ADB's program. From 1999 to 2008, ADB approved financing for four urban development and WSS projects, worth $388 million or about 8% of ADB's financing. The projects had several aims: to strengthen accountability in urban management and capabilities in urban services in Dhaka and selected municipalities; to support reforms in urban water supply; and to expand urban infrastructure and services. This evaluation also includes two projects (one each in urban development and WSS, worth $96 million) that were approved before 1999, since they were not fully evaluated in the previous CAPE. These two projects had aims similar to those of projects approved after 1999. ADB also approved six ADTAs worth $4.0 million, with aims to mitigate arsenic contamination, strengthen management of Dhaka Water Supply and Sewerage Authority, establish the Khulna Water Supply and Sewerage Authority, and support reforms in urban governance. 194. Assessment. ADB's program in urban development and WSS is relevant to the needs of Bangladesh and the Government's priorities. Although ADB’s program expanded under the 2005 country strategy, the program was the most consistently supportive among all development partners over the decade. It was in line with the expressed needs of the Government. ADB's program could have been more relevant if ADB had supported its investments earlier with program loans to deal with systemic problems. 195. ADB's program has been effective. Most of the expected outputs and outcomes of the two completed projects have been achieved. One of the ongoing projects, 75% complete, is also likely to hit most of its targets. Targets for rehabilitation and expansion of tube wells, treatment plants, pipelines, drainage, sanitation systems, and slum improvements have been hit or are within reach. ADB's financing and TA have helped improve urban services in many small towns. 196. ADB's efficiency has been comparable to that of other development partners, but startup and implementation delays have been common, due to shortcomings in preparing projects. Economic rates of return of completed projects have met the thresholds, but the program has not contributed much to broad-based socioeconomic progress through support for important reforms. ADB's program is therefore rated less efficient. 197. ADB’s completed projects have been successful, but their sustainability is less than likely because tariffs have not risen and needed reforms have not taken place. Local governments depend on external funds for development programs, and many are not able to manage their own affairs. Most have not consistently improved tax collection, generated revenue from completed facilities, and managed staff and finances well. The sustainability of results and benefits is less likely. 198. ADB has had a substantial impact on several development goals, especially improving access to safe water and sanitation, and strengthening urban governance. ADB has also had substantial impact on development in secondary towns. ADB's impact is modest in building capabilities for reducing poverty, due mainly low support for reducing poverty. 199. ADB's program in urban development and WSS is relevant, effective, less efficient, less likely sustainable, and is likely to have substantial impact, so is partly successful (Table 21).

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G.

Law, Economic Management, and Public Policy

200. Context. Bangladesh introduced reforms in the early 1990s to liberalize foreign trade and exchange rate regimes, strengthen fiscal management, encourage private sector development, and privatize state-owned enterprises. In that period ADB’s governance interventions were limited to policy dialogue and capacity building for its ongoing projects. Despite the Government's efforts and some progress, Bangladesh continued to face fundamental development challenges. Assessments done in the 1990s identified poor governance and weak institutions as the most significant constraints. In response, ADB's 1999 country strategy emphasized the need to move from project-based assistance for governance to more direct assistance for administrative capacity, public enterprise reforms, improving the legal framework and anti-corruption. To meet those needs, ADB provided a TA grant in 2003 to support the structural operationalization of the Anti-Corruption Commission (ACC), followed by another grant in 2005 to continue the organizational reforms within ACC (Appendix 12). 201. ADB’s governance assessment of 2004 reaffirmed the need to curb corruption, improve law and order and human security, and build local government capacity. Following through on the assessment as well as the 1999 country strategy, the 2005 strategy noted that economic growth and poverty reduction continued to be frustrated by a lack of good governance, specifically accountability, transparency, predictability, and participation by ordinary citizens in public decision making. 202. Despite all efforts, in 2005 Bangladesh still ranked last out of 158 countries surveyed in Transparency International's corruption perception index; in 2008 it ranked 147th out of 180 countries. In 2007 Bangladesh ranked in the bottom quarter of five out of six categories of the World Bank's governance indicators. Only for the voice and accountability indicator did Bangladesh do marginally better, but by 2007 its comparative performance had slid to just above the lowest quartile mark. 203. The Government's priorities, policies, and plans, and ADB's program. When Bangladesh's caretaker Government took office early in 2007, it asked for ADB's support to further strengthen ACC and separate the judiciary from the executive branch. ADB responded positively and approved in October 2007 a $150 million program loan to Bangladesh. The first and second tranches of $105 million equivalent were disbursed on time but one policy action required for the second tranche was only partially achieved. A National Integrity Strategy (NIS) should have been approved and published, with a time bound action plan and resource allocations for national and local level implementation. Instead, only a framework for the NIS was prepared outlining the work that must be done in order to finalize an NIS for adoption and implementation.145 The last tranche of $45 million equivalent, due for release at the end of November 2010 has as one of its conditions the review of NIS implementation. Considering the delay in finalizing the NIS and the fact that it has still not been adopted, there is a real risk that this condition for the third tranche may not be met on time. 204. A top priority of the recently elected government is fighting corruption and establishing good governance. Several governance-related legal reforms carried out by the caretaker Government were either endorsed or approved in principle by the new Parliament, while a few key ordinances became inoperable because they had not been endorsed to and ratified by Parliament.

145

The reasons for this are discussed in paragraph 18 of Appendix 12.

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205. Assessment. The ratings consider only achievements as of the release of the program loan's second tranche. The program loan was relevant to the needs of Bangladesh, the Government's priorities at the time it was provided, and initiated with strong Government ownership. As a direct result of this ownership and the accomplishments so far, the program had been effective and efficient in delivering the expected outputs. However, at least two key achievements under the first and second tranches appear to have been recently reversed, putting the sustainability of reforms at risk. The new Government has also not enacted the 2007 amendments to the ACC Act which could strengthen its independence and capacity. Neither has it supported the neutral supreme judicial commission that would be responsible for nominating Justices to the Supreme Court. These reversals may, however, prove temporary, as it is still early in the elected Government's term and the Government's priorities are not yet clear. ADB staff from headquarters and the resident mission are in continuing dialogue with the Government, and are confident that the Government will take full ownership of the program, and achieve the outputs and outcomes expected. The support provided so far has made modest gains in separating the judiciary from the executive branch, and in strengthening ACC. ADB's governance program is relevant, effective, less efficient, less likely sustainable, and has modest impact. It is rated partly successful (see Table 21). H. Overall Bottom-Up Ratings

206. Table 21 shows the assessments for the seven areas of the bottom-up evaluations. According to ADB's CAPE guidelines, the overall bottom-up score is the weighted average of the bottom-up scores across sectors. Energy and education are major sectors, and are given full weight. Disaster risk management has overlaps with transport and ANR, and so each of them is given two-thirds weights. ANR, public policy, urban development and water supply and sanitation are minor parts, and so are given half weights. The overall bottom-up rating is partly successful. Table 21: Summary of Bottom-Up Ratings
Sector Energy Transport DRM Education ANR UD-WSS Public Policy Relevance Highly relevant Highly relevant Relevant Relevant Relevant Relevant Relevant Effectiveness Effective Effective Less effective Effective Effective Effective Effective Criteria Efficiency Efficient Efficient Efficient Efficient Less efficient Less efficient Efficient Sustainability Likely Less likely Likely Likely Likely Less likely Less likely Impact Substantial Modest to substantial Substantial Substantial Modest Substantial Modest Overall Successful Partly successful Partly successful Successful Partly successful Partly successful Partly successful

ANR = agriculture and natural resources, DRM = disaster risk management, UD-WSS = urban development, water supply and sanitation. Source: CAPE team assessments.

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VI. A.

OVERALL ASSESSMENT, FINDINGS, LESSONS, AND RECOMMENDATIONS Overall assessment

207. The overall assessment of ADB's country assistance to Bangladesh is successful, based on the successful rating on the strategic and institutional assessment (top-down) and partly successful sector performance (bottom-up). B. Findings

208. ADB has been and continues to be in a good position to work with the Government on Bangladesh's development challenges. ADB has been one of Bangladesh's largest sources of financing, and a leader in financing energy, education, ANR, transport, and WSS (Table 4), sectors that are among the Government's top priorities (Table 2). ADB's top priorities in Bangladesh have been in energy, transport, education, and ANR, taking 84% of ADB's financing for projects and programs from 1999 to 2008 (Table 6). ADB's strategy and program has also been consistent with ADB's 2001 long-term strategy (Table 16 and Table A5.1 in Appendix 5), and is already close to ADB's 2008 long-term strategy (section III.A and Table A5.5 in Appendix 5). ADB's energy and education programs have been successful, although the transport and ANR programs have been only partly successful (Table 21 and Appendix 9). Financing in energy, transport, education, and ANR remain important to Bangladesh, and ADB has the support of relevant stakeholders to continue supporting those sectors (Appendix 7). ADB's sector focus is at least as good as the other main development partners working in Bangladesh (Table 11). ADB can continue its program of financing to Bangladesh without major changes. 209. ADB has developed a de facto major program in disaster risk management and emergency support. Because of the country's high poverty rate, high population density, and high exposure to natural hazards, disaster risk management is important to Bangladesh's development (Appendix 9). ADB recognized the importance of DRM, and included a substrategy on DRM in its 2005 country strategy. ADB consistently responded to the country's needs and the Government's requests for aid, culminating in 20% of financing for projects and programs going to disaster risk management and emergency aid from 2005 to 2008 (Table 14). ADB's program in DRM and emergency support is therefore comparable with its other major programs in transport and education (Table 6). Despite the size and importance of the program, DRM has not been "mainstreamed" in ADB's program, with some projects failing to include relevant DRM components (Appendix 9). The failure to fully mainstream DRM is perhaps partly due to the lack of "Disaster Risk Management Focal Points" in ADB's headquarters and the resident mission; and also partly due to the lack of DRM in ADB's project classification system (until 2009), meaning that ADB's program in DRM was not adequately monitored, and its size and scope were unknown. 210. The program in Bangladesh was consistent with ADB's strategies and themes. ADB's 2005 country strategy was closely aligned with ADB's 2001 long-term strategy, including core strategic areas and cross-cutting themes (Table A5.1). Judging by the classification of loans, ADB's program in Bangladesh broadly covered the long-term strategy (Table 15). In particular, the proportion of ADB-financed projects in Bangladesh with gender themes or that mainstream gender issues is higher than the ADB average (50% to 32%). The loan classification system, however, seems to be over-estimating ADB's thematic coverage. For example, following only loan classifications, 48% of ADB's financing seemed related to private

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sector issues (Table 15), but based on financing of subprojects, the evaluation found only 12% of financing related to the private sector issues. 211. ADB's program in Bangladesh is already close to ADB's 2008 long-term strategy. A large share of financing has been in Strategy 2020's five core areas, and for environmental management. Co-financing has been erratic, but will rise significantly in the future for the Padma Bridge project. The main limitation in ADB's recent program has been support for the private sector, accounting for only 12% of financing from 2005 to 2008. 212. ADB played a significant and influential role in promoting power sector reforms. ADB has developed a solid track record of support for the power sector in Bangladesh. ADB's program has included support for (i) power sector reforms through policy advice and TA; (ii) corporatization of power sector entities; (iii) rehabilitation and expansion of distribution and transmission networks; and (iv) establishment of new, financially secure power sector enterprises from previous state-owned enterprises. ADB's program has demonstrated the effectiveness of long-term engagement, extensive sector knowledge, and developing a critical mass of financing and advice even in a challenging environment like Bangladesh's power sector. 213. Rural infrastructure projects need links to agriculture. Most of ADB's support for ANR is through financing for rural infrastructure (i.e., rural roads, infrastructure for irrigation, drainage and erosion mitigation, and marketing infrastructure).146 According to beneficiaries consulted during this evaluation, ADB-financed rural infrastructure projects could have been more effective with stronger links to agricultural-related activities. Different types of infrastructure have different impacts on agriculture. Rural roads and marketing facilities promote diversification, while irrigation and other water control facilities, in contrast, limit diversification, because when given sufficient water farmers tend to intensify rice production. ADB should ensure that the rural infrastructure projects it finances are part of a comprehensive plan for rural and agricultural development. 214. Bangladesh has systemic problems with project implementation, but ADB's procedures for disbursement and project implementation contribute to slow implementation. The slow rate of progress for projects in Bangladesh shows the systemic challenges to project implementation in Bangladesh. ADB's large un-disbursed balances and the low rate of disbursements compared with physical progress indicate challenges within ADB's own procedures for project administration. ADB's procedures for project development and design also contribute to slow implementation, especially in the transport sector (Appendix 10). Slow implementation is a well-known problem in Bangladesh, and ADB has been working with the Government and other agencies to find solutions. The persistent problems with project implementation in Bangladesh call for redoubled efforts, and a continuing search for solutions. 215. ADB's relationships with the other development partners have strengthened ADB's program and contributions to development results. ADB's strategic partnerships include the joint approach to the country strategies (2005), and the partnership to support water supply and sanitation (2007). The joint approach to the country strategies hasn't delivered on all its potential, but it led the way through a challenging time, strengthened the division of labor among the four partners, and is paving the way for a broad partnership in a new joint approach to supporting development in Bangladesh. The partnership to support WSS may have already produced some results, stimulating the government to start long-needed reforms (part III.B).
146

Five projects mainly supported the development of the rural infrastructure: (i) SRIIP, (ii) CHTRDP, (iii) the Second Small-Scale Water Resources Development Sector Project, (iv) JMREMP, and (v) the Southwest Area Integrated Water Resources Planning and Management Project to a lesser extent.

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ADB's project-level partnerships include the SWAp to support primary education, and the project to design the Padma Bridge. The ongoing SWAp for education strengthened Government ownership and leadership, improved coordination among the development partners, and seems to be opening access to education.147 The estimated cost of the Padma Bridge ($2.4 billion) is too high for ADB to finance alone; therefore, ADB's relationships with other development partners will be vital to financing and building one of Bangladesh's most important future development projects. 216. ADB could make a stronger and clearer contribution to development results. ADB made a modest contribution to development, judging by the low rate of achievement in the results framework (26% of targets hit; Table 16); by sector evaluations (4 of 7 judged as modest contributions); and by the modest perceptions of ADB's non-financial value-added (Appendix 7). ADB has significant potential to contribute to development, though, judging by its contributions in the energy sector (promoting reforms), disaster risk management (river training and flood warning systems), and water supply and sanitation (improving urban public health). ADB could clarify and better document its contributions through a realistic results framework, concerted efforts to strengthen the Government's capabilities in project implementation, and a strategy and program to contribute knowledge to development. C. Lessons

217. A gradual, patient approach to reforms can be effective. ADB's experience in the energy sector shows that, in an environment with weak institutions, a gradual, patient approach to supporting reforms can limit risks to ADB and maintain prospects for improvement. The evaluation of ADB's energy program showed that Bangladesh's energy sector has long needed major reforms; the sector has indeed been reforming, but only slowly. Despite the problems in the sector, ADB stayed involved in suitable ways without compromising its position or policies, and ADB has perhaps helped maintain progress. As a result, ADB has built a strong track record and relationship with the Government, and is in position to help the Government meet one of the country's top development challenges. 218. Continued Government ownership and commitment is an important factor in the success of reform programs. ADB's experience with the governance program loan is an example of the political risks to reforms (Appendix 9). The caretaker Government came to ADB for help in governance reforms. The caretaker Government was committed to those reforms, but the reform program extended beyond that government's term. The elected Government, while showing interest in reforms in some areas, is less committed to the program of the caretaker Government, and the reforms supported by the governance program loan have started to falter. When future commitment is uncertain, a realistic, practical approach to reforms would be to, first, focus on reforms that can be solidly established within the Government's term; and second, beyond the Government's term, sow the seeds for future reforms, recognizing and accepting the reality and the risk that the efforts might falter. 219. Streamlined and efficient procedures, focused on outputs and results rather than process, can make joint work with other organizations more effective. ADB's experience with the SWAp for primary education and the joint approach to the 2005 country strategy shows the cost of maintaining ADB's bureaucratic procedures while working with other organizations. The SWAp achieved one of its aims to cut coordination costs to government, but has resulted in higher costs to the development partners. The costs to development partners were high
147

Footnote 137.

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because they had not harmonized procedures and they each continued to follow their own bureaucratic practices, while trying to work on a common basis. The joint approach to the 2005 country strategy faced a similar situation. ADB took an innovative approach to working with other development partners in developing the 2005 country strategy. Meanwhile, ADB still faced its standard, internal, bureaucratic requirements for producing the strategy, regardless of whether those requirements were relevant to the joint approach. Following ADB's internal bureaucratic requirements while working with other organizations contributed to the high cost of producing the 2005 country strategy. Joint work is likely to vary with every partnership, and so cannot be standardized. When working with other organizations, ADB should identify what processes really require a bureaucratic approach. For those that do not, ADB should set aside bureaucratic requirements and focus on the output, not the process. 220. Strategies need flexibility and freedom to be innovative. The high cost of ADB's 2005 country strategy (Appendix 6) compared with the minor strategic choices facing ADB in 2005 (part III.A) shows the need for flexibility in ADB's approach to developing country strategies. ADB's 2001 business processes imposed many requirements on the process of developing country strategies. The team developing ADB's 2005 country strategy met all of those requirements (part IV.A and Table A4.1), but many of the requirements were not relevant to the actual choices facing ADB in Bangladesh. Bureaucratic processes are relevant and efficient for work that is mechanistic and fully determined in advance, or for risky activities where a small mistake has high costs. Bureaucratic processes, by design, constrain innovation and creativity, which is an advantage when there are no benefits or there are high potential costs to innovation. A strategy, however, needs creative thinking and innovation. A country strategy also carries low risks since it aims only to guide choices and is not making actual choices itself. ADB should encourage innovation and creative thinking in country strategies, and should give country teams the authority to focus on the actual choices they face, and on work relevant to those choices. D. Recommendations

221. Maintain the recent sector focus of financing projects and programs. ADB's recent programming is already in line with the targets for financing the five "core areas" of Strategy 2020 (Table A5.5). The sectors ADB has been supporting are still important to Bangladesh's development (compare part II.A and Table 6), and stakeholders support ADB's continuing involvement (Appendix 7). The evaluation also found that ADB's sector focus is as good as or better than its partners in the joint approach to the country strategy (Table 11). Therefore there is no need for a major change in the sector focus, and ADB should work with the Government to keep a similar sector focus in future programming. 222. ADB could, however, avoid straying far into financing projects in health, industry, and the financial sector. Health is important to the Government (Table 2), but there are already four major financiers in the health sector (Table 4), and the development partners are already financing 97% of health projects (Table 5). Industry is among the Government's lowest priorities (Table 2), and although ADB has financed some projects in industry, it is not a priority in ADB's "Strategy 2020". Finance, in contrast to industry, is one of ADB's priorities in "Strategy 2020", but other development partners (mainly the World Bank) are already financing programs and projects in the financial sector, and the financial sector in Bangladesh seems already well supported. ADB could support urban health care through its program in urban development. 223. Continue strengthening the Government's capabilities in designing and implementing projects and programs though a systematic approach working with other

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development partners. ADB's work to improve project implementation has included efforts focused on ADB-financed projects, like meeting deadlines for specific projects, and efforts to solve the root causes of problems, like reforming government processes. ADB should continue working with other development partners, through joint portfolio reviews and through its leadership in the Local Consultative Group, on solving the root causes of problems with project implementation. A joint long-term plan for organizational reform and development in Bangladesh could help coordinate and orient the efforts of all development partners towards the common goal of strengthening the Government's capabilities. 224. Strengthen project implementation and expand the transport program. Lack of transport infrastructure is one of the country's binding constraints to growth (section II.A), and expanding transport is one of the Government's top development priorities Table 2). Among the Government's priority sectors, the share of projects financed by the development partners is the lowest in the transport sector (Table 5), so there seems to be an opportunity for expanding support for transport. Bangladesh's transport sector, however, suffers from the same or even worse problems with project implementation as other sectors. There is no point in developing and financing more transport projects if existing projects are not progressing. 225. ADB leads the LCG subgroups on transportation and on project implementation, and so is in an ideal position to work with the Government and other development partners to strengthen implementation in the transport sector. ADB could take a gradual, patient approach to improving project implementation, working steadily and closely with the Government along the way. When implementation starts to improve, ADB will be in a good position to raise its financing for transport projects. 226. The systemic problems with implementation must be solved before ADB's own implementation improves, but some of the problems with delays lie with ADB. Transport projects especially have been delayed because detailed design usually starts long after ADB approves a loan and is usually financed by the loan itself. The Padma Bridge Design Project is an exception to the usual pattern, and shows that changes are possible even within ADB's current bureaucratic procedures. ADB could review its own processes for project preparation, and change processes as needed to ensure that projects are "shovel-ready" by the time ADB approves a loan. 227. Continue supporting projects in agricultural production and rural infrastructure, and strengthen links between rural infrastructure and agriculture to contribute to poverty reduction and social inclusiveness. Although "Strategy 2020" focuses ADB's support for agriculture on rural infrastructure and microfinance,148 the strategy also gives ADB the freedom to "operate on a limited scale in other areas where its presence is needed."149 Lack of agricultural diversification is one of the country's binding constraints to growth (section II.A), and agricultural and rural development is one of the Government's top priorities (Table 2). ADB has a long track record of supporting agriculture in Bangladesh, with the ongoing Northwest Crop Diversification Project the fifth in a series of projects going back 20 years.150 Although ADB's recent projects in ANR have been less successful than those in other sectors (Table 13), the one project in agricultural production completed since 2002 was successful.151 In contrast,

148 149 150 151

Footnote 2. Footnote 2, page 20. The first was the Crop Intensification Project approved in 1979. ADB. 1997. Report and Recommendation of the President to the Board of Directors for a Proposed Loan to Bangladesh for the Participatory Livestock Development Project. Manila.

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neither of the two completed projects in irrigation was successful. ADB's ongoing productionrelated projects are on track to being successful projects (Appendix 9). 228. Rural infrastructure is likely to continue to be ADB's main support for agriculture, though, following "Strategy 2020". ADB can indirectly support agricultural production through rural infrastructure, provided infrastructure projects are part of a comprehensive Government strategy for agricultural and rural development. ADB is the lead financier in the Government's portfolio of aid-financed ANR projects (Table 6). ADB is thus in a good position to work with other development partners to ensure ADB-financed rural infrastructure projects are contributing to agricultural development. 229. Continue supporting urban development and water supply and sanitation. Bangladesh's urban population is growing fast, while only 20% of present WSS investment needs are being covered by the Government and development partners. The financing needs are particularly high in urban sanitation and drainage. The separately-published evaluation of urban development and water supply and sanitation recommended ADB to pay particular attention to technical assistance and economic, sector and thematic work in a number of areas, and to consider complementarity and compatibility with financing conditions of urban infrastructure promoted by other development partners. 230. Work with the Government to further reform and develop the energy sector, including reform of energy pricing. The separately-published energy sector evaluation found that the Government's current practice of under-pricing natural gas is economically and financially unsustainable and promotes inefficient use of gas. Misconceptions about the socioeconomic impacts of price reform and other issues are hindering reforms. ADB could support a comprehensive energy pricing study to understand the links between natural gas pricing and electricity pricing, industrial competitiveness, the fiscal impacts of price reforms, impacts on consumer welfare, and energy efficiency improvements. The findings of the study would contribute to ADB's future program in the energy sector, including in policy advice and project design. 231. Expand support for private sector development. Under Strategy 2020, ADB's private sector financing and support for private sector development should account for half of ADB's work by 2020. The target applies to all of ADB, not to each country, but a major program like the one ADB has in Bangladesh should make a significant contribution to ADB's private sector work. From 2005 to 2008, ADB did not approve any private sector financing in Bangladesh, and support for private sector development was only 12% of public sector financing. 232. One reason for the lack of private sector financing is the weak investment climate in Bangladesh (part II.A). ADB had opportunities, for example, to replicate its success in financing the successful Meghnaghat Power project (part III.B), but ADB took the right approach in being patient, and avoiding further private investments until conditions improve.152 Conditions in Bangladesh thus call for more ADB support for private sector development to help build an environment where ADB can later expand its private sector financing. In the medium term at least, ADB's program in Bangladesh can contribute to the ADB-wide target for private sector work by focusing on private sector development. 233. Continue mainstreaming gender, building upon the success so far. A study of gender in ADB's program in Bangladesh found that half of projects had gender as a theme or
152

ADB. 2009. Bangladesh Energy Sector Assistance Program Evaluation. Manila.

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had mainstreamed gender issues, compared to about third of projects for ADB overall. ADB should continue mainstreaming gender in projects and programs in Bangladesh to ensure higher participation of women in projects, more equitable access to training and public services, and higher income, greater financial security, and more livelihood opportunities for women. 234. Make a clear commitment to DRM in Bangladesh, start tracking the program, and mainstream DRM in all relevant projects. ADB has a major program in DRM and emergency support in Bangladesh, judging by the share of ADB's program that has financed disasterrelated spending (20% from 2005 to 2008; Table 14). ADB has not tracked DRM in projects (until 2009), and has not presented its work in DRM in a way consistent with its real status in the program. ADB's program in DRM is rated partly successful, but has a sound basis and with focused efforts could be a stronger program. Climate change will raise Bangladesh's exposure to typhoons, floods, and other natural hazards, so strengthening DRM will be even more important to Bangladesh's development in the future. ADB should make a clear and strong commitment to DRM in Bangladesh, and start tracking and monitoring its program. ADB's project classification system includes DRM as a sub-theme under social development. ADB could therefore develop a thematic program in DRM, mainstreaming DRM in projects as, for example, gender and environment have been mainstreamed, while including DRM as needed in projects for ANR, transport, and other sectors. 235. Regardless of ADB's position on DRM, ADB should ensure that all of the projects it finances are disaster-resistant, building on lessons learned from its current program. This evaluation found 10 projects that should have included components related to DRM based on lessons learned, but found clear evidence that only 4 projects included suitable components (Appendix 9). Likewise, many TAs lacked suitable DRM-related components. DRM is important to Bangladesh's development, and ADB should promote DRM in all relevant projects. 236. ADB can ensure that DRM is mainstreamed into ADB's program by appointing DRM focal points in the Bangladesh Resident Mission and the South Asia Regional Department, as required by ADB's Disaster and Emergency Assistance Policy. The focal points could be responsible for monitoring projects and TAs, and ensuring that DRM issues are covered as needed. The DRM focal point is a task assigned to staff, and is not a full-time position, so ADB can meet its responsibility for assigning DRM focal points without adding dedicated staff positions. The DRM focal point can be assigned to suitably-qualified current staff, but their work plans must be adjusted, removing previous responsibilities to make way for the new ones as DRM focal point. 237. Continue regional cooperation and integration efforts, especially in energy. Bangladesh has serious power shortages, and investment in power generation has not been able to keep up with rising demand. ADB should continue efforts under its regional cooperation and integration (RCI) programs to help the country tap hydropower sources in neighboring countries. ADB could facilitate agreements for cross-border transmission lines, and help finalize commercial and technical arrangements so Bangladesh can join India's power market. Progress may also be expected in ongoing efforts to integrate regional transport, led by prominent national projects like the bridge over the Padma River. The recommendations of the regional cooperation assistance program evaluation for the Greater Mekong Subregion may also be relevant to regional cooperation programs involving Bangladesh.153

153

ADB. 2008. Regional Cooperation Assistance Program Evaluation, Greater Mekong Subregion: Maturing and Moving Forward. Manila.

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238. Continue supporting governance reforms and anticorruption initiatives. Weak governance is one of the country's binding constraints to growth, while promoting good governance is one of ADB's "five drivers of change" under "Strategy 2020". Building on ADB's initiatives thus far, ADB should pursue policy dialogue and continue supporting further governance reforms and anti-corruption initiatives of the Government. Learning from past experience, ADB could take a patient, gradual approach, tailor reforms to likely government commitment, recognize the risks to success, and maintain realistic expectations for progress. 239. Work with the Government and development partners to develop a joint strategy for analytical work and a program to contribute to knowledge to Bangladesh's development. ADB has both the opportunity and the mandate to contribute knowledge to Bangladesh's development. The evaluation of the education program, for example, found a need for a comprehensive analysis of education in Bangladesh. Such analysis is relevant to the Government for planning educational development, and to the development partners for planning their support. Also, ADB's 2005 country strategy has much useful information, and in interviews for this evaluation, people familiar with the document thought it was a useful reference, showing the need and demand for information about Bangladesh's development. A country strategy, however, is not an encyclopedia, and knowledge is best produced through targeted research, not a bureaucratic process like that ADB had used for producing country strategies. Strategy 2020 calls for research and knowledge to be an important part of ADB's work in every country. "Knowledge solutions" is one of the strategy's five "drivers of change," and ADB is supposed to "play a bigger part in putting the potential of knowledge solutions to work."154 240. ADB should work with the Government and other development partners to develop a joint strategy and program for analytical work on Bangladesh. Research, maybe more than any other kind of work, should be done working with others, to avoid duplication and take advantage of specialization. The joint strategy could identify the Government's needs, survey existing sources of knowledge relevant to those needs, and set up a clearinghouse so that the development partners and researchers can see what topics are being studied, and where are the best opportunities for additional work. The joint approach to the 2005 country strategy may provide a good model for ADB and other development partners to work together in setting goals and allocating labor across topics. ADB should, however, learn the lessons of the joint approach, releasing ADB's bureaucratic constraints so that joint work can be done efficiently, and so that research can be creative and innovative. 241. Develop a short, simple, practical country strategy focused on the real choices facing ADB. For the next country strategy, ADB is facing similar strategic choices as it faced for the 2005 strategy. Although there is no need for a major change in the sector focus, the next strategy could explain the sectors and subsectors that ADB will support. With the sector focus continuing, ADB's main strategic choices are how to strengthen project design and implementation; how to expand work on private sector development and expand private sector financing; how to respond to the Government's predictable requests for aid in as yet unknown disasters and other emergencies, and how to build partnerships especially for co-financing. These are not major strategic choices, and ADB's next country strategy for Bangladesh could be 200 pages shorter and be done in 2 years less time without sacrificing strategic quality or relevance. ADB is planning to introduce new business processes for country strategies that may help simplify the process and the output.

154

Footnote 2, page 15.

55

242. The Government is still developing the second poverty reduction strategy, but meanwhile it is also planning to develop a new 5-year plan, expected in 2011. Hence, the document representing the Government's future plans is unclear, and is not likely to be available until after ADB's current country strategy expires in 2010. This is the same kind of uncertainty ADB faced in developing the 2005 country strategy, when the Government started to develop a full poverty reduction strategy, but then issued an interim strategy instead. The uncertainty in the Government's future plans extended ADB's bureaucratic process and added to the cost of developing the 2005 country strategy (section III.A and Appendix 6). 243. ADB could manage the uncertainty and contain costs by orienting its next country strategy towards the Government's 5-year plan. There are two ways to do that. First, ADB could develop a full country strategy by the end of 2010, assuming (as the Government claims)155 that the next 5-year plan will be consistent with the next poverty reduction strategy. Or instead, ADB could extend or issue a minor update of the current country strategy, and wait for the 5-year plan before developing a new strategy. Either way, ADB should avoid indecision and keep the strategy process short, focused, and efficient. 244. Develop a results framework relevant to programming and specific to ADB so that ADB can be held accountable for delivering results. ADB's results framework in the 2005 country strategy had 54 monitoring indicators and targets to hit in 3 years. Less than a third of the targets were hit, however, even a year after the expected date (Table 16). None of the targeted results were specific to ADB and neither were they under ADB's control; therefore, it is not realistic to hold ADB accountable for failing to meet those targets. Under ADB's Strategy 2020, "accountability and focus on results" is one of ADB's "corporate-wide core values."156 The results framework in ADB's next country strategy should clearly show what ADB can be held accountable for delivering. 245. ADB can realistically deliver and be held accountable for three kinds of mid-term and long-term results. First, ADB's financing has high value-added in Bangladesh, with interest rates significantly below the Government's marginal cost of borrowing. ADB's financing can therefore expand the Government's current investment plans, and accelerate development. Although ADB could not claim credit for the country's development projects, ADB could take credit and be held accountable for delivering a share of development projects sooner than would be feasible without ADB's financing. For example, instead of targeting expanded power generation for Bangladesh, ADB could realistically and practically target accelerating a specific expansion of power generation by a specific number of years. 246. Second, ADB could play a vital role in larger processes to deliver results. Although ADB is one of the largest financiers in Bangladesh, it can reasonably play only a marginal role in country-wide processes like expanding adult literacy. ADB could work with the Government to develop plans for working towards those goals, and identify specific tasks where the country needs ADB's support. ADB can be held accountable for those tasks, and can credibly claim a role in the larger process. A comprehensive plan with specific roles for ADB is crucial to keep ADB's role credible, practical, and realistic, and for ADB to be held accountable. 247. Third, ADB could target results in specific projects in the mid-term, and work to expand new and innovative approaches throughout Bangladesh in the long term. ADB has significant potential for non-financial value added in Bangladesh, by introducing new ideas and practices in
155 156

Comment from staff of the Planning Commission in a CAPE workshop held in Dhaka on 27 July 2009. Footnote 2.

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designing and implementing projects and programs. ADB's introduction of geo-textile revetments to control riverbank erosion is a good example of the potential for ADB to introduce innovations and promote their adoption through ADB-financed projects. ADB could target, claim credit for, and be accountable for delivering value-added in specific projects. The greatest impact of that value-added, however, will occur in the long-term, as innovations in ADB-financed projects spread throughout the country. With a plan for helping to spread those ideas through ADB's knowledge products and services, ADB could claim partial credit for major, long-term institutional changes in Bangladesh. 248. To develop a practical, realistic results framework for the next country strategy, ADB could start by reviewing the given portfolio of projects, and determining what results ADB could achieve with ongoing projects that are relevant to the Government's priorities and to ADB's corporate results framework. That initial results framework could then be updated annually showing progress towards previous results, and introducing new results, indicators, and targets for newly-approved projects. 249. Box 1 lists the recommendations from sector evaluations. Details are in the sector assessment reports circulated separately (education, urban sector and water supply and sanitation, energy) and in Appendices 9–12.

57
Box 1: Sector-Level Recommendations
1. ï‚· ï‚· ï‚· ï‚· 2. ï‚· ï‚· ï‚· ï‚· 3. ï‚· ï‚· ï‚· ï‚· ï‚· Energy Encourage Government to reform price subsidies. Promote supply-side and demand-side energy efficiency. Be open to financing public sector baseload power generation plants using more efficient technologies. Promote regional trading in electricity. Transport Maintain role as lead development partner to facilitate implementation of the sector reform agenda. Ensure projects are ready for implementation soon after loan approval. Continue promoting road safety and road maintenance. Intensify efforts to increase private sector participation in the transport sector. Disaster Risk Management (DRM) Include DRM Components in all relevant ADTAs and PPTAs, and ensure all relevant projects have suitable DRM components. Appoint DRM focal points in SARD and BRM. Support the planned National Disaster Risk Management Project, and continue promoting geotextilebased revetments. Supervise construction more closely to improve project implementation. Fund and lead a national-level, multi-hazard risk and vulnerability assessment, and fund a cost-benefit study to define what debilitating effect disasters have on the economy of the country and to what extent effective DRM could ameliorate that effect. Education Work with the other development partners to encourage the Government to lead a comprehensive analysis of education, integrating subsectors and charting future strategic direction for each subsector. Focus on education quality, equity, and institutional capacity in the design of future projects/programs. Build on the experience of the subsector-wide approach (SWAp) for primary education in designing future SWAps. Agriculture and Natural Resources Continue supporting projects in agricultural production and rural infrastructure, and strengthen links between rural infrastructure and agriculture to contribute to poverty reduction and social inclusiveness Urban Development, Water Supply and Sanitation Emphasize economic, sector, and thematic work in (i) Dhaka water supply; (ii) pourashava water supply, flood protection, and urban infrastructure; (iii) urban transport; and (iv) decentralization or devolution of powers to local governments. Assign more human resources to the Bangladesh Resident Mission, dedicated to urban development, and consider posting a specialist with a brief to enhance policy dialogue with other development partners and the Government. Consider the relationship among ADB, LGED, and the BMDF, notably in terms of the complementarity of their assistance with that provided by the BMDF. Financing conditions should be harmonized. Law, Economic Management and Public Policy Pursue the dialogue and continue work in anti-corruption and good governance for as long as these areas remain high priorities for the country. Enhance and appropriately resource the governance unit in the Bangladesh resident mission to contribute more strongly in the governance and anti-corruption dialogue, and better collaborate and interact with the Government and its development partners.

4. ï‚· ï‚· ï‚·

5. ï‚·

6. ï‚· ï‚· ï‚·

7. ï‚· ï‚·

ADTA = advisory technical assistance, BMDF = Bangladesh Municipal Development Fund, DP = development partners, DRM = disaster risk management, LGED = Local Government Engineering Department, PPTA = project preparatory technical assistance, SARD = South Asia Department, SWAp = subsector-wide approach.

RECOMMENDATIONS FROM THE 2003 CAPE
CAPE Recommendation From Cross-cutting Issues Consider new approaches to delivering social services to the poor Loan or TA in the Program During 1997-2002 Loan or TA in the Program during 2003-2008 L1881 Post-Literacy and Continuing Education - The Project represents an innovative attempt to address one of the main causes of poverty, especially among women, by focusing on the achievement of functional literacy and the acquisition of practical, employable skills; L2015 Second Primary Education Development Program - Under the component Improving and Supporting Equitable Access to Quality Schooling component, a flexible pool of funding will finance innovative programs based on collaboration between communities, government, and civil society. Grants will be awarded for new proposals, or for continuing and expanding existing innovations; L2101 Teaching Quality Improvement in Secondary Education - An innovation and development fund will be established and made available to teacher education institutions to support and implement reforms and innovative schemes for improving quality. Innovative schemes may include, where possible, learning from and working with NGOs, which have experience in teacher training in secondary education; L2172 Second Urban Primary Health Care - A comprehensive community social mobilization program will be designed to disseminate basic information on project services and motivate the poor to use health facilities. The program will include audiovisual and other innovative methods. Adopted. Comments

58
Appendix 1

RECOMMENDATIONS FROM THE 2003 CAPE
CAPE Recommendation Convince the central Government to strengthen the powers and administrative capacity of local authorities, especially in raising revenue Mainstream environmental considerations Loan or TA in the Program During 1997-2002 No loans or TAs were approved for this purpose during the period Loan or TA in the Program during 2003-2008 None of the six LEMMP ADTAs approved during this period aimed at strengthening local government. Comments Not adopted. Conclusion would have been different had there been at least one big loan and/or several TAs approved under the Subnational Administration subsector. Adopted but mainly as a result of changes in ADB organization and procedures (i.e. establishment of RSDD in 2002 and release of Environmental Assessment Guidelines in 2003).

RSDD was established in 2002 to, among other things, ensure compliance with ADB’s safeguard policies including those on environment. In 2003, ADB released the Environmental Assessment Guidelines. These actions effectively ensured that environmental considerations are mainstreamed in all ADB projects, including those in Bangladesh. Support through credit lines in 4 loans in 2 sectors worth $76 million - L1524 (ANR), L1624 (ANR), L1771 (MS) and L1782 (ANR) Support through credit lines in two loans in one sector worth $60 million - L2070 (ANR) and L2190 (ANR).

Devote more resources to supporting microenterprises across all sectors

Not adopted. Less resources devoted to microenterprises in 2003-2008 than in 1997-2002. Also, support for microenterprises is usually found in three sectors only - ANR, I&T and FIN. Not adopted. No such TA was approved.

Consider non-sector-specific TA to explore ways in which pro-women institutional reform could be most appropriately pursued From Lessons Learned Consider technical assistance in sectors where there is no significant lending

None

Optimize the role of NGOs

Of 24 projects during the period, 29% did not have NGO participation, 50% had some NGO participation, and 21% had substantial role for NGOs

Only one loan was approved for LEMPP, but 13 TAs were approved to support the sector. Several TAs were also approved in the FI and Industry & Trade sectors even if there was no significant lending in these sectors. Of 28 projects during the period, 35% had no NGO participation, 50% had some participation, and only 15% had substantial participation

Adopted.

Not fully adopted. Overall, 65% of public sector projects during 2003-2008 had some NGO participation, which is significant but lower than in 1997-2002. Also, there were more projects without NGO participation and also less projects with substantial NGO participation during 2003-2008. It was

Appendix 1

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RECOMMENDATIONS FROM THE 2003 CAPE
CAPE Recommendation Loan or TA in the Program During 1997-2002 Loan or TA in the Program during 2003-2008 Comments noted that NGO participation was dictated more by the sectors and nature of the projects (i.e., more NGO participation in social projects and sectors such as ANR, HN, MS, WSS and less on infrastructure projects). Explore private sector involvement in social services L1538 Urban Primary Health Care (1997) - Partnership agreements to deliver PHC service packages awarded to private sector participants; L2015 Second Primary Education Development Program - Outsource external monitoring and evaluation services from local institutions and private sector; L2172 Second Urban Primary Health Care - Partnership agreements to deliver PHC service packages will be awarded to private sector participants; NGOs were likewise involved in several community development projects in the ANR and MS sectors Six program loans approved (16% of total number approved during period) worth $405 million (13% of total amount approved during period) Adopted.

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Appendix 1

Consider more use of the program approach

Just one program loan approved (4% of total number approved during period) worth $80 million (5% of total amount approved during period)

Adopted. Significantly more program loans during 2003-2008 than in 19972002 in terms of number and amount

From Implications for Future Strategy and Program Increased support for SME No loans and TAs for SME development involving intermediate development size loan programs and in collaboration with NGOs and selected commercial banks Increase support for the recurrent budget in health and education

L2148, L2149, and L2150 Small and Medium Enterprise Sector Development project consisting of a program loan ($15 million), a project loan ($30 million), and a TA loan ($5 million) Under Second Urban Primary Health Care project, ADB approved grant of $10 million and administered another $30 million worth of grants from Side and DFID. ADB also administered grants worth $389 million from several Dips for the Second Primary Education Development Program and $18 million from Side for the Teaching Quality

Adopted.

Adopted although most of the trading came from other Dips.

RECOMMENDATIONS FROM THE 2003 CAPE
CAPE Recommendation Loan or TA in the Program During 1997-2002 Loan or TA in the Program during 2003-2008 Improvement in Secondary Education project. A small-scale TA (No. 4170) was approved in 2003 for $120,000 to review the arsenic contamination problem and to formulate a strategy for mitigating arsenic contamination. None Comments

Immediate and concerted action backed up by adequate resources to mitigate the spread of arsenic contamination in groundwater Increase TA and financial support to accountable and transparent "champion" organizations

Partly adopted. A study was approved for this purpose but probably not enough resources were provided.

