Global upheaval and the Asian Development Bank’s response
COVID-19 and the economic crisis it unleashed have spurred unprecedented action from governments and international institutions. Multilateral development banks (MDBs) like the Asian Development Bank (ADB) swiftly committed resources to COVID-19 response and recovery efforts in 2020 and 2021, including a $20 billion countercyclical support facility and a $9 billion facility specifically for COVID-19 vaccine procurement and vaccination program implementation. These facilities have allowed numerous countries to rapidly pump liquidity into their economies while targeting support for social sectors and have pushed ADB into accelerating loan approval processes and becoming more crisis-focused. These changes in the processes, types, and design of projects financed by ADB will not only affect the bank’s strategy in the medium- to long-run, they will also contribute to reshaping the development financing landscape.
Achieving transformational recovery
Asian and Pacific countries are at a crossroad of their growth and development pathways, facing several scenarios. The first—the one to be avoided—is constrained or negative growth. In this world, countries are unable to fully overcome the pandemic, possibly with socio-political turmoil compounding the issue. The second scenario is steady growth with business-as-usual measures, with countries relying on traditional economic growth stimuli like infrastructure investments to create jobs and exporting natural resources where available. There would be a blip for 2020 and 2021 but countries would rebound to the pre-COVID-19 development path within the next year or so. The third scenario is transformational recovery that takes maximum advantage of COVID-19 as a once-in-a-lifetime opportunity to attain high economic growth while simultaneously shifting the development discourse towards equality, resilience, and sustainability. Countries that follow the last, visionary path will be the best poised to withstand forthcoming health, social, or environmental crises. But that path is also the most challenging, and one which cannot be forged by governments alone.
What can MDBs like ADB do to assist countries to follow this third path? How have ADB’s COVID-19 responses contributed so far, and what more can be done? This blog, the first of a few, offers a picture of ADB’s initial COVID-19 responses; future blogs will provide more in-depth analysis.
ADB responses and bigger-picture effects
COVID-19 has put the “social” into development
The pandemic has highlighted to ADB the importance of investing more in the social sector. Before COVID-19, physical investments (transport, public sector management, and energy) served as the backbone of ADB’s lending and assistance. “Human” investments formed a thin slice of resources, with only 3 percent of the bank’s commitments in 2019, about US$636 million, committed to health and around 5 percent to education. Totals for both health and education include social protection components.
COVID-19 changed this landscape entirely. As with many other international financial institutions, 2020 saw a massive scale up in social-sector projects for ADB. ADB’s projects included emergency support for equipment and supplies to ramp up COVID-19 detection and treatment; foundational support for health systems strengthening; funding for health security; and support for the provision of basic social assistance. The beginning of 2021 has seen a shift towards vaccine procurement and delivery, as well as setting up longer-term investments for vaccine manufacturing and sustainable health financing. Social development, environment and climate change, gender, and regional cooperation and integration can no longer be sidelined. Social sector investments will undoubtedly be a core area for ADB going forward, and the institution will encourage countries to move away from targeting solely economic growth and toward human capital growth that addresses broader societal concerns such as environmental degradation and inequality more than ever before. Mainstreaming social sector issues—especially COVID-19-related interventions—into traditionally non-health sector projects will become standard operation. Further, complex development challenges will benefit from synergies between sovereign and non-sovereign operations, especially in countries where the private sector already plays a prominent role.
However, a few constraints make scaling up social sector operations difficult. First, ADB’s current organizational structure is divided by sectors and into sovereign and non-sovereign operations, which stunts the ability of experts to work across different regions and types of operations. Second, health or social sector expertise is in short supply within the organization, which limits the number of projects that can be processed and administered. Third, country offices have limited resources and staff which makes it difficult to keep up with rapid changes on the ground. Addressing these constraints requires increasing flexibility and dynamism in project team structure, faster feedback loops about what works, and better identification of cross-sector projects that can bring the largest returns on investment. Creating a vision within the ADB of the significance of social sectors in the long-term, post-COVID-19 era will help to ensure that they remain an important focus of the organization’s efforts.
