Support by ADB to Accelerate Graduation Kenichi Yokoyama Country Director ADB Nepal Presented at Kathmandu Ministerial Meeting of Asia-Pacific LDCs on Graduation and the Post-2015 Development Agenda, 18 December 2014 1
Presentation Outline 1. ADB Strategy 2020 and Mid-Term Review Actions 2. LDCs in South Asia and Support Strategies 3. Graduation Support for Nepal Country Partnership Strategy, 2013-2017 4. Conclusion 2
1. ADB Strategy 2020 & Mid-Term Review Actions 3
Approved in 2008 ADB s Strategy 2020 Strategic Agendas: Inclusive economic growth, Environmentally sustainable growth, Regional integration 5 Core Operational Areas: Infrastructure, Environment, Regional Cooperation and Integration, Finance Sector Development, Education 3 Other Operational Areas: Health, Agriculture, Disaster and Emergency Assistance Cross-cutting Drivers of Change: Private Sector Development, Good Governance, Gender Equity, Knowledge Solutions, Partnerships 4
Mid-term Review of Strategy 2020 Undertaken to meet the challenges of transforming Asia & Pacific 14 LDCs in Asia Pacific Region Includes a 10-point program on future directions Relevant Actions for LDCs: Sharpening ADB s Operational Focus Maintain focus on infrastructure (higher leverage & impacts) Deepen inclusiveness to reduce poverty Catalyze greater RCI Support climate change & environment Responding to the New Business Environment Expand private sector development and operations Mainstream knowledge solutions Strengthening ADB s Capacity and Partnership 5
Back to Basics Elements 1. Security and political stability 2. Macroeconomic stability 3. Infrastructure investment 4. Human capital 5. Open trade and investment regimes 6. Good governance 7. Inclusiveness in the society 8. A clear and shared vision for development ADB will focus on effectively implementing most of these basics so that LDCs (and other LICs and lower MICs) graduate to higher income levels. 6
2. LDCs in South Asia and Support Strategy 7
Present Status and Approach Per capita GNI (Atlas method) and graduation thresholds HAI score and graduation threshold EVI score and graduation threshold 2500 2000 1500 1000 500 0 Bangladesh Bhutan Nepal GNI per capita GNI threshold 1 70 60 50 40 30 20 10 0 Bangladesh Bhutan Nepal 50 40 30 20 10 0 Bangladesh Bhutan Nepal GNI threshold 2 HAI score HAI threshold EVI score EVI threshold 4 LDCs in South Asia: Bangladesh, Bhutan, Nepal, Afghanistan Country-specific binding constraints Vision & Strategy ADB support is guided by Country Partnership Strategy lignment to national strategy, harmonization, MFDR, capacity development Addresses LDC graduation criteria Addresses the core issues and support sought in Istanbul Programme of Action 2011-2020 8
Country-specific Support Strategy Bangladesh Bhutan Nepal Sustainable IEG & RCI Sectoral focus: Energy, transport, urban infra & water supply, education, finance, ANR Thematic priorities: Governance, capacity development, CC, RCI, PSD, gender, knowledge solution Equitable, job-creating IEG Sectoral focus: Energy, transport, urban infra & water supply, finance, education, ANR Thematic priorities: Governance, capacity development, RCI, PSD, gender, knowledge solution Employment-centric, sustainable IEG & institutional capacities Sectoral focus: Energy, transport, urban infra & water supply, education, ANR Thematic priorities: Governance, capacity development, RCI, PSD, gender, knowledge solution Common Features Alignment with national priorities/medium-term plans Structural transformation to build productive capacities, and create a diversified and resilient economy 9
Strategic Directions to Support Graduation Infrastructure as Strategic Core Transport: In-country and regional connectivity Energy: Security at home, clean energy, efficiency, RCI Urban services: Quality of life, productivity Human Capital Skills to raise productivity & employability Other/ Cross-cutting key drivers/ enablers Agriculture, water management, climate change Finance Governance, Capacity building RCI: SASEC as the RCI platform flagship program Private investments in infrastructure and industries Gender and social inclusion (GESI) 10
Infrastructure Investment 12 10 8 6 4 2 0 BANGLADESH: Required investment to close infrastructure gap (% of GDP per year, 2011-2020) 7 10 14 12 10 8 6 4 2 0 NEPAL: Required investment to close infrastructure gap (% of GDP per year, 2011-2020) 8 12 Low High Low High Large infrastructure financing gap in LDCs Public investment: Quantum and quality have to be increased (Nepal s capital spending is just 3.3% of GDP) Private investment: Enabling environment Robust legal, regulatory and institutional frameworks Directly contribute to criterion 1 and 3 for graduation 11
Enhancing Human Capital Critical to supply competent and able human capital Support for vocational training, technical education and skills development to boost jobs, productivity and income Ultimately helps to attract FDI & sustain high growth rate Addresses skills gap in the market Quality, management capacity and geographical balance are at the heart of such development assistance TAs for sector reforms, capacity building, and social protection Innovative interventions such as cash transfers 12