Not adopted. Although several projects involved significant participation of NGOs, none of them identified "champion" organizations that ADB would be working with or providing support to. In most cases, the projects would only have eligibility criteria for participating NGOs. No TA was also provided to any "champion" organization. Adopted. Approvals in both loans and TAs showed declining number of sectors.

Focus interventions on fewer sectors so as to have greater impact on poverty reduction and development effectiveness

Loan approvals declined from 5 sectors in 2004 and 2005 to 4 sectors in 2006 and to 3 sectors in 2007 and 2008; Similar trend in TA approvals (decline in number of sectors); 3-year rolling period shows increase from 6 sectors in 1999– 2001 to 10 sectors in 2004–2006but declined to 9 sectors in 2005–2007 and to 8 sectors in 2006–2008

ADB = Asian Development Bank, ADTA = advisory technical assistance, ANR = agriculture and natural resources, DFID = Department for International Development, DP = development partners, HN = health and nutrition, LEMPP = law, economic management, and public policy, MS = multisector, NGO = nongovernment organization, PHC = primary health care, RSDD = Regional Sustainable Development Department, Sida = Swedish International Development Cooperation Agency, SME = small and medium-sized enterprises, TA = technical assistance, WSS = water supply and sanitation. Source: CAPE Study Team.

Appendix 1

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62

Appendix 2

EVALUATION APPROACH AND METHODOLOGY 1. Preparation of this country assistance program evaluation (CAPE) is based on the Asian Development Bank’s (ADB) Guidelines for the Preparation of Country Assistance Program Evaluation Reports (February 2006), which combine bottom-up assessment with top-down assessment. 2. The top-down evaluation takes a broad view of performance covering the positioning of ADB’s assistance, the quality and responsiveness of ADB’s services, and the overall contribution of ADB’s assistance effort to national development results. Positioning refers to the extent to which ADB’s program of assistance chose the right issues to address and the appropriate instruments with which to address those issues given evolving country assistance requirements. ADB’s performance involves assessing the quality and responsiveness of the services that ADB provided in contributing to the design and delivery of development results. ADB’s contribution to development results refers to the extent to which the sum total of ADB’s program of assistance made an important contribution to development results. 3. The bottom-up assessment separately evaluated the strategy and program of ADB in key sectors according to the criteria of relevance, effectiveness, efficiency, sustainability, and impact. Relevance focused mainly on whether or not ADB’s strategy and program was consonant with the mission of ADB and the key sector priorities and plans of the Government. Effectiveness focused on the achievement of outcomes, as these are the development results that are largely attributable to ADB’s inputs. Efficiency compared the achievement of the country assistance plan goals and objectives with the use of ADB assistance resources. Sustainability focused on the likelihood that the achievement of program results and benefits will be sustained. In terms of impact, the discussion is on ADB’s contribution to sector-level results rather than attribution, as usually many other players are involved in their achievement. 4. Assessments were based on various sources of information: (i) perception surveys; (ii) interviews with officials in the Government of Bangladesh, nongovernment organizations, other development partners, relevant ADB staff, and other stakeholders; (iii) review of documents; (iv) project performance evaluation reports; (v) education, energy, urban development and water supply and sanitation sector assistance program evaluations (SAPEs); (vi) rapid sector assessments for transport, disaster management, agriculture and natural resources, and law, economic management and public policy; and (vii) analysis of data on the Government's and ADB's portfolio of development projects in Bangladesh.

Appendix 3

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SOCIOECONOMIC DATA ON BANGLADESH Table A3.1: Country Economic Indicators
Fiscal Year 2005 440.8 6.0 2.2 8.3 6.4 24.5 25.8 6.5 16.8 11.2 13.8 ( 2.6)

Item A. Income and Growth 1. GDP per Capita ($, current)a 2. GDP Growth (%, in constant prices) a. Agriculture b. Industry c. Services B. Saving and Investment (% of GDP) 1. Gross Domestic Investment 2. Gross National Saving C. Money and Inflation (annual change) 1. Consumer Price Index 2. Total Liquidity (M2) D. Government Finance (% of GDP) 1. Revenue (including grants) 2. Expenditure and Onlending 3. Overall Fiscal Surplus (deficit) E. Balance of Payments 1. Merchandise Trade Balance (% of GDP) 2. Current Account Balance (% of GDP) 3. Merchandise Export ($) Growth (annual % change) 4. Merchandise Import ($) Growth (annual % change) F. External Payments Indicators 1. Gross Official Reserves (including gold, $ million) Months of current year’s imports of goods 2. External Debt Service (% of exports of goods and services) 3. Total External Debt (% of GDP) G. Memorandum Items 1. GDP (current prices, Tk billion) 2. Exchange Rate (Tk/$, average) 3. Population (million)
a

2002 361.6 4.4 0.0 6.5 5.4 23.2 23.4 2.8 13.1 11.2 14.9 (3.7)

2003 389.1 5.3 3.1 7.3 5.4 23.4 24.9 4.4 15.6 11.2 14.5 (3.4)

2004 417.8 6.3 4.1 7.6 5.7 24.0 25.4 5.8 13.8 10.9 13.3 2.4

2006 446.6 6.6 4.9 9.7 6.4 24.7 27.7 7.2 19.3 11.3 13.9 (2.6)

2007 486.8 6.4 4.6 8.4 6.9 24.5 28.7 7.2 17.1 10.7 13.4 (2.7)

2008 558.7 6.2 3.2 6.8 6.5 24.2 30.2 9.9 17.6 11.9 15.8 (3.9)

(3.7) 0.3 5,929.0 (7.6) 7,697.0 (8.7)

(4.3) 0.3 6,492 9.5 8,707.0 13.1

(4.1)
0.3 7,521.0 15.9 9,840.0 13.0

(5.5) (0.9) 8,573.0 14.0 11,870.0 20.6

(4.7) 1.3 10,412.0 21.5 13,301.0 12.1

(5.1) 1.4 12,053.0 15.8 15,511.0 16.6

(7.0) 0.8 13,945.0 15.7 19,486.0 25.6

1,582.9 2.1 9.8 34.5 2,732.0 57.4 131.6

2,469.6 2.9 9.3 34.0 3,005.8 57.9 133.4

2,705.0 2.8 7.0 31.8 3,329.7 58.9 135.2

2,929.9 2.5 6.7 30.5 3,707.1 61.4 137.0

3,483.8 2.7 5.8 30.0 4,157.3 67.1 138.8

5,077.2 3.3 5.3 28.3 4,724.8 69.0 140.6

6,148.8 3.2 4.8 25.5 5,458.2 68.6 142.4

Computed from per capita GDP in Taka divided by the average exchange rate for the period. Sources: ADB Key Indicators, Bangladesh Bank, Ministry of Finance.

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Appendix 3

Table A3.2: Poverty and Social Indicators
Period Item 1990 A. Population Indicators 1. Total Population (million) 2. Annual Population Growth Rate (% change) B. Social Indicators 1. Total Fertility Rate (births/woman) 2. Maternal Mortality Rate (per 100,000 live births) 3. Infant Mortality Rate (below 1 year/1,000 live births) 4. Life Expectancy at Birth (years) a. Female b. Male 5. Adult Literacy (%) a. Female b. Male 6. Primary School Gross Enrollment (%) 7. Secondary School Gross Enrollment (%) 8. Child Malnutrition (% below age 5) 9. Population with Access to Safe Water (%) 10. Population with Access to Sanitation (%) 11. Public Education Expenditure (% of GDP) 12. Human Development Index 13. Human Development Index Rank 14. Gender-Related Development Index 15. Gender-Related Development Index Rank C. Poverty Indicators 1. Poverty Incidence a. Urban b. Rural 2. Poverty Gap 3. Inequality (Gini coefficient) 4. Human Poverty Index 5. Human Poverty Index Rank 109.6 1.9 4.3 480.0 94.0 56.1 56.7 56.5 37.0 23.0 47.0 56.0 28.0 66.0 72.0 41.0 1.5 0.39 147 0.33 116 58.8 44.9 61.2 17.2 25.9 46.5 65.0 2000 129.8 1.3 26. 318.0 58.0 63.6 63.5 63.7 49.6 43.4 55.5 97.3 44.0 48.0 77.0 53.0 2.3 0.47 138 0.47 121 48.9 35.2 52.3 12.8 33.5 42.4 72.0 Latest Year 140.6 1.3 2.4 29.0 43.0 66.6 67.9 65.4 58.3 53.5 63.1 98.8 50.0 48.0 83.8 85.7 1.5 0.52 147 0.52 128 40.0 28.4 43.8 9.0 33.2 36.9 110.0 (2007) (2007) (2007) (2006) (2007) (2007) (2007) (2007) (2007) (2007) (2007) (2007) (2007) (2005) (2006) (2007) (2007) (2006) (2006) (2006) (2006) (2005) (2005) (2005) (2005) (2005) (2006) (2006)

(2002) (2002) (2002) (2003) (2003) (2002) (2002) ('99-'01) (2002) (2002)

(1995) (1995) (1991/92) (1991/92) (1991/92) (1991/92) (1995) (1995)

Sources: Bangladesh Bureau of Statistics, Ministry of Finance, United Nations Development Programme (UNDP) Human Development Indices 2008, World Bank.

Table A3.3: Millennium Development Goals: Bangladesh Progress at a Glance
GOALS, TARGETS AND INDICATORS Base Year 1990-1995 MDG Report a 2005 Current Statusb 2015 Status of progress towards goal

GOAL 1: Eradicate Extreme Poverty and Hunger Goal will probably be met Target 1: Halve by 2015 the proportion of people living below poverty line Proportion by population below national poverty line 58.8 (1991) 49.6 40.0 (2005) 29 Poverty gap ratio 17.2 (1991) 12.5 9 (2005) 8 Share of poorest quintile in national income 6.5 (1991) – 5.3 (2005) Target 2: halve by 2015 the proportion of people who suffer from hunger Prevalence of underweight children under five years of age 67 (1990) 51 39.7 (2005) 33 Proportion of population below minimum level of dietary energy 28 (1990) N/A 19.5 (2005) 14 consumption GOAL 2: ACHIEVE UNIVERSAL PRIMARY EDUCATION Goal will probably be met Target 3: Ensure that all boys and girls complete a full course of primary schooling Net enrollment ratio in primary education 60.5 (1990) 82.7 87.2 (2005) 100 Proportion of pupils starting grade 1 who reach grade 5 43.0 38.8 53.0c (2005) 100 Adult literacy rate of 15+ years old 36.9 (1990) – 54 (2006 ) 100 GOAL 3: PROMOTE GENDER EQUALITY AND EMPOWER WOMEN Goal will probably be met Target 4: Eliminate gender disparity in primary and secondary education preferably by 2005, and at all levels by 2015. Ratio of girls to boys in primary education 45:55 48:52 53:47 (2005) 50:50 Ratio of girls to boys in secondary education 34:66 52:48 50:50 (2005) 50:50 Ratio of women to men in tertiary education institutes 25:75 36:64 92:58 (2006) 50:50 Ratio of literate women to men, 20-24 years old 42:58(1992) 55:71 46:54 (2002) 100:100 Share of women in wage employment in the non-agriculture sector 40.7 (1991) N/A 58.6 (2003) 50 Proportion of seats held by women in national parliament 10.3 (1991) 2% 14.8 (2006) GOAL 4: REDUCE CHILD MORTALITY Goal will probably be met Target 5: Reduce by two thirds by 2015, the under-five mortality rate Under five mortality rate (per 1,000 live births) 151 (1990) 82 62 (2006) 50 Infant mortality rate (0-1 year per 1,000 live births) 94 (1990) 56 45 (2006) 31 Proportion of 1 year-old children immunized against measles 54 (1991) 69 87.2 (2006) 100 GOAL 5: IMPROVE MATERNAL HEALTH Goal will probably be met Target 6: Reduce by the three quarters by 2015, the maternal mortality ratio Maternal mortality ratio (per 100,000 live births) 574 (1990) 320-400 290 (2006) 147 Proportion of births attended by skilled health personnel 5 (1990) 12 20 (2006) 50 GOAL 6: COMBAT HIV/AIDS, MALARIA, AND OTHER DISEASES Goal will probably be met Target 7: Have halted by 2015 and begin to reverse the spread of HIV/AIDS HIV prevalence among 15-24 year-old pregnant women N/A N/A N/A Contraceptive prevalence rate 40.0 N/A 58.1 (2004) Target 8: Have halted by 2015 and begin to reverse the incidence of malaria and other major diseases Notified cases of malaria per 100,000 population 42.38 (2001) – 34 (2005) Malaria death rate per 100,000 population, all ages 0.35 (2005) Proportion of population in Malaria risk areas using effective Malaria N/A N/A N/A prevention and treatment measures

On track On track – On track On track

On track Needs attention Needs attention Achieved Achieved Needs attention Needs attention On track – On track On track On track On track Needs attention – Insufficient data Insufficient data Insufficient data –

Appendix 3

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66

GOALS, TARGETS AND INDICATORS

Base Year 1990-1995

Tuberculosis prevalence rate per 100,000 population 406 (2005) Insufficient data Tuberculosis death rate per 100,000 population 47 (2005) Insufficient data Proportion of Tuberculosis cases detected under directly-observed 34 34 71.1 (2005 100 On track treatment short courses Proportion of Tuberculosis cases cured under directly-observed treatment 84 84 91.5 (2005) 100 On track short courses GOAL 7: ENSURE ENVIRONMENTAL SUSTAINABILITY Goal will probably be met Target 9: Integrate principles of sustainable development into country policies and programs, and reverse the loss of environmental resources Proportion of land area covered by forest 9 (1990) 10.2 13 (2006) 20 Needs attention Ratio of protected area to surface area for maintaining biological diversity – .01 2 (2006) – Insufficient data Carbon dioxide per capita emissions 0.14 (1990) 0.189 0.3 (2006) – Low contribution t pollution in global context Consumption of Ozone-Depleting CFCs 195 (1990) – 196.2 (2006) – Low contribution to pollution in global context Energy use (apparent consumption; Kg oil equivalent) per $1,000 (PPP) 123.18 (1990 92.36 (2000) – Insufficient data GDP Proportion of population using solid fuels N/A – 87.6 (2006) – Insufficient data Target 10: Halve by 2015, the proportion of people without sustainable access to safe drinking water and sanitation Proportion of urban population with access to safe drinking water 98.8 (1991) 82 99.99 (2006) 100 On track Proportion of rural population with access to safe drinking water 93.1 (1991) 72 79 (2006) 96.5 Needs attention Proportion of urban population with access to sanitary latrines 56.2 (1991) 56 88 (2007) 85.5 On track Proportion of rural population with access to sanitary latrines 15.3 (1991) 29 85 (2007) 55.5 On track Target 11: By 2020, have achieved a significant improvement in the lives of at least 100 million slum dwellers Proportion of households with access to secure tenure – – 36.4 (2006) – Insufficient data GOAL 8: DEVELOP A GLOBAL PARTNERSHIP Goal will probably be met Target 12: Develop further an open, rule-based, predictable non-discriminatory trading and financial system Net ODA received by Bangladesh (m US$) 1240 (1990) 102 (2002) 110 (2006) – – Net ODA as % of GNI (Bangladesh) 5.7 (1990) .05 0.2 (2006) – – Target 13: Address the special needs to the latest developed countries Proportion of bilateral ODA of OECD/DAC donors that is united – 79.1 82 (2005) – Insufficient data Target 14: Deal comprehensively with the debt problems of developing countries through national and international measures in order to make debt sustainable in the long-term Average tariffs imposed by developed countries on agricultural products – 12 12-16 (2006) – Insufficient data and textiles and clothing from developing countries (Bangladesh) Debt service as percentage of exports of goods and services 20.9 (1990) 7.29 8.8 (2005) – Needs attention Target 15: In cooperation with developing countries, develop and implement strategies for decent and productive work for youth Youth unemployment rate, aged 15-24, both sexes 2.88 (1990) 8 13.4 (2003) – Needs attention Target 16: In cooperation with pharmaceutical companies, provide access to affordable essential drugs in developing countries Proportion of Bangladesh population with access to affordable essential – 80 – – Insufficient data drugs on sustainable basis

MDG Report 2005a 233

Current Statusb

2015

Status of progress towards goal

Appendix 3

a b

MDG Current Statusb 2015 Status of progress Report towards goal 2005a Target 17: In co-operation with the private sector, make available the benefits of new technologies, especially information and communications Telephone lines and cellular subscribers per 100 population 0.2 (1990) 1.32 13.6 (2006) On track Personal computers per 100 population – 0.34 1.4 (2006) – Insufficient data Internet users per 100 population – 0.15 0.2 (2006) – Insufficient data GOALS, TARGETS AND INDICATORS Base Year 1990-1995

Millennium Development Goals: Bangladesh Progress Report 2005 jointly prepared by GoB and UNCT. The data range between the years 2000–2002. Millennium Development Goals: A mid-term Bangladesh Progress Report December 2007 by General Economics Division, Planning Commission. Most of the data range between 2004–2007. Data for only two indicators: Most of the data range between 2004 and 2007 "ratio of literate women to men" and "share of women in wage employment in the non-agriculture sector" are for 2003 and 2003 respectively. c According to the Ministry of Primary and Mass Education.

Appendix 3

67

68

Appendix 4

FINANCING THE GOVERNMENT OF BANGLADESH'S BUDGET DEFICIT AND ANNUAL DEVELOPMENT PROGRAMME A. Government's Fiscal Performance

1. The Government's total revenues (excluding grants) grew steadily from taka (Tk)198 billion in fiscal year (FY) 1999 to Tk605 billion in FY2008 for a compounded annual growth rate (CAGR) of 13% (Table A4.1). Total revenues as a percentage of GDP improved from 9.0% in FY1999 to 11.1% in FY2008. This improvement was attributed mainly to better tax management, improved taxpayer compliance, and collection of arrears. Tax revenue— consisting of income tax, value added tax (VAT), customs duty, excise duty and other taxes and of the Government revenue, accounting for an average of 80% of total revenues from FY1999 to FY2008. Bangladesh's tax revenue–to-GDP ratio of 8.3% in FY2007 is lower than the ratio for the Lao People's Democratic Republic (9.2%), Cambodia (9.3%), Nepal (10.2%), Pakistan (11.0%), Indonesia (11.4%), Viet Nam (14.2%), Philippines (14.3%), and Sri Lanka (16.3%).1 Non-tax revenue grew at a CAGR of 15% from FY1999 to FY2008 and includes such items as Telegraph and telephone board receipts, dividends and profits from state-owned enterprises, administrative fees and charges, and interest. Table A4.1: Government Revenue and Receipts FY1999 to FY2008
FY1999 In Tk Billion Tax Revenue Non-tax Revenue Total Revenue FY2000 FY2001 FY2002 FY2003 FY2004 FY2005 FY2006 FY2007 FY2008 CAGR

161.7 36.0 197.7

160.8 40.0 200.7

197.8 45.6 243.4

213.3 65.6 278.9

249.5 61.7 311.2

283.0 71.0 354.0

319.5 72.5 392.0

361.8 86.9 448.7

392.5 102.3 494.8

480.1 125.3 605.4

13% 15% 13% Ave.

As % of Total Revenue Tax 81.8 80.1 Revenue Non-tax 18.2 19.9 Revenue As % of GDP Tax Revenue Non-tax Revenue Total Revenue

81.3 18.7

76.5 23.5

80.2 19.8

79.9 20.1

81.5 18.5

80.6 19.4

79.3 20.7

79.3 20.7

80.0 20.0

7.4 1.6 9.0

6.8 1.7 8.5

7.8 1.8 9.6

7.8 2.4 10.2

8.3 2.1 10.4

8.5 2.1 10.6

8.6 2.0 10.6

8.7 2.1 10.8

8.3 2.2 10.5

8.8 2.3 11.1

Sources: Ministry of Finance Bangladesh Economic Reviews; Bangladesh Bank Annual Reports. CAGR = compounded annual growth rate

2. Public expenditure consists of non-development expenditure, development expenditure, and other expenditure. Public expenditure grew at a compounded annual growth rate of 14% from Tk297.8 billion in FY1999 to Tk936.1 billion in FY2008 (Table A4.2). Non-development expenditure comprises salaries and allowances, subsidies and current transfers, and interest payments on foreign and domestic debt. It accounted for an average of 58.7% of total expenditures from FY1999 to FY 2008 and grew at a CAGR of 15% during the period.
1

International Monetary Fund. 2008. IMF Country Report No. 334. October. Washington, D.C.

Appendix 4

69

Development expenditure, which comprises projects in the Annual Development Programme (ADP), grew at a slower pace of 7% per annum and accounted for an average of 35.2% of total expenditures during the same period. Other expenditure accounted for the remaining 6.1% of total expenditure and includes capital expenditure, food expenditure, net lending, and other development expenditures. Table A4.2: Public Expenditure FY1999 to FY2008
FY1999 In Tk Billion Nondevelopment Expenditure Development Expenditure Other Expenditure Total Expenditure 165.6 123.3 8.9 297.8 FY2000 182.0 152.2 10.5 344.6 FY2001 205.4 159.0 9.6 374.0 FY2002 227.0 150.5 30.1 407.6 FY2003 253.1 169.0 14.9 437.0 FY2004 283.9 190.0 19.8 493.7 FY2005 333.2 205.0 18.1 556.3 FY2006 366.2 215.0 29.4 610.6 FY2007 417.3 216.0 35.1 668.4 FY2008 574.3 225.0 136.8 936.1 CAGR 15% 7% 35% 14% Ave. 54.9 42.5 2.6 55.7 36.9 7.4 57.9 38.7 3.4 57.5 38.5 4.0 59.9 36.8 3.2 60.0 35.2 4.8 62.4 32.3 5.3 61.3 24.0 14.6 58. 35.2 6.1

As % of Total Expenditure Non55.6 52.8 development Expenditure Development 41.4 44.2 Expenditure Other 3.0 3.0 Expenditure As % of GDP Nondevelopment Exp. Development Expenditure Other Expenditure Total Expenditure

7.5 5.6 0.4 13.6

7.7 6.4 0.4 14.5

8.1 6.3 0.4 14.8

8.3 5.5 1.1 14.9

8.4 5.6 0.5 14.5

8.5 5.7 0.6 14.8

9.0 5.5 0.5 15.0

8.8 5.2 0.7 14.7

8.8 4.6 0.7 14.1

10.6 4.2 2.5 17.3

Sources: Ministry of Finance Bangladesh Economic Reviews; Bangladesh Bank Annual Reports

3. From FY2002 to FY2007, the Government managed to keep the budget deficit (excluding grants) below 5.0% of GDP. In fact, the budget deficit improved from 6.1% of GDP in FY 2000 to only 3.7% in FY2007, mainly as a result of improved tax collection (see Figure A4.1). In FY2008, despite another impressive revenue collection effort by the Government, the deficit jumped back to 6.1% of GDP as the Government, for the first time, assumed the liabilities of Bangladesh Petroleum Corporation (BPC) amounting to Tk75.2 billion.

70

Appendix 4

Figure A4.1: Government Revenue and Budget Deficit as % of GDP
Government Revenue and Budget Deficit as % of GDP
20.0% 18.0% 16.0% 14.0% 12.0% 4.6% 10.0% 8.0% 6.0% 9.0% 4.0% 2.0% 0.0% FY1999 8.5% 9.6% 10.2% 10.4% 10.6% 10.8% 11.2% 6.1% 5.2% 4.7% 4.2% 4.2% 4.4% 3.9% 3.7% 6.1%

10.6%

10.5%

FY2000

FY2001

FY2002

FY2003

FY2004

FY2005

FY2006

FY2007

FY2008

Revenue as % of GDP

Budget Deficit as % of GDP

Sources: Ministry of Finance Bangladesh Economic Reviews; Bangladesh Bank Annual Reports

B.

Financing the Budget Deficit

4. The budget deficit over the past decade was financed almost evenly from foreign and domestic sources (Table A4.3). Foreign grants as a funds source declined from 29% in FY1999 to 16% in FY2008, but the decline was offset by foreign loans which increased from 25% to 32% during the same period. Bangladesh is still considered a low-income country. Thus most foreign loans to the Government are highly concessional with low interest rates of 0% to 1.5% and long maturity periods of 24 to 40 years.2 The biggest lenders to Bangladesh are the International Development Association (IDA) and the Asian Development Bank (ADB), while the biggest sources of grant are Japan and the United Kingdom. Bangladesh's external debt outstanding grew from $14.8 billion at end-FY 1999 to $21.3 billion end-FY 2008. However, total debt service liability as a percentage of total foreign exchange earnings dropped from 7.0% to 3.6% during the same period due to improved commodity export earnings and workers remittances.

2

Out of the 57 ADB public sector loans to Bangladesh from 1999 to 2008, 46 loans were from the Asian Development Fund (ADF, 81%) with interest rates of 1.0% during the grace period and 1.5% thereafter. ADF loans typically have terms of 32 years and grace periods of 8 years. The remaining 11 loans were funded from OCR that had floating interest rates based on the London interbank offered rate (LIBOR), which averaged 3.0% from 1999 to 2008.

Appendix 4

71

Table A4.3: Government Budget Deficit Financing
FY1999 In Tk Billion Foreign Grants Foreign Loans Domestic Bank Loans Domestic Nonbank Loans Total FY2000 FY2001 FY2002 FY2003 FY2004 FY2005 FY2006 FY2007 FY2008 Total

29.2 25.3 19.9 27.7 102.1

36.5 22.8 35.3 32.3 126.9

27.2 24.3 29.1 42.1 122.7

27.5 30.6 25.7 47.1 130.9

24.5 45.4 -9.8 47.9 108.0

26.6 53.3 26.7 46.6 153.2

26.4 61.9 36.8 29.7 154.8

24.8 55.8 60.4 31.0 172.0

21.5 51.8 44.2 46.8 164.3

43.9 87.5 109.6 31.4 272.4

288.1 458.7 377.9 382.6 1,507.3 Ave.

As % of Total Financing Foreign 29 Grants Foreign 25 Loans Sub-total 54 Foreign Domestic Bank Loans Domestic Nonbank Loans Sub-total Domestic 19 27 46

29 18 47

22 20 42

21 23 44

23 42 65

17 35 52

17 40 57

14 32 46

13 32 45

16 32 48

20 30 50

28 25 53

24 34 58

20 36 56

-9 44 35

17 30 48

24 19 43

35 18 54

27 28 55

40 12 52

25 25 50

Sources: Ministry of Finance Bangladesh Economic Reviews; Bangladesh Bank Annual Reports.

5. Domestic bank loans include obligations of the Bangladesh Bank (mostly overdraft blocks), and Treasury-bills and Bonds issued by the Government and held by deposit money banks. Bonds have maturities of 2 to 25 years although the bulk of issuances are 5 and 10 year bonds. Coupon rates on outstanding bonds range from 5% to 8%. Nonbank loans, on the other hand, comprise national savings scheme certificates (NSSCs) and Treasury bills and bonds issued to and held by the public. The weighted average yields on 5-year and 10-year bonds auctioned in FY2008 were around 10.7% and 11.9%, respectively. Interest rates on NSSCs were slightly higher at 12.0% to 12.5%. Although domestic bank loans and nonblank loans were almost equal for the 10-year period ending 30 June 2008, the former have noticeably increased in recent years. C. Composition and Financing of the Annual Development Programme (ADP)

6. ADP expenditure grew at a compounded annual growth rate of 7% from Tk123 billion in FY1999 to Tk225 billion in FY2008. This was slower than the growth rate of non-development expenditure (15%). ADP expenditure was financed almost evenly from foreign and domestic sources during the past decade (Table A4.4). It was only in FY2008 when there was a big difference between the two financing sources in favor of foreign financing.

72

Appendix 4

Table A4.4: ADP Expenditure Financing (% of Total)
Foreign Domestic FY1999 58 42 FY2000 50 50 FY2001 48 52 FY2002 51 49 FY2003 48 52 FY2004 50 50 FY2005 51 49 FY2006 50 50 FY2007 47 53 FY2008 63 37 Ave. 52 48

Sources: Ministry of Finance Bangladesh Economic Reviews.

Appendix 5

73

DETAILS OF ADB'S COUNTRY STRATEGIES Table A5.1: Outline of ADB's Country Strategies
1999 Country Operational Strategy Poverty Partnership Agreement* and 2000 2005 Country Strategy and Program (CSP)

Core Strategic Areas Sustainable Economic Growth: Promoting faster private Sustainable Economic Growth: Improving the investment sector-led economic growth climate for private sector-led growth and employment ï‚· Help the Government speed up policy reforms ï‚· Private sector lending complements public sector lending ï‚· Provide assistance to improve infrastructure and financial systems ï‚· Provide catalytic role in attracting private investment ï‚· Support build-operate-transfer projects in power, ï‚· Modernize management in key transport corridors ports, gas, and telecommunications. (including Dhaka–Chittagong) ï‚· Facilitate cross-border trade and investment flows ï‚· Foster competitive, impartially regulated, and financially sound power and hydrocarbon entities ï‚· Develop the Padma Bridge ï‚· Improve the soundness and depth of the financial markets (enhance small and medium-sized enterprises (SME) access to finance; complementing the International Monetary Fund (IMF) and World Bank) ï‚· Diversify agricultural production ï‚· Strengthen farm-to-market linkages ï‚· Expand access to irrigation and associated flood protection through command area and small-scale water resource management ï‚· Improve the enabling environment for agribusiness (emphasis on initiatives by women and other excluded groups) Inclusive Social Development: Advancing the social Inclusive Social Development: Creating better development agenda to empower the poor so that all development opportunities for the poor benefit from growth ï‚· Assist the Government to invest in, and encourage ï‚· Play a leading role in providing support for social community and private sector participation in, rural development development, including rural infrastructure and credit ï‚· Improve the quality and relevance of primary and secondary education, and technical and vocational ï‚· Focus on small and secondary town development training ï‚· Focus on private sector projects that create jobs ï‚· Target urban maternal and child health care services ï‚· Support primary health, and primary, secondary, to poor women and children through publicand nonformal education nongovernment organization (NGO) partnerships ï‚· Increase equitable access of women to social ï‚· Improve infrastructure in urban slums services ï‚· Improve urban water supply and sanitation (including Dhaka) Governance for Effective Policies and Institutions Governance for Effective Policies and Institutions: Addressing key governance issues on a sector and ï‚· Develop core administrative capacity thematic basis as a crosscutting enabler ï‚· Reform state-owned enterprises ï‚· Recognize that a long time frame will be required to ï‚· Strengthen legal frameworks forge progress ï‚· Strengthen anticorruption ï‚· Pay more attention to transforming organizations ï‚· Build the Government's relationships with NGOs ï‚· Play a major role in improving sector and local and the private sector governance ï‚· Support anticorruption ï‚· Help improve access to justice ï‚· Help build governance management capacity ï‚· Encourage the Government to play a more effective regulatory and policymaking role ï‚· Widen the scope for private sector, NGO, and community-based organizations to supply public

74

Appendix 5

1999 Country Operational Strategy Poverty Partnership Agreement*

and

2000

2005 Country Strategy and Program (CSP) ï‚· ï‚· ï‚· ï‚·

services Improve financial management Modernize procurement practices Promote the spread of e-governance Focus on decentralizing and strengthening local government ï‚· Improve local resource mobilization, planning, and management capacity ï‚· Support involvement of communities (including women and other excluded groups) and the private sector in planning and delivering local services ï‚· Lead reforms in sector governance, and raising efficiency in energy, transport, education, urban health, urban water supply, and urban sanitation ï‚· Support reforms in agriculture (including agribusiness), water resource management, and in the financial sector (including SME development) Crosscutting Strategic Themes Promoting the Role of Private Sector in Development Promoting the Role of Private Sector in Development ï‚· Public and private sector operations will work in ï‚· Support private sector development through public harmony sector operations ï‚· Make Bangladesh more attractive to foreign direct investment (FDI) ï‚· Widen opportunities for public-private partnerships in energy, transport, social, and financial sectors ï‚· Ease infrastructure bottlenecks to growth ï‚· Build the basic education, skills, and health foundation for a more productive labor force ï‚· Nurture SMEs ï‚· Improve private financial governance ï‚· Facilitate restructuring and privatization of selected state-owned enterprises SOEs ï‚· Help improve the policy and regulatory environment for private sector development Supporting Regional Cooperation and Integration for Supporting Regional Cooperation and Integration for Development Development ï‚· Support reforms in the external trade regime ï‚· Promote subregional cooperation ï‚· Provide regional technical assistance and knowledge ï‚· Play role as "honest broker" rather than leader of products to build capacity to respond to cross-border cooperation challenges (e.g., trafficking and disaster ï‚· Prefer small projects from ongoing national management) programs ï‚· Establish an integrated subregional transport and ï‚· Focus on regional transport energy network ï‚· Support regional power sharing and cooperation in gas Addressing Environmental Sustainability Addressing Environmental Sustainability ï‚· Mainstream environmental concerns in all ADB ï‚· Address environmental concerns in all Asian operations Development Bank (ADB) projects ï‚· Promote improvements in water and air quality ï‚· Build capacity in environmental planning, management, legislation, and regulation ï‚· Mitigate arsenic contamination ï‚· Pay attention to urban environmental improvement ï‚· Promote environmentally benign interventions in and poverty-related environmental issues energy and transport ï‚· Promote solid waste management, drainage, and ï‚· Foster sustainable agriculture pollution control ï‚· Raise knowledge and awareness of environmental management Capacity Building Capacity building ï‚· Support capital market development ï‚· Build financial institutions ï‚· Support customized approaches to enhance ï‚· Build capacity in environmental planning, governance in front-line organizations management, legislation, and regulation

Appendix 5

75

1999 Country Operational Strategy Poverty Partnership Agreement*

and

2000

2005 Country Strategy and Program (CSP) ï‚·

Use more local experts in project design and implementation ï‚· Encourage participatory development and community participation ï‚· Build local government's and agencies' capacity to plan, finance, operate, and maintain public services Gender Gender ï‚· Use project-specific gender action plans to promote ï‚· Support policies, capacity building, and awareness women’s participation in planning, implementation, raising and monitoring of projects ï‚· Help implement commitments to Fourth World Reduce gender wage gaps in ADB-supported Conference on Women and Government's National ï‚· activities Action Plan for Women Build capacity of local government and others in ï‚· Support women's access to resources and services ï‚· gender-sensitive policy and program planning ï‚· Promote women's employment and income ï‚· Support sector studies to identify opportunities to generation close gender gaps ï‚· Ensure participation of tribal women ï‚· Help mainstream gender considerations in ministries ï‚· Incorporate affirmative action for women in social and agencies infrastructure ï‚· Develop monitoring mechanisms to track progress in ï‚· Support land titling, inheritance rights, and user overcoming gender discrimination rights through rural development projects ï‚· Support development and implementation of the national action plan for women’s advancement and other measures in the national plan Disaster Mitigation ï‚· Promote adoption of best international approaches to early warning systems and disaster mitigation ï‚· Develop regional planning, cross-border resource management, and risk mitigation capacity ï‚· Support policies to improve preparedness and adapt to flooding, rather than alter natural flows (excepting selective support for flood control in major urban areas) ï‚· Ensuring that flood risks are assessed during project preparation ï‚· Design projects that can withstand anticipated flooding ï‚· Include site-specific flood control measures Strategic Operating Principles Sovereign lending philosophy Sovereign lending philosophy ï‚· Ensure policy and institutional reforms are wellï‚· Gradually change from physical investment to sequenced promoting policy and institutional reforms ï‚· Integrate assistance with that of other aid ï‚· Evaluate projects for their contribution to reforms organizations and institutional development Promote private sector and civil society, including ï‚· Play a more active role in regional cooperation and ï‚· NGO participation, in infrastructure and public governance, including administrative reforms services ï‚· Separate physical investment, policy reforms, and ï‚· Use national systems to the greatest extent possible institutional reforms into three coherent components ï‚· Align the program with the Government's priorities* ï‚· Finance projects in areas with high poverty rates* Principles for overall sovereign lending Principles for overall sovereign lending ï‚· Process four loans per year ï‚· Use pilot financing instruments and modalities including multitranche financing facility Emphasize ï‚· Use ordinary capital resources (OCR) for projects sector development program loans that generate foreign exchange ï‚· Choice of assistance instruments will be made as ï‚· Use Asian Development Fund (ADF) for poverty part of the design and delivery of the program reduction, social services, and environmental management ï‚· Build and foster use of country systems ï‚· Annual ADF lending of $350 million to US$400 ï‚· Encourage ownership and participation in designing

76

Appendix 5

1999 Country Operational Strategy and Poverty Partnership Agreement* million* ï‚· Annual OCR lending up to $50 million*

2000

2005 Country Strategy and Program (CSP) and managing the program Cofinance all large-scale infrastructure projects with several partners ï‚· ADF lending averaging $300 million annually ï‚· Use ADF to finance development of complex energy and transport projects ï‚· OCR lending averaging $300 million annually ï‚· Use OCR lending to finance major infrastructure projects Principles for selecting sectors for sovereign lending ï‚· Focus on fewer sectors ï‚· Exit the following sectors (without compromising results of past projects): ï‚· Biodiversity ï‚· Forestry ï‚· Land administration reform ï‚· Stand-alone crop diversification ï‚· Livestock development ï‚· Rural livelihood development ï‚· Clean fuel development ï‚· Early childhood development

Principles for selecting sectors for sovereign lending ï‚· Reduce the number of subsectors from 30 to 15 or less ï‚· Provide an average of three successive interventions in each selected subsector over approximately 10-12 years, depending upon satisfactory implementation ï‚· Drop an existing subsector whenever a new subsector is adopted ï‚· Support only subsectors where there is an updated comprehensive sector study and a clear strategy for ADB’s long-term involvement (within 2 years, complete a new set of long-term operational strategies for each subsector) ï‚· Sectors must help reduce poverty or promote private sector development ï‚· Government must have firm ownership of and commitment to reforms and institutional change (Slow down project processing and, if necessary, temporarily withdraw from sectors or subsectors where agreed-upon policy reforms are not implemented) ï‚· ADB can play an important or leading role ï‚· ADB can catalyze private sector investment ï‚· Must be a clear division of labor among other aid agencies Principles for selecting projects for sovereign lending ï‚· Avoid ad hoc or one-off type of projects which are not grounded in solid sector work Principles for designing public projects and processing sovereign loans ï‚· Strengthen project preparatory technical assistance ï‚· Involve NGOs and women in project design ï‚· Use sector development program loans more frequently, gradually becoming the preferred modality ï‚· Mobilize cofinancing

Selected sectors and subsectors for sovereign lending

Principles for designing public projects and processing sovereign loans ï‚· Use a sector approach for railways (jointly with the World Bank and others) ï‚· Build country capacity in designing and implementing projects ï‚· Rely on local experts to design and implement projects ï‚· Ensure community participation (especially by women and disadvantaged groups) ï‚· Design projects that are better prepared for implementation (i.e., less complex; advanced stage of recruitment of project consultants and finalized procurement plans) ï‚· Consider capacity constraints ï‚· Include covenants that are realistic, focused, and properly sequenced ï‚· Ensure transparency and accountability in the flow of funds and implementation mechanisms Selected sectors and subsectors for sovereign lending

Appendix 5

77

1999 Country Operational Strategy Poverty Partnership Agreement* ï‚· Agriculture and Natural Resources Rural roads Small-scale irrigation Agro business credit Flood protection Microfinance ï‚· Health Basic health care Family planning ï‚· Education Primary Secondary Nonformal ï‚· Energy Power generation Gas ï‚· Transport and Communication Railways Roads Ports Telecommunications ï‚· Finance Capital markets ï‚· Urban Development Urban water supply and sanitation* ï‚· Governance

and

2000

2005 Country Strategy and Program (CSP) ï‚· Agriculture and Natural Resources

ï‚· ï‚·

Health Education Primary Secondary Madrasah Energy Transport and Communications Ports Roads and bridges Railways

ï‚· ï‚·

ï‚·

Principles for private sector lending

Finance Small and medium-sized enterprises ï‚· Urban Development Water supply and sanitation ï‚· Governance Principles for implementing sovereign projects ï‚· Review, monitor, and follow up agreed-upon projectand sector-specific action plans ï‚· Delegate more project supervision to the resident mission ï‚· Involve civil society in monitoring and evaluation of ADB operations ï‚· Joint monitoring and managing for results with the Government and aid organizations ï‚· Review portfolio regularly with the Government and three other partners, following the agreed-upon project- and sector-specific actions plans and results framework ï‚· Harmonize the procurement guidelines among aid organizations and the Government’s 2003 public procurement regulations Principles for private sector lending ï‚· Complement public sector operations ï‚· Support infrastructure development ï‚· Support financial sector reforms ï‚· Introduce innovative approaches in equity participation and lending ï‚· Introduce new instruments and contractual arrangements for managing private sector risk Principles for technical assistance ï‚· $1.6 million annual grant funding (including project preparation) ï‚· More funding for capacity building and design of reforms

Topics for advisory technical assistance ï‚· Macroeconomic management ï‚· Judicial reforms

78

Appendix 5

1999 Country Operational Strategy and 2000 Poverty Partnership Agreement* ï‚· Banking and financial sector development ï‚· Administrative reforms ï‚· Foreign investment promotion ï‚· Civil society development Reforms to be supported ï‚· Income redistribution ï‚· Privatization of SOE ï‚· Strategy for coastal sustainable development ï‚· Private sector financial intermediation (especially for SMEs)*

2005 Country Strategy and Program (CSP)

Principles for Monitoring Results ï‚· Country Assistance Plan will report if the program follows the country strategy, impacts of the strategic priorities, policy and institutional achievements, and lessons learned ï‚· Support monitoring and evaluation of poverty reduction

Results focus ï‚· CSP Results Framework will help the Implementation, Monitoring, and Evaluation Division of the Ministry of Planning track sector reforms and physical progress of projects ï‚· Joint Results Framework will be the basis for assessment by the General Economics Division of the Planning Commission on overall progress in poverty reduction and delivery of key results under the National Poverty Reduction Strategy (NPRS) ï‚· Build capacity of both government institutions involved in monitoring results ï‚· Update results frameworks periodically to ensure their relevance Principles for Monitoring Results ï‚· Maximize use of national systems, and build capacity to generate and utilize required information ï‚· National Poverty Focal Point at the General Economics Division (GED) will coordinate poverty monitoring and evaluation with the Implementation, Monitoring, and Evaluation Division (IMED) ï‚· Build GED’s capacity by mobilizing technical staff and developing an effective management information system ï‚· Establish links between GED and IMED, and among GED’s management information system and the databases of the Bangladesh Bureau of Statistics (BBS), Bangladesh Bank, and line ministries ï‚· Build capacity of BBS ï‚· Integrate BBS with Bangladesh Bank, Bangladesh Institute of Development Studies, and line ministries ï‚· Network with NGOs and civil society for participatory monitoring of NPRS ï‚· Assist GED in establishing a framework for poverty monitoring and evaluation ï‚· Develop a participatory poverty monitoring mechanism ï‚· Devise means for engaging civil society organizations ï‚· Track progress in poverty reduction and delivery of results ï‚· Assess reforms and implications for poverty reduction, sector portfolio performance, lending and nonlending assistance to ensure ADB's relevance and effectiveness, performance-based allocation of ADF, and OCR borrowing capacity ï‚· CSP monitoring will be a part of the overall monitoring of NPRS implementation ï‚· Use and build capacity of the Government’s

Appendix 5

79

1999 Country Operational Strategy Poverty Partnership Agreement*

and

2000

2005 Country Strategy and Program (CSP) monitoring and evaluation systems Integrate CSP monitoring with efforts to assess performance of other foreign aid ï‚· Jointly monitor and manage for results Resource Requirements ï‚· No substantial increase in staffing (must fill vacant posts immediately) ï‚· Change in staff mix toward governance, urban water supply and sanitation, and solid waste management ï‚· Less effort required in progress review ï‚· More attention to procurement, financial management, performance audits, monitoring and evaluation, and cooperation with civil society ï‚· Developing larger and fewer projects should help ease constraints on technical assistance (TA) resources ï‚·

Resource Requirements

Table A5.2: Partnership Principles for the Joint Approach to Country Strategies, ADB, DFID, Japan, and World Bank
(i) (ii) (iii) (iv) (v) (vi) (vii) (viii) (ix) (x) (xi) (xii) (xiii) (xiv) (xv) (xvi) (xvii) (xviii) We will invest time and effort into understanding different agency mandates. We will recognize our relative institutional strengths and build upon those strengths. We will work in partnership, resolving differences openly and constructively and will respect each other's views. We will share information in a spirit of openness. We commit to mutual respect in the matter of communication. We will communicate and maintain agreed-upon common messages to the Government and others. We will represent each other's interests to the Government and other development partners whenever possible. We commit to ensuring coherence between field offices and our respective agency headquarters. We commit to coordinating and harmonizing our activities in support of agreed-upon outcomes. We recognize the high transaction costs associated with such partnerships and resolve to ensure that we will always carefully weigh the costs and benefits of all joint activities and avoid imposing unnecessary burdens on each other. We aim to build and maintain our understanding of Bangladesh's development context and base our engagement on this knowledge. We aim to continue to deepen our understanding of the incentives and institutions in each sector where we provide support. We are committed to building the capacity in Government to lead and implement its development agenda. We commit to base our dialogue and programs on Bangladesh's development agenda. We will work with the Government to identify a manageable number of achievable priorities and align our strategies around such priorities. We commit to a participatory approach with the Government, ensuring that commitment and ownership exist before providing support. We will be realistic in our expectations, we will be patient, and we will take a long-term perspective. Above all, we will ensure that everything we do is in the long-term interests of Bangladesh's poor.

