ADB sees challenges ahead for better performance

Though the Asian Development Bank (ADB) has given 89 per cent score — which is above the average of its aid effectiveness — for Nepal operations, it has lagged behind in loan disbursement ratio coupled with timely programme tranche release, continuation of quarterly Country Portfolio Review meeting, focus on problematic projects, ensuring prompt signing and effectiveness, and continuity in monitoring transfer which are key to improving its performances.

"Against the revised annual targets of $171 million for contract awards and $118 million for disbursements, the achievements as of November 23, stood at 40 per cent for contract awards and 62 per cent for disbursements," said country director at ADB Nepal Resident Mission Kenichi Yokoyama during the Country Portfolio Review Meeting here today.

"Though this year is challenging, we are still hopeful that the figures can be increased substantially," he said, adding that there is, however, a risk that achievements may be at around 80 per cent of the targets.

The ADB-financed portfolio has been steadily increasing in Nepal. Currently, active portfolio amounts to about $1.3 billion, with 33 investment projects.

"Critical sectors like energy have been performing low, followed by urban transport sector," he said, asking the participants in the Country Portfolio Review Meeting to come up with some viable action plan to improve portfolio performance in terms of timely and quality implementation.

The two-day meeting is also expected to discuss a specific mechanism to provide sufficient budget for timely implementation of ADB-assisted projects in the current fiscal year, Yokoyama added. "Portfolio management needs to be more result oriented, going beyond physical and financial progress and covering outputs and outcomes."

Emphasising on the need to enhance quantity and quality of public investments in critical infrastructure and social capital, Yokoyama also highlighted the paramount importance of enhancing the implementation capacity of development programmes including prudent accountability to ensure quality and sustainability of created assets, along with stronger efforts to attract private sector investments in infrastructure.

Currently, it takes two to two-and-a-half years for 25 per cent contract awards and 10 per cent disbursement but according to ADB best practice, 100 per cent contract awards and 20 per cent disbursement should be completed within one year of project approval, said lead development effectiveness specialist of SAOD-PR Hans Carlsson.

The meeting will cover a range of areas including implications of the budget of fiscal year 2012-13 for development projects, performance constraints in energy and urban sectors, progressive actions to improve portfolio performance including readiness at project signing, public financial management, public procurement reforms, and enhanced quality of project audits and effective monitoring and support of social and environmental safeguards, mainstreaming gender empowerment and social inclusion, and policy and institutional reforms such as sustainable infrastructure maintenance and improved accountability of project institutions.

Meanwhile, finance secretary Shanta Raj Subedi presented the Outstanding Project Management Team Awards to the ADB-supported Rural Reconstruction and Rehabilitation Sector Project, Subregional Transport Enhancement Project and the Secondary Town Integrated Urban Environmental Improvement Project, on the occasion, for their contribution in improving the lives of the rural poor. They were also recognised for their excellence in delivering results by the ADB today.

"These awards recognise the projects teams' strong performance, efficiency in implementation and achievement of targets," said Yokoyama, adding that the successful implementation of these projects has significantly contributed toward maximising ADB’s overall contribution to helping reduce poverty in the country, and in supporting efforts to promote sustainable development.

ADB’s Nepal Resident Mission instituted the award in 1996 to encourage ADB project teams to improve projects to strengthen ADB’s goal to reduce poverty and promote development in Nepal.

ADB has worked in partnership with Nepal since the country joined ADB as a founding member in 1966. As of September 31, 2012, Nepal has received 158 loans/grants — 122 sovereign ADF loans ($2,775.88 million), five non-sovereign loans ($58.64 million), and 32 ADF grants ($763.25 million) totalling $3,597.77 million.