Knowledge management and real-time, big-data analytics are increasingly important for evidence-based policymaking
COVID-19 has shown the importance of accurate and timely data, but the velocity, variety, and volume of new information has challenged policymakers worldwide. Governments face a mammoth task in keeping themselves (and the public) updated with digestible information, analyzing “real-time” trends, managing knowledge processes, and translating findings into policy action for near-term and future planning.
In the immediate aftermath of COVID-19, ADB responded to such challenges by providing “ad-hoc” analytics including digital tools for data analysis and economic modelling on vaccination policies. ADB has also convened development fora with high-profile experts and expanded its futures thinking and foresight program to develop future scenarios for recovery. In parallel, ADB continues to maintain open databases and publish macroeconomic and social indicators to guide governments’ economic forecasts. However, to maximize value-added, more attention needs to be paid to addressing governments’ longer-term capacity constraints. ADB has introduced the Knowledge Management Action Plan 2021-2025, which emphasizes increasing collaboration, improving the quality and efficiency of knowledge services, making knowledge work more attractive, and using a country-focused approach to benefit clients.
In line, ADB can step up support for cross-agency knowledge management processes, help develop foresight skills among policymakers, generate better understanding of anticipatory policymaking for resilience, and create a legal framework for fast crisis response. Policymakers will need to be equipped with tools for predictive analysis and be able to leverage data and knowledge effectively across multiple levels and sectors of government and the private sector. ADB can do more to strengthen governance for data management, including data security and privacy issues. This is crucial to ensure that public service delivery is transparent and responsive to citizen’s needs and that policies are evidence-based and forward-thinking.
COVID-19 has highlighted the importance of multi-stakeholder leadership and strategic partnerships
The magnitude and scope of the issues involved in the COVID-19 crisis cannot be handled by governments alone. A COVID-19 response requires multi-stakeholder leadership, including the private sector, civil society organizations, think tanks, and research institutions. The private sector has proven effective at manufacturing (the biggest brands in the pharmaceutical industry have scaled up research and development and production capacity and manufactured vaccines at record pace and scale); supporting vaccine logistics (delivery to rural locations); and health service provision (telemedicine, for instance, has brought low-cost, high-quality health services to remote and urban populations alike). Private companies have also helped procure vaccines, particularly for their employees, to reach herd immunity as quickly as possible; and have started to shift attention to increased social protection measures, including wellbeing at work. Meanwhile, civil society organizations have played an indispensable role in delivering relief and supplies to remote communities, tackling vaccine hesitancy and misinformation on COVID-19 through community engagement and giving voice on a range of issues to the often unheard. Think tanks and research institutions have often been the first to analyze data, model predictions, and offer practical solutions for policymakers. They have offered insights into lessons from past epidemics and have been at the heart of many heated debates on COVID-19.
ADB has a strong reputation as a convenor of stakeholders, but given the scale and nature of coordination needs post COVID-19, ADB will need to leverage its membership base further. ADB can help to break down complex development problems and find local solutions based on global and regional experiences, encouraging real-time policy conversations across developed and developing member countries. Already, successful examples on how to manage the COVID-19 pandemic and how to tackle other development challenges are coming out of Asia and the Pacific. ADB could help set up new engagement processes and platforms to support public sector innovation processes. To start, ADB is setting up the Hub for Applied Learning, Knowledge and Innovation to experiment with new ways of working; engaging champions across government, private sector, academia, and civil society; and nurturing new partnership modalities. It is time to ramp up the convening power of MDBs to address such global challenges.
ADB continues to support countries to increase investment in human capital development and encourage policymaking informed by real-time analytics and foresight. These ambitious goals will require all stakeholders to build on the immediate response to COVID-19 as they shape their countries’ future development. And ADB will need to conduct further research to answer broad questions such as “how has the COVID-19 response by MDBs shifted the development financing landscape?”; “what might support from ADB for COVID-19 look like in the next few years?” and, “how can MDBs like ADB optimize or reshape operations to best support countries on their transformational recovery paths?” Such questions remain to be explored in forthcoming blogs.
Note: Ideas presented here are the author’s and do not necessarily represent those of ADB. Many thanks to Scott Morris, Dodo Banzon, and Susann Roth for their insights.
CGD blog posts reflect the views of the authors, drawing on prior research and experience in their areas of expertise. CGD is a nonpartisan, independent organization and does not take institutional positions.