ADB = Asian Development Bank, DFID = Department for International Development of the United Kingdom.

80

Appendix 5

Table A5.3: ADB's Commitments under the Paris Declaration Relevant to Country Strategies, and ADB's Response
Paris Declaration Respect partner country leadership, and align aid with partner countries’ priorities Delegate, where appropriate, authority to lead donors Eliminate duplication of efforts and rationalize activities to make them cost-effective Focus on upstream analysis, joint assessments, and joint strategies Provide reliable indicative commitments of aid over a multi-year framework, and disburse in a timely and predictable fashion according to agreed schedules. Use an appropriate mix of aid, including support for recurrent financing Use country systems and procedures (public financial management, procurement, fiduciary safeguards and environmental assessments), and harmonize assessments ADB's Response "In line with the NPRS strategies and priorities" (CSP, page 14). CSP does not mention the Annual Development Programme. Resulting program has been consistent with Government priorities. (Tables 2, 5, and 6) Joint Results Framework indicates each partner's role (World Bank, CAS, Annex 1). Leadership also arranged through the LCG. Joint approach to country strategy aimed to cut costs. ADB's CSP likely cost ADB over $1 million and was longer than all others (Appendix 6). Joint approach to country strategies among the four largest aid agencies in Bangladesh. Joint assessment of Government's strategy. Joint portfolio reviews. Average annual lending = $600 million (half ADF; CSP, page 22). Actual financing averaged $612 million from 2005 to 2008 (Table 6).

Help to strengthen country capacities, and align support for capacity development with partners’ objectives Link country programming and resources to results Harmonize monitoring and reporting requirements

"Gives special emphasis to the sector development program modality" (CSP, page 15) SDP use increased from 2005 to 2008 (Table 10). "Build and foster use of country systems" (CSP, page 15). Does not mention harmonizing assessments, although does discuss harmonizing other activities (CSP, page 20) A separate evaluation of implementation of the Paris Declaration in Bangladesh found little progress overall in using country systems, but some progress in using country procurement systems. (SES on ADB's Approaches to Partnering and Harmonization: In the Context of the Paris Declaration on Aid Effectiveness, pages 6 and 22). Includes section on "Capacity Building" (CSP, page 18) 95% of projects classified as "Capacity Development" from 2005 to 2008 (Table 14) Strategy includes results framework (CSP, pages 32-36) Pledges to harmonize results monitoring with the Government and other aid agencies (CSP, page 30) Joint monitoring was not successful (Kolkma et al., page 2)

Source: IED's review of the Paris Declaration, and ADB's 2005 Country Strategy and Program.

Appendix 5

81

Table A5.4: Country Strategies Prepared for Bangladesh by ADB and Other Development Partners
Organization ADB ADB World Bank ADB ADB Danish International Development Assistance European Union ADB ADB International Fund For Agricultural Development United Nations ADB Swiss Agency for Development and Cooperation World Food Programme MOFA Japan Canadian International Development Agency Sweden International Development Agency United Kingdom Department for International Development United States Agency for International Development United Nations Population Fund Australian Development Agency Netherlands Embassy German Agency for Technical Cooperation
Source: The agencies listed in the table.

Document 2005 Country Strategy and Program 2003 Country Strategy and Program Update Country Assistance Strategy (2006-2009) 2004 Country Strategy and Program Update 2002 Country Strategy and Program Update Bangladesh-Denmark Partnership: Strategy for Development Cooperation (2005-2009) Country Strategy Paper (2007-2013) 2001 Country Assistance Plan 2000 Country Assistance Plan Country Strategic Opportunities Programme (2006) United Nations Development Assistance Framework in Bangladesh (2006-2010) 1999 Country Operational Strategy Country Cooperation Strategy (2008-2012) Country Programme (2007-2010) Country Assistance Programme Bangladesh Country Development Programming Framework (2003-2008) Country Strategy (2002-2005) Interim Country Assistance Plan (2007-2009) USAID/Bangladesh Strategic Statement (2006-2010) Country Programme (2004-2009) Australian Aid to Bangladesh Dutch Development Co-operation Strategy Priority Areas in Bangladesh

Pages 212 168 151 132 66 57 55 54 52 42 41 39 34 29 28 24 22 22 20 4 3 2 1

82

Appendix 5

Table A5.5: Strategy 2020 versus ADB's Recent Program in Bangladesh
Strategy 2020 By 2012, 80% of ADB's annual approvals should be in five core areas: infrastructure, environment, regional cooperation, financial sector development, and education. A "significant" share of approvals should be in environmental management, including climate change. Co-financed lending should grow faster than ADB's standalone financing, and co-financing should eventually exceed stand-alone financing. By 2020, 50% of ADB's projects and financing should be in private sector development or private sector operations. Recent Status From 2005 to 2008, about 75% of annual approvals have been for infrastructure, and 7% for education. From 2005 to 2008, 59% of financing was classified under the crosscutting theme of environmental sustainability. Grants and co-financed lending averaged $176 million from 2005 to 2008. Cofinancing varied from none in 2007 to $459 million in 2008. No private sector initiatives since 2005. In three public sector loans, $173.1 million was for subprojects related to private sector development, versus $2,448 total public sector lending (7%). ADB's macroeconomic reporting is highly regarded. No other information is available on ADB's knowledge products in Bangladesh.

ADB's knowledge products and TA should be highly rated.

Source: IED's review of Strategy 2020, and CAPE Team's calculations using ADB's data on projects and programs in Bangladesh.

Table A5.6: Government's Requests for ADB's Support, and ADB's Response
Date 9 Dec 2004 23 Apr 2005 Government's Request Technical Assistance (TA) for feasibility study of a deep-sea port Loan of $150 million to finance infrastructure projects through Infrastructure Development Company Ltd. Loan of $400 million for installing digital telephone exchanges TA for a study on developing and modernizing Bangladesh Krishi Bank ADB's Response and Explanation Study was funded instead by Japan International Cooperation Agency. (Request is consistent with the 1999 country strategy.) Asian development Bank (ADB) approved the Public–Private Infrastructure Development Facility in October 2008. Total approved loan was $165 million. (Request is consistent with the 1999 and 2005 country strategies.) The Government chose not to pursue the projects. (Request not consistent with the 2005 country strategy) ADB hired a staff consultant to conduct a feasibility study. The Government has so far not followed up on the feasibility study report. The initial idea for reforming the bank came from ADB. No reply on file. No TA approved and no TA in the pipeline for this purpose. (Request is not consistent with the 2005 country strategy.)

16 Aug 2005

20 Jul 2006

10 Oct 2006

TA for setting up an "e-Asia and Knowledge Partnership Fund" to finance e-commerce and e-trade projects TA to fund reconnaissance survey and prefeasibility study for a hydropower plant near the border with Myanmar

17 May 2007

No reply on file. Government apparently dropped the request after discussions with ADB. (Request is consistent with the 2005 country strategy.)

Source: Files of ADB's Bangladesh Resident Mission.

Appendix 5

83

Table A5.7: Progress of Expected Outputs/Outcomes of 2005 Country Strategy and Program
Sector Progress Indicators (by 2008 unless otherwise specified) Latest Progress (source is CSP midterm review unless otherwise specified) No information Achieved: 42% in 2007 Some progress: 7.3% in 2007 Some Progress: 165 kwh in FY2008 Achieved: system loss was 8% in FY2008 Not achieved: system loss was 20% in FY2008 Achieved: 2.5% in FY2008 No information Not achieved: contract of 450 MW IPP at Meghnaghat-2 cancelled, and no progress in 450 MW IPP at Sirajganj and 450 MW IPP at Bibiyana Achieved: Fuel and power tariffs have been substantially rationalized, fuel prices cut in October and December 2008 and January 2009, and power tariffs increased by 5%-10% effective 1 March 2007 Not achieved: no change in funding Not achieved

Pillar: Sustainable Growth Energy Energy Energy Energy Energy Energy Energy Energy Energy Increased infrastructure provision and improved access to power, gas, and transport Increased access to electricity from 35% today to 42% Increased access to natural gas from 6% today to 10% of all households Increased per capita generation to 178 kWh in 2009 Bangladesh Power Development Board zone system loss reduced to 10% Dhaka Electricity Supply Authority system loss reduced to 15% Reduced gas system loss from 6% today to 4% Improved financial performance, management, and accounting in power and gas sectors Three new large IPP contracts awarded in the power sector Rationalized tariffs and improved cost recovery for infrastructure entities and utilities

Energy

Transport Transport Transport Transport Agriculture

Road maintenance funding increased from Tk6 billion today to Tk10 billion Increased modal shares for railway and inland waterway transport relative to today Decreased transport cost for road, rail, and IWT per ton-kilometer and per passenger kilometer relative to today Increased funding for infrastructure maintenance Irrigated farmland increased from 50% today to 55%

No information

No information Achieved: 62% in 2007. Irrigated areas increased by 20%, from 4.8 million hectares in 2004 to 5.8 million hectares in 2008, but ADB did not provide significant support for irrigation. No information No information No information No information Achieved: Female:male ratios were 1.04

Finance Finance Finance/SME Finance/SME Pillar: Social Development Education

Increased investor confidence in the financial sector Nonresident portfolio investment increased Financial services to the private sector and SMEs improved Annual growth of SMEs improved Eliminated gender disparity in schooling

84

Appendix 5

Education

Education

Education Education Education

opportunities, achieving the Millennium Development Goal in this area by 2008 Increased gross enrollment: i) primary (grades 1–5) from 97% 2005 to 106%; ii) secondary (grades 6-10) from 44% to 55%; iii) higher secondary (grades 1112) from 20% to 30% Reduced dropout rates: i) primary from 35% 2005 to 20%; ii) secondary from 52% to 40%; iii) higher secondary from 41% to 30% Improved primary-school completion rate from 68% today to 75% Improved pass rates in secondary education from 41% today to 55% Improved adult literacy rate from 50% today to 60% Increased provision of credit to the poor, specifically women Urban access to safe water increased from 82% today to 88%

in primary education and 1.08 in secondary education in 2007 Some progress: i) 103% in 2006 according to World Bank's World Development Indicators 2008; ii) 44% in 2006; ii) no information Some progress: i) 48% in 2007; ii) 30% in 2006; iii) no information. Some progress: 72% in 2006 according to World Bank's World Development Indicators 2008 Achieved: 70.41% in 2008 Some progress: 58% in 2007 (Bangladesh Economic Review 2008 reports that adult literacy rate is 56.1% in 2008) No information No reliable information: Midterm review reports an implausible 99.9% in 2006; Bangladesh Economic Review 2008 reports that improved drinking water coverage in urban areas is 60.0% in 2008) Achieved: 78.6% in 2006 (Bangladesh Economic Review 2008 reports that improved drinking water coverage in rural areas is 85.0% in 2008) Achieved: 88% in urban areas No reliable information: Midterm review reports an implausible 85% in rural areas; Bangladesh Economic Review 2008 reports that improved sanitation coverage in rural areas is 87.0% in 2008. No information Achieved: Fewer casualties and less damage to recently built infrastructure No information

Agriculture/SME Water Supply and Sanitation

Water Supply and Sanitation

Rural access to safe water increased from 72% today to 78% Improved urban access to sanitation from 56% today to 65% Improved rural access to sanitation from 29% today to 35%

Water Supply and Sanitation Water Supply and Sanitation

Water Supply and Sanitation Multisector Transport Pillar: Good Governance Law, Economic Management and Public Policy

Wastewater treatment increased from 60% today to 70% Reduced vulnerability to floods Reduced number of road accidents by 20% relative to today Strengthened functioning and operation of Anticorruption Commission (ACC)

Law, Economic Management and Public Policy Law, Economic Management and Public Policy Law, Economic Management and Public Policy Energy

Initial phase completed of judicial reform program Arbitration laws reviewed Judicial sector medium-term budgetary framework introduced Strengthened functioning and operation

Some progress: ACC has been reconstituted with new Chairman and Commissioners, Rules of Procedures have been approved, new organogram with decentralized set-up approved, ACC has been declared as self-governed body. Some progress: Judiciary has been separated from the executive No progress No progress Some progress: Chairman and all four

Appendix 5

85

of Energy Regulatory Commission Energy Siddhirganj power station corporatized and fully operational

Energy

Dhaka Electricity Supply Authority corporatized and fully operational

Energy Energy

Bangladesh Power Development Board corporatized and fully operational Additional power sector distribution companies in place

Commissioners are presently in place. Organogram and pay structure approved. Achieved: Electricity Generation Company of Bangladesh has been established and made operational. Organogram, Board reconstitution and pay structure finalized Some progress: Dhaka Power Distribution Company has been established, Managing Director, Director Technical and Director Finance appointed and other staff appointments are being made. Some progress: Process ongoing Some progress: North West Zone Power Distribution Company has been formed with finalization of Board structure to meet ADB’s requirement. Recruitment of Managing Director, Director Technical, Director Finance, and Company Secretary completed. Some progress: Holding company decision yet to be taken Some progress: First steps in reorganization implemented Some progress: Act ready for submission to Cabinet Some progress: Draft Integrated Multimodal Transport Policy is to be submitted to Cabinet Achieved: Regulation implemented No progress Some progress: Draft prepared Some progress: Draft prepared Some progress: Draft prepared Some progress: still being implemented under new ADB/Japan/World Bank reform program. Some progress: Draft finalized with legal opinions being sought. Some progress: ADB providing a related TA. (Target is confusing since a plan was approved in March 2004 and is already being implemented)

Energy Transport Transport Transport Transport Transport Transport Transport Transport Transport Water Supply and Sanitation Water Supply and Sanitation

Petrobangla restructured into a holding company with unbundling of units Roads and Highways Department reorganized Road maintenance fund established Multimodal Transport Policy implemented Strengthened port regulation Establishment of a national highway authority Promulgation of a new public road act Promulgation of a new highway code Promulgation of a road transport and traffic act in place of the Motor Vehicle Act and Ordinance Bangladesh Railways restructured and corporatized Promulgation of a national water act A national water management plan implemented

86

Appendix 5

Table A5.8: Status of Monitoring Indicators from the Revised Results Framework of the 2005 Country Strategy and Program
Status Some No Progress Progress 5 1 15 21 6 6 1 1 1 0 0 0 6 21 8 6 2 16 3 4 5 2 0 0 1 0 1 16

Achieved By Pillar Sustainable Growth Social Development Good Governance Total By Sector/Theme Energy Transport Education WSS Governance Gender Health Finance ANR Total 8 4 17 29 5 3 4 1 13 0 0 0 3 29

No Data 1 1 6 8 1 0 1 1 2 3 0 0 0 8

Total 22 12 40 74 15 13 11 5 16 3 1 0 10 74

ANR= agriculture and natural resources, WSS = water supply and sanitation. Source: CAPE Team's analysis of the revised indicators in ADB. 2009. Bangladesh: Country Partnership Strategy Mid-term Review 2006-2010.

Appendix 6

87

RESOURCES AND COSTS OF PREPARING THE 2005 CSP A. CSP Process

1. The preparation of the 2005 country strategy program (CSP) for Bangladesh began with the stock-taking meeting in May 2003 and culminated with Board circulation of the CSP in October 2005. CSP preparation therefore took 2.5 years to be completed. Compared with other CSPs that were circulated to the Board in 2004 and 2005, the CSPs for Bhutan, Mongolia, and Nepal took 1 year or less to prepare while those for the Cambodia and the Philippines took a little over 2 years. Factors contributing to the extended period of preparing the 2005 Bangladesh CSP were the decision to synchronize CSP preparation with the Government’s preparation of the full National Poverty Reduction Strategy (NPRS) and the decision to prepare a joint country strategy with the Department of International Development of the United Kingdom (DFID), World Bank and the Government of Japan. The timeline for the preparation of the 2005 CSP is shown in Table A6.1. B. Staff and Consultant Resources

2. The preparation of the CSP entailed considerable staff and consultant resources. Twenty nine Asian Development Bank (ADB) staff logged in an estimated 767 person-days or more than 3 person-years in preparing the CSP (assuming 240 person-days per year). The activities included (i) preparing economic, thematic, and sector studies; (ii) preparing sector/thematic strategies and roadmaps; (iii) participating in meetings with government, nongovernment organizations, aid agencies, private sector, and other stakeholders; (iv) preparing the joint results framework; and (v) drafting the CSP. The list excludes administrative work done by staff at headquarters (HQ) and at Bangladesh Resident Mission (BRM), work done by other departments in commenting on the CSP, management time, and editing work. 3. According to the information obtained from ADB's Budget, Personnel, and Management Systems Department, in 2005 the average cost per person-day of ADB staff was $961 for professional staff, and $107 for national officers. Based on the 767 person-days spent by ADB staff, the estimated total staff cost in preparing the CSP as estimated at $527,000. C. Consultants

4. Eight consultants put in 421 person-days or nearly 1.75 years to prepare the CSP. Total consultant expenses (remuneration and travel expenses) amounted to $281,610, or $669 per day. D. Travel Costs

5. From May 2003 to October 2005, travel expenses between Manila and Dhaka of staff on the country team amounted to about $500,000. Travel expenses include air fare, accommodation, per diem, and other out-of-pocket expenses. It should be noted, however, that some of the trips made by staff on the country team may not have been dedicated solely to CSP preparation. The evaluation is otherwise unable to determine exact travel costs associated with CSP preparation.

88

Table A6.1: Timeline for Processing of 2005 Bangladesh CSP
Activity
Stock-taking by regional management team (RMT) Preparation of initiating paper CSP initial consultation with DMC Initiating meeting Preparation of sector/thematic strategies and roadmaps Management decision to adjust CSP preparation to synchronize with Government’s full NPRS preparation Second CSP consultation Formulation of joint results framework with WB, DFID and Government of Japan RMT meeting CSP/CPM Mission Circulation of 1st draft of CSP for Interdepartmental review Management Review Meeting (MRM) Government clearance Editing CSP submitted to President for approval Board circulation
CPM = country programming mission, CSP = country strategy and program, DFID = Department for International Development, DMC = developing member countries, MRM = management review meeting, NPRS = national poverty reduction strategy, RMT = regional management team, WB = World Bank. Source: Minutes of Meetings; Back-to-Office Reports; Aide Memoires; 2005 Country Strategy and Program.

Appendix 6

2003
5 6 7 8 9 10 11 12 1 2 3 4 5

2004
6 7 8 9 10 11 12 1 2 3 4

2005
5 6 7 8 9 10

E.

Total Costs

6. Table A6.2 outlines the total estimated cost to prepare the CSP. The total staff and consultant time used to prepare the CSP was 1,188 person-days, or almost 5 person-years over the 2.5-year process. Total expenditure, including staff costs, consultants, and travel, was estimated at $1,308,610. Table A6.2: Total Cost of Producing the 2005 CSP
Personnel ADB Staff Consultants Time Person-Days 767 421 1,188 Costs Input Expense ADB Staff $527,000 Consultants $281,610 Travel $500,000 $1,308,610

Total

90

Appendix 7

CLIENT/STAKEHOLDER AND STAFF SURVEYS A. Survey Administration

1. The country assistance program evaluation (CAPE) team prepared questionnaires to (i) obtain the perceptions of clients, aid agencies, nongovernment organizations (NGOs), private sector, staff and other stakeholders on the strategy and program of the Asian Development Bank (ADB) in Bangladesh; and (ii) solicit their suggestions on how to improve future operations. Some of the questionnaires were administered by the Bangladesh Resident Mission (BRM) staff to participants at the country strategy and program (CSP) Mid-Term Review Stakeholder Consultation Meetings held at various dates between 7 April and 17 May 2009. The participants included government officials; and representatives from NGOs, the academe, the private sector and other stakeholders. The questionnaires were also used during interviews with Government officials and aid agency representatives during the main CAPE Mission (3 May to 22 May), and with former and present country directors of BRM. Finally, an online version of the survey was used to solicit the views of ADB staff that have worked or are presently working on Bangladesh. There were 194 respondents: 7 high-level Government officials, 25 other Government representatives, 57 NGO representatives, 28 private sector representatives, 14 aid agency representatives, 13 academicians, 43 other stakeholders, 3 country directors, and 4 ADB staff. A summary of the survey result is presented in Table A7 and discussed in the following paragraphs. B. Perceptions of ADB Operations

2. A vast majority of the respondents including 100% of high-level government officials, development partner representatives, and ADB staff perceived ADB operations in Bangladesh to be relevant/highly relevant (77%). A significant number of respondents also believe that ADB operations in the country are efficient/highly efficient (68%), likely/very likely sustainable (67%), and effective/highly effective (60%). 3. Overall, about half of the respondents believed that ADB made significant/substantial contributions to strengthening the capacity of government agencies but a significant number of aid agency representatives (64%), ADB staff (75%), and country directors (100%) believed that ADB assistance in this area was only moderate. Similarly, 51% of the total respondents perceived that ADB contributions to promoting private sector development was significant/substantial but only 28% of aid agency donor representatives, 25% of ADB staff, and none of the country directors believed this to be the case. 4. Less than half of the respondents perceived ADB contributions as significant/substantial in the areas of improving governance (42%) and promoting environmental sustainability (40%). In governance, the figures were particularly low among ADB staff (25%), private sector representatives (32%), government representatives (34%), and aid agency representatives (36%). About 55% of the respondents thought that ADB's efforts in aid coordination with other development partners were generally satisfactory/highly satisfactory but the figure among aid agencies was much higher (79%). 5. When asked to assess the importance of the roles of BRM, about two-thirds of the survey respondents believed that the following were important/very important roles: project identification (69%), project preparation (54%), project implementation (64%), policy dialogue (66%), and capacity development activities (65%). Also deemed important, but to a lesser

Appendix 7

91

extent were helping in the implementation of ADB’s safeguard policies (59%) and private sector operations (58%). 6. About two-thirds of the respondents believed that one of ADB’s main strengths was its responsiveness to the country’s development needs. This belief was particularly high among ADB staff (100%), government representatives (87%), and aid agencies (71%). Nearly half of the respondents also thought that continuity in key sectors was one of ADB’s main strengths. Less than a third perceived that flexibility in adapting the ADB’s processes to suit a project and fostering beneficiary/country participation and ownership were strengths. On the other hand, the lack of a well-integrated, programmatic modality was seen by 43% of the respondents as one of ADB’s main weaknesses. 7. Slightly more than half of the respondents perceived that ADB adds value to development projects and reform programs in Bangladesh by improving the design of projects and reform program through expert advice (56%), and contributing needed financing on attractive lending terms (54%). Less than a majority thought that ADB adds value by introducing knowledge and practices that are new to Bangladesh (47%), by fostering participation and ownership by beneficiaries (43%), and by improving the implementation of projects and reforms by using ADB’s own systems (25%). C. Suggestions for Future ADB Operations

8. When asked to rank which should be ADB’s operational priorities in Bangladesh (among t10 items), 49% of the respondents ranked promoting poverty reduction as the top priority, and 88% also placed promoting poverty reduction in their top five operational priorities. The other operational priorities that received top rankings were promoting sustainable economic growth (19%), improving governance (19%), and improving infrastructure (14%). They were also the operational priorities that obtained the most number of top five rankings after promoting poverty reduction. Conversely, the operational priorities that received the most number of bottom five rankings were supporting regional cooperation (81%), establishing effective disaster management (76%), promoting private sector development (72%), and promoting gender equity (64%). 9. When asked to choose five sectors that ADB should be involved in, respondents selected energy (81%), education (77%), agriculture and natural resources (72%), health (46%), and water supply and sanitation (41%). The sectors that received the least number of votes were law, economic management, and public policy (16%), finance (19%), trade and industry (19%), and private sector development (22%). 10. As for suggestions on how to improve ADB operations, the respondents believed that ADB should delegate more projects to BRM to administer (54%), adopt a sector-wide approach in some sectors (47%), and streamline procedures and simplify requirements (46%). Less than a third of the respondents felt that ADB should focus on a smaller number of sectors.

92

Appendix 7

Table A7.1: Summary of Client/Stakeholder and Staff Survey Results (in %)
High-Level Government A. PERCEPTIONS OF ADB OPERATIONS Relevance of ADB Assistance Highly relevant Relevant Partly relevant Not relevant Don't Know/No opinion Effectiveness of ADB’s contributions to development outcomes/impacts Highly effective Effective Partly effective Ineffective Don’t know/No opinion Efficiency of ADB’s operations Highly efficient Efficient Slightly inefficient Inefficient Don’t know/No opinion Sustainability of ADB’s projects Very likely Likely Less likely Unlikely Don’t know/No opinion ADB’s contributions to strengthening institutional capacity of government agencies Substantial Significant Moderate Negligible Don’t know/No opinion ADB’s contributions to improving governance Substantial Significant Moderate Negligible Don’t know/No opinion ADB’s contributions to promoting private sector development Substantial Significant Moderate Negligible Don’t know/No opinion Other Gov't NGOs Private Sector Aid Agencies Academe Other Stakeholders Country Directors ADB Staff Consolidated

86 14 0 0 0

24 44 32 0 0

28 39 30 4 0

39 32 18 7 4

93 7 0 0 0

23 62 8 0 8

28 51 16 5 0

33 67 0 0 0

75 25 0 0 0

37 40 20 3 1

43 43 0 0 14

16 28 52 4 0

14 49 30 5 2

21 29 43 7 0

29 29 36 0 7

21 42 35 2 0

0 100 0 0 0

0 100 0 0 0

19 41 34 4 2

71 14 0 0 14

24 52 21 4 7

18 51 21 4 7

18 36 36 4 7

7 50 21 0 21

19 56 19 2 5

0 33 33 0 33

0 75 25 0 0

19 49 22 3 7

14 86 0 0 0

12 56 16 0 16

9 51 26 4 11

18 57 4 4 18

21 50 21 0 7

9 53 16 0 21

0 67 0 0 33

25 75 0 0 0

12 55 17 2 14

0 71 0 14 14

20 40 24 16 0

25 28 32 11 5

25 18 50 4 4

7 29 64 0 0

33 23 21 7 16

0 0 100 0 0

0 25 75 0 0

23 28 34 8 7

14 57 14 0 14

4 20 52 16 8

11 44 19 21 5

11 21 43 18 7

7 29 50 0 14

12 30 26 14 19

0 67 0 0 33

0 25 25 0 50

9 33 31 15 12

14 14 0 29 43

8 48 32 8 4

12 46 30 9 4

11 36 43 4 7

14 14 14 7 50

16 44 16 14 9

0 0 67 33 0

0 25 25 0 50

12 39 27 10 12

Appendix 7
High-Level Government ADB’s contributions to promoting environmental sustainability Substantial Significant Moderate Negligible Don’t know/No opinion ADB’s efforts in aid coordination with other development partners Highly satisfactory Generally satisfactory Needs some improvements Needs a lot of improvements Don’t know/No opinion Has ADB been involved in the appropriate areas or regions of Bangladesh? Yes No Don’t know/No opinion Has ADB been working with the appropriate levels of government in Bangladesh? Yes No Don’t know/No opinion Assessment of the role of ADB's BRM in: Project identification Very important Important Not so important Unimportant Don’t know/No opinion Assessment of the role of ADB's BRM in: Project preparation Very important Important Not so important Unimportant Don’t know/No opinion Project implementation Very important Important Not so important Unimportant Don’t know/No opinion Policy dialogue Very important Important Not so important Unimportant Don’t know/No opinion Other Gov't Private Sector Aid Agencies Other Stakeholders Country Directors ADB Staff

93
Consolidated

NGOs

Academe

14 57 14 0 14

12 20 52 8 8

9 28 30 18 16

11 32 43 4 11

0 21 36 0 43

16 35 23 9 16

0 67 33 0 0

0 25 50 0 25

10 30 34 9 16

57 43 0 0 0

16 32 12 32 8

14 23 35 16 12

36 29 25 4 7

36 43 14 0 7

15 62 8 8 8

26 30 21 14 9

33 33 0 33 0

0 50 25 0 25

23 32 22 13 9

86 0 14

68 24 8

54 37 9

61 29 11

93 0 7

44 44 12

100 0 0

60 31 10

100 0 0

56 16 28

60 14 26

70 11 19

100 0 0

53 12 35

100 0 0

65 11 24

28 28 12 0 32

35 37 7 4 18

43 36 0 0 21

44 23 7 3 23

38 31 7 2 22

20 40 8 0 32 16 24 24 0 36 24 24 16 0 36

19 39 9 2 32 33 30 9 5 23 42 32 5 0 21

39 36 0 0 25 52 22 4 0 22 30 44 4 0 22

42 26 2 2 28 47 23 0 5 26 44 16 12 2 26

29 35 5 1 29 38 26 8 3 26 38 28 9 1 25

94

Appendix 7

High-Level Government Capacity development activities Very important Important Not so important Unimportant Don’t know/No opinion Private sector operations Very important Important Not so important Unimportant Don’t know/No opinion Helping implement safeguard policies Very important Important Not so important Unimportant Don’t know/No opinion ADB's main strengths (affirmative replies): Responsiveness to the country’s development needs Flexibility in adapting ADB's processes to suit a project Continuity in key sectors Fostering beneficiary/country participation and ownership Partnership Good understanding of Bangladesh ADB's main weaknesses (affirmative replies): Lack of a well-integrated, programmatic modality Inability to adapt ADB's processes to suit a project or context Overly ambitious and complex project/program design in some sectors Lack of synergies between related sectors Cumbersome procedures and stringent requirements Ways that ADB adds value to development projects and reform programs in Bangladesh (affirmative replies): Contributing needed financing on attractive lending terms

Other Gov't

NGOs

Private Sector

Aid Agencies

Academe

Other Stakeholders

Country Directors

ADB Staff

Consolidated

16 32 4 4 44

25 44 9 0 23

33 37 7 0 22

26 42 2 5 26

25 40 6 2 27

16 24 12 8 40

21 35 12 5 26

33 33 7 0 26

35 33 7 2 23

26 32 10 4 28

28 20 0 4 48

19 39 9 0 33

27 46 0 0 27

35 26 5 2 33

26 33 5 1 34

86 29 43 0

87 35 48 43

60 30 45 42

61 29 54 29

71 7 71 29

70 48 38 18

10 0 100 50

100 100 100

69 33 49 31

57 43

71 57

100 100

70 57

0 29 14 0 29

57 19 38 43 33

39 24 30 28 28

52 22 19 37 30

13 29 21 29 14

56 26 23 41 23

0 100 100 50 100

33 0 100 33 67

43 25 28 34 28

86

57

33

69

64

57

100

100

54

Appendix 7
High-Level Government 29 43 Other Gov't 35 61 Private Sector 46 65 Aid Agencies 43 71 Other Stakeholders 50 60 Country Directors 100 50 ADB Staff 33 100

95
Consolidated 47 56

Introducing knowledge and practices that are new to Bangladesh Improving the design of projects and reform program through expert advice Improving the implementation of projects and reforms by using ADB's own systems Fostering participation and ownership of beneficiaries B. SUGGESTIONS FOR FUTURE OPERATIONS Which should be the operational priorities of ADB in Bangladesh: Promoting Poverty Reduction Ranked as top priority Ranked in top 5 priorities (rank 1–5) Ranked in bottom 5 priorities (rank 6–10) Promoting Sustainable Econ. Growth Ranked as top priority Ranked in top 5 priorities (rank 1–5) Ranked in bottom 5 priorities (rank 6–10) Improving Social Services Ranked as top priority Ranked in top 5 priorities (rank 1–5) Ranked in bottom 5 priorities (rank 6–10) Improving Governance Ranked as top priority Ranked in top 5 priorities (rank 1–5) Ranked in bottom 5 priorities (rank 6–10) Improving Infrastructure Ranked as top priority Ranked in top 5 priorities (rank 1–5) Ranked in bottom 5 priorities (rank 6–10) Promoting Environmental Sustainability Ranked as top priority Ranked in top 5 priorities (rank 1–5) Ranked in bottom 5

NGOs 52 40

Academe

14

26

31

27

21

21

50

0

25

29

43

42

42

36

45

100

33

43

50 100 0

42 83 17

53 80 20

59 94 6

38 100 0

18 82 18

56 96 4

50 50 50

49 88 12

40 100 0

0 75 25

17 80 20

35 76 24

38 100 0

25 92 8

11 78 22

0 100 0

19 82 18

0 50 50

0 42 58

3 43 57

0 53 47

0 50 50

0 60 40

0 41 59

0 100 0

1 47 53

29 86 14

50 75 25

17 83 17

6 76 24

0 90 10

45 82 18

11 70 30

0 100 0

19 79 21

60 100 0

0 67 33

3 47 53

0 76 24

43 93 7

17 67 33

15 59 41

50 100 0

14 66 34

0 75 25

8 67 33

0 59 41

0 41 59

0 43 57

9 45 55

4 59 41

0 50 50

3 55 45

96

Appendix 7

High-Level Government priorities (rank 6–10) Promoting Gender Equality Ranked as top priority Ranked in top 5 priorities (rank 1–5) Ranked in bottom 5 priorities (rank 6–10) Supporting Regional Cooperation Ranked as top priority Ranked in top 5 priorities (rank 1–5) Ranked in bottom 5 priorities (rank 6–10) Establishing Effective Disaster Mgt. Ranked as top priority Ranked in top 5 priorities (rank 1–5) Ranked in bottom 5 priorities (rank 6–10) Promoting Private Sector Dev't Ranked as top priority Ranked in top 5 priorities (rank 1–5) Ranked in bottom 5 priorities (rank 6–10) Sectors which ADB should be involved in: Agriculture and Natural Resources Disaster Management Education Energy Health Finance Law, Economic Management & Public Policy Private Sector Development Trade and Industry Transport and Communications Water Supply and Sanitation Suggestions on ways to improve ADB’s operations in the future (affirmative replies): Focus on fewer number of sectors Delegate more projects to BRM to administer Adopt a sector-wide approach in some sectors Streamline procedures and simplify requirements

Other Gov't

NGOs

Private Sector

Aid Agencies

Academe

Other Stakeholders

Country Directors

ADB Staff

Consolidated

0 33 67

0 24 76

7 57 43

0 41 59

0 17 83

0 10 90

0 30 70

0 50 50

2 36 64

25 75 25

0 8 92

0 13 87

0 0 100

9 64 36

0 0 100

0 22 78

0 0 100

2 19 81

0 0 100

0 33 67

0 20 80

0 18 82

0 33 67

0 20 80

0 26 74

0 50 50

0 24 76

50 50 50

0 16 84

0 20 80

0 24 76

0 50 50

0 60 40

0 26 74

0 50 50

1 28 72

71 0 43 100 14 0 0 43 14 86 57

82 50 86 68 59 32 18 5 14 32 36

76 42 80 72 68 12 12 28 16 28 40

67 30 85 78 37 26 19 30 30 30 33

29 7 43 100 29 7 0 21 21 86 50

54 31 54 77 38 23 38 31 0 31 62

86 43 88 90 38 21 19 7 26 31 33

50 0 100 100 0 0 50 50 0 100 100

67 33 33 100 0 33 0 67 0 67 33

72 36 77 81 46 19 16 22 19 38 41

43 57 43 29

25 58 54 38

20 45 51 51

33 44 37 44

43 71 43 50

15 63 49 41

50 100 50 100

67 33 0 100

25 54 47 46

Appendix 7
High-Level Government Percentage of respondents who think that ADB should reduce/withdraw assistance in some sectors Suggestions on how ADB could improve aid coordination activities (affirmative replies): Doing more discussions/consultations with other development partners Doing more collective policy dialogue Doing more joint meetings with other donors to harmonize implementation procedures 20 Other Gov't 35 Private Sector 23 Aid Agencies 36 Other Stakeholders 34 Country Directors 100 ADB Staff 0

97
Consolidated 32

NGOs 35

Academe

100

88

80

74

21

90

81

100 50

46 42

50 42

37 41

14 29

50 45

46 43

Suggestions on how to improve BRM’s operations in the future (affirmative replies): 62 BRM staff should discuss with other development partners more often BRM staff should visit 52 project sites more often BRM staff should be 29 more client-oriented ADB = Asian Development Bank, BRM = Bangladesh organizations. Source: Compiled by the CAPE Team

65 54 38

56 48 32

73 41 38

67 67 100

65 49 37

Resident Mission, Devt. = development, Govt. = government, NGO = nongovernment

98

Appendix 8

ADB's PORTFOLIO in BANGLADESH Table 8.1: ADB Loans to Bangladesh, 1999–2008
Sector/ Loan Fund Project Name Subsector Number Type Agriculture & Natural Resources Agriculture Production, Agroprocessing, & Agrobusiness 1 1782 Northwest Crop ADF Diversification 2 2190 Agribusiness Development ADF Agriculture Sector Development 3 2254 Second Rural Infrastructure ADF Improvement Livestock 4 2070 Second Participatory ADF Livestock Development Water Resource Management 5 1831 Second Small-Scale Water ADF Resources Development Sector 6 1941 Jamuna-Meghna River ADF Erosion Mitigation 7 2200 Southwest Area Integrated Water Resources Planning ADF and Management Education Basic Education 8 1690 9 10 Amount ($ million) 301.07 46.30 42.50 96.10 20.00 34.00 42.17 20.00 Date Approved 21 Nov 2000 27 Oct 2005 18 Aug 2006 19 Dec 2003 12 Jul 2001 25 Nov 2002 23 Nov 2005 Current Status Active Active Active Active Active Active Active PCR Rating PPER Rating

458.91 60.00 100.00 68.91 22 Jun 1999 03 Nov 2003 09 Nov 2004 Closed Active Active S

11 12

13 14

Secondary Education ADF Sector 2015 Second Primary Education ADF Development Program (Sector Loan) 2101 Teaching Quality Improvement in Secondary ADF Education Education Sector Development 2266 Secondary Education ADF Sector Development Project 2267 Secondary Education Sector Development ADF Program Nonformal Education 1881 Post-Literacy and ADF Continuing Education Technical, Vocational Training & Skills Development 2425 Skills Development ADF

85.00 30.00

26 Oct 2006 26 Oct 2006

Active Active

65.00 50.00 1,409.50 42.40 30.20

13 Dec 2001 06 Jun 2008

Active Active

Energy Conventional Energy Generation (other than hydropower) 15 1942 Dhaka Clean Fuel ADF 16 1943 Dhaka Clean Fuel OCR 17 18 19 Energy Sector Development 2188 Gas Transmission and Development 2189 Gas Transmission and Development 2332 Sustainable Power Sector Development Program (Project)

26 Nov 2002 26 Nov 2002

Active Closed

No PCR yet

OCR ADF OCR

225.00 5.00 400.00

27 Oct 2005 27 Oct 2005 26 Jun 2007

Active Active Active

Appendix 8

99
PPER Rating

Sector/ Subsector 20 21

22 23 24 25 26 27

Sustainable Power Sector Development Program (Project) 2334 Sustainable Power Sector Development Program (Program) Transmission & Distribution 1730 Dhaka Power Systems Upgrade 1731 Dhaka Power Systems Upgrade 1884 1885 2038 2039 West Zone Power System Development West Zone Power System Development Power Sector Development Program (Program Loan) Power Sector Development Program (Project Loan)

Loan Number 2333

Project Name

Fund Type ADF

Amount ($ million) 5.00 60.00

Date Approved 26 Jun 2007 26 Jun 2007

Current Status Active Closed

PCR Rating

ADF 75.00 82.00 OCR 60.20 ADF OCR OCR OCR 186.00 10 Dec 2003 Active 138.70 100.00 17 Dec 2001 10 Dec 2003 Active Closed 17 Dec 2001 Closed 21 Dec 1999 21 Dec 1999 Active Closed

No PCR yet

ADF

No PCR yet No PCR yet No PCR yet

Finance Finance Sector Development 28 2232 Improvement of Capital Market and Insurance Governance Project Health, Nutrition, & Social Protection Health Systems 29 2172 Second Urban Primary Health Care Industry & Trade Small & Medium- Sized Enterprises 30 2148 SME Sector Development Program (Program Loan) 31 2149 SME Sector Development (Project Loan) 32 2150 SME Sector Development Program (TA Loan) Law, Economic Management & Public Policy National Government Administration 33 2362 Good Governance Program Multisector Multisector 34 1771 35 36 37 1947 2117 2156

3.00 3.00 ADF 09 Mar 2006 Active

30.00 ADF 30.00 31 May 2005 Active

50.00 ADF ADF ADF 15.00 30.00 5.00 20 Dec 2004 20 Dec 2004 20 Dec 2004 Active Active Active

150.00 ADF 150.00 864.30 30 Oct 2007 Active

Chittagong Hill Tracts Rural Development Urban Governance and Infrastructure Improvement (Sector) Secondary Towns Integrated Flood Protection Project - Phase 2 Emergency Flood Damage Rehabilitation

ADF ADF

30.00 60.00 80.00

26 Oct 2000 28 Nov 2002 02 Dec 2004 20 Jan 2005

Active Active Active Closed HS

ADF ADF 152.30

100

Appendix 8

Sector/ Subsector 38 39 40 41 42

Loan Number 2409 2430 2453 2454 2462

Project Name Emergency Disaster Damage Rehabilitation (Sector) Emergency Assistance for Food Security Public-Private Infrastructure Development Facility Public-Private Infrastructure Development Facility Second Urban Governance and Infrastructure Improvement (Sector)

Fund Type ADF ADF ADF OCR ADF

Amount ($ million) 120.00 170.00 83.00 82.00 87.00

Date Approved 31 Jan 2008 22 Jul 2008 02 Oct 2008 02 Oct 2008 29 Oct 2008

Current Status Active Active Not yet effective Not yet effective Active

PCR Rating

PPER Rating

Transport & Communication Multimodal Transport & Sector Development 43 2147 Chittagong Port Trade Facilitation Railways 44 2316 Railway Sector Investment Program - Subproject 1 45 2317 Railway Sector Investment Program - Subproject 1 Roads & Highways 46 1708 Southwest Road Network Development 47 1789 Road Maintenance and Improvement 48 1790 Road Maintenance and Improvement 49 1825 Southwest Flood Damage Rehabilitation 50 1920 Road Network Improvement and Maintenance 1952 Rural Infrastructure 51 Improvement 52 2021 Road Network Improvement and Maintenance Project II 53 2375 Padma Multipurpose Bridge Design Project Telecommunications & Communications 54 2397 South Asia Subregional Economic Cooperation Information Highway Project Water Supply, Sanitation & Waste Management Water Supply & Sanitation 55 2265 Secondary Towns Water Supply and Sanitation Sector 56 2382 Dhaka Water Supply Sector Development Program (Project Loan) 57 2383 Dhaka Water Supply Sector Development Program (Program Loan) TOTAL

696.10 OCR OCR ADF ADF ADF OCR ADF ADF ADF ADF ADF 30.60 100.00 30.00 115.00 72.00 22.00 54.80 65.00 60.00 126.00 17.60 3.10 ADF 20 Dec 2004 13 Feb 2007 13 Feb 2007 16 Nov 1999 29 Nov 2000 29 Nov 2000 21 Dec 2000 10 Oct 2002 02 Dec 2002 20 Nov 2003 05 Dec 2007 17 Dec 2007 Active Active Active Closed Active Active Closed Active Active Active Active Active HS S S

241.00 41.00 ADF 150.00 ADF 50.00 ADF 10 Dec 2007 Active 10 Dec 2007 Active 16 Oct 2006 Active

4,203.88

ADF = Asian Development Fund, OCR = ordinary capital resources, PCR = project completion report, PPER= project performance evaluation report, S = Successful, HS = Highly Successful. Source of basic data: ADB Database on Loan, TA, Grant and Equity Approvals.