Regional Cooperation and Integration Members: Bangladesh, Bhutan, India, the Maldives, Nepal and Sri Lanka Project-based initiative Investment: Over $6.3 billion since 2001 (33 projects, majority in transport sector) $60 million TA (capacity development and knowledge initiatives) 2014-2016: $3.34 billion planned Trade facilitation Customs modernization Harmonization of standards Improvement of crossborder infrastructure Transport facilitation Energy Cross-border transmission Export-oriented power generation Transport Roads Railways Ports Airports 13
Disaster Risk Reduction Strategy Disaster and emergency assistance is featured in Strategy 2020 Close integration of DRR into development projects to boost resilience Climate change and DRR intersection is addressed Investment in disaster resilience Capacity development and knowledge solutions Support initiatives Emergency flood damage and rehabilitation Water resources project preparatory facility Capacity development for school sector reform Mainstreaming climate change risk management in development Building climate resilience of watersheds in mountain ecosystems 14
3. Graduation Support for Nepal 15
Nepal s Graduation Strategy & ADB Support Status & Strategy EVI criterion already met For graduation, either increase its per capita GNI by US$770 or HAI score by 6.17 Nepal needs to: Tackle supply-side constraints Reorient structural transformation Promote value chains & high value exports ADB Support Investment to tackle binding constraints and boost productive capacities Infrastructure Human capital Institutional basis Development vision Public investment capacity PPP framework Thematic priorities RCI GESI, etc. Partnerships/ leveraging 16
High & Sustainable Growth Social Inclusion & Employment Generation Enhanced Institutional Capacities CPS (2013-2017) Structure Accelerated Economic Growth & Poverty Reduction Thematic Priorities GESI Good Governance Environment & CC Regional Cooperation & Integration Private sector development Energy Transport Urban Infra. & Services Human Capital Agriculture Transformation Risk Management Tools Post-Conflict Sensitive Approach. Disaster & Climate Change Risks Screening. Governance Risk Assessment Tool 17
Capacity Enhancement for Graduation Vision 2030 for rapid and sustainable growth & job creation LDC graduation to be a medium-term vision/strategy Meaningful structural transformation: Robust industrial sector and higher value added in key industries Collective DP support, South-south cooperation/ twinning Enhancing investment planning & implementation capacity Improved budgetary and monitoring process Sector investment strategies, plans & project pipelines Implementing agencies capacity PPP framework PPP Policy and PPP Act drafted PPP Center within NPC Sector PPP strategy PPP concession documents 18
Support for Infrastructure Development for Graduation Energy Expansion of generation & transmission infrastructure Policy, regulatory and institutional reforms (including PPPs) Catalyze private sector investment and promote RCI to facilitate power trade Domestic consumption + export Transport Strategic Road Network, trans-boundary connectivity, customs modernization Urban transport planning and management Further upgrade TIA capacity and domestic airports Institutional strengthening, PPP Urban Enhance access to and service level of WSS for all Improve urban environment wastewater treatment and efficient urban transport Enhance governance and institutional capacity for sustainability of assets 19
Support for Education and Agriculture for Graduation Education School sector reform focusing on access, quality & sector capacity TEVT to expand demand-driven skills training Agriculture Implementing Agriculture Development Strategy with policy and institutional reforms Irrigation infrastructure and institutions Higher education in science and technology, to build synergy with investments in infrastructure Value chains with private sector & cooperatives IWRM, CC adaptation, & disaster risk management 20
Conclusion ADB MTR supports the key priorities and thrusts outlined in IPoA 2011-2020 and the proposed SDGs Long-term development vision and strategy, backed by dynamic national leadership Addressing critical gaps in infrastructure (requisite & actual investments); human capital (outcomes to attract investors) Institutional bases: Enhancing infrastructure investments (planning, implementation, asset management); Attracting PPPs; Governance (including PFM), Anti-corruption Productive capacity development: Proactive facilitation for value chains, entrepreneurship development, etc. Tapping RCI opportunities: combining investment & TA support to incentivize integration 21
THANK YOU! 22