Appendix 8

101

Table A8.2: ADB Technical Assistance to Bangladesh, 1999–2008
Sector/ TA TA Name Type Amount ($) Subsector Number Agriculture & Natural Resources 7,999,000 Agriculture Production, Agroprocessing, & Agrobusiness 1 4139 Agribusiness Development PP 650,000 2 4674 Strengthening Project AD 600,000 Management Agriculture Sector Development 3 3230 Northwest Agriculture PP 500,000 Development 4 4516 Second Rural Infrastructure PP 400,000 Improvement Environment & Biodiversity 5 3269 Bangladesh Environment AD 99,000 Operational Strategy Irrigation & Drainage 6 4740 Second Command Area PP 950,000 Development Livestock 7 3876 Second Participatory PP 500,000 Livestock Development Water Resource Management 8 3267 Kalni-Kushiyara River PP 500,000 Management 9 3358 Second Small-Scale Water PP 400,000 Resources Development Sector 10 3659 Jamuna-Meghna River PP 1,000,000 Erosion Mitigation 11 4000 Secondary Towns PP 900,000 Integrated Flood Protection II 12 4079 Southwest Area Integrated PP 900,000 Water Resources Management 13 7041 Participatory Small-Scale PP 600,000 Water Resources Education Basic Education 14 3766 15 5,460,000 PP AD 800,000 250,000 13 Nov 2001 19 Dec 2002 Completed GS Date Approved 04 Jul 2003 27 Oct 2005 26 Jul 1999 20 Dec 2004 30 Sep 1999 19 Dec 2005 31 May 2002 29 Sep 1999 22 Dec 1999 28 May 2001 25 Nov 2002 14 Jan 2003 18 Dec 2007 Ongoing Completed S Ongoing Completed Completed GS Current Status Completed Ongoing Completed Completed TCR Rating TPER Rating

16 17

18 19 20

Primary Education Sector Improvement 4065 Strengthening Primary Education Development Program Education Sector Development 3901 Teaching Quality Improvement in Secondary Education 4532 Secondary Education Sector Improvement II 4532 Secondary Education Sector Improvement II (Supplementary) 7169 Primary Education Sector Development Program 7206 Capacity Development for Madrasah Education Nonformal Education 3465 Second Nonformal

PP PP PP PP AD PP

600,000 600,000 120,000 990,000 1,000,000 600,000

19 Aug 2002 23 Dec 2004 14 Dec 2005 10 Nov 2008 12 Dec 2008 05 Jul 2000 Ongoing Ongoing

102

Appendix 8

Sector/ Subsector 21

TA Number

TA Name

Type

Amount ($)

Date Approved 15 Jun 2006

Current Status

TCR Rating

TPER Rating

Education Technical, Vocational Training & Skills Development 4799 Skills Development PP

500,000 7,235,000 600,000

Energy Conventional Energy Generation (other than hydropower) 22 4953 Tendering Process for AD Independent Power Producer Plants Energy Sector Development 23 3244 Capacity Building of the AD Dhaka Electric Supply Co. Ltd. 24 4332 Gas Sector Development PP 25 4379 Power Sector Development PP Program II 26 4528 Promoting Private Sector AD Participation in the Energy Sector 27 4626 Corporatization of the AD Bangladesh Power Development Board 28 4898 Promotion of Private Sector AD Participation in the Power Sector 29 4952 Gas Sector Development PP Program Transmission & Distribution 30 3343 Corporatization of the AD Ashuganj Power Station 31 3801 Corporatization of the West AD Zone Distribution Operations of the Bangladesh Power Development Board 32 3978 Corporatization of the AD Dhaka Electric Supply Authority

16 Jul 2007

Ongoing

90,000 480,000 840,000 500,000 800,000 600,000 575,000 1,000,000 900,000

20 Aug 1999 28 Apr 2004 23 Aug 2004 23 Dec 2004 02 Aug 2005 15 Dec 2006 16 Jul 2007 17 Dec 1999 17 Dec 2001

Completed Completed Completed Completed Completed Completed Ongoing Completed Completed GS

850,000

07 Nov 2002

Completed

Finance 2,650,000 Capital Markets & Funds AD 850,000 33 3533 Capacity Building of the Securities and Exchange Commission and Selected Capital Market Institutions 34 3787 Central Depository Capacity AD 150,000 Building Finance Sector Development 35 4140 Supporting Good AD 950,000 Governance Initiatives 4140 Supporting Good AD 50,000 Governance Initiatives (Supplementary) 4140 Support to Good AD 100,000 Governance Initiatives (Supplementary) 36 4246 Financial Markets PP 550,000 Governance Program Pensions, Insurance, Social Security & Contractual Savings 37 3590 Pension and Insurance PP 0

09 Nov 2000

06 Dec 2001 04 Jul 2003 18 Dec 2003 28 Dec 2004 12 Dec 2003 15 Dec 2000 Completed GS

Appendix 8

103
TPER Rating

Sector/ Subsector

TA Number

TA Name Sector Project

Type

Amount ($)

Date Approved

Current Status

TCR Rating

Health, Nutrition, & Social Protection Health Systems 38 4165 Second Urban Primary Health Care 39 4568 Second Urban Primary Health Care Bridging Support 40 4986 Urban Primary Health Care Sector Development Program 4986 Urban Primary Health Care Sector Development Program (Supplementary) Social Protection 41 4006 Enhancing Capacity of Infrastructure Agencies in Management of Involuntary Resettlement 42 4085 Social Protection for Disadvantaged Women and Children 43 4320 Social Protection of Poor Female Workers in the Garment Sector in the Context of Changing Trade Environments 44 4517 Development of a National Involuntary Resettlement Policy Industry & Trade Industry 45 3698

3,020,000 PP AD PP PP 400,000 150,000 650,000 400,000 25 Aug 2003 25 Feb 2005 08 Nov 2007 12 Dec 2008 Ongoing Completed

AD

150,000

28 Nov 2002

Completed

PP AD

500,000 420,000

11 Feb 2003 16 Mar 2004

Completed Completed

PS GS

AD

350,000

21 Dec 2004

Completed

GS

1,325,000 AD 125,000 07 Aug 2001 Completed

46

47

Finance, Industry and Trade Sector Review and Strategy Formulation Small & Medium Scale Enterprises 3879 Small and Medium Enterprise Development and Export Expansion Program 4507 Support Program Implementation and Coordination of the Small and Medium Enterprise Sector Development Program

PP

600,000

11 Jun 2002

AD

600,000

20 Dec 2004

Ongoing

Law, Economic Management & Public Policy Economic Management 48 3336 Strengthening Project Portfolio Performance 49 3339 Partnership Agreement on Poverty Reduction between the Asian Development Bank and the Government of Bangladesh 50 3359 Strengthening External Debt Management Capacity

9,195,000 AD AD 1,000,000 95,000 12 Dec 1999 14 Dec 1999

AD

400,000

22 Dec 1999

Cancelled

104

Appendix 8

Sector/ Subsector 51 52 53 54 55

TA Number 3582 3648 4104 4303 4688

TA Name Strengthening the National Accounts and Poverty Monitoring System Bangladesh Poverty Assessment Assistance to the Privatization Commission Strengthening Capacities for Poverty Monitoring and Evaluation Improving National Accounts, Price, and Wage Statistics

Type AD AD AD AD AD

Amount ($) 600,000 100,000 150,000 350,000 400,000

Date Approved 14 Dec 2000 23 Apr 2001 02 May 2003 19 Dec 2003 31 Oct 2005

Current Status Completed Completed

TCR Rating PS

TPER Rating

Ongoing

56 57 58 59 60 61 62

Law & Judiciary 4743

Supporting Good Governance Initiatives II 4744 Good Governance Project National Government Administration 4880 Strengthening Result Based Monitoring and Evaluation 4983 Supporting the Good Governance Program Public Finance & Expenditure Management 3649 Public Expenditure Review 4044 Efficiency Enhancement of Fiscal Management II Subnational Government Administration 3690 Urban Governance and Infrastructure Improvement

AD PP AD AD AD AD PP

750,000 1,000,000 800,000 2,500,000 100,000 600,000 350,000

19 Dec 2005 19 Dec 2005 01 Dec 2006 30 Oct 2007 23 Apr 2001 18 Dec 2002 27 Jul 2001

Ongoing Ongoing Ongoing Ongoing Completed

Completed

Transport & Communication Ports, Waterways, & Shipping 63 3357 Oil Spill Impact and Response Management Program 64 4136 Chittagong Port Trade Facilitation 65 Railways 66 3490 3490 67 68 69 70 71 72 3491 4847 Regional Rail Traffic Enhancement Regional Rail Traffic Enhancement (Supplementary) Organizational Reform of Bangladesh Railway, Phase III Institutional Support for Railway Reforms 4506 Chittagong Port Efficiency Improvement

11,092,846 AD PP AD PP PP AD AD AD PP AD PP 1,000,000 500,000 700,000 900,000 117,846 840,000 2,000,000 645,000 800,000 150,000 440,000 22 Dec 1999 02 Jul 2003 20 Dec 2004 29 Aug 2000 13 Jul 2007 29 Aug 2000 10 Oct 2006 16 Nov 1999 29 Sep 2000 03 Jul 2001 19 Sep 2001 Ongoing Completed GS

Roads & Highways 3297 Urban Transport and Environmental Improvement 3508 Road Network Improvement and Maintenance 3681 Jamuna Bridge Impact Study 3723 Rural Infrastructure Improvement

Appendix 8

105
TPER Rating

Sector/ Subsector 73 74 75

TA Number 3753 3755 4446

TA Name Northwest Road Corridor Development Road Network Improvement and Maintenance II Support to the Roads and Highways Department for Safeguard Policy Compliance Padma Multipurpose Bridge Development of Transport Corridors for Trade Facilitation

Type PP PP AD

Amount ($) 150,000 600,000 500,000

Date Approved 29 Oct 2001 30 Oct 2001 23 Nov 2004

Current Status

TCR Rating

Completed

76 77

4652 4821

PP PP

800,000 950,000

22 Sep 2005 26 Jul 2006

Ongoing

Water Supply, Sanitation & Waste Management Integrated 78 4863 Second Urban Governance and Infrastructure Improvement (Sector) Water Supply & Sanitation 79 4170 Arsenic Mitigation Review and Strategy Formulation 80 4535 Secondary Towns Water Supply and Sanitation 81 4651 Dhaka Water Supply 4651 Dhaka Water Supply (Supplementary) 4651 Dhaka Water Supply (Supplementary) 82 7001 Management Support for Dhaka Water Supply and Sewerage Authority 83 7223 Supporting the Establishment of Khulna Water Supply and Sewerage Authority Multisector Multisector 84 3213 85 86 87 88 89 90 91 92 3226 3328 4003 4561 4562 4707 7057 7101

5,655,000 PP 700,000 07 Nov 2006 Ongoing

AD PP PP PP PP AD AD

120,000 800,000 1,000,000 160,000 150,000 2,500,000 225,000

03 Sep 2003 23 Dec 2004 22 Sep 2005 31 Jul 2006 19 Mar 2007 10 Dec 2007 22 Dec 2008

Completed Completed Completed

Ongoing Ongoing

4,830,000 Chittagong Hill Tracts Rural Development Urban Sector Strategy Chittagong Hill Tracts Region Development Plan Supporting Urban Governance Reform Support for Financial Management and Monitoring Early Warning Systems Study Participation of the Urban Poor in Municipal Governance Financial Management and Monitoring Strengthening the Government's Institutional Capacity for Improving Food Security Capacity Development for PP AD AD AD AD AD AD AD AD 500,000 150,000 1,000,000 400,000 150,000 250,000 480,000 200,000 600,000 30 Jun 1999 16 Jul 1999 08 Dec 1999 28 Nov 2002 20 Jan 2005 20 Jan 2005 02 Dec 2005 31 Jan 2008 22 Jul 2008 Completed Completed Completed Ongoing Ongoing Completed PS

93

7143

AD

500,000

02 Oct 2008

Ongoing

106

Appendix 8

Sector/ Subsector

TA Number

TA Name the Infrastructure Development Company Limited Strengthening the Resilience of the Water Sector in Khulna to Climate Change

Type

Amount ($)

Date Approved

Current Status

TCR Rating

TPER Rating

94

7197

AD

600,000

10 Dec 2008

Ongoing

TOTAL

58,461,846

ADTA = advisory technical assistance, GS = generally satisfactory, PPTA =project preparatory technical assistance, S = satisfactory, TCR = technical assistance completion report, TPER = technical assistance performance evaluation report. Source of basic data: ADB Database on Loan, TA, Grant and Equity Approvals.

Table A8.3: Grants to Bangladesh, 1999–2008
Sector/ Grant No. Project Name Subsector Agriculture & Natural Resources Agriculture Sector Development 9009 Supporting Livelihood Improvement for the Poor through Water Management Associations Health, Nutrition, & Social Protection Health Systems 0008 Second Urban Primary Health Care Social Protection 9080 Social Development for ErosionAffected Poor in the JamunaMeghna Floodplains TOTAL ADF 0 0 JFPR 900,000 900,000 Total 900,000 900,000 17 Aug 2001 Date Approved

10,000,000 10,000,000 0

790,000 0 790,000

10,790,000 10,000,000 790,000 31 May 2005 05 Dec 2005

10,000,000

1,690,000

11,690,000

ADB = Asian Development Bank, ADF = Asian Development Fund, JFPR = Japan Fund for Poverty Reduction. Source of basic data: ADB Database on Loan, TA, Grant and Equity Approvals.

Table A8.4: ADB Nonsovereign Loans, Investments, and Guarantees to Bangladesh, 1999–2008
Sector/ Subsector Investment No. Company Investment 0.0 0.0 OCR 50.0 50.0 ADF 0.0 0.0 Total 50.0 50.0 B-LOAN 20.0 20.0 Guarantees 70.0 70.0 Combined 140.0 140.0 05 Dec 2000 Date Approved

Energy Conventional Energy Generation 7165/1793 AES Meghnaghat Power Finance Banking Systems 7177

0.5 Central Depository Bangladesh Limited 0.5

0.0 0.0

0.0 0.0

0.5 0.5

0.0 0.0

0.0 0.0

0.5 0.5 15 Aug 2002

Transport & Communications Telecommunications & Communications 7194/2078 Grameenphone Telecommunications Expansion TOTAL

0.0 0.0

20.0 20.0

0.0 0.0

20.0 20.0

0.0 0.0

0.0 0.0

20.0 20.0 26 Jan 2004

0.5

70.0

0.0

70.5

20.0

70.0

160.5

ADB = Asian Development Bank, ADF = Asian Development Fund, B-Loan = ,OCR = ordinary capital resources. Source: ADB Database on Loan, TA, Grant and Equity Approvals.

Appendix 8

107

108

Table A8.5: Completed Projects, 1999–2008
Loan type Original Subsector Approved Completion Closed PPER Irrigation, Drainage, and Flood Protection 17-Dec-93 31-Dec-99 18-Mar-03 U Water-Based Natural Resources Management 27-Nov-98 31-Dec-06 19-Dec-07 Forestry Irrigation, Drainage, and Flood Protection Water-Based Natural Resources Management Forestry Livestock Pre-Primary and Basic Education Pre-Primary and Basic Education Pre-Primary and Basic Education 2-Mar-95 7-Nov-95 31-Dec-02 30-Jun-01 23-Jun-95 30-Jun-03 Ratings Relevance Effectiveness Partly relevant Less Effective Partly relevant Relevant Partly relevant Highly relevant S S S S S S S Relevant Highly relevant Relevant Highly relevant Relevant

Appendix 8

Loan

Name Khulna- Jessore Drainage 1289 Rehabilitation

Amount

Sector ANR

PCR

PCV

Efficiency Inefficient

Sustainability Sustainable

EIRR 4.08

48722 Project

Sundarbans Biodiversity 1643 Conservation Project 1353 Coastal Greenbelt Project Command Area Development 1399 Project Small-Scale Water Resources 1381 Development Project 1486 Forestry Sector Project Participatory Livestock 1524 Development Project Secondary Education 1268 Development Project Second Primary Education 1521 Sector Project Secondary Education Sector 1690 Improvement Project

36527 Project 21141 Project 27651 Project

ANR ANR ANR

U PS PS

U

Less Effective Inefficient Less Efficacious Less efficient Effective

Sustainable Less likely Less likely Likely sustainable Likely sustainable Likely sustainable Sustainable Likely sustainable Likely sustainable

13.9 7.2 MIDP 14, PIRDP 19, SSFD 36

27988 Sector 58831 Sector 19240 Project 73124 Project 95411 Sector 62545 Sector

ANR ANR ANR EDU EDU EDU

26-Sep-95 21-Nov-96 19-Jun-97 23-Nov-93 22-May-97 22-Jun-99

31-Dec-02 30-Jun-04 30-Jun-03 30-Jun-00 30-Apr-03 03-Apr-06

14-Jan-03 30-Jun-06 10-Jul-03 04-Jun-01 30-Jun-03 25-Apr-07

S

Effective Effective Efficacious

Efficient Efficient Efficient

12.8 to 135.4 2200% 16.78 – – – BGFCL 168.15, BGSL 22.88, TGTDC 104.07, JGTDSL 21.98

Hihgly Efficacious Effective

Efficient Less efficient

Third Natural Gas Development 1293 Project 105091 Project

ENR

1505 Ninth Power Project 1634 Rural Livelihood Project Urban Primary Health Care 1538 Project Third Rural Infrastructure 1581 Development Project

125205 Project 45919 Project 39943 Project 69784 Project

ENR FIN HLT MS

Conventional Energy Electricity Transmission and Distribution Microfinance Health Systems Multisector

21-Dec-93

31-Dec-99

23-Oct-03

S

Highly relevant Highly relevant Partly relevant Highly relevant Highly relevant

Efficacious Likely sustainable Unlikely Likely sustainable

18-Dec-96 29-Sep-98 16-Sep-97 20-Nov-97

31-Jul-01 30-Jun-05 30-Jun-03 30-Jun-05

12-Jul-04 22-Nov-07 30-Jan-06 30-Jun-05

S PS S HS

S

Effective

Efficient

29.2 50 – – DH/JA/01 25.5, DH/MA/01 and 02 53.4, CO/NO/01 17.9, CT/X/01 64.1

Less Effective Less efficient Effective Highly Effective Efficient Highly Efficient

S

Flood Damage Rehabilitation 1666 Project

99512 Sector

MS

Multisector

11-Dec-98

30-Jun-01

29-Jan-02

S

HS

Highly relevant

Highly Effective

Efficient

Unlikely

Loan

Name Emergency Flood Damagae 2156 Rehabilitation Project Jamuna Bridge Access Roads 1478 Project Jamuna Bridge Railway Link 1561 Project Southwest Road Nerwork 1708 Development Project 1298 Jamuna Bridge Project Southwest Flood Damage 1825 Rehabilitation Project

Amount

Loan type

Sector MS

Subsector Multisector

Original Approved Completion 20-Jan-05 31-Jul-07

Closed 31-Dec-07 HS Highly relevant Highly relevant

173041 Project

Ratings Highly Effective

Likely sustainable Likely sustainable

66436 Project 106293 Project 118114 Project 209302 Project

TRN TRN TRN TRN

Road Transport Rail Transport Road Transport Road Transport

05-Nov-96 31-Dec-01 01-Aug-01 02-Oct-97 31-Dec-01 18-Dec-03

S S S HS S

Efficacious Efficacious Effective – Highly Effective

Efficient

EIRR Regional Road 39.9, Zila Road 23.9 R505/217 54.52, N5/32 22.15, N1/2 18.99, N1/5 60.13 14.31

01-Nov-99 30-Sep-04 17-Sep-06 08-Mar-94 30-Jun-99 30-Jun-00

Relevant Highly relevant – Highly relevant

Efficient –

58347 Sector

TRN

Road Transport

21-Dec-00 31-Dec-03 17-May-04

HS

Secondary Towns Infrastructure 1376 Development Project II Second Water Supply and 1264 Sanitation Project

57241 Project 29831 Project

USD WSS

Urban Sector Development Water Supply and Sanitation

19-Sep-95 30-Sep-01 16-Nov-93 30-Sep-99

08-Oct-03 28-Oct-02

S S

Highly relevant Highly relevant

Effective Efficacious Efficient

27.6 16.8 Jesore-Benapole Road 47.76, KushtiaLikely sustainable Meherpur Road 25.59 Bagerhat 36.6, Brahmanbaria 37.5, Jessore 50.2, Munshigonj 13.9, Sirajgonj 28 Unlikely Less likely –

Less likely –

ANR = agriculture and natural resources, EDU = education, FIN= finance, HLT = health, HS = highly satisfactory, MS = multisector, PS = partly satisfactory, S = satisfactory, TRN=, USD = urban sector development, WSS = water supply and sanitation.

Appendix 8

109

110

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DISASTER RISK MANAGEMENT A. Introduction

1. The following evaluates the activities of the Asian Development Bank (ADB) in disaster risk management (DRM),1 and to a lesser extent, the activities of ADB's partners in the joint approach to the country strategies, from 1999 to 2008 in the context of the overall development effort made by the Government and its development partners. The main questions concern the relevance of the support for DRM, the positioning of the various partners, and the degree of success and sustainability of the various interventions. The evaluation also briefly reviews the Government’s programs in DRM. To make its assessments, the evaluation reviewed many documents, mostly ADB publications and internal documents; reviewed some Government publications available on websites; interviewed Government and development partners; held a workshop with 11 pertinent non-government organizations (NGOs) in the Bangladesh Resident Mission; and made two field visits.2 2. DRM covers natural, technological, environmental hazards, and health emergencies. Among the natural hazards covered by DRM are (i) floods, (ii) cyclones, (iii) tornados, (iv) drought, and (v) earthquakes. In Bangladesh, some of the issues associated with floods are riverbank erosion,3 landslides, flood early warning systems, flooding pattern, damage due to flood, extent and duration of floods. Issues associated with cyclones are loss of lives and destruction of property, especially homes, in response to which the Government is implementing its Cyclone Preparedness Programme that includes the construction of thousands of cyclone shelters. Issues associated with droughts are the lack of river flow data and transboundary rainfall measurements from India. Earthquakes are not as frequent as cyclones in Bangladesh, but individually they are as devastating. In a country with as many poor people as Bangladesh, an immediate problem resulting from these disasters is food security, and the overarching effect of all of the disasters is the deceleration of economic development and the attendant decrease in the efficacy of poverty reduction efforts. B. Sector Development Context

3. Bangladesh faces many natural hazards. It is also one of the world's most densely populated countries, ranking as the world's seventh largest country by population but 94th by area. The combination of natural hazards, high population density, and a high poverty rate means that many millions of people are unusually exposed to natural disasters. The high poverty rate also means that millions of people are vulnerable to global economic changes, like the rise in food prices that hit the world in 2008. Recent disasters that have struck Bangladesh have included Cyclone Sidr in 2007 that took more than 3,200 lives, injured 40,000 of the 8.5 million affected population, and caused an estimated $1.6 billion in damages (including 564,000 destroyed houses and another 885,000 that were damaged), some 0.6% of the country's GDP. 4. From 1999 to 2008, a number of steps were taken to alleviate disaster-related concerns in Bangladesh. For example, cyclone and flood early warning systems were developed to where
1 2 3

Disaster Risk Management is the term used internationally, and the term adopted by ADB. Source: ADB. 2008. Action Plan for Implementing ADB's Disaster and Emergency Assistance Policy. Manila. See Supplementary Appendix 1 for a map showing sites visited. Riverbank erosion is a perennial problem in Bangladesh. It displaces over 100,000 people annually with devastating social and poverty impacts along the major rivers, where poverty is heavily concentrated. Source: ADB. 2002. Report and Recommendation of the President to the Board of Directors on a Proposed Loan to the People's Republic of Bangladesh for the Jamuna-Meghna River Erosion Mitigation Project. Manila.

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it is now possible to warn people about impending floods 7 to 10 days in advance. The Flood Forecasting and Warning Centre (FFWC) under the Bangladesh Water Development Board (BWDB) regularly forecasts floods at various locations of the major rivers with a lead time of 3 days. The country's latest cyclone warning system is using up-to-date spatial technology. As a result, although cyclone Sidr caused immense damage to property, far fewer lives were lost than from the 1991 cyclone that claimed 139,000 lives. The warning system alone would not have reduced casualties, if it had not also been accompanied by community-based DRM, public awareness and education programs, the development of DRM legislation, and other associated actions. 5. Riverbank erosion as a result of floods was reduced to a great extent by introducing geotextile sand bags along several erosion-prone areas, to replace the more prevalent, but less effective, concrete blocks. Agricultural lands were protected by providing flood embankments and flood retention basins along major rivers. During a field visit in May 2009, this evaluation noted an example of successful intervention on the Jamuna River where, in an extensive pilot installation, a combination of grout-filled mattresses above normal river level, replacing marginally useful conventional concrete block armament, and geo-textile sand bags below normal river level, had reportedly been unaffected by several annual floods—a great achievement in a river that changes its banks by hundreds of meters (m) per year and has reportedly shifted its bank in at least one location by one kilometer (km) in 4 months.4 The technology is both more effective and efficient, costing up to 50% less than alternative technologies. 6. Floods. Around 10,000 hectares (ha) of land is eroded by rivers annually in Bangladesh.5 Some 100,000 people are displaced, many of whom become urban squatters. Of the 462 administrative units in Bangladesh, 100 are subjected to some form of riverbank erosion (35 of them serious) that affects about 1 million people annually. The Government has been developing and implementing various measures to better equip the country to deal with floods. The Ministry of Water Resources (MoWR) is leading the country on flood risk reduction initiatives. Important initiatives include a Flood Action Program, a Flood Hydrology Study, a Flood Management Model Study, a National Water Management Plan, a National Water Policy, and a Flood Early Warning System Study.6 7. Cyclones. In the past 100 years, of the 508 cyclones that originated in the Bay of Bengal, 17% have hit Bangladesh, once every three years on average. More than half of those cyclones have claimed more than 5,000 lives. Early warning systems can reduce the loss of lives substantially, as was demonstrated during and after Cyclone Sidr hit in 2007 when much less destruction resulted than was first feared, due to the Government’s preparedness. Better early warning systems, including more and better data collection and analyses as well as more cyclone shelters (either stand-alone or in combination with other structures such as schools) and quicker and more widespread emergency assistance can further prevent loss of lives. 8. Tornados. It is difficult to locate tornados or forecast their occurrence with the techniques available at present; however, numerical weather prediction models, high-resolution satellite imagery, suitable radar, and a network of densely spaced meteorological observatories could be useful for predicting or for issuing warnings of nor’westers (a local term for tornados). A forewarned population could, therefore, hope to avoid the loss of life; however, the occasional loss of agricultural products and some other property is inevitable.
4 5 6

Personal communication with local resident during field visit on 15 May 2009. Government of Bangladesh. 2001. National Water Management Plan. Dhaka. Government of Bangladesh. 2007. Draft National Plan for Disaster Management (2007–2015). Dhaka.

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9. Droughts. Agriculture in Bangladesh and elsewhere is affected by precipitation (rainfed paddies, for example) and irrigation from surface and groundwater sources. Parts of Bangladesh are affected adversely by low river flows caused by seasonal abstractions upstream. The Government is also considering commissioning drought forecasting models to better guide the farmers with their crop calendar. 10. Earthquakes. Although much work has been done on cyclones and floods in Bangladesh, risk assessments for earthquake damage have not been prominent. This is despite the fact that prominent seismologists7 believe that a major earthquake (more than 8.0 on the Richter scale) is overdue along the plate boundaries in Bangladesh, with potentially devastating consequences in the densely populated cities of Bangladesh. A national-level, multi-hazard risk and vulnerability assessment, including earthquakes, should be seriously considered. C. Government priorities, policy, and plans

11. Following the devastating floods in 1988 and the 1991 cyclone, the Government adopted a holistic approach toward the processes of hazard identification and risk reduction, community preparedness, and integrated response efforts. Relief and recovery activities are now planned within an all-risk management framework, seeking enhanced capacities of at-risk communities and thereby lowering their vulnerability to hazards. In line with the paradigm shift from postdisaster relief and response to comprehensive disaster management, focusing more on preparedness, the Disaster Management Bureau (DMB) was created in 1992, and the Ministry of Relief and Rehabilitation was renamed the Ministry of Disaster Management and Relief; in 2003 the ministry was again renamed the present Ministry of Food and Disaster Management (MoFDM). With the aid of United Nations Development Programme (UNDP), the MoFDM developed a Comprehensive Disaster Management Program (CDMP). The major goal of this program is to promote reduction of risk disasters through community-based risk management. 12. In its Draft National Plan for Disaster Management 2007-2015 (NPDM) issued in 2007, the Government describes 11 hazards and 5 other key targets it intends to address. While all of these hazards would affect individuals seriously, only floods, cyclones, tornados, droughts, and earthquakes and their consequences (e.g., severe river bank erosion as a function of floods) are generally regarded as national scale disasters, as they often affect millions of people. Among them, floods and cyclones and related calamities have received the most attention from the Government and consequently from ADB and other development partners, as well as from nongovernment organizations. 13. The 2008 report on Cyclone Sidr in Bangladesh8 details the disaster itself as well as the estimation of damage and losses, economic and social impacts, early recovery requirements, and medium- and long-term recovery and reconstruction requirements. In line with the Government’s shift in emphasis, the report also discusses DRM requirements, the costs of which total some $4 billion9 over the period 2008 to 2022. The report likewise notes that the Government’s NPDM is aligned with the objectives and priorities for action identified under various international conventions, including the Hyogo Framework for Action 2005–2015, the
7

8

9

For example, Earthquake risk in Bangladesh: Facing the reality, Dr. Tahmeed M. Al-Hussaini, quoting Prof. Bruce Bolt of University of California at Berkeley, a world renowned seismologist, “…Bangladesh can be affected by large magnitude earthquakes generated in four tectonic zones…” Government of Bangladesh. 2008. Cyclone Sidr in Bangladesh: Damage, Loss and Needs Assessment for Disaster Recovery and Reconstruction. Dhaka. ADB was part of the joint assessment team that produced the report. Based on World Bank staff estimates.

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UN Framework Convention on Climate Change, and SAARC Framework for Action 2006–15. DRM is obviously accorded great importance; the Prime Minister himself or herself is head of the National Disaster Management Council, policies and decisions of which are implemented by the Inter-Ministerial Disaster Management Coordination Committee, assisted by the National Disaster Management Advisory Committee. Nationally coordinating interventions is the responsibility of the MoFDM. The Government’s NPDM has five sub-programs: (i) risk identification and assessment, (ii) strengthening emergency preparedness, (iii) institutional capacity building, (iv) risk reduction investments, and (v) catastrophe risk financing and transfer, including the possibility of risk insurance. 14. The Government intends to constitute a fund called the National Disaster Response and Recovery Fund10 from its own resources and donations from home and abroad. The fund will be used for response, relief, and recovery. Allocation and utilization of the fund will be governed by rules and guidelines laid down by the Government. MoFDM, in consultation with the Ministry of Finance (MoF), will take the initiative to establish the fund by consolidating existing relief funds. The Government also intends to constitute a fund called the National Risk Reduction Fund11 for projects designed for the purpose of prevention, mitigation and preparedness. The allocation and utilization of the fund will also be governed by rules and guidelines laid down by the Government. TMoFDM, in consultation with MoF, will take the initiative to establish the fund by consolidating existing risk reduction funds. D. ADB’s Support for Disaster Risk Management

15. Before 1999, ADB contributed mainly to disaster relief in Bangladesh, in accordance with its emergency assistance policy that advocated short-term assistance. From 1999 to 2008, ADB introduced several DRM-related policies and strategies that applied to ADB generally (i.e., not specifically to Bangladesh). Most notably, ADB’s stance on disasters shifted from an earlier "emergency assistance policy [that] advocates short-term assistance"12 to “a new approach that emphasizes preventive measures”.13 In line with its revised emergency assistance policy14 and operations manual.15 Since 1999 ADB's program in Bangladesh has included disaster preparedness and disaster prevention; or rather, ADB has funded projects designed to ameliorate the effects of disaster (for example, prevention of river bank erosion and improved flood management covering both urban and rural areas along with improved drainage). 16. ADB's support for DRM in Bangladesh started in 1986, with a $16.9 million loan for the Khulna Coastal Embankment Rehabilitation Project. Starting with that loan until the end of 2008, ADB approved 16 loans worth about $1.1 billion that address DRM specifically (see Table A9.1). That number represents 13.4% of the loans approved for Bangladesh from 1986 to 2008. From 1987 to 2008, 40% ($456.6 million) of ADB's disaster-related financing to Bangladesh was for emergency assistance.16 17. ADB's support for DRM was higher during 1999–2008 than during 1986–1998. From 1999 to 2008 ADB approved 6 disaster-specific loans, compared with 10 from 1986 to 1998.
10 11 12 13 14 15 16

Government of Bangladesh. 2007. Draft National Plan for Disaster Management 2007-2015. Dhaka. Government of Bangladesh. 2007. Draft National Plan for Disaster Management 2007-2015. Dhaka. ADB. 1995. Operations Manual, Section 25: Rehabilitation Assistance after Disasters. Manila. ADB. 2004. Operations Manual. Section D7/OP: Operational Procedures. Disaster and Emergency Assistance. ADB. 2004. Disaster and Emergency Assistance Policy. Manila. ADB. 2004. Operations Manual, D7/OP, Operational procedure: Disaster and Emergency Assistance. Manila. Data provided by ADB Regional and Sustainable Development Department.

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Despite the fewer loans from 1999 to 2008, DRM loans approved were higher in aggregate amount ($620 million vs. $468 million) and as a percentage of approved lending (14.7% vs. 12.8%) than those for 1986–1998. Table A9.1: ADB Total and DRM-Specific Loan Approvals to Bangladesh
Period 1986–1998 1999–2008 Total Total Number of Loans 62 57 119 Number of DRM Loans 10 6 16 % of Total Number 16.1 10.5 13.4 Total Amount $M 3,669.2 4,204.2 7,873.4 DRM Loan Amount $M 467.9 619.6 1,087.5 % of Total Amount 12.8 14.7 13.8

Note: DRM loans are loans that focus specifically on disaster risk management issues. Totals do not include grants. Source: Asian Development Bank database.

18. Four of the six DRM-specific projects approved during 1999–2008 were for emergency assistance and were primarily responses to cyclones and floods that hit Bangladesh in 2000, 2004, and 2007. The main objectives of three of these projects (Loan Nos. 1825, 2156, and 2409) were to rehabilitate and restore damaged infrastructure such as roads, bridges, culverts, railways, growth centers, irrigation facilities, drainage, and also embankments and river-bank protection works. The other disaster-response loan (Loan No. 2430) focused on improving food security of the poor and vulnerable people affected by repeated natural disasters and rising food prices. The two other DRM-specific loans were for risk reduction. These loans financed projects that intended to establish mitigation measures for riverbank erosion (Loan No. 1941) and to construct or improve facilities for urban flood protection (Loan No. 2117). Of the six DRMspecific loans approved from 1999 to 2008, two are closed (Loan Nos. 1825 and 2156) and both were self-evaluated as highly successful. The four other loans are in advanced stages of implementation. Table A9.2: ADB Loans Relevant to Disaster Risk Management
Loan No. Title Omitted DRM-related components 1708 Southwest Road Network Development 1789/1790 Road Maintenance and Improvement 1920 Road Network Improvement and Maintenance 2015 Second Primary Education Development Program 2021 Road Network Improvement and Maintenance Project II 2462 Second Urban Governance and Infrastructure Improvement IIncluded DRM-related components 1831 Second Small-Scale Water Resources Development Sector 1952 Rural Infrastructure Improvement 2200 Southwest Area Integrated Water Resources Planning & Mgt. 2254 Second Rural Infrastructure Improvement Source: Asian Development Bank database, Reports and Recommendations of the President. Date Approved 16 Nov 1999 29 Nov 2000 10 Oct 2002 03 Nov 2003 20 Nov 2003 29 Oct 2008 12 Jul 2001 02 Dec 2002 23 Nov 2005 18 Aug 2006

19. Aside from DRM-specific loans, ADB also approved loans that were not exclusively for DRM but had DRM-related components. From 1999 to 2008, ADB approved loans for 10 projects in which arguably disaster-related components should have been included, based on lessons learned (Table A9.2). Four of them did, in fact, include such disaster-related components that could be identified, worth an estimated $45.9 million (see Table A9.3). For the projects that omitted DRM-related components, DRM could have been adequately covered in the Government's design standards; if so, ADB should have confirmed that the coverage is

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indeed adequate through a review of the design standards and their implementation, and the loan documents should have noted that. In addition, savings from five other loans totaling $30.59 million were reallocated for DRM works and activities during the period being evaluated.17 DRM-specific loans as well as loans with DRM components or amounts transferred to DRM activities are shown in Table A9.3. Thus, in all, ADB's financing associated with DRM reached $740 million during 1999–2008, which is 17.6% of the total amount of loans approved during the period. Table A9.3: DRM Specific and Related Loans
Loan No. Project Title Date Approved 21 Dec 00 25 Nov 02 02 Dec 04 20 Jan 05 31 Jan 08 22 Jul 08 Amount ($M) 64.74 42.17 80.00 162.30 144.00 170.00 DRM portion 64.74 42.17 80.00 162.30 144.00 170.00 663.21 23.57 3.00 2.83 16.50 45.90 1.65 5.22 10.22 4.00 9.50 30.59

DRM-Specific Loans 1825 Southwest Flood Damage Rehabilitation 1941 Jamuna-Meghna River Erosion Mitigation 2117 Secondary Towns Integrated Flood Protection Project II 2156 Emergency Flood Damage Rehabilitation 2409 Emergency Disaster Damage Rehabilitation (Sector) 2430 Emergency Assistance for Food Securitya Sub-total Loans with DRM-related Components 1831 Second Small-Scale Water Resources Development Sector 1952 Rural Infrastructure Improvement 2200 Southwest Area Integrated Water Resources Planning & Mgt. 2254 Second Rural Infrastructure Improvement Sub-total Loans with Amounts Transferred to DRM Projects 1376 Secondary Towns Infrastructure Development Project II 1399 Command Area Development 1486 Forestry Sector 1581 Third Rural Infrastructure Development 2015 Second Primary Education Development Program Sub-total

12 Jul 01 02 Dec 02 23 Nov 05 18 Aug 06

34.00 60.00 20.00 96.10

19 Sep 95 07 Nov 95 21 Nov 96 20 Nov 97 03 Nov 03

65.00 30.00 50.00 70.00 100.00

a

739.70 TOTAL ADB considered the rise in global food prices in 2008 as an emergency under its Disaster and Emergency Assistance Policy. ADB. 2008. Advisory Note to Country Teams In Processing Food Price Crisis Response Operations. Manila. Note: Amounts shown for Loan Nos. 1825 and 2156, which are both closed, are actual amounts provided by ADB (including grants from other sources that are administered by ADB). The amount shown for Loan No. 2409 was revised from the original approved amount to take into account an additional $24 million grant from the Government of the Netherlands which ADB administers. Sources: Asian Development Bank database, reports and recommendations of the President to the Board of Directors, project completion reports, and project performance reports.

20. Two other loans are also relevant to this evaluation, as they were approved before 1999 but closed after 2001, and so were not covered in the first CAPE. In 1995 ADB approved the Small-Scale Water Resources Development Sector Project, 58% of which was for flood control and drainage, amounting to $15.8 million; the loan closed in 2003.18 On December 18, 1998 (2
17 18

Some of these loans were approved prior to 1999 but the funds were transferred to DRM during 1999–2008. ADB. 2007. Project Performance Evaluation Report, BAN: Small-Scale Water Resources Development Sector Project. Manila.

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weeks before the start of coverage of this CAPE), ADB approved a loan of $104 million for the Flood Damage Rehabilitation Project; the loan closed in 2002.19 Adding those loans to the total approved from 1999 to 2008 brings ADB's DRM-related financing (but not approvals) to $860 million. 21. DRM is also relevant to ADB's technical assistance (TA) program. Of the 45 project preparatory technical assistance (PPTAs) projects approved from 1999 to 2008, 17 could arguably be expected to have included disaster management issues based on their objectives. Of those 17 PPTAs, only 7 included relevant DRM-related components (TA3267, TA3508, TA3659, TA3755, TA4000, TA4079, and TA4516).20 Two of the PPTAs resulted in DRM-specific loans. Of the 54 advisory technical assistance (ADTAs) approved from 1999 to 2008, 8 could arguably be expected to have included disaster management issues based on their objectives. However, only three of the eight ADTAs included relevant DRM-related components (Table A9.4). Table A9.4: DRM-Related ADTAs
ADTA No. Title Date Approved 08 Dec. 1999 16 Nov. 1999 30 Sep. 1999 16 July 1999 30 June 1999 Associated Loan Amount ($)

Omitted DRM-related components 3328 Chittagong Hill Tracts Region Development Plan 3297 Urban Transport and Environmental Improvement 3269 Bangladesh Environment Operational Strategy 3226 Urban Sector Strategy 3213 Chittagong Hill Tracts Rural Development Included DRM-related components 4562 Early Warning Systems Study 7101 Strengthening the Government's Institutional Capacity for Improving Food Security 7197 Strengthening the Resilience of the Water Sector in Khulna to Climate Change Total Source: Asian Development Bank database.

1708

20 Jan. 2005 22 July 2008 02 Dec. 2004

2156 2430 N/A

250,000 600,000 600,000 1,250,000

22. DRM did not figure prominently in ADB's strategy in the 1999 Country Operational Strategy. ADB's 2005 Country Strategy and Program (CSP), however, departed from convention and included a clear and specific strategy for ADB's role in DRM. ADB’s main strategic thrusts in the 2005 country strategy are captured in 12 programs.21 Whereas the country strategy promises that disaster risk considerations would be mainstreamed, only 222 of the 12 programs referred to DRM issues. Arguably, 723 of the remaining 10 programs would benefit from incorporating DRM, which means that DRM could have been further mainstreamed in the 2006–2010 country strategy.
19 20 21

22 23

ADB. 2006. Project Performance Evaluation Report, Bangladesh: Flood Damage Rehabilitation Project. Manila Two TAs were approved in early 2009, CDTA7273 and R-CDTA7276. Both relate to disaster management and indicate ADB’s continuing commitment to DRM in Bangladesh. The 12 programs are (i) Poverty; (ii) Gender; (iii) Governance; (iv) Private Sector; (v) Environment; (vi) Agriculture and Natural Resources; (vii) Transport; (viii) Energy; (ix) Education; (x) Health and Social Protection; (xi) Financial Sector (including SMEs); and (xii), Urban Water Supply, Sanitation, and Urban Development. ADB. 2005. Country Strategy and Program (2006-2010): Bangladesh. Manila. Environment and Agriculture and Natural Resources Poverty, Gender, Governance, Health and Social Protection, Transport, Urban Water Supply, Sanitation and Urban Development, and Education

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23. The 2005 country strategy pledges to ensure that flood risks were assessed during project preparation, with projects designed to withstand anticipated flooding and include sitespecific flood control measures such as rural irrigation facilities, whose performance hinges on mitigating the risks of major floods. However, a review of ADB's program from 2005 to 2008 reveals that DRM was not fully mainstreamed in ADB projects. In fact, 2 out of 3 non DRMspecific projects and none of three relevant PPTAs approved during the period included relevant DRM-related components. 24. The responsibility for ensuring that DRM was mainstreamed into ADB's program would have been taken by the DRM focal points in the resident mission and in headquarters. ADB's Disaster and Emergency Assistance Policy requires a DRM focal point in each regional department and resident mission.24 ADB's Regional and Sustainable Development Department, responsible for monitoring ADB's policy, confirmed that neither the Bangladesh Resident Mission nor the South Asia Regional Department has a DRM focal point. E. Top-Down Assessment 1. Positioning of ADB’s Support Sector Program

25. Relevance. The Government formulated a strategy with its National Plan for Disaster Management, May 2007 (Draft). In it, there is no reference to a predecessor and so it is reasonable to assume that Bangladesh did not have a development strategy vis-à-vis DRM prior to 2007. There was, however, a Corporate Plan (framework for Action 2005-2009) formulated to serve as a key management tool to guide the then MoFDM, and that plan included frameworks for mainstreaming disaster risk reduction. 26. In contrast, ADB had a strategy to finance flood protection since well before 1999. ADB’s loans specifically directed to DRM alone amounted to almost 15% of its total loan portfolio, via responses to disasters and reconstruction of infrastructure affected by floods and cyclones, with additional funds earmarked for disaster relief and preventive activities in other projects. Consistent with the bottom-up assessment, ADB’s sector strategy has been highly relevant in addressing development needs in a timely manner and consistent with Government objectives. 27. ADB’s loan and TA approvals from 1999 to 2004 were consistent with ADB’s policy Rehabilitation Assistance after Disasters (1989) and ADB’s 1999 country strategy. From mid2004, ADB’s Disaster and Emergency Assistance Policy, May 2004 applied; again ADB’s loan and TA approvals were consistent with policy. Whereas ADB’s corporate policy does not specifically endorse emergency disaster-related aid, pertinent documents presume, correctly, that not providing such aid would retard economic growth and with it, poverty reduction. Providing emergency assistance and embarking on rehabilitation of infrastructure damaged by natural disasters (mostly floods and cyclones) is consistent with the spirit of ADB’s long-term strategic framework and medium-term strategies, and as such, ADB’s DRM program in Bangladesh is highly relevant to ADB's policies and strategies. 28. Corporate policy notwithstanding,25 ADB appears to respond to a moral obligation to assist its developing member countries distressed by natural and human-made (e.g., the 1997
24 25

ADB. 2004. Disaster and Emergency Assistance Policy. Manila. Articles 2 [ii] and 14, of the Operating Principles of ADB’s Charter define ADB’s mandate to finance development of its DMCs, which mandate does not allow ADB to engage in humanitarian relief that are normally assumed by other international aid agencies, regional bodies, non-government organizations (NGOs), and the United Nations (UN).

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Asian financial crisis) disasters. Consequently, decisions to fund immediate emergency relief and subsequent infrastructure repairs are not based on project-specific targets and road maps, although road maps for other sectors include disaster-related components (e.g., flood protection works in agriculture and transport). The decisions are, however, consistent with the Government’s poverty reduction targets as well as ADB’s overarching policy of poverty reduction inasmuch as speedy disaster response enhances speedy economic recovery from those effects and with it, stops poverty from rising. In that respect, ADB’s support is considered substantial. 29. In view of the fact that ADB includes reference to DRM in only 2 of its 12 support programs detailed in the 2005 country strategy, whereas DRM should arguably be mainstreamed in at least nine support programs, the degree of program design must be regarded as negligible to modest. 30. Selectivity and ownership. ADB’s operations in DRM have not only been in step with the Government’s stated priorities, but also have been ahead of the Government’s reform initiative to shift its focus from response to risk reduction. As such, ADB’s sector operations can be regarded as having focused to a substantial to high degree on Government sector priorities and related reform initiatives. 31. Sequencing and continuity. ADB’s support in DRM has been three-fold: (i) timely responses to the Government’s requests for emergency support after disasters; (ii) appropriate disaster-related projects in various sectors that ran in parallel with projects in line with national development strategies; and (iii) innovative initiatives in disaster preparedness that were somewhat ahead of the Government’s reform agenda, although limited to flood-related aspects. Therefore, ADB’s sector operations can be considered to have had a high degree of sequencing and continuity. 32. ADB’s support in DRM was timely in response to the Government’s requests for emergency support that were made when disasters struck. Of the 57 loans that ADB approved during from 1999 to 2008 for a total of $4.3 billion, six loans, worth $663 million, specifically addressed disaster-related issues. Another nine loans included disaster-related components or reallocated amounts (such as flood control in ANR loans). ADB’s country assistance can be considered to have had a substantial degree of continuity for development effectiveness. 33. ADB's positioning in DRM is thus substantial. 2. ADB’s Performance

34. Responsiveness. As noted above, ADB has responded in a reasonably timely fashion to the Government’s request for emergency assistance, even though ADB does not engage in immediate disaster relief. ADB approved six loans totaling $663 million, plus another nine loans with disaster-related components or reallocated amounts worth $77 million. ADB’s responsiveness is considered substantial to high. 35. Suitability of ADB's policies, systems, and lending instruments. Bangladesh regularly experiences natural disasters. ADB’s policies recognized this fact early on and acted, apparently based on a moral obligation, without a strategy and without a formal program. 36. ADB’s 1999 country strategy identified poverty reduction as its overall strategic objective, listed two main strategies of promoting faster economic growth, but did not associate

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these strategies with DRM. The strategy, however, noted that ADB would continue to finance, among other things, flood protection. The 1999 strategy covered seven sectors. None of them features DRM and only in agriculture and natural resources was ADB’s commitment to continue to finance flood protection noted. The 2005 country strategy, in contrast, included a specific strategy for DRM, possibly a unique feature among ADB country strategies, and clearly appropriate to Bangladesh. 37. When the Government requested assistance in response to several major disasters, ADB responded. All six of the disaster-specific loans were from the Asian Development Fund (ADF); one emergency loan (2156) was processed as a project loan instead of as an emergency assistance loans (EALs) as proposed in ADB’s Disaster and Emergency Assistance Policy of May 2004, making the suitability of the loan questionable. In addition, DRM was not fully mainstreamed, perhaps partly due to the failure to appoint DRM focal points in headquarters and the resident mission, and that deficiency may have detracted from ADB’s overall effort. On balance, ADB policies, systems, lending instruments, and assistance modalities are considered modestly to substantially appropriate for country conditions. 38. Capacity and competencies. Projects were generally delayed by executing and implementing agencies whose implementation capacity could be regarded as negligible to modest. Two initiatives that caught the imagination of the Government, the placement of groutfilled mattresses and sand-filled geo-textile bags in lieu of the traditional concrete blocks, and the early warning system study; are expected to have a positive influence on the Government’s capacity for DRM. National replication of the hardware initiative and conversion of the software initiative to a real and effective early warning system are necessary to gauge the significance. As it is, their potential is considered modest to substantial. 39. Overall, ADB's performance in DRM is substantial. 3. Contribution to Results

40. Sector work and policy dialogue. As noted in OM 25, Rehabilitation and Assistance after Disasters, the processing of rehabilitation assistance after disasters does not involve policy dialogue. This would have applied to all six of ADB’s disaster-specific loans. However, based on ADB’s considerable participation in the international community’s efforts to alleviate Bangladesh’s sufferings from the effects of mostly floods and cyclones but also other hazards, ADB’s country strategy recognizes that a comprehensive complement of regional and national initiatives is needed to improve Bangladesh’s ability to prepare for and manage risks arising from those hazards. Whereas ADB’s 2005 country strategy advises that “disaster-risk considerations will be mainstreamed”, only 2 of the 12 sub-programs include disaster-related considerations; the evaluation found three projects under the 2005 country strategy (that is, projects approved 2005 to 2008) that should have included DRM, but only two of three included relevant DRM components (see Table A9.2). More thought should be given to incorporate DRM considerations in projects where applicable. The rating for ADB’s sector work and policy dialogue is modest to substantial. 41. Outputs and Outcomes. As noted, ADB’s 2005 country strategy promises mainstreaming but delivers less. In contrast, ADB invariably complies with the Government’s pleas for emergency assistance in meaningful TAs, grants, and loans. In addition, ADB has delivered two high-quality initiatives related to the reduction of risk from flooding and cyclones. The greatest effect of both, once implemented, will be on poverty reduction. ADB’s subprogram that addresses poverty is one of five subprograms in ADB’s 2005 country strategy that arguably

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should include a reference to disaster-related issues but fails to do so. While not entirely consistent with ADB’s strategy, the effect of the outputs and outcomes is still considered substantial. 42. Outcomes of projects specifically related to DRM and projects that included disasterrelated components in the transport sector were often less than satisfactory due to poor execution at the local level and the Government’s failure to put in place and properly administer adequate maintenance programs. Rural roads, for example, were poorly constructed and maintained, shortening their economic life significantly. ADB has recognized these shortcomings and included in its strategies the demand for tighter adherence to relevant covenants and for institutional competence. What remains to be seen is for those strategies to be operationalized. The difference between ADB’s strategies and actual practice as evidenced by the outcomes of projects suggests only a modest rating. 43. Value-Added of ADB Assistance. The Food and Disaster Management budget of the Government in 2009 is $816 million of the total budget of $16,259 million (about 5%). Assuming a 10% increase in the overall budget since 1999 and an average 5% disaster-related expenditures brings the Government's estimated total disaster-related spending over the CAPE period to about $5 billion. The total disaster-related budget by all other development partners is roughly about $740 million from 1999 to 2008. This compares with $740 million of ADB loan funds directed to DRM; ADB therefore may have provided up to half of DRM-related financing from the development partners, which is considered substantial. 44. ADB's Jamuna-Meghna River Erosion Mitigation Project has made a substantial contribution by introducing an effective technology (geo-textile based revetments) with unit costs only 30% to 50% of the costs of concrete revetments. Two other contributions of that project are (i) integrating an erosion prediction system for major rivers with advance planning and warning, and (ii) implementing methods to improve the construction of underwater works, and to more effectively cope with changing channels and flows. 45. The greatest impact of those innovations will be through their replication in other projects. ADB has taken steps in that direction by including the design and implementation guidelines for the Jamuna-Meghna project in the Secondary Towns Integrated Flood Protection Project. The project's guidelines are also being included in national guidelines for managing riverbank erosion. 46. ADB has delivered two high-quality initiatives related to the reduction of risk from flooding and cyclones. In both cases, ADB has advanced the institutional capabilities of the relevant Government entities. To maximize the potential benefit from the two initiatives, institutional capacity building must continue so that Government agencies can participate effectively in planning projects and implementing them properly. ADB’s approaches and institutional capacity building are regarded as substantial. 47. The Government has shifted its approach from post-disaster relief and response to comprehensive disaster management. ADB's efforts in erosion control and early warning systems contributed significantly to that policy shift. ADB has justifiably recognized, notably in the "disaster mitigation" sub-strategy of its 2005 country strategy, that other development partners, particularly the United Nations organizations, are better placed to lead in disaster risk management. ADB has thus contributed to the collaboration and harmonization among the development partners in supporting the Government's approach to DRM.

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48. Overall, ADB’s contribution during 1999–2008 added substantially to the financial and technical assistance provided by the numerous organizations working in Bangladesh, to address the plight of millions of Bangladeshis coping with the forces of nature. F. Bottom-up assessment

49. The following reviews the relevance, effectiveness, efficiency, sustainability, and impact of ADB's program in DRM. Table A9.5 summarizes the findings. ADB's program is assessed as party successful overall. Table A9.5: Bottom-Up Performance Assessment and Rating
Rating Criterion Relevance Effectiveness Efficiency Sustainability Impact Overall Assessment
Source: CAPE Team Assessment.

Assessment Relevant Less effective Efficient Likely sustainable Substantial Partly successful

1.

Relevance

50. ADB’s activity in DRM from 1999 to 2008 was relevant to the country's needs and the Government's priorities. ADB participated in, and possibly furthered, the Government's shift to disaster preparedness by two initiatives: (i) hardware (loans for geotextile-based riverbank erosion protection works) and (ii) software (TA 4562 Early Warning Systems Study). ADB also supported the Government into addressing emergencies on seven occasions during 1999– 2008, and changed its strategy from purely responding to disasters to planning for disasters by way of two initiatives (early warning systems study and loans for innovative erosion protection). It is unclear, however, if ADB has a comparative advantage in the emergency aspects of DRM, thereby limiting the relevance of its program. ADB's future program could be more relevant by focusing on disaster risk reduction, and fully mainstreaming DRM into projects. ADB can better address the emergency aspects of DRM through its Asia Pacific Disaster Response Fund, which was approved in April 2009.26 2. Effectiveness

51. ADB's contributions in DRM are likely to be less effective in achieving DRM objectives, mainly due to the lack of explicit consideration of DRM components in relevant projects. Table A9.2 shows 10 projects that should have included DRM components based on context and lessons learned, but only 4 projects included relevant components. It is possible that the relevant DRM issues could have been covered in all projects through the Government's design standards. For ADB to adequately address the DRM issues, ADB would have needed to review the design standards and their implementation to ensure that DRM issues were indeed properly covered, and then mention the review in relevant project documents. Without a general consideration of DRM issues and explicit mention in project documents, the six projects without relevant DRM components must be judged ineffective by default. 52. ADB's contributions through DRM-specific projects have been effective. Two of the six DRM-specific projects have been completed, and each was rated highly effective. (Among the two loans approved before 1999, one was effective and the other highly effective.) One ongoing
26

ADB. 2009. Establishment of the Asia Pacific Disaster Response Fund. Manila.

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DRM-specific project appears to be on track to being highly effective (Loan 1941), and another is on track to be effective (Loan 2117). The two other DRM-specific loans are still in the early stages of implementation. No DRM-related loans have been completed, but progress reports indicate that each ongoing loan is making satisfactory progress. 53. ADB's geotextile revetments and the study on early warning systems are two cases of good practice, lending weight to ADB's effectiveness. The early warning systems study has clearly strengthened the Government's institutional capabilities in disaster preparedness. The geotextile revetments will strengthen the country's resistance to floods when the JamunaMeghna project is complete, if indeed they haven't been strengthened already. 54. ADB’s loans for post-disaster reconstruction achieved mixed results in achieving institutional objectives due partly to the design of the projects, and partly to the Government’s failure to provide for sufficient funding to adequately maintain the infrastructure. ADB's effectiveness also suffered from the failure to mainstream DRM into projects and TAs. Interviews and surveys of staff from the Government, other aid agencies, and NGOs indicated lack of knowledge of ADB’s activities in DRM despite ADB allocating a major share of financing to DRM. 3. Efficiency

55. ADB’s activity in DRM during 1999 to 2008 was rated efficient. The four completed DRM-specific loans have economic internal rates of return (EIRR) above 12; two were rated successful and two were rated highly successful. Some subprojects had EIRRs as high as 135; each was rated efficient or highly efficient. The ongoing Jamuna-Meghna Flood Mitigation Project is using the geo-textile revetments that have proven to be more efficacious than standard concrete revetments, and at a fraction of the cost. That project, when completed, is likely to have a high EIRR. The Secondary Towns Integrated Flood Protection Project has also adopted the technology, and so is likely to also have a high EIRR. These four completed and two ongoing projects accounted for $440 million of ADB's $860 million DRM financing, or 51% of the total. Assuming the two ongoing projects continue to make good progress (as is likely), the majority of ADB's program will be successful and will have EIRRs above 12%. 4. Sustainability

56. ADB’s activity in DRM during 1999 to 2008 is likely sustainable. In Bangladesh, strong political will in support of ADB's work in early warning systems and riverbank erosion protection help to ensure the sustainability of ADB's efforts. ADB’s TA report on early warning systems is expected to spawn a project in 2011, which will strengthen the sustainability of the systems. ADB is promoting the replication of its successful geotextile-based riverbank protection method throughout the country; however, it is up to the Government to endorse countrywide replication. ADB’s assistance has not helped strengthen institutional capacity for formulating sector policies in general; however, the management of ADB’s TA report on early warning systems was instrumental in inducing the Government to claim total ownership of the project. 57. Constraints to the sustainability of ADB's DRM contributions are the quick-fix nature of emergency support, and systemic problems in the transport sector with financing of maintenance for repaired roads. Much of ADB's emergency financing has been for road rehabilitation. Project site visits indicated that construction materials and methods were inadequate to achieve reasonably long service life, partly due to the decision to provide quick fixes and partly due to poor execution at the lower levels of government. As also discussed in

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the transport sector evaluation, long-term sustainability of roads depends on adequate maintenance. As shown in the monitoring indicators for the results framework (Appendix 5), there has been no progress on the indicator for providing more funding for road maintenance. 5. Impact

58. ADB’s activity in DRM during 1999 to 2008 had substantial impact. With respect to ADB's hardware and software initiatives discussed earlier, expectations for the work were exceeded, and the impact created was high. ADB's work in DRM is regarded positively by the government, development partners, and NGOs, to the extent that they know about ADB's work. Whenever the Government requested emergency assistance, ADB responded quickly and appropriately, and projects were put in place and implemented efficiently, although not always to the very best effect, to address the results of disasters caused by floods and cyclones. G. Lessons learned and good practices for the future strategy

59. Programming lessons learned and better practice. ADB, having had two successful interventions intended to lead to disaster risk reduction, is in a strong position to build on those successes. A loan to continue the direction set by TA 4562, Early Warning Systems Study, is in the pipeline and should be realized. Moreover, the excellent preparatory institutional strengthening provided to nationalize riverbank erosion control by way of effective and efficient use of geotextile-based revetments should be continued. Both face some challenges as both require substantial and sustained support from the Government and development partners. For the software side of the flood warning systems, ADB has had a working relationship with one of the global leaders in the field, the Danish Hydraulics Institute, and that should serve the effort well. On the hardware side, the Japanese Government would likely be an interested partner. In short, ADB has the background and the good relationship with the Government and other development partners to take the lead in coordinating efforts for both. H. Recommendations

60. Include DRM components in all relevant ADTAs and PPTAs, and ensure all relevant projects have suitable DRM components. This evaluation found that only 2 of 8 ADTAs, only 7 of 17 PPTAs, and only 4 of 10 projects included suitable DRM components. During TA design and project formulation and preparation, more care should be taken to include issues relevant to DRM. The changing climate will further expose Bangladesh to typhoons, floods, and other natural hazards, so it will be even more important to mainstream DRM in projects in the future, and to help strengthen DRM in the country. ADB's Regional and Sustainable Development Department has drafted a risk screening which may useful in fully mainstreaming DRM.27 ADB could ensure broad coverage of DRM issues in all projects by working with the Government and other development partners to review the Government's design standards and their implementation, and either confirm their adequacy or recommend efforts to strengthen the standards or implementation. 61. Appoint DRM focal points in the South Asia Regional Department and the Bangladesh Resident Mission. Better mainstreaming of DRM could have been achieved by assigning responsibility for reviewing loans and TAs to DRM focal points, as required by ADB's policy. The DRM focal point is a part-time responsibility that can be assigned to suitably qualified existing staff, and does not require creating a new position.
27

ADB. 2009. Draft Risk Screening Tool. Manila.

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62. Support the planned National Disaster Risk Management Project, and continue promoting geotextile-based revetments. Two projects stood out during this evaluation: (i) ADTA 4562, Early Warning Systems Study and (ii) Loan 1941, Jamuna-Meghna River Erosion Mitigation. With these two successful interventions leading to disaster risk reduction, ADB is in a strong position to build on those successes. To promote the geotextile-based revetments, ADB could fund a comprehensive hydrological study to determine the most appropriate locations for this cost-effective, risk-reducing intervention, and then implement all river bank protective work on a comprehensive scale and not on an ad hoc basis under emergency assistance projects. The hydrological study and investment plan could be part of a broader road map for DRM, led by the Government and involving all relevant development partners, perhaps also identifying suitable follow-up to ADB's flood warning systems study. 63. Supervise construction more closely to improve project implementation. ADB used to insist that projects, particularly in loans to inexperienced borrowers, included ample time for international consultants to supervise construction. ADB recognized that during construction, the quality of the project would be in jeopardy if sufficient, competent supervision was not provided. To lessen problems with poor quality in project implementation, ADB should revert to greater emphasis on construction supervision, particularly since inexperienced contractors are able to win contracts, further underscoring the need for strong, competent supervision. 64. Coordinate all grants and loans for disaster prevention, risk reduction, and preparedness with the Government's respective funds, and with ADB's Asia Pacific Disaster Response Fund. The Government is planning to establish a National Disaster Response and Recovery Fund and a National Risk Reduction Fund. Both funds are described in the Draft National Plan for Disaster Management 2007-2015 and both will be governed by rules and guidelines laid down by the Government. The MoFDM, in consultation with MoF, has taken the initiative to establish the funds by consolidating the existing risk reduction funds. ADB should coordinate all grants and loans for projects that are DRM-specific or have substantial DRM components with the Government’s respective fund managers. 65. Fund and lead a national-level, multi-hazard risk and vulnerability assessment, including tornados and earthquakes, and fund a cost-benefit study to define what debilitating effect disasters have on the economy and how DRM could ameliorate that effect. Tornados and earthquakes are two natural hazards that have so far not received as much attention in Bangladesh's DRM. The country has a high earthquake risk, and although urbanization is still low, the high population density and questionable construction quality in urban areas means many millions of people are at risk. Tornados are difficult to forecast with current practices, but high-resolution satellite pictures and other accessible technology promise improvements in forecasting. Bangladesh needs to take earthquakes, tornados, and all risks into consideration in a comprehensive study of risk and vulnerability, including measuring economic risks to better guide investments. 66. In the next country strategy, include DRM (preparation and rehabilitation) in all relevant programs in clear, unambiguous language, and include procedures to ensure the strategy is implemented. ADB’s Disaster and Emergency Assistance Policy of 2004 refers to mainstreaming disaster risk management as an integral part of the development process and advises that “prevention and preparedness should be mainstreamed into a country’s development process.” The policy then notes that country strategies and project appraisal work already incorporate environmental assessments that consider natural disasters, providing a foundation for mainstreaming risk reduction and preparedness activities into ADB’s project

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lending and TA.28 That “mainstreaming” policy is echoed in ADB's 2005 country strategy and in Strategy 2020. 67. This evaluation found gaps in the application of the policy and in the country strategy. DRM should have been integrated into 9 of the 12 support programs in the 2005 country strategy; however, only 2 of ADB’s 12 programs in the strategy refer to DRM when arguably 7 more should. The following are some examples of how DRM can be included in country strategies: (i) (ii) (iii) (iv) (v) (vi) (vii) (viii) (ix) Transport: incorporate design features such that roads are constructed to better withstand inevitable flooding. Education: incorporate design features such that schools are constructed to better withstand inevitable floods and cyclones and earthquakes (if in or near flood-, cyclone-, or earthquake-prone zones). Urban water supply, sanitation, and urban development: refer specifically to applicable DRM issues, such as earthquake safety. Environment: stress the need to manage nonbeneficial flooding. Health and social protection: expand DRM considerations beyond the integration of risk disaster insurance. Poverty reduction strategy: acknowledge that DRM impacts poverty reduction, and consider how ADB should respond to future disasters to help the poor. Gender strategy: recognize the potential for different impacts of disasters on women, given that families are separated by rural-urban or overseas migration. Governance: consider how to strengthen disaster rehabilitation efforts against corruption, given that rehabilitation efforts by their nature involve faster and less controlled processes. Agriculture and natural Resources: consider ways to manage the impact of disasters on agriculture; recognize watershed management as integral to DRM.

28

ADB. 1985. Review of the Bank’s Environmental Policies and Procedures. Manila; ADB. 1987. Implementation of the Bank’s Environmental Policies and Procedures and Its Future Activities. Manila; ADB. 2002. Environment Policy. Manila.

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Table A9.6: Findings and Comments on DRM-Specific and DRM-Related Loans, 1999 to 2008
Loan 1376 1399 1486 Comment $1.65 million transferred on 8 October 2008 for flood damage rehabilitation component (FDRC) civil works (73.5 km roads, 150 m bridge/culverts, 7.7 km storm water drainage, and 1,250 households of slum improvement) $5.22 million transferred for flood damage rehabilitation component from Loan 1486 on 1 April 2002 In October 2002, SDR6.43 million was cancelled from Loan 1268 (Second Education Development Project), Loan 1298 (Jamuna Bridge Project), and Loan 1353 (Coastal Green Belt Project) and consolidated into the loan account of the ongoing Loan 1486 for its FDRC; SDR4.058 million from the other components of Loan1486 was also reallocated to the FDRC of Loan 1486 Included during implementation, FDRC civil works (117 km feeder roads (type B) and 648 m of bridge/culverts) under JBIC financing (JBIC was one of the major cofinanciers, and the flood damages were mainly in its area) for ¥422 million (about $4 million) No identified disaster-related components No identified disaster-related components. Although the Scope of Services in the RRP included to “Study the existing hydrological regime …to establish the adequacy of road…design”, the Summary of Design Approach and Technical Standards and cost estimates did not refer to floodrelated construction. Extensive cost estimate does not specifically refer to flood protection details. However, the project officer estimates ADB's loan portion for flood protection and associated irrigation works is approximately 90%, or $30.5.5 million. Even though the RRP contains ample discussion of flood-related issues, the cost estimate does not appear to include for flood-proofing of roads. Under "Assumptions and Risks" in the Project Framework, the RRP notes "No major natural disasters", after having noted that "The cyclone risk is very high in the coastal areas." It is not clear from quite detailed cost estimates what amounts were estimated to be spent on floodproofing. In the absence of a PCR, and based on sketchy descriptions ("develop ...flood control works" and "cross-drainage structures will be built to ensure passage of floodwaters"), it is assumed that flood-related construction was no more than $3million. Included during implementation, FDRC civil works (8,700 classrooms in moderate and high flood zone and 397 of Government Primary School-cum-Cyclone Shelters) for $9.5 million "This project area is sometimes flooded due to heavy rainfall." "The area is periodically flooded." "River erosion and flooding are significant." Other project areas are not flood-prone. The Summary of Design Approach and Technical Standards does not refer to any flood-proofing considerations and the quite detailed cost estimates do not include costs for flood-proofing. In the absence of a PCR that might indicate otherwise, it is assumed that this project does not include flood-related construction. Even though the project includes 1,360 km of subdistrict roads, 780 km of union roads, and 7,780 km of village roads in Bangladesh flood-prone areas, there’s no flood control component – also not included in the “Risks and Assumptions” discussion of the RRP. Except for the inclusion of improved drainage for health-related reasons, there's no "disaster component" A $34 million grant from the Netherlands was added $2.83 million identified for “…improving the productivity and sustainability of existing underperforming flood control and drainage or irrigation (FCD/I) schemes...while providing a model for rejuvenating poorly performing FCD/I systems that can be replicated throughout the country. The main benefits are increased agriculture production–brought about by improved flood protection.”

1581 1708 1789/ 1790 1831 1920 1952

2015 2021

2254 2462 2409 2200

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TRANSPORT SECTOR A. Sector Development Context

1. Because of its geography and high population density, Bangladesh faces unique transport challenges. Mobility levels are low and transport availability is hampered by inadequate traffic management in the urban areas and lack of transport in the rural areas. A working and efficient transport sector is vital for promoting and sustaining economic growth. The sector has received major support from the Government as well as from development partners, yet overall conditions have not improved much due to the high growth in demand and the deteriorating performance of the railway and inland waterways—two subsectors that have the strongest potential in Bangladesh. Roads, despite the geographic constraints, have become the dominant mode of transport. 2. Development expenditure in the transport sector amounted to 20% of total Annual Development Programme (ADP) expenditure from 1999 to 2008.1 The road subsector receives a significant portion of the transport budget (about 80%), followed by inland water transport, and then railways. The funding allocated to roads was used mostly for major corridors and secondary roads. As very little expansion and renewal investment was made in railways and inland waterways, the infrastructure and services in these subsectors deteriorated, resulting in a fall of demand for these modes. 3. Roads. The network of national highways, regional highways, and type A feeder roads managed by the Roads and Highways Department (RHD) expanded significantly from 12,321 km in 1988 to 20,854 km in 1998, but has since barely increased to 20,865 km in 2008.2 The network of national and regional highways actually expanded by 2,709 km from 1998 to 2008, but this expansion was offset by the decline in type-A feeder roads by almost the same length. The coverage of the national road network is adequate, providing access throughout the country. However, the network suffers from a backlog of road rehabilitation, lack of proper maintenance, and poor quality of feeder roads. Meanwhile, rural roads managed by the Local Government Engineering Department (LGED) almost doubled from 64,124 km in 2002 to 116,398 km in 2008. Around 44% of these are paved roads and the rest are dirt roads. The Bangladesh Road Transport Authority (BRTA) is tasked with ensuring road safety. 4. Railways. Bangladesh Railways (BR) operates a network of 2,835 route km, of which some 660 route km are broad gauge located in the western part of the country. From 1988 to 2008, the net increase to BR's route km was only 100 km. During the same period, the number of passenger coaches declined from 1,502 to 1,387, while the number of freight wagons decreased from 16,247 to 9,470.3 In FY2008, BR carried 53.8 million passengers, up 17% from the previous year and up 40% from FY1998. Freight transport, in contrast, went up by 10% from 3.0 million tons in FY2007 to 3.3 million tons in FY2008.4 5. Rail transport suffers from closures due to floods and poor management. A severe shortage of capacity exists in the network, especially along the Dhaka-Chittagong corridor. Poor maintenance of locomotives is another factor affecting the operations of BR. Another important issue is the high level of direct and indirect subsidies provided by the government. About 36% of
1 2 3 4

Government of Bangladesh. 2008. Ministry of Finance Bangladesh Economic Review 2008. Dhaka. Footnote 1. Footnote 1. Bangladesh Railways. 2009. Available http://www.railway.gov.bd/statistical_highlights.asp

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BR’s total operating expenditure is supported by subsidies. All capital expenditures are financed by the government as well. The last time BR made an operating profit was in 1970. 6. Inland waterways. Inland waterways are a critical component of the Bangladesh transport system in view of the floods that regularly affect the country and disrupt other transport modes. More than half of the country’s total land area is within 10 km of a navigable waterway. The country has about 6,000 km of perennially and seasonally navigable waterways. The system includes 11 main river ports. However, the market share of the inland water transport network of navigable waterways is poor as well as uncertain as observed in the last comprehensive hydrographic survey in 1989. Ports on inland water systems are owned and operated by the Bangladesh Inland Waters Transport Authority (BIWTA). BIWTA maintains waterways, aids navigation, regulates private passenger services, among other responsibilities. Ferries across rivers and between the mainland and offshore islands are provided by Bangladesh Inland Waters Transport Corporation (BIWTC). BIWTC also provides cargo and passenger services within the inland water systems. 7. Seaports. The two major sea ports are managed by the Chittagong Port Authority (CPA) in the east and the Mongla Port Authority (MPA) in the west. Together they handled about 1,129,257 twenty-foot equivalent units (TEU) of containerized traffic in FY2008, a 7.7% increase from 1,048,631 TEUs in FY2007. Chittagong Port is the larger port and handles more than 90% of total import-export traffic. Despite recent improvements, the efficiency of CPA still remains low. 8. Urban Transport. The rapidly growing urban population has far outstripped the capacity of urban infrastructure, leading to low efficiency and massive shortages. For example, transport in Dhaka, the country’s largest and most industrialized city, is characterized by traffic congestion and delays, inadequate traffic management, conflict of jurisdictions and poor coordination among agencies, as well as increasing air pollution problems. The Dhaka Transport Coordination Board (DTCB) is responsible for planning and coordinating transport infrastructure facilities and traffic management in the Dhaka Metropolitan Area. 9. Transport sector agencies. The government has played a central role in the transport sector, as regulator, operator, and investor in infrastructure and services. In recent years, however, the role of the private sector as service provider or operator has increased in providing passenger and freight transport services, managing cargo handling operations at ports, operating small inland waterway services, and constructing transport infrastructure. Briefly, the development responsibility for transport in Bangladesh is divided between the Ministry of Communication (railways and main road network), Ministry of Shipping (inland water transport, ports and shipping), Ministry of Local Government (rural roads), and Ministry of Civil Aviation and Tourism (Biman Bangladesh Airlines). 10. Transport sector issues and constraints.5 The key transport sector issues and development challenges facing Bangladesh are as follows (the issues and challenges apply to all sectors unless otherwise noted): (i) inadequate intermodal and multimodal opportunities/linkages; (ii) insufficient funding for road maintenance; (iii) weak governance, poor financial management, and poor project implementation; (iv) archaic traffic safety regulation resulting in high accident rate and major congestion; (v) rapid rate of motorization; (vi) inadequate strategic international transit corridors, including lack of infrastructure and weak
5

Based on review of project documents; interviews with government officials, other donors, ADB staff, other stakeholders; and inter-department comments on draft report.,

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institutions; (vii) capacity constraints and weak administrative capacity at ports; (viii) slow reform of railways which need to become a commercial operation; (ix) underdeveloped inland waterways—a transport mode that should have a strong potential in Bangladesh; (x) lack of coordinated transport policy to integrate all transport modes at planning, investment, operation, management, and monitoring stages; (xi) fragmented transport institutional structure that has made coordination difficult for transport development; (xii) high turnover of senior government officials; (xiii) lack of ownership of development partner-supported projects; (xiv) inherited structural and physical weaknesses from a historical system not designed to serve Bangladesh's needs; and (xv) policy favoring private vehicles, promoting congestion and raising greenhouse gas emissions. B. The Government's Sector Development Policies and Plans

11. The Government’s Fifth Five-Year Plan (1997-2002) identifies an adequate and efficient transport system as a prerequisite for both initiating and sustaining economic development, citing the link between transport efficiency and the expansion and integration of markets and growth of international trade. The main objective of the plan for the transport sector is to develop a balanced and integrated transport network. In the road sub-sector, the main objectives include (i) developing the five strategic road corridors, including the Southeast Road Corridor between Dhaka and Chittagong, which is also a key access road to the Jamuna Bridge; (ii) improving rural transportation; (iii) strengthening road maintenance; (iv) improving institutional capacity; (v) attracting additional financial resources by introducing enhanced road user charges; and (vi) establishing the legal and policy framework for private sector participation. 12. In April 2004, the Government approved and adopted the National Land Transport Policy (NLTP). It is expected to change the way land transport is planned and managed by promoting greater private sector participation and adopting a user-pays principle. NLTP’s strategic objectives for the road sector include (i) clarifying the responsibility of Government entities; (ii) introducing long-term network planning; (iii) proposing a road maintenance fund as an earmarked source; (iv) coordinating transport planning; (v) improving organizational efficiency of LGED and RHD; (vi) increasing the involvement of the private sector in infrastructure, services, and maintenance; (vii) protecting the environment from road construction programs; and (viii) improving management of traffic and roadside activities. For the railway subsector, the NLTP stipulates that BR will be transformed into a corporate entity with greater autonomy. This will enable BR to function independently on a commercial basis, as well as allow private sector participation and investments in the conduct of its business. Public service operations compensation will be transparent. The new corporate entity will assume all assets and liabilities of BR. The NLTP also states that improved operational methods and financial management systems will be introduced into BR. The government also envisages linking BR to neighboring countries through strategic partnerships. 13. The Government's Poverty Reduction Strategy Paper, which was released in October 2005, contained 40 strategic goals and over 60 key targets for the transport sector. The strategic goals and key targets are organized by relevant transport government agencies but there are common themes. These include (i) prioritizing pro-growth infrastructure (strategic corridors), (ii) emphasizing routine and periodic maintenance (in road and railway operations), (iii) increasing private sector participation, (iv) improving institutional capacity and financial performance of transport agencies, and (v) promoting transport safety. 14. In 2007, the Government adopted the Road Master Plan (RMP) that will serve as a guiding document for road sector investment priority investment. It provides a physical plan for

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new road construction, rehabilitation and maintenance over the next 20 years. The objectives of the RMP are to set out a comprehensive investment program so as to (i) protect the value of RHD's road and bridge assets; (ii) improve the connectivity of the road network; (iii) enhance and develop the strategic road network to meet economic and traffic growth targets; (iv) improve the Zila Road network to enhance connectivity to the growth centers; (v) improve road safety and reduce road accidents; (vi) provide environmental and social protection; and (vii) outline the institutional improvements required for RHD. To improve transport safety and efficiency in Dhaka, the Government has launched a Strategic Transport Plan through DTCB. The plan includes a proposed mass transit system and traffic management. 15. The Integrated Multi-Modal Transport Policy (IMTP) is another important government transport policy paper but it is still awaiting Cabinet approval. The IMTP has two themes: (i) policies should allow the development of a transport system that best meets the users' needs at fair prices, and at economic cost; and (ii) an integrated approach is needed to address Bangladesh’s competitiveness in the export market, and to help reduce the cost of imports. The IMTP covers all transport modes, including rural transport and urban transport. The new policy will be coordinated under NLTP, through the newly established Transport Sector Coordination Wing of the Ministry of Planning. C. ADB's Sector Support Program

16. The transport sector has been one of the main areas of intervention in Bangladesh. From 1973 to 2008, ADB approved 28 public sector loans in the transport sector worth $1.8 billion and representing 18.5% of total loans approved in the country, second only to the energy sector’s 25.5%. Of the 28 loans approved, 19 worth $1.4 billion and representing 76.3% of total sector loan amounts, had been in the roads and highways subsector. Of the remaining nine loans, six were in the railways subsector ($389 million), two were in the ports subsector ($7 million), and one was in the multimodal transport and sector development subsector ($31 million). In addition to the loans, ADB provided 43 technical assistance (TA) grants to the transport sector from 1973 to 2008 worth $28.0 million, of which $14.5 million were advisory TAs. More than half of the ADTA (55%) was for the railways subsector. As with the loans, the ports and multimodal transport and sector development subsectors received the least amount of ADTAs ($1.9 million and $358,000, respectively). 17. ADB’s transport sector strategy for Bangladesh has been evolving over a decade. The two key ADB strategy documents covering the evaluation period are the 1999 Country Operations Strategy and the 2006-2010 Country Strategy and Program. The main elements of ADB's transport sector strategy, contained in these two documents, are listed in Table A10.7, along with a list of operations (both projects and TA) approved during these periods in support of the strategic objectives.

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Table A10.1: Sector Strategic Thrusts and Program 1999–2008
Strategic Period Main Strategic Thrusts Operations Approved Loans ï‚· Southwest Road Network Development (1999) - $115 million ï‚· Road Maintenance & Improvement (2000) - $94 million ï‚· Southwest Flood Damage Rehabilitation (2000) - $54.8 million ï‚· Road Network Improvement & Maintenance (2002) - $65 million ï‚· Rural Infrastructure Improvement (2002) - $60 million ï‚· Road Network Improvement & Maintenance II (2003) - $126 million ï‚· Chittagong Port Trade Facilitation (2004) - $30.6 million Advisory Technical Assistance ï‚· Urban Transport & Environmental Improvement (1999) - $645,000 ï‚· Oil Spill Impact and Response Management Program (1999) - $1 million ï‚· Organizational Reforms of Bangladesh Railway III (2000) $840,000 ï‚· Jamuna Bridge Impact Study (2001) $150,000 ï‚· Support to the Roads and Highways Department for Safeguard Policy Compliance (2004) - $500,000 ï‚· Chittagong Port Efficiency Improvement (2004) - $500,000

1999–2004 (1999 COS)

ï‚· Commercialize and restructure of Bangladesh
Railways into an autonomous body.

ï‚· Support policy and institutional reforms in the
railway sector.

ï‚· Support investments in sections of major
transport corridors, especially those with regional implications.

ï‚· Invest in internal road network, particularly
those with strong poverty impact.

ï‚· Support reforms and efficiency in the ports
sector.

2005–2008 (2005 CSP)

ï‚· Help Government sequence its transport

reforms to improve safety, efficiency, and quality of service.

ï‚· Support private sector participation and

Loans ï‚· Padma Bridge Design (2007) - $17.6 million ï‚· Railway Sector Investment I (2007) $130 million Advisory Technical Assistance ï‚· Institutional Support for Railway Reforms (2006) - $2 million

partnership in infrastructure operations and management.

ï‚· Improve sector governance, including that of

Chittagong Port Authority, Roads & Highways Department and Bangladesh Railways.

ï‚· Promote subregional cooperation by

developing strategic transport links and crossborder arrangements.

Source: ADB Country Operational Strategy (1999–2004); ADB Country Strategy and Program (2006–2010); ADB project database

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18. ADB's support for transport sector consisted of 11 loans for 9 projects worth $693 million (excluding transport subprojects of loans not classified as transport). This represented an 8% increase from $639 million during the previous decade and 16.5% of total loan approvals for Bangladesh during the period (down from 20.9% during the previous decade). Seven of the nine projects approved, worth $532 million were in the roads and highways subsector. The two other projects are one each in the railways subsector ($130 million) and the multimodal transport and sector development subsector ($31 million). The main goals of the transport sector projects are to contribute to economic growth and poverty reduction while the specific objectives to (i) increase economic opportunities by expanding the road network and by improving and maintaining existing roads; (ii) restore economic activity in disaster-affected areas by rehabilitating roads, bridges, and railways to pre-disaster levels; (iii) improve public sector governance through institutional reform of major transport agencies and greater private sector participation; (iv) improve railway efficiency and capacity by adding new lines in busy corridors, procuring additional rolling stock, and strengthening the capacity and operational capability of BR; and (v) increase the capacity of the container terminal at the port of Chittagong by constructing access roads to the port and upgrading the container terminal management system of the Chittagong Port Authority. Three of the nine projects approved in the transport sector (all in the roads subsector) have been completed, four are in different stages of completion (35% to 90%), and the remaining two are in the early operational stages. 19. Aside from the nine transport projects, two rural development projects and two emergency assistance projects include significant transport components worth roughly $355 million. In two of these projects, transport components account for more than 50% of total project costs. ADB also approved a Public-Private Infrastructure Development Facility in 2008 for $165 million, but the loan is not yet effective. The bulk of the loan is earmarked for energy projects, but transport projects also qualify for the facility. 20. In all, the investment components of road projects (including nontransport sector projects with transport components) are expected to construct, improve, and rehabilitate almost 4,400 km of national, regional, and type A feeder roads (21% of the current length of 20,865 km), about 12,500 km of rural roads (14% of average length of 90,000 km of rural roads between 2002 and 2008), and 36,000 m of bridges/culverts. The projects will also provide for maintenance of about 1,000 km of national roads and rehabilitation of rail infrastructure. 21. From 1999 to 2008, ADB provided the transport sector in Bangladesh with 15 TA grants worth $11.1 million. Eight were project preparatory TAs (PPTAs) that resulted in five loans. The rest were ADTAs worth $5.8 million. Two of these ADTAs aim at supporting reforms in the railway subsector including organizational reform of BR. The objectives of the other ADTAs were to (i) help improve the efficiency of the Chittagong Port; (ii) strengthen the capacity of the RHD to conduct comprehensive assessments of the social and poverty impacts, resettlement, and environmental impacts of large-scale highway projects; (iii) to develop an oil spill contingency plan; and (iv) prepare a strategy to improve air quality. D. Activities of Other Development Partners

22. For Bangladesh, the key development partners in the transport sector are ADB, World Bank (WB), Government of Japan, and Department for International Development (DFID) of the United Kingdom. In addition, a number of bilateral agencies have supported the transport sector, mostly for rural infrastructure. The development partners are collaborating in supporting the implementation of the NLTP. In 2006, ADB, DFID, WB and the Government of Japan

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established a joint strategic framework for their assistance in Bangladesh and also agreed to conduct joint evaluation of their assistance to the transport sector. 23. The Government of Japan recently assessed transport assistance to Bangladesh of the four partners in the joint country strategy. The assessment6 focused on the collaborative efforts of the four partners with a focus on “Alignment and Harmonization.” The main areas in which the four partners have been working collaboratively are the design of the Padma Bridge; BR reforms and investments; and establishment of a sustained road maintenance funding mechanism.7 The report is moderately positive in its assessment. E. Sector Performance Assessment and Rating 1. Top-Down Assessment

24. The top-down assessment considers the positioning of ADB’s assistance, the contribution of the assistance effort to sector performance, and the quality and responsiveness of ADB’s services. The overall top-down assessment of ADB's transport program is “partly successful.” Details of the components of the assessment are given below. 25. Relevance and positioning of ADB's sector program. ADB has substantial positioning in the transport sector. ADB's transport sector strategy and program addressed the country's relevant and priority transport needs. It was also consistent with the Government's development strategies and plans for the sector. ADB's focus on the roads subsector was likewise deemed appropriate as it was in line with the Government's own priorities. 26. The continuity of ADB's assistance to the transport sector has been satisfactory. Since 1985, ADB has maintained its presence in the sector with at least one transport project every other year. Sequencing of assistance has also been satisfactory. For instance, road projects initially focused on expanding of the road network. Assistance then shifted to road upgrading and rehabilitation and then to road improvement and maintenance. 27. ADB's performance. Overall, ADB's performance in the transport sector is modest. ADB responded adequately and in a timely manner to changing country needs and the Government's requests for support. A majority of high-level government officials, other government officials, development partners, non-government organizations, and other stakeholders surveyed for the CAPE agreed with this assessment. The lending and non-lending instruments and assistance modalities used by ADB were likewise deemed appropriate for the country and the sector, and harmonized well with those of the other development partners. 28. ADB's performance in implementing of the projects, however, was less than satisfactory. Several projects had long delays; some of the delays may be attributed to the Government and force majeure, but some are due to ADB's approach to project design and management of procurement and consultant recruitment processes. 29. Contribution to development results. ADB has made a substantial contribution to development results. ADB's transport sector work in Bangladesh was generally satisfactory. ADB was able to design appropriate strategies and programs. ADB has also been continuously
6 7

ADB. 2008. Evaluation of Four Donors’ Assistance in the Bangladesh Transport Sector, Draft Report. Manila DFID, which took the lead in the analytical work for the road maintenance fund has reportedly decided to pull out of the Bangladesh road sector.

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engaged in policy dialogue with the Government on transport issues and is in close coordination with other development partners. ADB chairs the transport sub-group of the Local Consultative Group. ADB was instrumental in the adoption of important transport sector policies and plans, namely the NLTP and the RMP. 30. ADB's transport program from 1999-2008 has made a positive contribution to the achievement of outcomes that enabled pro-poor growth, social development, and to a lesser extent, good governance. Contributions to capacity development, gender and development, and environmental protection were also positive. Most projects included capacity building components and were able to effectively mainstream gender and environmental considerations. Contributions to private sector development and regional cooperation were minimal. 2. Bottom-Up Assessment

31. The assessment of ADB’s operations (including three completed projects, six ongoing projects, seven ADTAs, and policy dialogue) in support of the transport sector is outlined in Table A10.2. The bottom up assessment, rated partly successful, considered performance in terms of the direct results from ADB’s operations—namely, the outputs, outcomes and impacts produced. The standard evaluation criteria of relevance, effectiveness, efficiency, sustainability and impact were used. Table A10.2: Bottom-Up Performance Rating of ADB Transport Sector Program
Rating Criterion Relevance Effectiveness Efficiency Sustainability Impact Overall Assessment Assessment Highly relevant Effective Efficient Less likely Modest Partly successful

32. Relevance. ADB’s transport sector strategy and program in Bangladesh is highly relevant as it is fully consistent with ADB's overall mission and strategy in the country, is of sufficient size to achieve results, and harmonized with assistance provided by other development partners. More importantly, it was also responsive to the country's evolving needs, priorities, and plans as articulated in the Government's Fifth Five-Year Plan, Poverty Reduction Strategy Paper, and other transport policies and plans. Specifically, the elements of ADB's strategy and program that are congruent with those of Government priorities and plans are (i) expanding strategic corridors; (ii) improving and rehabilitating existing roads; (iii) improving rural transportation; (iv) improving the institutional capacity of and governance in key transport agencies; (v) increasing private sector involvement in the sector; and (vi) protecting the environment. 33. Effectiveness. Overall, ADB's assistance in the transport sector was effective. The physical outputs and outcomes envisaged at appraisal of the three completed road projects were substantially achieved (with additional work done in some subcomponents as a result of savings). Three ongoing road projects that are in advanced stages of implementation are on track to meet their physical targets as well. Two of the three completed road projects had institutional development and governance components, but the expected outcomes were only partly achieved. Efforts to increase private sector participation in two projects were unsuccessful.

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34. Efficiency. ADB's transport sector activity is efficient. One of the completed road projects was assessed as highly efficient while another was assessed efficient because of their high economic internal rate of returns (EIRRs). This was in turn due to the lower than estimated project costs (lower bids) and the higher than anticipated project benefits (higher traffic growth). Ongoing projects are also anticipated to have actual costs that are lower than appraisal estimates based on the highly satisfactory ratings given the "cost overrun" criterion in the project performance reports of these projects. Implementation delays, however, continue to plague several projects. The recently completed road project was closed more than 3 years beyond its original closing date while two other ongoing road projects are delayed by more than 2 years. The main reasons cited for the delays were (i) the delay in the Government's approval of the Revised Development Project Proposal in the case of two road improvement projects; (ii) consultant recruitment delays; (iii) lack of government funds; (iv) unwieldy procurement procedures; (v) poor performance of some contractors; and (vi) lengthy land acquisition processes of the government. 35. Sustainability. The program is less likely sustainable. The physical components of the projects will initially lead to improvements in the road network. Long-term sustainability would depend on adequate maintenance of these roads, which is a major issue in most developing countries, including Bangladesh. Unless a sustained road maintenance funding mechanism (under consideration) is established, preservation of the roads is unlikely. The declining interest of the development partners in financing roads in Bangladesh could also lead to deterioration of the road network. The recent initiatives to selectively commercialize the port management functions are off to a good start and are likely to be sustainable. The institutional and technical aspects of sustainability are not so much an issue, especially in the road subsector since the lead agencies (RHD and LGED) are technically capable and institutional weaknesses are being addressed by ongoing assistance. 36. Impact. The actual and expected impacts of ADB's transport sector assistance are modest to substantial. The two completed road projects with completion reports increased economic activity and generally improved quality of life in the project areas. The rehabilitation of flood-damaged infrastructure in one of these projects had a considerable impact as it helped restore economic activity and access to markets, hospitals, and schools in the affected areas. In the other project, an unexpected impact was the creation of 185,000 permanent jobs in the project area. Upon completion, ADB-financed transport projects would have helped improve and rehabilitate a significant portion of the country's existing roads—21% of the existing national road network and about 10% of existing rural roads. However, the lack of road maintenance funds is a grave concern that affects sustainability of achievements in the sector and therefore diminishes impact. Ongoing assistance in the railways and ports subsectors is expected to have modest impacts. 38. Based on the assessments of highly relevant, effective, less efficient, less likely sustainable, and substantial impact, the overall bottom-up assessment is partly successful. F. Recommendations

39. ADB should maintain its role as lead development partner in the transport sector, to facilitate implementation of the sector reform agenda. The policy and institutional reform needs of the Bangladesh transport sector are enormous, and so is the agenda on the table. To achieve actual results will require substantial, well coordinated, and sustained support from the development partners. ADB should appoint a senior transport specialist as coordinator for the

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overall reform program to conduct dialogue with government agencies and development partners. 41. To improve project implementation, ADB needs to ensure projects are ready for implementation soon after loan approval, to cut start-up delays. The detailed design and bidding document stage must be moved upstream in the project preparation cycle through alternative financing arrangements. The present situation, where the detailed designs are financed out of the loan itself and consultant selection starts after loan approval, should be avoided. 43. ADB should compile an inventory of all nonlending transport sector activities, sector studies and advisory services, from all sources, to serve as reference document for the transport sector in Bangladesh. This exercise should capture all previous studies, their recommendations, and follow-up actions, if any. 44. ADB should continue to pursue efforts to promote road safety and road maintenance. Road maintenance is a major concern affecting the sustainability of achievements in the road subsector. ADB should therefore continue to support the establishment of the Road Maintenance Fund. ADB should also promote road safety. 45. ADB should intensify efforts to increase private sector participation in the transport sector. Expanded private sector participation in providing roads is needed to improve economic efficiency and reduce the required public financing for road infrastructure. ADB should design more projects that would promote greater private sector involvement.

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AGRICULTURE AND NATURAL RESOURCES A. Sector Development Context 1. Sector Development Issues

1. Growth in Bangladesh's agriculture and natural resources (ANR) sector needs to be generated from intensification of food production and diversification to high-value crops that include horticulture, livestock, and fishery products. To achieve higher growth, water resource management must be improved and irrigation facilities developed. The country suffers from flooding from transboundary inflows and rainfall. Seasonal flooding and winter flow shortages are common constraints, salinity intrusion impacts on environmental sustainability, and the poor are highly vulnerable to fluvial and coastal flooding that are likely to be amplified by climate change. Crop intensification is mainly constrained by seasonal flooding, limited development of irrigation and increasing competition for water, unavailability of improved technologies for unfavorable environments, lack of efficient postharvest operations, unavailability of quality inputs in a timely manner, and poor extension services. 2. Complex challenges confront the sustainable management of water resources. Technically, the dynamic state of the delta’s hydrology creates challenges for the protection of existing flood control, drainage, and irrigation, and building new infrastructure. Climate change can exacerbate the situation as the country’s geographic location, low deltaic floodplain, and the hydrological influence of erratic monsoon rainfall can lead to more frequent floods, cyclones, and storm surges, as well as drought. At an institutional level, the priority needs are on establishing functional water management systems so that management and maintenance of the schemes can be devolved to users. Recently, national-level policies have been developed and institutional reforms carried out for integrated water management. 3. Some of the main constraints to crop diversification include inadequate rural infrastructure such as rural roads, markets, and storage facilities; and inadequate policy support for agribusiness and off-farm activities. In particular, agribusiness has not identified its key objectives and strategies, has difficulties in mobilizing finance for entrepreneurs, and suffers from unavailability of technologies. 4. The capacity of core agricultural agencies such as the Ministry of Agriculture for sector planning, monitoring, and implementation is weak and fragmented. Strategic responsibilities for agriculture and rural development are spread among eight separate ministries, often resulting in overlapping and poorly coordinated functions. Most of the sector agencies suffer from excessive centralization in decision making, are poorly informed of ground-level realities, and have inadequate capacity to deliver services.1 Of the core agricultural agencies, the Department of Agricultural Extension (DAE) is decentralized but has inadequate resources to be fully effective. Of the related agencies, the Local Government Engineering Department (LGED) has a strong decentralized presence; however, its strength is limited to providing infrastructure, which is largely dependent on the budget provided by the central Government.
1

Fostvedt, Nils, Paul Thornton, and Walter Kolkma. 2009. "Donor Coordination and Harmonisation in Bangladesh". ADB, Manila. This paper is the product of a joint exercise by the evaluation units of the Asian Development Bank (ADB)—the Independent Evaluation Department, the Government of Japan's Japan Bank for International Cooperation and the Japan International Cooperation Agency, the United Kingdom’s Department for International Development (DFID), and the World Bank (WB)—the Independent Evaluation Group (IEG).

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2.

Sector Performance for the Evaluation Period

5. The contribution of ANR to the country's gross domestic product (GDP) for 2007–2008 was estimated at 21%. This represents a decrease of about 5% from a decade ago..2 The ANR sector still maintains strong backward and forward links with the rest of the economy. In 2008, the GDP growth rate of 6.2% was lower than that in 2007; the weaker growth rate in the ANR sector (3.6%) was one of the main reasons for this slower growth.3 Over three quarters of the population and close to 85% of the poor live in rural areas, which absorb over 50% of the growing labor force. Further developing ANR is critical for women as about 30% of rural families are headed by women and many of those families are extremely poor. The performance of the rural economy is, hence, a critical determinant of the overall trends in economic growth, poverty reduction, and food security. 6. Rice accounts for about 75% of the total cultivated area, and almost half the value of agricultural GDP. The average growth rate for the evaluation period for different components of ANR is as follows: (i) 3.52% for crops and vegetables; (ii) 4.37% for livestock; (iii) 4.74% for forestry; and (iv) 3.77% for fisheries. Agricultural production diversified in the 1990s, but diversification has now slowed.4 Some factors leading to diversification were growth in income, transport networks, and trade in agriculture. It is also argued that increased availability of irrigation tends to lead to expansion of rice cultivation and reduces crop diversification.5 7. Progress toward achieving the Millennium Development Goal (MDG) on hunger (Goal 1) is reported to be off track for both6 targets for this goal. Target 17 is reported to be making slow progress and no major progress has been made toward achieving Target 2.8 In fact, it is reported that the indicators for Target 2 indicate stagnation or even retrogression.9 However, a recently released World Bank report on Poverty Assessment indicated that if the average GDP growth of 5.3% (as between 2000 to 2005) can be maintained, it is likely that Bangladesh will achieve the targets.10 More recent data on poverty is not available. B. Government Priorities, Policies, and Plans

8. The evaluation period encompassed three national development strategies: (i) the Fifth Five-Year Development Plan 1997–2002;11 (ii) an Interim Poverty Reduction Strategy Paper
2 3 4 5 6 7 8 9

10 11

Ministry of Finance (MOF). 2008. Bangladesh Economic Review. Dhaka. The estimate for 2008 is disaggregated as follows: (i) crops and vegetables (11.7%), (ii) livestock (2.8%), (iii) forestry (1.8%), and (iv) fishery (4.6%). ADB. 2009. Asian Development Outlook 2009: Rebalancing Asia's Growth. Manila. The growth rate estimates for the sector were for agricultural crops, livestock, poultry, fisheries, and forestry. Deb, U.K. 2008. Agricultural Diversification in Bangladesh: Progress, Constraints and Policy Issues, in Centre for Policy Dialogue, Emerging Issues in Bangladesh Development, 2005–2006. University Press Limited. Dhaka. Footnote 4. Two targets were set under MDGs on hunger (goal 1) prior to revision of MDGs in 2007. Target 1: Halve, between 1990 and 2015, the proportion of people whose income is less than $1 a day. Target 2 Halve, between 1990 and 2015, the proportion of people who suffer from hunger. The United Nations Development Programme's Economic and Social Commission for Asia and the Pacific. 2007. The Millennium Development Goals: Progress in Asia and the Pacific 2007. Asia-Pacific MDG Study Series: Table A, page 33. Bangkok. World Bank. 2008. Poverty Assessment for Bangladesh: Creating Opportunities for Bridging the East-West Divide. Washington, DC. The plan aimed to reduce poverty through accelerated economic growth—an average of 7% per annum—bringing about a significant improvement in the standard of living by raising income levels and meeting basic needs. To achieve the goals required a public sector outlay of 21% of GDP, 21% of which was allocated to ANR, comprising (i) agriculture (5%), (ii) rural development (10%), and (iii) water resources (6%). This represented a very marginal increase over the allocations made to those sectors during the fourth plan (19.7%).

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(2003);12 and (iii) the National Poverty Reduction Strategy (2005). In all the national development plans, agriculture was important due to the strong correlation of agricultural growth with overall growth. During this period, on average, the Government allocated 24% of annual development spending to ANR (i.e., agriculture, 4.8%; rural development, 13.1%; and water resources, 6.1%).13 9. The national development plans provided the overall direction for ANR sector development, including sector-specific policies and strategies. From 1999 to 2008, the Government announced a series of reform measures: (i) ensuring the availability of agricultural inputs; (ii) strengthening agricultural extension; (iii) simplifying procedures for disbursing agricultural credit; (iv) creating opportunities for investments in agriculture; (v) modernizing the research system for improving the quality of agroproducts; and (vi) utilizing and extending integrated technologies derived from research. The National Agriculture Policy (1999) was followed by the Plan of Action (2003) with six strategic themes.14 However, the plan proved to be overambitious and was followed by the Actionable Policy Brief and Resource Implications (2004), which emphasized the provision of quality seed, together with pricing and marketing of fertilizers, appropriate land use, minor irrigation, mechanization, marketing and agribusiness, agricultural research, and agricultural extension. Sub-sector policies were introduced to cover extension,15 and livestock and fisheries.16 The Government progressively improved the policy, institutional, and planning framework for the water sector and coordinated the support of external financiers including the Asian Development Bank (ADB). The National Water Policy (NWP) of 1999 and National Water Management Plan (NWMP) of 2004 provide water subsector strategy and priority programs with a long-term perspective. They adopted key principles including integrated water resource management, and sustainable service delivery and maintenance with progressive transfer of facility management to water management associations (WMAs). 10. The preceding sector-specific development policies are generally compatible and are largely consistent with the MDGs. However, most of them were formulated with a mind-set directed to agriculture only, and not to the rural economy as a whole; with planning, policymaking, and decision-making functions and authorities located in the apex level offices; without a clear demarcation of the responsibilities of the line ministries; and without serious policy analyses and feedback from the stakeholders.17 C. The Asian Development Bank's Sector Assistance Program

250. In broad terms, ADB's sector strategies during the evaluation period supported four activities: (i) intensification, diversification, and value addition of crops, fishery, and livestock to improve productivity and food security; (ii) improvement of farm-to-market linkages; (iii)
12 13 14

15

16 17

Economic Relations Division, MOF. 2003. National Strategy for Economic Growth, Poverty Reduction and Social Development. Dhaka. CAPE main text, Table 2. The six strategic themes are (i) strengthening partnerships, (ii) improving the enabling environment, (iii) commercialization of agriculture, (iv) increasing agricultural productivity, (v) creating and increasing crosssectoral interlinkages, and (vi) developing institutional capability. The New Agricultural Extension Policy (1999) proposed that extension service should include developing partnerships with nongovernment organizations (NGOs) and other government agencies, in addition to DAE, the private sector, and education providers. The National Fishery Policy (1998) and the National Livestock Policy (2005). Shahabuddin, Q., and M. Yunus. 2008. Estimation of Food Demand and Demand Projections. In K A S Murshid (ed.) Food Availability and Consumption Patterns and Nutritional Standards in Bangladesh, Department for International Development and World Food Programme, Country Office, Bangladesh, 2008.

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generation of on-farm and off-farm employment; and (iv) improved management of water resources, including irrigation. Some of the support envisioned for productivity growth included development and adaptation of technologies, improved water management systems, and commercialization, with measures to overcome such critical constraints as financing. There was also support for policy and institutional reforms and capacity building to encourage greater community participation in planning and implementing rural development initiatives, and private sector participation for improved delivery of rural services. The main activities pursued were development of rural infrastructure (i.e., irrigation, flood management, rural roads), management of water resources, microfinance, and livestock. 11. ADB's 2005 country strategy stated that ADB would not continue supporting forestry, land administration reforms, stand-alone crop diversification, livestock development, and rural livelihood development.18 To ensure that benefits of past investments were not compromised by the withdrawal of ADB support to those activities, ADB planned on working closely with other development partners who have continued to support those activities.19 The 2005 country strategy differs also from the 1999 strategy by putting a greater emphasis on nonfarm issues, mirroring the Government’s holistic view of the rural sector with the increasing recognition of nonfarm activities as a potential contributor to GDP. 12. ADB's lending and nonlending assistance to the ANR sector was $340.47 million.20 The assistance supported the development and implementation of 23 projects (8 loans, 12 project preparatory technical assistance (PPTA), and 2 advisory technical assistance (ADTA), and 1 grant). 21 These projects are in five subsectors: (i) agricultural production and marketing (2 loans, 1 PPTA, and 1 associated ADTA with a total value of $90.05 million); (ii) agricultural and rural development (2 loans and 3 PPTAs worth $127.5 million); (iii) livestock (1 loan and 1 PPTA worth $20.5 million); (iv) water resource management (3 loans, 7 PPTAs, and 1 grant with a total amount of $101.42 million); and (v) environment and biodiversity (1 ADTA worth $0.99 million). 13. All the ongoing projects, which are at various stages of implementation,22 are included in this evaluation. Five of the eight loans have completed the midterm review. The project performance report (PPR) reviews rated the projects as satisfactory or better. D. Review of Past Evaluation Findings

14. Thirty-five projects in the ANR sector for Bangladesh have been evaluated since the 1970s (Table A11.1). The success rate for the ANR sector (48.6%) is lower than the overall project success rate in Bangladesh (58.1%). The projects’ performance in the ANR sector
18 19 20

21

22

ADB. 2005. Country Strategy and Program: 2006–2010: para. 59. Manila. The ongoing program is broadly a continuation of the preceding program, and the projects in the current pipeline largely constitute a further continuation. The total amount also includes projects previously classified under the multisector project and only account for ongoing projects (i.e., a loan project of $30 million, and project preparatory technical assistance [PPTA] 3212, $0.50 million). In the project reclassification in 2009, those projects come under the ANR sector classifications. The total amount for loan projects was $331.07 million, (97.2%); the others are nonlending projects that include PPTA ($7.8 million, 2.3%), advisory TA (ADTA) ($0.70 million, 0.2%), and grant projects ($0.90 million, 0.26%). The PPTAs are not evaluated separately, as they are inputs for the project design. ADTA 4674: Strengthening Project Management was associated with Loan 2190-BAN: Agribusiness Development Project (ADP) and will be assessed with the project. Similarly, grant project 9009: Supporting Livelihood Improvement for the Poor through Water Management Associations (funded by Japan Poverty Reduction Fund) supported loan project 1831: Second Small-Scale Water Resources Development Sector and will be assessed with the project. The ANR sector assistance also includes ADTA 3269: Bangladesh Environment Operational Strategy. ADTA 3269 is not included in this evaluation study.

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varied over the years. The projects approved in the 1980s reported 62.5% success rate. For the projects approved in the 1970s and 1990s, the success rates were low at about 37%. Of the subsectors in ANR, the agriculture production, agroprocessing subsector has the lowest success rate at 22.2%. Half of the projects in environment and biodiversity, and forestry subsectors were rated successful. The subsectors with higher success rates were in fishery (66.7%), irrigation and drainage (77.8%), and livestock (66.7%). Table A11.1: Success Rates of Evaluated Projects/Programs in Agriculture Sector in Bangladesh (by Subsector and by Decade of Approval)
1970s No. of Rated Success Projects/ Rate Programs (%) b 3 0.0 1980s No. of Rated Success Rate Projects/ (%) b Programs 6 33.3 1990s No. of Rated Success Projects/ Rate Programs (%) b Total No. of Rated Success Rate Projects/ (%) b Programs 9 22.2

Agriculture Subsector a 1 Agriculture Production, Agroprocessing and Agrobusiness 2 Agriculture Sector 1 0.0 3 0.0 4 0.0 Development 3 Environment and 1 100.0 1 0.0 2 50.0 Biodiversity 4 Fishery 2 50.0 1 100.0 3 66.7 5 Forest 2 50.0 2 50.0 4 50.0 6 Irrigation and Drainage 2 100.0 4 100.0 3 33.3 9 77.8 7 Livestock 1 0.0 1 100.0 1 100.0 3 66.7 8 Water Resource 1 100.0 1 100.0 Management Total 8 37.5 (%) 16 62.5 (%) 11 36.4 (%) 35 48.6 (%) a 2004 sector classification. b Based on aggregate results of project/program completion reports ( PCRs), project/program completion report validation reports (PCRVRs), project/program evaluation reports (PPERs) using PCRVR or PPER ratings in all cases where PCR and PCRVR/PPER ratings are available. Source: Independent Evaluation Department.

15. In addition, seven completed (closed) projects have been evaluated since the completion of the previous CAPE (2003). The review of the evaluation reports shows that three of the seven projects were rated successful, two as partly successful, and three as unsuccessful (Table A11.2). This indicates a 42.8% success rate. Three of the completed projects have follow-on projects that were being implemented during the evaluation period. These follow-on projects were included as part of the evaluation of the ongoing projects (Table A11.3).

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Table A11.2: Evaluation of Completed ANR Projects
Loan Amount No. Name ($10,000) A. Irrigation, Drainage, and Flood Protection 1289 1399
a

Closed 18-Mar03 30-Jun03 19-Dec07 14-Jan03 23-Jun95 30-Jun06 10-Jul-03

Rating U PS

Relevance Partly relevant Partly relevant Partly relevant Highly relevant Partly relevant Relevant

Ratings Effective Effi-nests ciency Less effective Effective Inefficient Less e efficient Inefficient Efficient

Sustainability Less likely Less likely Unlikely Likely

Impact Modest Modest
e

Khulna- Jessore Drainage Rehabilitation

48.72

27.65 Command Area Development d Project B. Water-Based Natural Resources Management
c

b

Sundarbans Biodiversity Conservation Project a Small-Scale Water Resources 1381 d Development Project C. Forestry b Coastal Greenbelt Project 1353 1486
c

1643

36.53 27.99

U S

Less effective Effective

Negligible Substantial
e

21.14 58.83

U/PS S

Forestry Sector Project

Less effective Effective

Less efficient Efficient

Less likely Likely

Modest Substantial

D. Livestock 1524
b

Participatory Livestock d Development Project

19.24

S

Highly relevant

Effective

Efficient

Likely

Substantial

PS = partly successful, S = successful, U = unsuccessful. a The ratings are based on the project performance evaluation report. b The ratings are based on the project completion reports. c The ratings are based on the project completion validation reports. d The project has a follow-on project. e The ratings were not specifically indicated in the project documents. Source: Asian Development Bank's Loan, Technical Assistance, Grant and Equity Approval database.

E.

Strategic and Institutional Assessment (Top-Down) 1. Positioning of the ANR Sector Assistance

16. The ANR sector assistance was guided by the three national development plans and the ANR sector-specific strategies, and essentially addressed the challenges and opportunities mentioned above. To a large extent, the projects formulated from 1999 to 2008 were a continuation of previous interventions. The Government accorded priority to the sector and identified four aims: intensification, diversification, noncrop agriculture, and nonfarm activities. ADB’s response was largely appropriate in aligning its strategies to the priority issues with important contributions to small-scale credit, devolution of water resource management, and a first intervention in agribusiness. Nongovernment organizations (NGOs) were used extensively in delivering services and facilitating microcredit and other support to small-scale farmers. 17. ADB assistance has played an important part in promoting devolved management of water resources through water management organizations (WMOs). However, it has not done much in addressing the long-term institutional needs of the sector. While it is widely recognized that agricultural agencies are weak and that there are overlapping responsibilities within the sector, ADB assistance has been seriously constrained in building capacity and restructuring the institutional framework by slow progress in making the necessary changes in the national systems. It has also made limited contribution to the development of agricultural technology identified as one of the priority areas for intensification of agricultural products, particularly the staple crop―rice. A larger part of the ANR assistance has gone to financing for infrastructure development (e.g., rural roads and markets, community facilities, and water control systems).

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18. Despite attempts to harmonize with development partners through the preparation of a joint results framework, there is actually little synergy or coordination of activities other than in some geographical and allocation of responsibilities. There is also inconsistency between ADB’s 2005 country strategy and its assistance program. While the country strategy specifically states ADB will discontinue assistance to livestock or stand-alone crop diversification, and questions ADB’s role in large-scale water resources schemes, ADB has continued supporting those subsectors. 19. ADB has supported the Government in addressing social inclusiveness and gender issues. ADB was one of the first development partners to provide assistance to ethnic minority groups (in Chittagong Hill Tracts Rural Development Project [CHTRDP]), and is continuing its assistance with a specific focus on minority groups. However, it is also noted that the sector assistance did not target inclusion of ethnic minorities based in other regions of the country. Women are specifically targeted, particularly as recipients of credit,23 and have representation on all the water resource management committees. 2. Asian Development Bank’s Institutional Performance

20. ADB engages in policy dialogue with the Government jointly with other development partners through consultative groups. It also undertakes dialogue at the project level, addressing key elements of the government’s strategy of intensification, diversification, noncrop agriculture, and nonfarm activities. Additionally it has played a significant role in developing water management policies, together with a co-financier, the Government of the Netherlands. Currently, ADB and the Netherlands co-chair the Local Consultative Subgroup on water resources management. 21. ADB has acknowledged the low absorptive capacity of most agricultural agencies and has tried to address this by involving line agencies such as DAE, Department of Agricultural Marketing (DAM), and Department of Livestock Services (DLS) in the program. In the ADB program, however, they have played only subsidiary roles to LGED—a department that is not a core agriculture agency, but is by far the largest partner of ADB― with NGOs taking much of the role that might otherwise have been assigned to core line agencies. Core agencies are EAs in three of the eight ongoing projects. 22. ADB sector assistance shows little synergy across projects and subsectors. The ongoing eight projects are freestanding and spread in different locations with no unifying thread across the projects. For example, rural roads and markets under the Second Rural Infrastructure Improvement Project (SRIIP) are not necessarily designed to be linked so as to improve connectivity for the projects producing high-value crops or a larger volume of cereals. Likewise, there is limited creation of synergy with other development partners through shared experience, lessons learned, or common methodologies. The Second Small-Scale Water Resources Sector Project illustrates this point on inadequate harmonization and synergy. It is also noted that the responsibility of partnering and harmonization could not rest entirely on ADB as other development partners and sources do not always practice this approach.24 ADB has, however,

23

24

In Second Rural Infrastructure Improvement project, women constitute virtually 100% of the beneficiaries; while in CHTRDP and Northwest Crop Diversification project, women constitute 90% and 50% of credit recipients, respectively. Footnote 24.

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filled niches where other development partners were not active at the time of project design.25 It also included actions that protected or built on prior investment26 such as the Jamuna-Meghna River Erosion Mitigation project (JMREMP) to ensure that benefits from sunk costs would be maximized. 23. All projects have run significantly behind schedule. The slow government start-up procedures and particularly the lengthy delays in recruiting consultants, complexity of project design, and involvement of multiple stakeholders contributed to delays. In two projects, implementation was seriously hampered by the withdrawal of co-financing.27 In most cases, extending the loan period could compensate for the delays. In the case of the Agribusiness Development Project (ADP), much of the credit had been—sometimes inappropriately— disbursed before the supporting systems were in place. 24. ADB has a long involvement in the ANR sector in Bangladesh. Although there has been some erosion in the ANR sector competencies at headquarters,28 there is high-level sector expertise in the Bangladesh Resident Mission (BRM). Project implementation, coordination, and monitoring have been satisfactory and have benefited from the high level of responsibility delegated to BRM. The review missions could put more focus on achievement of outcomes and actual impacts, particularly for projects nearing completion. Where the midterm or other reviews identified the need for changes in the scope of projects, ADB has been responsive to such recommendations. 3. Contribution to Long-Term Development Results

25. ADB assistance to ANR has contributed positively to the achievement of the Government’s objectives of crop intensification and diversification. It has supported direct grassroots agricultural production—diversified crops and livestock—by strengthening the role of NGOs as credit retailers, with allied responsibility for preparing the beneficiaries and giving them technical support. Along with the immediate impact on production, the support has favored the emergence of stronger NGOs. Interventions in water resources management—infrastructure and institutions—should lead to higher production of rice, although more needs to be done to support agricultural production and marketing. The high level of investment in rural infrastructure is expected to lead to increased productivity and improved margins although it will require direct support to production and postharvest activities to capitalize fully on the opportunities created by the improved infrastructure development. 26. A strong public-private sector partnership has long been a tenet of the Government’s approach to the development of the ANR sector. ADB has attempted to foster such partnership through ADP, but due to poor implementation, little has been achieved in expanding the role of the private sector in activities upstream and downstream of production. NGOs’ involvement is
25

26

27 28

ADB. 2000. Report and Recommendation of the President to the Board of Directors on a Proposed Loan to Bangladesh for the Chittagong Hill Tracts Rural Development Project. Manila. When this project was designed there were practically no other development partners or aid agencies present in this geographical area. ADB. 2002. Report and Recommendation of the President to the Board of Directors on a Proposed Loan to Bangladesh for the Jamuna-Meghna River Erosion Mitigation Project. Manila; and ADB. 2005. Report and Recommendation of the President to the Board of Directors on a Proposed Loan to Bangladesh for the Southwest Area Integrated Water Resources Planning and Management Project. Manila Danida withdrew from CHTRDP on security grounds, and DFID withdrew from SRIIP. ADB. 2007. Rural Poverty Reduction and Inclusive Growth: Report of the Working Group on Rural Poverty. Manila.

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sometimes considered as a public-private partnership. NGOs have largely taken over a role that might have been taken by the government. 27. ADB has tried to contribute to capacity development and institutional change in ANR. Some efforts have been made to build the capacity of line agriculture agencies and local government bodies including the Hill District councils in Chittagong, the district-level offices of LGED, and the Union Parishads29. By supporting the establishment of WMOs on both smalland large-scale flood control, drainage, and irrigation schemes, ADB has made an important contribution by facilitating the formulation of government policy for devolution of responsibility for planning, managing, and maintaining water resources projects. 28. There is significant replication with projects going into second and third phases, such as small-scale water resources projects for which the third phase has been approved. The replications are based largely on the successful methodology of the predecessor projects. This is particularly true of ADB’s approach to credit and microfinance working through NGOs. This is well-exemplified by the approach taken in the Northwest Crop Diversification Project (NCDP), which is based on the system of group formation, credit delivery, and technical support used in the Participatory Livestock Development Project.30 However, symptomatic of the inadequate harmonization of effort among the development partners, ADB's approaches have not been widely replicated by the other development partners. The relatively low level of involvement of the core agricultural government agencies in sector assistance also limited wider replication and scaling up of the successful interventions. There are also examples from the water subsector where innovative and cost-effective approaches to erosion and mitigating strategies developed are being replicated in other ADB-financed projects in Bangladesh (also in government and other externally funded projects) and in India.31 F. Bottom-Up Assessment

29. This assessment is based on seven completed (closed) and eight ongoing projects (Tables A11.2 and A11.3). Of the eight ongoing projects, two are nearing completion. Five of the eight ongoing projects have completed the midterm review. The overall bottom-up assessment for the sector is partly successful. Of the seven completed projects, three were rated successful, two partly successful, and another two unsuccessful. Of the eight ongoing projects evaluated, four were rated successful (Table A11.3). The ratings of the ongoing projects in particular may change in relation to changes that may occur in their implementation. 30. Relevance. Four of the seven completed projects were rated partly relevant, and all the eight ongoing projects relevant, giving an overall rating of relevant for ANR assistance. The majority of the ANR projects were relevant to the country and also consistent with ADB's country strategy, but their design in several cases could have been better. In general, the projects essentially addressed the challenges and opportunities in the ANR sector and were aligned with the country’s development objectives; in several cases the projects had overly ambitious development goals. Projects included actions that protected and built on prior investments,32 or filled niches where other development partners were not active.33 It is not clear why a reputedly
29 30 31 32 33

Translates to authority and/or government. ADB. 1997. Report and Recommendation of the President to the Board of Directors on a Proposed Loan to Bangladesh for the Participatory Livestock Development Project. Manila. JMREMP has pioneered the use of geotextile bags, which are much lower-priced (estimated to be almost half the cost) alternative to concrete blocks for stabilizing riverbanks. The technology is replicated widely. JMREMP, and the Southwest Area Integrated Water Resources Planning and Management Project. The Chittagong Hill Tracts Rural Development Project (CHTRDP).

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satisfactorily completed project should require further phases of intervention as with the Jamuna-Meghna River Erosion Mitigation Project (JMREMP) having to support WMOs established in a predecessor project. It is recognized that the whole process of social mobilization is time-consuming, but this should have been explicitly spelled out in the project design. The additional investments made to ensure benefits from sunk costs are appropriate. However, a number of other issues regarding the design of the projects have reduced the relevance of the overall program. The issues include (i) inadequate recognition of the weaknesses of the executing or implementing agencies; (ii) failure to take account of shortages of competent contractors or experienced NGOs;34 (iii) overambitious geographical coverage;35 (iv) withdrawal of cofinancing; and (v) lack of adaptability.36 31. ANR assistance under the current country strategy has been dominated by financing for infrastructure development—rural roads, water control systems, and markets—with five of the eight projects accounting for 65% of the total assistance.37 The roles of various agencies in providing support services were not always clear. For example, in the Second Small-Scale Water Resources Development Sector Project, LGED, NGOs, and DAE were all involved in supporting beneficiaries. In the SRIIP, the assumption was that providing roads and improving market facilities would result in enhanced agricultural productivity. While there had been some beneficial effects on input supply and marketing of produce, maximizing the benefits would require stronger links to the beneficiaries. The SRIIP alone accounts for 30% of the total ANR sector assistance, but it had no link to key priority areas for the sector development identified in the national plan. The project had unclear links to recognized key factors for productivity growth such as (i) better extension services, (ii) capacity development, (iii) credit facilities, (iv) storage and post- harvest facilities, and (v) access to quality inputs. 32. Effectiveness. Overall, the ANR sector assistance is rated effective in achieving the intended project and sector-level objectives. Four of the seven completed projects were rated effective, and six of the eight ongoing projects are rated likely to be effective. All ongoing loans are intended to contribute to the goal of poverty reduction, and most are on track in achieving at least some of their outputs and outcomes. A brief account of their achievements to date in respect to the stated targets is given below. (i) Improved incomes. All projects included improved income as an outcome either directly or implied from the stated outcome of increased production. Generally, the projects appear to have achieved this outcome. In CHTRDP, income generation exceeded the targets; in NCDP, the increase in incomes reached 60%;38 and of the three water resources-based projects, the longer running ones have demonstrated an impact on incomes. In the case of the Southwest Area Integrated Water Resources Planning and Management Project, implementation
34

35 36

37

38

For example, in the Second Participatory Livestock Development Project (SPLDP) inadequate support has been provided to DLS. In the Southwest Area Integrated Water Resources Planning and Management Project, the Bangladesh Water Development Board struggles to fulfill its role with much of the management being provided by the main consultants. In the Second Small-Scale Water Resources Development Sector Project, there was an unprecedented failure to attract contractors on 27 packages, and the NGO facilitators for the Project do not perform as required. The Agribusiness Development Project has nationwide coverage despite its use of an untried approach. In the Second Rural Infrastructure Improvement Project (SRIIP), the withdrawal of DFID funds has not led to any overall revision of the appropriate balance between different levels of roads. For example, the network roads joining rural growth centers might have been more relevant to supporting agricultural productivity. Five projects mainly supported the development of the rural infrastructure. These are (i) SRIIP, (ii) CHTRDP (iii) the Second Small-Scale Water Resources Development Sector Project, (iv) JMREMP, and (v) the Southwest Area Integrated Water Resources Planning and Management Project to a lesser extent. The figure is based on the information provided by the executing agency during the Evaluation Mission in May 2009.

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(ii)

(iii)

(iv)

(v)

(vi)

has been too slow to have any noticeable effect to date on incomes. Also no assessment could be made of the SRIIP in which improved incomes are supposed to result from cheaper inputs and better access to markets, as the project is not yet sufficiently advanced. Expanded employment opportunities. Two projects—the Second Participatory Livestock Development Project (SPLDP) and ADP—specifically target employment generation as an outcome. In the case of SPLDP, employment is still in direct agricultural production, not in nonfarm activities, but in the newer or expanded area of livestock production. ADP has to date generated employment for 44,58739 persons against the target of 70,000. However, the evidence is that this is largely in the production sector and little of it is in the newly established businesses as had been planned. Extended nonfarm activities. Only ADP specifically targeted this outcome. To date, not enough of the investment has gone into new entrepreneurial enterprises, particularly those beyond the control of production agriculture. In NCDP, the component for a pilot agribusiness credit line has made relatively little progress with less than 30% disbursement of available credit by March 2009. Access to credit. Although only one project refers directly to improved provision of credit as one of the outcomes, three others contribute directly to the provision and management of credit.40 In all cases, credit largely underpins the project achievements. The provision of microcredit and microenterprise finance essentially using NGOs has been largely effective. However, questions must be raised as to the ability of these programs to reach the poor when real interest rates are high and repayment has to start within as little as a week after receiving a loan. improved access to services. Only one project—SRIIP—specifically gives enhanced access to basic services as a target outcome.41 SRIIP has been significantly delayed and its scope was reduced due to a substantial increase in the cost of construction materials and withdrawal of cofinancier (DFID) support accounting for 23% (over $60 million). CHTRDP also sought to improve access through the construction of rural roads; its scope was, however, downsized significantly mainly due to the withdrawal of Danida cofinancing of $15 million for rural infrastructure development.42 Strengthened institutions. All loans included provision for institutional strengthening, mostly of government agencies at different levels. At the central level, Department of Livestock Services (DLS), Department of Agricultural Marketing (DAM), and DAE all received support for institutional strengthening. However, the support has had limited effectiveness. The underlying problem of an overly complex structure within the agriculture and rural development sector, with overlapping ministerial domains that are not clearly defined and coordinated, was not addressed. At the local level, there was limited strengthening of the Hill District councils in Chittagong,43 and LGED was supported through the Second

39 40

41 42 43

The information provided by SANS and/or BRM at the time of the interdepartmental comment. In the SSW-2 project, capital is injected from external resources. But in this case, water management cooperative associations rely entirely on their savings and share capital as a source of funds. There has been no review of the microcredit scheme of this nature. The information was provided during the interdepartmental review. Other projects i.e., TRIDP, RIIP, CHTRDP provide support to increasing access to basic services. However, there were no explicit targets and indicators. Danida withdrew from the project after the kidnapping of its staff in the Chittagong area, It is recognized that these were relatively fledgling organizations operating in a difficult postconflict environment in the Chittagong area.

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(vii)

(viii)

Small-Scale Water Resources Development Project and SRIIP. In all water resource projects, the WMAs were established or strengthened. SRIIP plans to strengthen the beneficiary participatory approach by developing the capacity of the local government institutions and market management committees at the local level. In most projects, the targeted beneficiaries are supported usually through group formation that is often linked to the provision of credit. Increased NGO capacity. The sector program has extensively involved NGOs and, where appropriate, has provided the required training. In the community development component of CHTRDP, six NGOs were recruited and trained by the project management unit. The three NGOs working on the microenterprise component were supported through the credit apex organization. Similarly, NCDP used NGOs for farmer mobilization and credit support by forming over 12,000 groups. Much of the success of this arrangement has been the result of a good working partnership between the NGOs and DAE. SPLDP has involved 15 partner NGOs in community development and livestock enterprise development. Over 28,000 groups (84% of target) have been formed with half a million beneficiary members. The members have also been provided with training on livestock development. NGOs have shown an increasing ability to implement various pilot programs, and ADB is making progress in moving toward a wider involvement of NGOs in sector assistance rather than using them mainly as contractors. For example, with increased capacity NGOs have institutionalized agribusiness, and are making agribusiness as one of their core operations. Improved status of women. In general, all projects have provided a strong focus on engaging women. Two projects—SPLDP and SRIIP—have included enhancement of the status of women as specific target outcomes. In SPLDP, women constitute 90% of the beneficiaries. SRIIP targets women’s empowerment through improved access to social services and higher family income. In CHTRDP, 90% of loan recipients were women; and in NCDP, half of the farmers' training was allocated to women who also were the recipients of half of the credit amount disbursed. The Second Small-Scale Water Resources Development Project reported that women are being involved in the managing committees and in WMAs. Taking as possible indicators the direct participation of women as project beneficiaries and the improvement of their status through significantly enhanced involvement in scheme management, the sector assistance program is deemed effective in improving the status of women.

33. The projects are largely effective where there has been a direct focus on enhanced agricultural production or supplementary microenterprise development.44 Water resources projects are likely to lead to increased agricultural production through better water control and higher cropping intensity. No independently verified figures are available to confirm this, but previous projects have shown increases in productivity and similar outcomes may reasonably be expected of the current projects.45 SRIIP is still at an early stage after long start-up delays; no figures are available on outputs achievement to date.
44 45

CHTRDP, NCDP, and SPLDP. The Small-Scale Water Resources Management Project reported an increase of 242,000 tons (t) in cereals, 218,000 t in noncereal crops, and 1,600 t in fisheries. The SSW-2 benefit monitoring evaluation undertaken in 2008 indicated that (i) average cropping intensity increased by 28 percentage points from 170% to 198%, compared with only 8 percentage points in the control area; (ii) paddy production increased by 57%; (iii) nonagricultural assets increased from Tk9,993 to Tk13,779; and (iv) annual income from agriculture crops increased by 93% from Tk23,150 per household to Tk44,729 per household. The Command Area Development Project (subsequently supported by JMREMP) resulted in an incremental food production of over 100,000 t.

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34. Environmental assessments are conducted for all ADB projects, and support for appropriate mitigating measures is provided as necessary in the project design. However, the expansion of irrigation has increased the use of fertilizer. Fertilizer prices are distorted by subsidies, so farmers tend to apply only nitrogen and ignore the need for potash and phosphate, which are not subsidized. The result is an unbalanced use of fertilizers. Other factors have also contributed to reducing overall effectiveness. In the case of ADP, production has been enhanced but effectiveness is reduced because the project was intended to target new entrepreneurs, particularly for activities upstream and downstream of production. In practice, the NGOs providing the credit lent mostly to well-established borrowers operating largely in production activities. Many of these borrowers were their graduated clients before the project was initiated. 35. Efficiency. Efficiency is assessed from three major perspectives: quality of implementation, returns on investments or cost-effectiveness, and contribution to sector policy reforms. Overall, the ANR sector assistance is rated less efficient. Only three of the seven completed projects were rated efficient; two, less efficient; and another two, inefficient. Of the eight ongoing projects, five are rated as likely efficient. Delays (start-up, consultant recruitment and mobilization) in implementation, changes in co-financing arrangements, and in some cases frequent changes of project staff seem to have contributed to implementation issues. 36. Except for the water resource management sub-sector, ANR projects have made a negligible contribution to sector policy. Appraisal estimates of the economic internal rate of return (EIRR) ranged from 12% to 30% for six ongoing projects. It is frequently found that appraisal estimates are not reached, and given the relatively low appraisal estimates, it is possible that some EIRRs will fall below 12%.46 This risk to achieving the intended level of investment efficiency has increased because all projects ran behind schedule, thus substantially increasing costs and delaying the onset of project benefits. 37. All the ongoing projects reviewed suffered start-up delays with the extreme case of a nearly 4-year delay in implementing CHTRDP. In the case of ADP, the provision of credit is seriously out of phase with the support and institutional strengthening inputs, which significantly compromises the attainment of the objectives of providing credit. In the Second Small-Scale Water Resources Development Sector Project, concerns have been raised over quality control and failure to complete individual subunit construction on time, resulting in a loss of benefit to the farmers. The focus group discussions with the targeted beneficiaries and NGOs interviewed indicated that the scheduling of loan repayments on all credit schemes increases the risk of credit juggling, with beneficiaries taking multiple loans to meet their repayments. 38. Sustainability. Sustainability of project outputs and outcomes is assessed from the perspectives of likely availability of funding for operation and maintenance, institutional capacity, and possibility of continuity or scaling up and replication, where appropriate. Three of the seven completed projects and six of the eight ongoing projects are assessed as likely sustainable based on progress so far. 39. However, there are risks. The sustainability of the grassroots interventions is dependent on the continued provision of credit by NGOs. Given the high repayment rates and establishment of revolving funds, it is likely that these interventions will continue to be supported. Also, the NGOs have indicated a commitment to a long-term involvement beyond the

46

ADB. 2009. 2009 Annual Evaluation Review.: Role and Direction of Self-Evaluation Practices. Manila.

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life of the projects. Success is, however, not solely dependent on the availability of credit; it requires technical support, which is generally to be supplied by the credit provider. However, even during the initial loan periods, the level of technical support was not as much as planned. For example, in SPLDP, continuity of livestock enterprises is dependent on adequate animal health support. Most likely, NGOs may not continue the services upon completion of the projects as such activities are unlikely to be funded. There is some doubt that DLS will be able to step in and provide these services as it lagged behind in delivering the intended outputs during implementation of the project. 40. Sustainability of the infrastructure built depends on adequate maintenance. Limited budget allocation from the central Government for such maintenance has been flagged as a concern.47 The concerned departments are also aware that the current budgetary allocation is inadequate. Within the water resources sector, various WMOs have been established with a specific mandate for operation and maintenance. 41. Active participation and ownership by the government agencies are necessary to facilitate scaling-up and replicating the projects. Where the government agencies were involved, their performance has lagged behind that of the NGOs in general. ADB acknowledges the limited capacity of government agencies and has made efforts to address them. However, it could be argued that not enough is being done to foster their active participation and establish a basis for building their capacity and ensuring their long-term involvement. Projects may include memoranda of understanding (MOU) between the executing agency and various government agencies, but the MOU do not seem to lead to the agencies’ substantive involvement during implementation. 42. The NGOs that are actively involved during implementation do offer some possibilities for sustainability, but cannot be expected to undertake wider scale replication or to continue providing services. Building partnerships between government agencies and the NGOs would be an important strategy to enhance sustainability. However, in the projects where the NGOs play a significant role in implementation,48 the relevant government departments play little role and, hence, effective partnership does not seem to be feasible. The move by LGED to directly employ specialists outside their normal core skills49 is likely to exacerbate the marginalization of government agencies in the projects. More fundamentally, there is no clear understanding of the long-term respective roles of government, NGOs, and the private sector in providing field-level support to agriculture, livestock, and fisheries. If projects in the ANR sector are to be sustainable, a clear policy must be developed on what the mandates are for the NGOs vis-a-vis government agencies, such as DAE, DLS, and DAM. 43. Impact.50 Overall, the ANR sector assistance is assessed as likely to have modest impact. The outputs and outcome as stated in the design and monitoring framework in the project reports were used in assessing the impact of assistance to ANR. Only three of the seven completed projects were rated to have substantial impact, three have modest impact, and one has negligible impact. The preliminary assessment of the impact of the ongoing projects is substantial in five cases, and modest in the remaining three cases.
47 48 49 50

SRIIP review mission back-to-office report October 2008. SPLDP, CHTRDP, NCDP, and ADP LGED is reported to employ agricultural and fisheries specialists in the Second Small-Scale Water Resources Development Sector Project. Through its various interventions, the ANR sector targets poverty through the growth of sustainable agricultural productivity. This is to be achieved through grassroot interventions (microcredit, microfinance, crop inputs, and technology), improved water resource management, and improved access and market facilities.

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Table A11.3: Evaluation of Ongoing ANR Projects (1999–2008)
Bottom-Up Assessment Loan/ TA/ Grant No. Project Namea Agriculture Production, Agroprocessing, and Agrobusiness 1782 Northwest Crop Diversification 2190 Agribusiness Developmentb Relevance Effectiveness Efficiency Sustainability Relevant Relevant Effective Less effective Less effective Effective Efficient Efficient Likely Likely Impact Substantial Modest Overall Rating Successful Partly successful

Agriculture Sector Development 2254 Second Rural Infrastructure Improvement 1771 Livestock 2070 Chittagong Hill Tracts Rural Development Second Participatory Livestock Development

Relevant Relevant

Less efficient Less efficient Efficient

Less Likely Likely

Modest Substantial

Unsuccessful/d borderline partly successful Partly successful Successful

Relevant

Effective

Likely

Substantial

Water Resource Management 1831 Second Small-Scale Water Resources Development Sector 1941 2200 Jamuna-Meghna River Erosion Mitigation Southwest Area Integrated Water Resources Planning and Management Overall Bottom-Up Rating
a b

Relevant Relevant Relevant Relevant

Effective Effective Effective Effective

Efficient Efficient Less efficient Less efficient

Likely Likely Less likely Likely

Substantial Substantial Modest Modest

Successful Successful Partly successful Partly successful

The Bangladesh Environment Operational Strategy (TA 3269) is within the evaluation period; however, it is not included in the Study. Advisory technical assistance (ADTA) 4674: Strengthening Project Management is associated with this loan project. The TA and the loan project are jointly assessed. c Used project performance report (PPR) ratings as of 31 December 2008 as midterm review ratings for these projects are not available. d The project has been delayed by many factors including the complete withdrawal by the Department for International Development (DFID) of the United Kingdom of financial support to the project. The project ratings may change in relation to changes that may occur during operation or implementation.

G.

Lessons Identified and Strategic Considerations for the Future 1. Lessons Identified

44. Design flaws, implementation delays, and withdrawal of expected co-financing. Design flaws, delays, and inadequate co-financing appear to be the key factors contributing to the less than successful performance of ANR projects. In addition, weak institutional capacities and inadequate funding for operation and maintenance undermine the sustainability and longterm development impact of ANR projects. 45. Respective roles of government agencies, NGOs, and the private sector. To a large extent, NGOs work directly with the beneficiaries in most ongoing projects. NGOs are involved as facilitators, managers in group formation, and credit retailers. For long-term sustainability of the project benefits and project replications, government agencies can play an important role. Greater efforts are needed to bring the core agriculture agencies into prominence and thereby increase their capacity to meet their functional objectives. Finding the

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right balance between the government, NGOs, and the private sector in the sector assistance for optimal development results is difficult and will require greater efforts from the Government and also assistance from development partners. 46. Microcredit modalities for ANR sector to help the poor. NGOs have been effective microcredit retailers. They have provided a strong presence at field level and supported their borrowers. However, closer attention needs to be given to their terms and process for selecting beneficiaries. Loan repayment starts within weeks to a month. It is very rare for agriculture and rural development-related activities to generate returns in such a time frame. The current practice in providing loans shows a bias toward beneficiaries who have other sources of income. Thus, the participation of the poor is restricted. In addition, only part of the loan is likely to be actually used for the intended purpose, or people become involved in multiple borrowings to pay for the earlier loan. BRAC51 and other influential NGOs recognize that the current approach is largely inadequate, and alternative modalities such as seasonal credits or loans may be better suited to agricultural programs. Under the alternative modalities, repayment starts after the crop is harvested, or payment on a loan for agricultural machinery coincides with the seasonal income and the loan is paid in installments. BRAC and other national NGOs have started to experiment and promote these modalities of microcredit. 47. Rural infrastructure and links to production activities and transport network. Rural infrastructure projects need to have direct links to agriculture production activities or areas to maximize their development impacts. Target beneficiaries during the focus group discussions said that providing some direct support to agriculture-related activities would have enhanced the benefits of the infrastructure projects (i.e., rural roads, infrastructure for irrigation, drainage and erosion mitigation, and marketing infrastructure). The impact on crops diversification and intensification depends on the type of rural infrastructure provided. Rural roads and marketing facilities promote diversification; while irrigation and other water control facilities may encourage more rice farming rather than promote other crops. 2. Strategic Considerations for the Future

48. Agriculture has to grow in the context of falling land-person ratio, increasing pressure from population growth, and rising demand for food. There is little scope for agricultural growth through increase in the production area. Given the shrinking availability of arable land at 1% per annum (footnote 17), sector growth must come from productivity gains linked to more intensive land use, diversification into high-value crops, and post-harvesting support. Similarly, given the limited availability of water resources during the dry season, improved water use efficiency is essential for expanding irrigated agriculture. Productivity-driven growth requires support systems with focus on (i) technology generation and adaptation; (ii) upgrading human capital in the rural areas; and (iii) increased connectivity through upgraded rural infrastructure. There is also need to develop the sector's strategies to adapt to climate change. 49. Bangladesh's farming system is characterized by smallholdings (average size is less than 1 hectare), with over half of the rural households being functionally landless. Hence, the Government's ANR sector strategy must continue to go beyond crop production. Of critical importance in this context is the role of rural non-farm enterprises to provide productive employment for the growing labor pool in the rural areas. Agribusiness and agro-processing are given top priority as a thrust to promote value addition to crops, livestock, fish, and horticultural
51

Formerly known as the Bangladesh Rural Advancement Committee, based in Bangladesh. It is currently (June 2009) the world's largest non-governmental development organization.

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products. Few concrete measures have been taken to support the development of the agribusiness sector, although in the 1990s there were policy frameworks that should have engendered an environment conducive to such developments. While agribusiness and processing are largely in the private sector, the government needs to promote them by providing the policy, physical, fiscal, and technological environment in which they will flourish. 50. Credit was emphasized in the Fifth Plan, but the problem is that there is little scope for lending more geared to production support and business development, which are underserved by both the commercial banking system and the country’s microfinance NGOs. The flow of rural credit from nationalized and private banks declined and many bank branches that were incurring losses were closed. The National Poverty Reduction Strategy emphasizes the role of microcredit to incorporate production lending while at the same time reaching the extreme poor with microcredit through innovative approaches with respect to changes in the mechanism for delivering credit, diversified financial services, and complementing microfinance with nonfinancial interventions. 51. Food security surfaced as a major development challenge in 2008. The sharp rise in global food prices and domestic crop losses due to natural disasters led to a surge in domestic food prices. Given that assuring food security through international trade proved unreliable during the recent food crisis, most decision-makers in Bangladesh equate food security with food self-sufficiency, backed up by adequate reserves to manage year-to-year fluctuations. Various safety net measures, including infrastructure for storage facilities in areas with surplus, were identified as one of the strategies to avoid similar shocks in the future. 52. Almost all the ANR projects are grassroot-level development assistance with potential to benefit the poorer sections of the country. ANR projects will therefore continue to be important for promoting social inclusiveness, including for women and ethnic minorities, in the economic development process and also for reducing income poverty by creating jobs. Similarly, external support to ANR projects will continue to be important. 53. The poor and the vulnerable groups, including girls, women, and ethnic minorities, tend to get the disproportionate brunt of natural disasters as those affect their livelihood. The major climate-induced disasters include more frequent floods, cyclones, and storm surges, as well as drought. A further rise in the sea level will make more areas of the country extremely vulnerable to floods, squeezing settlements, and adversely affecting resource use; rising sea levels will have serious implications for livelihoods and the environment. Higher salinity intrusion in coastal areas and increased riverbank erosion across the country will severely affect the lives and livelihood of millions of poor people. These disasters cause severe loss of life and destruction of the livelihood assets of the poor. Strategies for adapting to climate change and mitigating the effects of natural disasters need to be explored in the sector assistance and coordinated at the national level.

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LAW, ECONOMIC MANAGEMENT, AND PUBLIC POLICY (PUBLIC SECTOR GOVERNANCE) A. Sector Context

1. In the early 1990s, Bangladesh initiated a number of structural reforms to liberalize trade and the exchange rate regime, strengthen fiscal and monetary management, restructure industry, encourage private sector development, and privatize state-owned enterprises. By 1999, these had positive results on macroeconomic stability and social development. Average annual economic growth rose to 5.6% from 1999 to 2008, from the previous decade's annual average of 4.6%. 2. Despite high economic growth, Bangladesh remains one of the poorest countries in the world, and continues to face the development challenges of poverty, inequality, and poor living conditions. The country's year-end 2007 per capita GNI of $4701 ranks 184th out of 209 countries.2 Deep-seated governance problems have restricted growth.3 Poor governance and weak institutions have been identified as among the country's development constraints, resulting in poor provision of public services. They were also identified as causing failures in development projects, cost overruns, severe project completion delays, and Government's continuing inability to establish an effective enabling environment for private sector development.4 ADB's 2004 Country Governance Assessment5 noted that underlying the weak governance were problems with public financial management and the civil service, a lack of judicial independence, and official secrecy. ADB observed in 20056 that growth and poverty reduction were being continuously frustrated by a lack of accountability, transparency, and predictability in governance. 3. Driving much of the corruption were highly centralized authorities for decision-making, poor law and order including poor delivery of judicial service,7 rigid administrative orientation of the public service, and very few opportunities for ordinary citizens to participate in public decision-making. A confrontational, centralized, money and personality (rather than issue) based, winner-takes-all political system had undermined the checks and balances of the political process, fuelling political instability,8 politicization of the bureaucracy, and politically motivated violence. Since achieving independence in 1971, Bangladesh has had more than a dozen heads of government and five military coups. Consequently, the civil service had to struggle against political influence,9 and had little incentive or capacity to deliver service or reforms.

1 2 3 4 5 6 7

8 9

The World Bank Atlas method was used to determine the $470 GNI of Bangladesh. Using the purchasing power parity method, Bangladesh had a GNI of $1,340 as of year-end 2007 and ranked 177th out of 207 countries. World Bank. 2008. World Development Indicators Database. Available: http://siteresources.worldbank.org/ DATASTATISTICS/Resources/GNIPC.pdf. DFID. 2008. Bangladesh Country Governance Analysis. London. ADB. 1999. Country Operational Strategy: Bangladesh. Manila. ADB. 2004. Bangladesh: Country Governance Assessment. Manila. ADB. 2005. Country Strategy and Program (2006-2010): Bangladesh. Manila. In a 2005 survey of national households, 2/3 of people who interacted with the lower courts said they were forced to pay bribes amounting to 1/4 of their annual income. TI. 2008. Bangladesh Global Corruption Report (Cambridge University Press), Section 7.3, 181-186. Available: http://www.transparency.org. Iftekhar Zaman, Tanvir Mahmud. Citing the National Household Survey on Corruption 2005. Available: http://www.tibangladesh.org. World Bank Governance indicator for Political Stability fell from 21% in 2002 to 9% in 2006 but rose slightly to 9.1 and 9.5 in 2007 and 2008, respectively. Footnote 3.

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4. In 2006 and 2007, the country's Transparency International (TI) corruption perception index (CPI)10 score was 2.0. It went up slightly to 2.1 in 2008. Bangladesh ranked 158th out of 158 countries surveyed in 2005, and 147th out of 180 countries surveyed in 2008. Table A12.1 below shows Bangladesh's comparative rankings with those of other DMCs in south Asia and southeast Asia. Figure A12.1 below shows Bangladesh's comparative percentile rank for the years 1998, 2000, 2002–2006, and 2008 using Kauffman-Kray's governance indicators. Higher values would have indicated better comparative governance, while the lower values in this case indicate that more countries compare better than Bangladesh.
Table A12.1: Governance Indicators in 2008 - Regional Comparisona (percentile ranking) Country South Asia Bangladesh Bhutan India Maldives Nepal Pakistan Sri Lanka Southeast Asia Indonesia Lao PDR Malaysia Thailand Viet Nam Voice and Accountability 30.7 25.9 58.6 36.0 25.0 19.2 33.6 44.2 6.2 31.7 32.2 6.7 Political Stability 9.5 77.5 16.7 39.2 7.6 1.4 2.8 15.7 43.5 50.2 12.9 56.4 Government Effectiveness 22.7 59.2 53.5 44.0 24.1 25.5 46.9 47.3 17.5 83.8 58.7 45.4 Regulatory Quality 20.7 19.3 46.8 37.1 26.5 34.7 44.4 45.4 9.6 60.3 59.9 32.3 Rule of Law 27.2 60.7 56.4 49.2 24.8 19.1 54.5 28.7 20.0 64.5 54.0 41.6 Control of Corruption 10.6 74.8 44.4 32.8 28.9 24.6 54.1 31.4 5.7 62.8 42.9 25.1

PDR = People's Democratic Republic a Latest data is for 2008. Ranking is interpreted as follows: Bangladesh's rank is 30.7% for voice and accountability. This means for this category, Bangladesh ranks higher than 30.7% of the 212 countries included in this indicator. Source: World Bank. 2009. Governance Matters 2008: Worldwide Governance Indicators. Washington, DC.

10

TI has been including Bangladesh in its CPI surveys since 1996. The CPI is a measure of the perception of the degree of corruption as seen by business people and country analysts, and ranges between 10 (highly clean) to 0 (highly corrupt).

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Figure A12.1a

a

Percentile rank indicates the percentage of countries that rank below the selected country. The indicators are adjusted for changes over time in the countries covered. The statistically likely range of the indicator is shown in the thin black line. A bar of length 75% with the thin black line extending from 60% to 85% shows that an estimate 75% of countries fare worse than the selected countries and an estimated 25% of the countries fare better. Since the confidence level of this perception survey is 90%, only 60% of the countries fare worse and 15% fare better.

 
B. The Government's Priorities and Plans 5. Various national programs for poverty reduction and social development were adopted by successive governments over the past 20 years. The Fifth Five-Year National Plan (1997– 2002) focused on reducing poverty through economic growth; improving living standards by raising income levels and ensuring adequate supply of basic needs; and emphasizing the private sector as an engine of growth. In 2001, Government focused broadly on fiscal and financial issues, public sector efficiency, and corporate governance in key sectors. In March

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2003, the Government adopted the Interim National Poverty Reduction Strategy (I-NPRS).11 Consistent with the Millennium Development Goals, it enshrined many of the mutual commitments embodied in the April 2002 Partnership Agreement for Poverty Reduction between the Government and ADB. The I-NPRS underlined the need for participatory governance, the importance of transparency and accountability in reforming political institutions, and the value of independent civic monitoring of strategy outcomes. It covered issues like combating corruption, restoring the rule of law, and the need to accord governance a prominent place in the poverty reduction strategy. 6. On 23 February 2004 an act was passed creating the Anti-Corruption Commission (ACC) of Bangladesh, and replacing the previous anti-corruption body, the Anti-Corruption Board. The ACC was tasked to investigate corruption, file cases against perpetrators of corruption, raise awareness for governance and anti-corruption, and to assist the President with anti-corruption efforts. For three years the ACC remained ineffectual due to a combination of political biases and interference, and legal challenges to ACC's creation and mandate. Its jurisdiction was also limited by rules that prevented access to banking, finance, money laundering, foreign exchange records, and the activities of multinational corporations, and its independence of action was curtailed by government control over its budget and administrative powers. 7. In 2005, the Government outlined its governance agenda in the National Strategy for Action on Poverty Reduction (NSAPR) and included improving implementation capacity, promoting local governance, strengthening the Anti-Corruption Strategy, reforming criminal justice and enhancing access to justice for the poor, and improving sector governance. It also set out to develop governance indicators to track corruption. Although it has been noted that the strategies in the NSAPR are unbudgeted items of government and have not been put into operation,12 the document became the basis for a broad consultation process that involved Bangladesh’s development partners. 8. When the caretaker government assumed office in 2007, it undertook to address the critical governance and infrastructure constraints. Initially, it restricted civil rights in order to stabilize political uncertainty but these resulted in human rights violations, such as arbitrary arrest and detention.13 The caretaker government also sought to eliminate excessive political patronage, and introduce legal reforms to strengthen the capacity of key governance institutions, including the ACC and Bangladesh Election Commission (BEC). On 22 February 2007 three new commissioners were appointed to replace the previous ACC commissioners. With the support of a joint task force of military officers, the new ACC embarked on a highprofile, anti-corruption drive. Powerful individuals suspected of corruption, including ministers, lawmakers, politicians and businessmen, were arrested, detained, investigated, and prosecuted. Some were meted penalties of medium- to long-term imprisonment.14 The ACC led a significant anti-corruption drive, initially challenging the culture of impunity, but later restrained by difficulties in prosecutions. 9. Civil society viewed that under the caretaker government there was greater political space to operate, although many also protested against the misuse of powers, particularly arbitrary arrest. In a major and long-overdue move, the caretaker government separated the
11 12 13 14

Ministry of Finance, ERD. 2003. A National Strategy for Economic Growth, Poverty Reduction, and Social Development. Dhaka. Footnote 3. Footnote 3. TI. 2008. Global Corruption Report. New York.

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Judiciary from the Executive and Legislature reducing the legal space for external interference in judicial functions. Between 1975 and 1991, the President had the authority to appoint, promote, and transfer judges and magistrates, leaving the judiciary with no security of tenure or organizational independence. Even after democratic rule was restored in 1991, the three successive governments that followed retained this authority, and continued to politicize the judiciary. It was not until the historic Masdar Hossain ruling in 2000,15 that the Supreme Court ordered the Government to re-establish an independent subordinate court and, among other things, amend criminal procedures to remove it from the control of the Executive. The Government at the time of the Masdar decision, and the one that followed from 2001 to September 2006, were slow to implement the Supreme Court decision. It was the caretaker government in February 2007 that finally moved to separate the branches of government and approve an amended criminal procedure.   10. It remains to be seen whether the changes initiated by the caretaker government will be sustained. If the institutional reforms are to have a long-term impact, ACC and the Judiciary need to have their independence respected and supported under the elected Government. 11. When the elected Government assumed office in early 2009 it declared that among its top priorities are effective action against corruption, and the establishment of good governance. This Government endorsed to Parliament, and the latter confirmed, a number of the governance related legal reforms carried out by the caretaker government.16 Several others were reviewed, revised, and reenacted by Parliament,17 while a few key ordinances became inoperable because they had not been endorsed to and ratified by Parliament.18 C. ADB’s Sector Support Program

12. In the early 1990s, ADB’s assistance to Bangladesh's the sector focused mainly on policy dialogue and capacity building for the implementation of its ongoing loans and projects in the country. The 1999 Country Operational Strategy stressed the need to move from this indirect approach to more direct assistance in core governance areas including administrative capacity, public enterprise reforms, the legal framework, and anti-corruption. Between 1999 and 2005, ADB approved TAs for project portfolio management, poverty assessments, the monitoring of the poverty indicators, and anticorruption efforts. ADB’s Governance Assessment of 2004 reaffirmed the need to improve governance by curbing corruption, improving law and order and human security, and building local government capacity. 13. In 2003, ADB approved a TA to support an integrated anticorruption strategy in Bangladesh.19 It was designed to help the Government modernize the secured transactions framework and improve its governance; establish an independent anti-corruption commission; and develop anti-corruption measures and governance audit systems in line ministries. Most of the expected TA outputs had been delivered. Most notably, an ACC was established and commissioners had been appointed. However, despite what was termed in the TA Completion
15 16

17 18 19

Masdar Hossain vs. Bangladesh. 2000. These include the Human Rights Commission Ordinance, the Representation of People Ordinances, the Money Laundering Prevention Ordinance, the Metropolitan Police Ordinances, and the Amendment of Code of Criminal Procedures. These include the Right to Information Ordinance and the Local Government Ordinances. These include ordinances relating to Anti-Corruption Commission, the Permanent Prosecution Service, and the Supreme Judicial Commission. ADB. 2003. Technical Assistance to the People’s Republic of Bangladesh for Supporting Good Governance Initiatives. Manila (TA 4140-BAN, approved on 10 July).

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Report as “maximum possible" engagement with the client and stakeholders, the technical advice on secured transactions was not implemented. The TA did provide a basis for policy dialogue on governance and anti-corruption issues and an extensive governance reform menu for the next government. Following through on this, a second TA was provided20 to help improve ACC’s prosecution skills and performance, develop and implement anti-corruption awareness programs, develop streamlined business processes, instill in the organization a better understanding of the context and impact of corruption, and provide some basic office equipment. Under this TA, a detailed report and organizational manual was produced to guide the ACC’s institutional development and build its capacity for investigation, intelligence, surveillance, prevention, prosecution, and corporate affairs. Together with this second TA, a project preparatory TA was provided to develop a strategic and legislative policy framework on governance and anticorruption, build capacity in line agencies for corruption prevention, and design a project to support the Government’s good governance efforts.21 Completion, adoption, and implementation of the policy framework, now known as the National Integrity Strategy (NIS), was delayed due to consultant issues, and the political changes resulting from national elections in late 2008. In June 2007, ADB requested that the then consultant team leader be removed from the project with immediate effect because he had not lived up to expectations, and he had not acted loyally to ADB in the performance of his project duties. In addition, in the view of the Executing Agency (the Cabinet Division) and the ADB user-division (SAFM), the consulting team had no understanding of local conditions, nor did they consult sufficiently or appropriately with the stakeholders. New local consultants were eventually engaged several months later. A framework for the NIS was subsequently prepared and widely consulted around the country. However, in view of the upcoming elections and the certainty of an incoming elected government, it was agreed that the framework would be accepted for purposes of the tranche conditions, while a full NIS would be developed, consulted, and adopted under the new government. As a result, the development and adoption of the NIS is now delayed by almost 12 months. It should have been final and adopted by the time the second tranche was disbursed in November 2008. On the other hand, with the delays and the acceptance by the caretaker government of a simple framework it becomes possible for the current elected Government to buy-into and own the NIS since it is in the process of being completed under its supervision and auspices. 14. Under the project preparatory TA, vulnerability to corruption assessments (VCA) and corruption risk mitigation plans (CRMP) were also developed for Bangladesh Railways. At the request of the caretaker government, instead of a project loan, a program loan was designed to support the caretaker government’s anti-corruption efforts. 15. Recognizing governance as one of the three main pillars of the country's National Poverty Reduction Strategy (NPRS) sector, the ADB's 2005 country strategy proceeded to lay out a thematic strategy and road maps to help address the country's governance and corruption issues.22
A lack of accountability, transparency, and predictability in the way government operates continues to frustrate progress on the development agenda...Such governance constraints also have triggered declining public confidence in the integrity of public institutions, and deprived the
20

21 22

ADB. 2005. Technical Assistance to the People’s Republic of Bangladesh for Supporting Good Governance Initiatives II. Manila (TA 4743-BAN, approved on 19 December). ADB. 2005. Technical Assistance to the People’s Republic of Bangladesh for Preparing the Good Governance Project. Manila (TA 4744-BAN, approved on 19 December). The CSP did not have a LEMPP strategy or road map but instead focused on a governance strategy and roadmap.

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poor, women, and other marginalized groups of opportunities to participate in public decision making. Some modest progress has been made in resolving major issues, or in raising overall standards of governance. However, considerably more work will be required if the perception of governance standards in Bangladesh, as reflected in the low ranking of the Government of Bangladesh in terms of corruption is to be changed.23

16. ADB’s core governance strategy in Bangladesh was to focus on support for (i) developing an overarching NIS to provide a strategic policy framework for governance in Bangladesh; (ii) putting the ACC into operation in order to foster an independent mechanism for anticorruption; (iii) implementing judicial independence, such as at the lower tier of magistracy responsible for criminal cases, and support to the work of the Judicial Service Commission to complement the ACC; (iv) developing an independent public prosecution and related criminal justice system reforms to ensure a credible systemic deterrent for corruption prosecution, as well as law and order concerns; and (v) development of governance reviews, audits, and public expenditure tracking surveys for selected line ministries, and related public administration training and capacity building to foster and provide incentives for corruption prevention within government. This would complement ADB's sector specific operations by encouraging the adoption of governance reforms and building capacity to manage the process of governance change. 17. After the caretaker government came into power it sought out ADB to request its assistance for capacity development of the ACC, and for the judiciary's separation from the executive. On 30 October 2007, in response to the caretaker government's report, ADB approved a $150 million Good Governance Program Loan to Bangladesh (GGP)24 to assist the Government set a vision and strategy for its governance and anti-corruption efforts, strengthen enforcement and sanction mechanisms, and develop effective corruption prevention mechanisms. Broadly, this included the development and implementation of the NIS,25 continued organizational strengthening of the ACC and improvement of its skills and performance, support for judicial reforms including the independence and accountability of the judiciary, establishment of a permanent and independent prosecution service, pilot VCAs and anti-corruption plans in selected line agencies, establishment of a ombudsman office, and enactment of a right to information law and a whistleblower protection act. The first tranche of $50 million equivalent was disbursed upon loan effectiveness, against the achievement of first tranche actions. The second tranche of $55 million equivalent was released exactly on the target date of 28 November 2008, against full achievement of 16 tranche actions and the partial achievement of one. The last tranche of $45 million equivalent is due for release at the end of November 2010. A copy of the Program Policy Matrix, taken from the Progress Report on the Second Tranche Release (PRTR),26 with notes on compliance and status, is in Attachment 1. It briefly outlines the tranche actions and the achievements as of the second tranche release. 18. The partially achieved second tranche action was to have been the approval and publication of the NIS, with a time-bound action plan and resource allocations for national and local-level implementation. The poor performance of the international consultant leading the
23 24

25 26

ADB. 2005.Country Strategy and Program (2006-2010): Bangladesh. Manila. ADB. 2007. Proposed Program Loan and Technical Assistance Grant to the People's Republic of Bangladesh for the Good Governance Program. Manila. (Loan 2362-BAN, approved on 30 October). The piggy-backed technical assistance grant of $2.50 million was also approved for capacity building and program implementation support; ADB. 2007. Technical Assistance to the People’s Republic of Bangladesh for Supporting the Good Governance Program. Manila (TA 4983-BAN, approved on 30 October). The NIS would be along the lines of United Nations Convention Against Corruption (UNCAC), which Bangladesh had then just recently acceded to. ADB. 2008. Loan 2362-BAN: Good Governance Program Progress Report: Release of Second Tranche. Manila.

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preparatory TA27 team, the subsequent cancellation of the team's contract, and the drawn out process of engaging the new local consultants resulted in long delays in the development of and consensus building for the NIS. The engagement of the second firm took up to eight months to complete. In the end, only a vision and policy framework could be agreed for the second tranche to be disbursed. The delays caused by consultant issues brought the possible adoption of a full NIS too close to the election period. There was no time for the caretaker government to fully own and implement the NIS, and any NIS adopted by the caretaker government would have had no buy-in or ownership from the newly elected government. As of May 2009, the newly elected government had still to approve the NIS. It has been reviewed at the ministry secretary level, there has been engagement with the Prime Minister on the contents of the NIS and there is ongoing discussion of the NIS within the bureaucracy. An independent review of the NIS implementation is supposed to be a third tranche condition. With the delays, achievement of this condition within the time originally planned is at risk. 19. One of the actions achieved, as part of the first tranche, was the amendment of the 2004 Act creating the ACC by the caretaker government in 2007. Among other things the amendments made the ACC an independent and self-governing body, and gave ACC control over its own budget and expenditures. Under that new framework, resources would be transferred to the ACC through single line budgets, allowing the latter autonomy in setting priorities and making plans. For the amendments to remain in effect, however, the newly elected government would have had to submit them to Parliament for ratification within 60 days of assuming office. Since this was not done, the amendments have become inoperable. The same applies to the caretaker government ordinance establishing the Supreme Judicial Commission (SJC), and the adoption of detailed criteria for the nomination and appointment of judges to the Supreme Court. Although the program report for the tranche release described the achievement of this action as a landmark in Bangladesh governance and a new precedent in South Asia, which it was at the time, the ordinance had also not been submitted to parliament for ratification. Therefore, it too has become inoperable. D. Assessment 1. ADB's Support for Governance, Law, Economic Management, and Public Policy

20. Lending. ADB has had no lending in the sector other than the Good Governance Program Loan. The CAPE assessed it using the top-down and bottom-up approaches. The first approach assesses and rates ADB’s general positioning and contribution to development results at a national level, and the second assesses and rates ADB's lending and non-lending operations (i.e., projects) in the sector. It must be noted that in connection with the GGP, the rating took into consideration the achievements as of the release of the program loan's second tranche as well as more recent developments including current Government priorities and acts. a. Top-down Assessment

21. Country positioning. This criteria measures how well ADB responded to or anticipated the evolving development challenges and priorities of the Government. In this regard, the program is rated as substantial. Good governance and anti-corruption have been a priority for the country for many years. They were at the top of the caretaker government's agenda and continue to be on the agenda of the current Government. This priority reflects society's
27

Footnote 21.

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demands for improvements in these areas, and responds to numerous studies that cite corruption and the lack of governance as major constraints to development in Bangladesh. ADB's early response to the reports was to offer modest technical assistance for the establishment and support for ACC. This made ADB the natural partner for the caretaker government, after it took office, in its effort to push ahead with improving governance and strengthening anti-corruption. It also paved the way for ADB to partner with the caretaker government in the pursuit of a long-time need to separate the judiciary from the executive. For the caretaker government, it was important to have ADB as its partner in the process of fundamentally renegotiating the balance of government power. ADB is a multilateral institution that is neither bound nor seen to be not bound by the political interests of another government. In addition, its early work with the ACC and its accumulated ADB-wide knowledge in judicial reform put ADB in a good position to respond positively, when the caretaker government asked ADB, and no other development partner, for assistance with the ACC and its judicial reform plans. It also supported ADB's credibility when it advised on the need to prepare, adopt, and implement a national integrity strategy. In addition, the non-lending operations have been useful in assisting the Government with the poverty reduction agenda, specifically in the poverty assessment, poverty reduction strategy, and the monitoring of the implementation of the strategy. 22. ADB's performance and donor coordination. ADB's performance is rated as modest. Project implementation has been satisfactory, well coordinated from the Bangladesh Resident Mission (BRM), and ably supervised by headquarters staff. Through their work they have forged a number of good partnerships with other development partners, and government and civil society groups. ADB is generally held in high regard by the executing agencies. Its ability to provide major financing for government priorities is appreciated, as are its general responsiveness, close partnership (particularly in the case of the ACC), and its willingness to dialogue and be flexible. There was, however, dissatisfaction from the implementing agency in the selection of the NIS consulting team under the PPTA. There was also dissatisfaction from the implementing agency and the current NIS consultants in the drawn out process of engaging the current team to complete the NIS. ADB's assistance to Bangladesh could have benefited from a clearer, more effective and more efficient consultant engagement process. 23. DANIDA expressed a wish to be more involved in the dialogue, consultations, and preparation of the NIS, the dissemination of which DANIDA has provided some TA funding for (under ADB administration). In response, BRM and headquarters staff explained their position that the development of the NIS should be locally and stakeholder driven, with minimal interventions from ADB. Some bilateral development partners noted that ADB does not always attend meetings of the Local Consultative Group. BRM explained that staff and time resources are limited, and it is often imperative to use them for implementation matters, which thus calls them away from attending all LCG meetings. In an effort to improve and maintain coordination, BRM and headquarters staff had shared various drafts of the program documents with the other development partners; program review missions made the effort to meet and consult with development partners; and regular contacts are maintained by BRM through email and phone calls. With the addition of a long-term governance consultant in BRM, this problem may be mitigated. 24. There was only one strong negative feedback from among all the meetings with development partners done for this CAPE. This came from DFID, which said that ADB should concentrate on infrastructure, where they believe ADB's strength lies. They stated that ADB should withdraw from governance because this is an area where it has no substantive competence and because bilateral donors have more capacity to assist with governance

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reforms. Although ADB is a new-comer to governance in Bangladesh, the implementation of GGP so far shows that ADB has modestly contributed in important areas of governance where no headway had been made until the GGP. For example, the subordinate courts have finally been separated from the executive, initial but important accountability measures are being institutionalized in the judiciary (e.g., annual statement of assets of judges and the annual report on the state of the judiciary), and initial steps have been taken towards the institutional strengthening of the ACC. As for ADB's continuing engagement in the area of the NIS, only time will tell whether it will be productive; expanding the participatory process of dissemination will raise its chances of becoming a normative standard for social and political governance. 25 Contribution to development results. This criterion assesses ADB’s contribution to national development outcomes. ADB’s contribution is rated as modest. ADB's assistance contributed considerably to what will continue to be a long and complex process of improving governance and fighting corruption. The GGP started what had been waiting 10 years to initiate: the separation of the judiciary from the executive. It had also made real something almost no citizen thought possible: that public officials, regardless of position, status, or wealth, could be investigated and prosecuted. The achievements, however, are only modest because there is still a long way to go. More work still needs to be done to enhance the institutional independence of the judiciary (e.g., reducing political intervention in the selection of higher court judges); the institutional capacity of the ACC has not yet solidified; and Chittagong Port Authority (CPA) seems uncommitted to the GGP conditions relating to its improved governance and anti-corruption agenda. The NIS has not been finalized and adopted by Government. Its implementation was to have set the stage for all parts of government as well as society to move forward and jointly improve governance and fight corruption. A document such as the NIS could be as fundamental to Bangladesh as a written constitution. The extent to which its preparation is inclusive of different sectors and the extent to which its final form is owned by government and society are of critical importance. It was prudent of ADB to allow more time for its preparation and gestation, under the auspices of the Government that is expected to initiate its implementation. b. Bottom-up Assessment

26. Relevance and design. The GGP is rated as relevant. On the whole, the GGP was relevant to the needs of the country. The GGP integrated under one program a strategy for anticorruption that sought to strengthen aspects of two important parts of government, namely ACC and the judiciary, with an overall strategy for governance and national integrity (i.e., the NIS), coupled with governance and anti-corruption plans for specific agencies (e.g., the Chittagong Port Authority or CPA). The strengthening of ACC and the separation of the subordinate judiciary from the executive were among the top priorities of the caretaker government. These remain important areas for the newly-elected Government but may not hold the same high level of priority. The NIS surfaced at the suggestion of ADB through an early TA. It was discussed and agreed with the caretaker government. Delays in its preparation made it impossible for the caretaker government to implement, and it was agreed that the incoming elected government would be given a chance to direct its final preparation, dissemination, and implementation. It will soon become clear whether the current Government views this kind of document as a fundamental starting point for improving overall governance in Bangladesh. The CPA had limited buy-in to the governance and anti-corruption measures. 27. Considering the political context in which it was prepared, however, there is concern that ADB was overly ambitious when it was extended the GGP loan to an interim caretaker government with extraordinary powers, on the assumption that the incoming elected

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government and parliament would accept all legislative acts of the caretaker government. Usually, reform actions requiring legislative acts are discouraged as being ambitious. For the GGP, not only were legislative acts required, it was clear from the start that these legislative acts would necessarily have to be made by the elected Government. There was indeed a high risk to buy-in by the elected Government. Until the current Government announces its decisions on key reforms, the concern will remain. Separately, the weak buy-in showed by the CPA implies lack of ownership by and demand from the implementing agency. 28. Effectiveness. The GGP is rated as effective, based on the achievement of conditions under the first and second tranches. The third tranche is still scheduled for future disbursement and effectiveness of the full program can only be assessed after that. Under the caretaker government, the formal basis for an institutionally independent ACC was put on course; the ACC investigated and successfully prosecuted corruption cases against several mid- to highlevel public servants; ACC also initiated an anti-corruption awareness campaign at the local levels; and the basic framework for an independent lower judiciary was put in place. ACC had, however, stretched itself beyond its investigation and prosecution abilities and had not been adequately institutionalized to sustain the effort over the long term. As a result, many cases were dismissed or are no longer being pursued. As previously discussed, the NIS is delayed. It still needs to be approved by Cabinet. After approval a dissemination plan and implementation activities still have to be prepared before the NIS can be rolled out, and a review of implementation conducted and published (as is required for the release of the third tranche). 29. Efficiency. The GGP is rated as efficient. Processing of the GGP was accomplished within a year of the caretaker government taking office. The first two disbursements were made as scheduled and without any delays, although the NIS-related condition was only partially complied with for reasons already discussed. Long delays in implementation and disengagement of consultants under the preparatory TA affected program implementation in connection with the NIS. As a result, the relevant third tranche condition for the NIS might not be met on time. Considering several of the tranche conditions required legislation and the gazetting thereof, it was an important achievement to get those through, although not surprising when one considers the extraordinary powers of the caretaker government and the extraordinary time during which it held office. In one sense, the circumstances proved to be efficient and effective for the achievement of the conditions. In another sense, however, the same circumstances put the achievements at risk when one considers them from a sustainability perspective. 30. Sustainability. The GGP's sustainability greatly depends on the buy-in by the current Government. Since it has spent less than a year in office, it is still too early to predict whether it will own and pursue the program as originally designed, pursue the broader and higher level goals with a different strategy, or simply comply with the form of the tranche conditions without fully engaging at a substantial level. The manner and process by which compliance with the third tranche conditions are achieved and evidenced will be a good indication of such buy-in. The third tranche is due for disbursement in November 2010, and the Government has enough time to decide and act on the direction of the program. One of the assumptions of the program was that "Ordinances on all legal changes will be accepted by Parliament when it is eventually reconvened."28 At least two key initiatives by the caretaker government were not accepted by Parliament. These were the establishment of a neutral SJC for the appointment of judges to the Supreme Court, and the ratification of the 2007 Amendments to the ACC Act. Although they were accomplished under the caretaker government, they were not endorsed by the elected Parliament. Accordingly, they lost prospective effect which represents a step back from
28

Footnote 24. Appendix 1, p. 28.

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achievements under GGP's second tranche disbursement. The caretaker government also approved the creation of the Office of the Ombudsman and it now needs to be established. As already noted, the NIS has yet to be approved. There is another concern relating to the Judicial Service Pay Commission Report which recommended increased benefits for judges. It was submitted to Cabinet in time for the second tranche, and an allocation for it was included in the 2008 national budget. Although it is not a condition of the program that Government must accept the recommendations, or increase the judiciary pay scale, Government has yet to decide what to do with the recommendations. In the meantime, the Supreme Court has instructed Government to approve the Report and implement the recommendations. The Supreme Court even called the Government to ask why it should not be declared in contempt for failing to comply with the Supreme Court's instructions. This dispute could likely strain the balance of power and become a constitutional problem, unless the Government and the Supreme Court exercise mutual respect, and exert mutual restraint. 31. In contrast, the Right to Information Act was passed by the caretaker government, then reviewed, revised, and approved by Parliament. Its implementation and enforcement in the future will be a key factor in the sustainability of this particular output. The annual report on assets and the annual report on the state of the judiciary have continued to be submitted even after the elected Government took office. 32. On the whole, the program can only be rated on a very preliminary basis to be less likely sustainable in terms of continuity and enforcement. Staff from BRM and ADB headquarters are in continuing dialogue with the elected Government on these matters and are confident that over the course of the program the Government will take full ownership of the program, and achieve the outputs and outcomes expected. 33. Impact. The key outcome of the Program would have been improved governance and a lower incidence of corruption in the public sector. On the whole, the program can only be rated on very preliminary basis to have made a modest impact on achieving this. The support provided has so far made modest gains in strengthening the institutional independence of the judiciary from the executive department. The first critical steps in the right direction were actually taken after many years of inaction. Much more needs to be done, however, to reduce political access to the judiciary. For example, better compensation, security of tenure, neutral selection processes, and capacity building of judicial personnel are critical. Modest gains were also made to strengthen ACC to combat corruption, but more needs to be done to bring ACC to full investigative and prosecutorial competence. The 2007 ACC Act needs to be ratified or readopted. ACC needs to fill its prosecutor's roster with properly trained, motivated, and competent investigators and prosecutors. As for the NIS, the main part of the effort has not begun since Government and other stakeholders still need to approve and adopt it. 34. Overall Bottom-up Assessment. For the reasons given above, GGP's bottom-up numeric rating is partly successful, as shown in Table A12.2.

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Table A12.2: Bottom-up Rating for the Good Governance Program Rating Criterion Relevance and Design Effectiveness Efficiency Sustainability Impact Total E. Technical Assistance Assessment Relevant Effective Efficient Less Likely Sustainable Modest Partly Successful

35. Of the 14 TAs approved from 1999 to 2008, 5 are still ongoing. Of the ongoing TAs, those that were directly related to the GGP or built up to it were assessed, although only on a preliminary basis. Overall, the nonlending operations were assessed as partly successful.29 The four TAs directly related to the GGP, TAs 4140-BAN, 4743-BAN (ongoing), 4744-BAN (ongoing), TA 4983-BAN (ongoing), are briefly discussed below. 36. All three components of TA 4140 were relevant to improving governance and the fight against corruption; the component supporting the establishment of ACC, in particular, was relevant for reasons already discussed. TA 4140-BAN, however, was unable to deliver its expected outcome because advice on the secured transactions legal framework was not adopted due to changes in political priorities. The TA was supplemented twice and the implementation period extended by 2 years to take account of changes in priorities and the direction of the dialogue. The assistance was administered efficiently and flexibly taking account of the needs and capacity of the client. The account was closed 2 years after the advisory work was completed and for this reason, it is rated less efficient. Sustainability is assessed as likely. The Government and ADB have sustained and expanded the early TA anti-corruption efforts through the Program. Governance work on secured transactions has not, to date, been sustained. 37. TA 4743 is focused on supporting institutional strengthening of ACC, and its success is best seen in the outputs and outcomes of the Program. It was and continues to be relevant to Bangladesh, and puts ADB in a good position to provide the assistance extended under the GGP. It has so far been effective in delivering a detailed final report on the organizational development of ACC. The consultancy contract and mobilization, however, took about a year and a half to conclude after the TA was approved. The work itself continues to be a high priority of the Government but as discussed under the program assessment, it is uncertain whether the Government will continue to support the independence and strengthening of ACC’s earlier envisioned mandate. For this reason, it is given a preliminary rating of less likely sustainable. 38. TA 4744-BAN was a preparatory TA to support the design of the GGP. Under this TA the delays relating to the NIS began. The reforms recommended in relation to the CPA were also not fully realized as assessed in the Transport Sector Assistance Program Evaluation. TA 4983 is the advisory TA piggy-backed to the GGP to assist in the implementation of the program. It is assessed as part of the GGP.

29

See Attachment 2.

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167

F.

Conclusions

39. On the basis of the review, specifically of paragraphs 26–34, and the amount of work that still needs to be done to complete the program and ensure the sustainability of the achievements and progress already made, ADB needs to pursue the dialogue and continue work in anti-corruption and good governance for as long as these areas remain high priorities for the Government. This means continuing the program to establish ACC as an anti-corruption force with a track record of successful and credible prosecutions against corruption; pursuing the institutional development of an independent and accountable judiciary; embedding the governance values of the NIS in the public service and national psyche; and enforcing and upholding rights under the new laws like the Right to Information Act. Without efforts to sustain these components of the GGP there is a risk that the initial achievements under the program will be eroded over time, and the intended long-term impacts may not take effect. As recognized in all project documents relating to the program, this work requires extended and intensive engagement. For this, ADB needs to enhance and appropriately resource its governance unit in Bangladesh for ADB to contribute more strongly in the governance and anti-corruption dialogue, and better collaborate and interact with the Government and its development partners. It is important that ADB, as a multilateral partner, remain a viable choice for the Government in crucial areas like governance and anti-corruption.

GOOD GOVERNANCE PROGRAM – POLICY MATRIX
First Tranche (disbursed November 2007) Output 1) Vision, Strategy, and Procedures (i) National integrity Cabinet Division to approve a detailed strategy (NIS) consultation plan to seek feedback on the design of the NIS from all stakeholders across the country (Approved consultation plan on NIS– Cabinet Division) Second Tranche (disbursed November 2008) Cabinet to approve and publish the NIS, including a detailed timebound action plan, with resource allocation, for both central and local level Government, to implement the NIS (Approved NIS and action plan–Cabinet) – PARTIALLY COMPLIED. NOTE: FINAL DRAFT ALREADY SUBMITTEDTO GOVERNMENT AND AWAITING ACTION.
a Ministry of Law or Parliament Secretariat to gazette amended ACC Act, aligned to the UN Convention Against Corruption (Gazette notification–Ministry of Law) FULLY COMPLIED.

Third Tranche (within 24 months of second tranche) Cabinet Division to publish outcomes of an independent review of NIS implementation at all levels of Government (Evaluation report by independent source–Cabinet Division)

(ii) United Nations Convention Against Corruption (UNCAC), Anticorruption Commission (ACC) Act and rules of procedures; strengthened ACC

Ministry of Foreign Affairs to constitute interministerial committee with terms of reference (TOR) to prepare action plan for the implementation of UNCAC (Memorandum and TOR of Committee–Ministry of Foreign Affairs) Government to reconstitute the ACC (Gazetted notification–Cabinet Division) Cabinet Division to approve the ACC proposed decentralized set-up as reflected in the revised organogram (Copy of approved revised organogram–Cabinet Division) Ministry of Law to gazette amendments to ACC Act 2004, Anticorruption Act and Rules 1957, and the amendments to the Criminal Law Amendment Act 1958 (Gazette notification– Ministry of Law)

Cabinet Division to publish results of independent expert survey and national perception survey on progress in (i) anticorruption work, and (ii) UNCAC implementation (Evaluation report– Cabinet Division) Cabinet Division to publish results of assessment of community outreach and corruption prevention activities, including partnership modalities of anticorruption agencies with civil society (Evaluation report–Cabinet Division) Ministry of Finance to allocate sufficient funds to allow ACC to implement its approved performance management scheme (Budget statement – Finance Division)

NOTE: BUT NOW AMENDMENTS NEED TO BE ENDORSED BY PARLIAMENT.

Attachment 1

168

Output

First Tranche (disbursed November 2007)

Second Tranche (disbursed November 2008) Cabinet Division, through Ministry of Law to gazette all revised ACC rules of procedure incorporating the amendments to the 2004 ACC Act (Gazette notification–Ministry of Law) FULLY COMPLIED. NOTE: BUT NOW AMENDMENTS NEED TO BE ENDORSED BY PARLIAMENT. Ministry of Finance to increase allocation for development budget of ACC with sufficient funds to allow it to implement its decentralized set-up and its community outreach program (Budget statement–Finance Division) FULLY COMPLIED.

Third Tranche (within 24 months of second tranche)

2) Enforcement and Sanction Mechanisms (i) Strengthened Judiciary Ministry of Law to gazette April 2007 amendments to the rules of the Code of Criminal Procedure 1898 which are related to the separation of the judiciary (Gazette ification–Ministry of Law) Judicial Service Commission to complete entry examinations for 100 assistant judges (Progress report–JSC) FULLY COMPLIED. All judges of subordinate courts to submit a declaration of assets and wealth statement to the Office of the Registrar (Report on submission– Office of the Registrar) FULLY COMPLIED. Ministry of Finance to allocate sufficient budget to meet the approved capital and operational expenditures for the full operation of the Judicial Service Commission (Budget statement–Ministry of Finance)

Attachment 1

169

170
Attachment 1

Output (ii) Improved prosecution service

First Tranche (disbursed November 2007) Supreme Court to issue directive to all judges of subordinate courts on the strict implementation of the rules on submission of declaration of assets and wealth statements to the Office of the Registrar (Directive–Supreme Court) Ministry of Law to notify the approved organogram of the judicial service (Notification–Ministry of Law) Judicial Service Commission (JSC) to complete first departmental examination to confirm those assistant judges on probation (Published examination results–JSC)

Second Tranche (disbursed November 2008) Ministry of Law or Parliament Secretariat to gazette legislation prescribing specific qualifications for the recruitment of Supreme Court judges (Gazette notification–Ministry of Law) FULLY COMPLIED. Ministry of Finance to allocate sufficient budget to meet the increases in special allowances that may be recommended by the Judicial Service Pay Commission and approved by Government (Budget statement–Ministry of Finance) FULLY COMPLIED Ministry of Finance to allocate sufficient budget to meet the approved development expenditures for district courts to implement the policy of separation of the judiciary from the executive (Budget statement–Ministry of Finance) FULLY COMPLIED. Supreme Court to publish 2007 State of the Judiciary report, including results of annual random inspection and monitoring activities of district courts (State of the Judiciary report– Supreme Court). FULLY COMPLIED. Ministry of Law or Parliament Secretariat to gazette legislation for the creation of an independent and competent prosecution (or attorney) service (Gazette notification–Ministry of Law) FULLY COMPLIED.

Third Tranche (within 24 months of second tranche) Judicial Service Commission to complete entry examinations for all approved positions for assistant judges (Progress report–JSC)

First Tranche (disbursed November 2007) Output (3) Prevention Mechanisms (i) Focused Anticorruption Interventions Chittagong Port Authority (CPA) to complete a Vulnerability to Corruption Assessment (VCA) for the Chittagong Port (VCA–Chittagong Port Authority (CPA)) CPA to establish a committee with TOR to develop a strategic plan for reforms at CPA (Memorandum and TOR of Committee– CPA)

Second Tranche (disbursed November 2008) Shipping Ministry to approve a strategic plan for action on reforms at the CPA (Action plan – Ministry of Shipping) FULLY COMPLIED.

Third Tranche (within 24 months of second tranche) Power Division, Ministry of Communications, Ministry of Education, Ministry of Health, and Ministry of Shipping to approve corruption risk mitigation strategies in line with the NIS (Corruption risk mitigation strategies– Relevant Ministries) Ministry of Shipping, through MLJPA, to gazette, as required, (1) any amendments to existing rules and regulations, or (2) new rules and regulations, to reflect the approved changes in management resulting from a computerized terminal management system at Chittagong Port (Gazette notification–Ministry of Shipping)

(ii) Accountability Mechanisms in Line Ministries

Government to reconstitute the Public Service Commission (Gazette notification – Ministry of Establishment) Ministry of Establishment to issue a circular to all public servants on the strict implementation of the rules on the submission of declaration of assets and wealth statements to their respective line agencies (Circular–Cabinet Division) Ministry of Finance to issue guidelines on, and provide resources for, strengthening internal audit in MTBF ministries (Guidelines and budget allocation–Ministry of Finance)

At least 50% of line ministries to establish easily accessible grievance handling mechanisms (Departmental reports–line Ministries)

All public sector training institutes to incorporate, and use, integrity and anticorruption training modules in their curricula (Revised curricula– Ministry of Establishment) FULLY COMPLIED. Cabinet Division to collate and publish departmental information on grievances Public Service Commission (PSC) to approve revised examinations for civil servants to make their and public complaints (Published information–Cabinet Division) entry and promotion more transparent and meritbased (Approved revised exam–PSC) Ministry of Establishment to review the FULLY COMPLIED. existing quota system for entry into the civil service (Review of quota system– Ministry of Establishment) All line ministries to establish easily accessible grievance handling mechanisms (Departmental reports–line Ministries) Line ministries that provide utilities and basic services to institute and publicize citizen report cards as a way of addressing grievances at the local level (Publicly announced Ministry directive– Relevant ministries)

Attachment 1

171

172
Attachment 1

Output (iii) Grievance Redress Mechanisms

First Tranche (disbursed November 2007) Cabinet Division to issue directive to all line ministries to designate an officer as focal point for initiating grievance handling mechanism in all government offices, for both internal and external purposes (Directive–Cabinet Division)

Second Tranche (disbursed November 2008) Government to publicly announce its decision to establish a national Office of the Ombudsman (Public announcement–Ministry of Law) FULLY COMPLIED. Ministry of Law or Parliament Secretariat to gazette the Right to Information Act (Gazette notification–Ministry of Law) FULLY COMPLIED.

Third Tranche (within 24 months of second tranche) Ministry of Law or Parliament Secretariat to gazette the Whistleblower Protection Act (Gazetted notification–Ministry of Law) Government to establish a well-resourced Office of the Ombudsman in line with Art. 77 of the Bangladesh Constitution and with provisions for regional outreach and access (Cabinet decision–Cabinet)

ACC = Anticorruption Commission, CAPE = country assistance program evaluation, CPA = Chittagong Port Authority, CTMS = computerized terminal management systems, JSC = Judicial Service Commission, MTBF = medium-term budgetary framework, NIS = National Integrity Strategy, TOR = terms of reference, UNCAC = United Nations Convention Against Corruption, VCA = vulnerability to corruption assessment. a The Ministry of Law can issue a gazette notification when Parliament is not in place; otherwise, it is the Parliament Secretariat that does so. Sources: Government of Bangladesh and Asian Development Bank .

LAW, ECONOMIC MANAGEMENT, AND PUBLIC POLICY TAS TO BANGLADESH, 1999–2008

TA Count 1

Subsector Economic Management Economic Management Public Finance and Expenditure Management Economic Management Economic Management Economic Management

Project Count 1

TA No. 3339

2 3 4 5 6

1 1 1 1 1

3648 3649 4104 3336 3582

TA Name Partnership Agreement on Poverty Reduction between the Asian Development Bank and the Government Bangladesh Poverty Assessment Public Expenditure Review Assistance to the Privatization Commission Strengthening Project Portfolio Performance Strengthening the National Accounts and Poverty Monitoring System Efficiency Enhancement of Fiscal Management II Supporting the Good Governance Initiatives Supporting the Good Governance Initiatives Supporting the Good Governance Initiatives

Type AD

Date Approved 14-Dec-99

Financial Status closed

TCR nr

TCR Rating

RSA Rating S

Remarks Partnership Agreement of Poverty Reduction signed Poverty Assessment jointly published with WB PER jointly published with WB Privatization has been slow Project portfolio performance indicators have improved Reduced scope, slow implementation, unlikely sustainable due to institutional weakness Sustainability in question due to institutional weakness Outputs were delivered; but not the outcome on secured transactions framework; amount was supplemented twice and implementation period extended by two years. Account was closed 2 years after completion TA completed and outputs completed and delivered on time and in budget. Objectives of the TA were achieved.

AD AD AD AD AD

23-Apr-01 23-Apr-01 02-May-03 12-Dec-99 14-Dec-00

closed closed closed closed closed

nr nr nr Y Y S PS

S S PS S PS

7 8

Public Finance and Expenditure Management Law and Judiciary Law and Judiciary Law and Judiciary

1 1 0 0

4044 4140 4140 4140

AD AD AD AD

18-Dec-02

closed closed closed closed

Y

PS

PS

Y

S

PS

Attachment

9

Economic Management

1

4303

Strengthening Capacities for Poverty Monitoring and Evaluation

AD

19-Dec-03

closed

Y

S

S

2

173

174
Attachment

TA Count 10 11

Subsector Economic Management Law and Judiciary

Project Count 1 1

TA No. 4688 4743

TA Name Improving National Accounts, Price, and Wage Statistics Supporting the Good Governance Initiatives II

Type AD AD

Date Approved 31-Oct-05 19-Dec-05

Financial Status open open

TCR

TCR Rating

RSA Rating

Remarks Not assessed Delivered on the requirements for ACC but sustainability of ACC's institutional independence is at risk. The required out put on the NIS was not satisfactorily delivered and caused major delays in the achievement of a major tranche condition under GGP. Not assessed TA supporting the GGP. Assessed as part of the GGP.

2

PS (preliminary) PS (prelimnary)

12

Law and Judiciary

1

4744

Preparing Good Governance Project

PP

19-Dec-05

open

13 14

National Government Administration National Government Administration

1 1

4880 4983

Strengthening Result Based Monitoring and Evaluation Supporting the Good Governance Program

AD AD

01-Dec-06 30-Oct-07

open open PS (prelimnary)

AD = advisory, N = no, nr = not required, PP = project preparatory, PS = partly successful, RSA = rapid sector assessment, S = successful, SSTA = small-scale technical assistance, TA = technical assistance, TCR = technical assistance completion report, Y = yes. Sources: Lotus Notes Database on Loan, Technical Assistance, Grant, and Equity Approvals; Technical Assistance Information System; Technical Assistance Completion Reports.

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SUGGESTED ACTIONS FROM THE COUNTRY ASSISTANCE PROGRAM EVALUATION FOR BANGLADESH, WITH BASELINES
Suggested Actions Maintain the recent sector focus of financing projects and programs. Baselines Top five sectors: Energy; Transport; Education; Agriculture and Natural Resources; Water Supply and Sanitation; 86% of financing for 2005 to 2008. Concentration or "effective number of sectors": 5.1 effective sectors for 2005 to 2008 Program avoids new or uncommon subsectors: 17 unique subsectors programmed from 2005 to 2008; 23 unique subsectors from 1999 to 2008 Continue strengthening the Government's capabilities in designing and implementing projects and programs though a systematic approach working with other development partners. Strengthen project implementation and expand the transport program. Ratio of percent physical progress and of disbursement to percent of time elapsed, for Government- and ADBfinanced projects: Table 10

Average ratio of percent physical progress and of disbursement to percent of time elapsed, for Government- and ADB-financed transport projects: Govt. ADB Physical .62 .33 Financial .61 .26

Share of ADB's financing for transport in the Government's portfolio: 21% in 2009; and in ADB's recent programming: 17% for 2005 to 2008 Continue supporting projects in agricultural production and rural infrastructure, and strengthen links between rural infrastructure and agriculture to contribute to poverty reduction and social inclusiveness. Continue supporting urban development and water supply and sanitation. Work with the Government to further reform and develop the energy sector, including reform of energy pricing. Expand support for private sector development. Share of financing for projects classified as Agricultural Production and Markets and Livestock: 2% for 1999 to 2008

Share of financing for water supply and sanitation: 12% 2005 to 2008. ADTA study on energy pricing reform: none as of 2009.

Financing for private sector initiatives and for private sector development, relative to public sector financing: 12% for 2005 to 2008 Share of projects with gender issues or gender mainstreaming: 50% 1998 to 2007. Share of financing for projects and subprojects classified as "Disaster Risk Management": 20% for 2005 to 2008 DRM focal points appointed in headquarters and the

Continue ensuring mainstreaming gender, building upon the success so far. Make a clear commitment to DRM in Bangladesh, start tracking the program, and mainstream DRM in all relevant projects.

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Appendix 13

Suggested Actions

Baselines resident mission: none as of 2009 DRM is included in relevant projects: 4/10 projects, 7/17 PPTAs, and 2/6 ADTAs, for 1999 to 2008

Continue regional cooperation and integration efforts, especially in energy. Continue supporting governance reforms and anticorruption initiatives.

Agreements for cross-border transmission lines: none as of 2009 Support for reforms through public sector financing and ADTA: $150 million Good Governance Program Loan and 4 related ADTAs. Joint research strategy and program for Bangladesh: none as of 2009 ADB's "knowledge products" are well regarded: no information as of 2009 Country strategy focuses on strengthening project design and implementation, boosting private sector work, contributing knowledge, and responding to the Government's requests for disaster and other emergency aid. Length of the strategy development process: 2.5 years for the 2005 country strategy Resources used to develop the strategy: up to 5 personyears for the 2005 CSP Length of the strategy: 212 pages for the 2005 CSP

Work with the Government and development partners to develop a joint strategy for analytical work and a program to contribute to knowledge to Bangladesh's development.

Develop a short, simple, practical country strategy focused on the real choices facing ADB.

Develop a results framework relevant to programming, and specific to ADB so that ADB can be held accountable for delivering results.

Clear link between programming and results: no link in 2005 CSP Percentage of results for which ADB can be held accountable: 0% in 2005 CSP

Source: CAPE Team

MANAGEMENT RESPONSE TO THE COUNTRY ASSISTANCE PROGRAM EVALUATION FOR BANGLADESH On 12 November, the Director General, Independent Evaluation Department, received the following response from the Managing Director General on behalf of Management: I. General Comments

1. We appreciate the collaborative and consultative manner in which the Country Assistance Program Evaluation (CAPE) for Bangladesh was undertaken. The CAPE is comprehensive and well written, and will provide valuable inputs for the next country partnership strategy (CPS) scheduled to be prepared late next year. The CAPE rightly notes that although Bangladesh has made significant development progress, it could have achieved faster growth with better infrastructure, education, health care, governance, and disaster risk management (DRM). 2. While we are appreciative of the overall assessment that ADB's assistance during 1999-2008 was successful, and the recognition of the achievements made under very challenging circumstances, we disagree with some of the sector-specific assessments as noted below. The CAPE assesses that ADB made major contributions in key sectors such as energy and education. However, for sectors such as agriculture and natural resources (ANR), DRM, and urban development, water supply and sanitation, we believe that the assessment does not fully reflect the ground realities or the significant development impacts that have been, or are likely to be, achieved as a result of ADB assistance. 3. With respect to governance, it is too early to take a definitive view on the results of ADB's engagement under the Good Governance Program (GGP). We thus find the corresponding evaluation of the law, economic management and public policy sector, including the low "bottom up" scoring (12 of 24), to be speculative. While we share some of the CAPE's concerns on the Government's commitment to following through on key reforms (notably strong anticorruption measures), we remain hopeful that the reforms under the GGP—as well as the broader reform objectives—will be achieved in a timely manner. 4. The CAPE has listed key lessons, which will be very valuable in the preparation of the next CPS. The observation that in an environment with weak institutions, a gradual and patient approach to supporting reforms is appropriate, and can limit risks to ADB-financed projects, is well-advised. ADB will build on this experience, gained notably in the context of the long engagement in the energy sector, in supporting the Government in implementing future reforms. The emphasis on Government ownership and commitment in ensuring the success of reforms, and the need for adopting a more realistic and practical approach to reforms, will also be helpful in identifying areas for future ADB policy dialogue and support. II. Comments on Specific Recommendations

5. Recommendation 1: Maintain the current sector focus of financing projects and programs for infrastructure development, education, and

governance to support private sector-led higher economic growth and poverty reduction. We agree, but with the qualifications noted in paragraph 6 below. Continued support to infrastructure is needed to narrow the large infrastructure deficits in Bangladesh—a key requirement for fostering rapid economic growth. We acknowledge the CAPE's recommendation to strengthen and expand the transport sector, and we anticipate a scaling up of ADB's support in key subsectors (e.g., roads and highways). Further support to education is vital for poverty reduction and inclusive growth through human capital development. We will build on the successes of, and lessons learned in, ADB's support to the energy and education sectors, and try to replicate the good practices in other sectors. 6. While we generally agree on the need to focus on fewer subsectors, we believe that ADB should remain selectively engaged in urban primary health, small and medium enterprises, and the financial sector given our successful track record in these areas and given their high potential for contributing to job creation and poverty reduction. We will remain engaged in the ANR sector (while taking into consideration that it is no longer a core sector under Strategy 2020). We disagree with the CAPE's assessment of some ongoing operations in the ANR sector; for example, it is too early to conclude that the Second Rural Infrastructure Improvement Project will not be effective in delivering development impacts. We also disagree with the conclusion that DRM has not been adequately mainstreamed into ADB operations. We will continue to build on the current program in DRM through our efforts to mainstream climate change dimensions in the new CPS, as well as the expanding program in urban development, water supply and sanitation. 7. Recommendation 2: Help strengthen the Government's capabilities in designing and implementing projects and programs though a systematic approach working with other development partners to improve project implementation. We agree. Weak capacity in the Government is a critical obstacle to achieving aid effectiveness. We will continue to review and refine our approach to engagement with the Government, and work more closely with the other development partners to raise capacity and streamline Government approval processes for project/program preparation and implementation. This will be done through our annual country portfolio review missions and broader policy dialogue with Government, as well as through the Local Consultative Group, the forum through which development partners coordinate their assistance in Bangladesh. 8. Recommendation 3: Continue supporting governance reforms and anticorruption initiatives and gender mainstreaming. We agree. Governance reforms and anticorruption initiatives are critical for ensuring proper use of scarce resources and ensuring transparency and accountability in public sector operations. Despite challenges in sustaining the progress made, we will remain engaged in supporting governance reforms and anticorruption initiatives. We also agree with the recommendation for continued gender mainstreaming in our operations. Implementation of ADB's gender strategy has yielded meaningful gender equality results in various sectors, and our efforts in Bangladesh have become a model of good practice within the region that we are keen to build on.

Gender gaps in development indices linked to socially based discrimination remain large, so there is still much hard work to be done. 9. Recommendation 4: Develop a results framework relevant to programming and specific to ADB so that ADB can be held accountable for delivering results. We agree. The CAPE rightly stresses the need for developing monitoring targets and indicators specific to ADB and over which ADB has substantial influence or control. Careful analysis and greater clarity are, however, needed to identify areas in DMCs' development efforts for which ADB's potential direct contribution can be measured. We will also draw on lessons from the experiences of other DMCs in developing these monitoring targets and indicators.

DEVELOPMENT EFFECTIVENESS COMMITTEE (DEC) Chair's Summary of the Committee Discussion on 17 November 2009 COUNTRY ASSISTANCE PROGRAM EVALUATION FOR BANGLADESH a) Sector Assistance Program Evaluation for the Urban Sector and Water Supply and Sanitation in Bangladesh b) Sector Assistance Program Evaluation - Bangladesh: Energy Sector 1. Management welcomed the comprehensive country assistance program evaluation (CAPE) for Bangladesh, which was prepared by the Independent Evaluation Department (IED) in close consultation with key stakeholders within and outside ADB to provide feedback to the preparation of the next country partnership strategy (CPS) for Bangladesh and related ADB operations. Director General, SARD expressed appreciation on the CAPE's overall assessment that ADB's assistance to Bangladesh for the period 1999-2008 was successful, and in particular, for the recognition of ADB's achievements in key sectors like energy and education. 2. Management raised concerns on some of the findings of the CAPE and the two sector assistance program evaluations (SAPEs), on which DEC members expressed their own views and IED provided clarifications. Evaluation methodology 3. Director General, SARD was concerned that the CAPE's assessment of some ongoing operations in the agriculture and natural resources sectors and governance reform program loan appeared to be too definitive. It would be premature to draw any conclusion on the projects' development impact. Director, OED1 explained that the methodology applied to all CAPEs includes looking at ongoing portfolio in order to make evaluations forward-looking. As an early warning tool, such approach helps in identifying risks to success. The methodology does not mean to pre-judge the success of an ongoing project but certainly provides real-time feedback to Management, on the likelihood of project success. Implementation issues are best resolved, before it is too late. The methodology used in preparing the CAPE was similar to that used for India, Sri Lanka and Nepal, amongst others. Joint evaluation 4. One DEC member noted that the CAPE did not refer to the fact mentioned in the SAPE on Urban Development and Water Supply and Sanitation that there had been originally a joint country evaluation initiative with the World Bank, Japanese Government, and the United Kingdom Department for International Development (DFID). The member recommended that IED should pursue more joint evaluations at the country, sector and project levels with other development partners (DPs), and especially when DPs have earlier signed up to joint strategic frameworks, such as in the case of Bangladesh. IED mentioned that from its side, the IED had delivered on the joint evaluation agreements made with the evaluation partners (e.g. two sector level assessments) but that there had been special circumstances which had prevented the completion of a full joint country evaluation. First, delays had been encountered as a result of the Caretaker Government's wish to postpone the evaluation. Then, the differing time frames of the country strategies of some of the DPs (however, not ADB) had made them to decide to go ahead on their own.

5. Director General, SARD noted that the findings of a joint evaluation could have meaningfully evaluated the formulation of a common country results framework. This in turn could have reviewed the preparation of individual country strategies of DPs. Country Director, BRM reported that 17 development partners have recently signed a statement of intent to prepare a joint cooperation strategy. The various evaluation initiatives undertaken by the evaluation partners in the context of the joint evaluation initiative have helped in this process, although they do not amount to a full joint country evaluation. IED staff informed the meeting that a paper on donor harmonization and alignment has been prepared jointly by the World Bank, DFID and ADB, which would be useful for all DPs and the Government. Sector focus 6. DEC members suggested that ADB should engage in fewer sectors and subsectors in Bangladesh, and maintain its current focus on financing projects and programs for infrastructure development, education, governance reform, including anti-corruption initiatives, and gender mainstreaming. Director General, SARD, expressed the view that ADB should also remain selectively engaged in urban primary health, small- and medium-size enterprises, and financial sector, given the Bank's successful track record in these areas, and the high potential for job creation and poverty reduction of ADB's assistance in these areas. However, the question remained as to whether ADB should be spreading its sector coverage. Country Director, BRM noted Management's concurrence with IED's recommendation to mainstream disaster risk management (DRM). There have been ongoing efforts for DRM in line with ADB's policy to mainstream climate change in its operations. Further, DRM has been embedded in the design and implementation of projects in Bangladesh for quite some time. Sustainability 7. DEC members were concerned about the long-term sustainability of the outputs and outcomes of the ADB program in Bangladesh. One DEC member cited, as an example, ADB programs on energy and urban development being rated successful but less sustainable. Director General, SARD discussed ongoing efforts by ADB to address regulatory and capacity issues, and improvements to institutional frameworks. Country Director, BRM, explained that it is essential for ADB to remain engaged in policy dialogue, maintain a long-term presence and pursue investments in the sectors, which was in line with the CAPE recommendation. There are adequate resources (including administrative resources) for ADB's efforts in achieving better sustainability. Director, SAUD suggested that evaluation of the sustainability of urban development operations should look at the long term. Although such operations were not fully sustainable as yet, the situation was much better now than before. 8. On portfolio performance in general, Director General, SARD mentioned the use of country-based project readiness filters to address issues relating to start-up and implementation delays, and increased delegation of procurement and disbursement functions to the resident mission. The Government has also launched a number of initiatives to streamline its business processes. Private sector operations 9. One DEC member noted the CAPE's recommendation to support private sector-led economic growth, and inquired about the role of the Private Sector Operations Department (PSOD) in implementing the recommendation. Director General, SARD indicated that with the establishment of the coordinating unit in PSOD, there has been closer coordination between

PSOD and regional departments. Country Director, BRM informed that a comprehensive private sector assessment for the next country strategy paper is already under discussion with PSOD. Director, SAEN described how private investments in Bangladesh had not come in the manner expected due to changes in the government and economic climate, and uncertainty of gas supply situation in recent years. ADB and World Bank have been working together with the government in order to attract private investments through projects involving independent power producers. Conclusions 10. DEC welcomed the CAPE and the two SAPE reports. DEC noted with satisfaction that ADB's program in Bangladesh has generally been consistent with the country's development strategy. DEC also noted Management's concurrence with IED's recommendations. 11. On the evaluation of ongoing projects, DEC welcomed the real-time feedback from IED and hoped that corrective actions taken by Management would result in much better evaluation ratings once the projects are completed. 12. DEC welcomed joint evaluations of programs and projects as and when there would be enough commonality of interest and involvement among various donors. 13. DEC emphasized the need for mainstreaming disaster risk management and improving project implementation.

Ashok K. Lahiri Chair, Development Effectiveness Committee

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