Bankers with a heart, but with no will?

ADB‘s objectives are above those of the mainstream banker. They want to see that the money they lend, brings transformation to communities. But has the model worked?
The grey corridors wear a sober look. Metres of them connecting into a maze of neatly laid out H–grids, with many trained minds busily pecking away at their computers.
There are Energy Specialists; there are Financial Analysts for Energy Specialists. There are Transport Consultants; Water Economists; and Financial Economists. There are Anti-money Laundering Consultants, and Poverty Reduction Specialists, too.
There is here an old, American look of efficiency. Lots of people quietly, purposefully, walking away toward or from another meeting. No one has the time—agendas are piling up that need attention.
The Asian Development Bank in Manila is the second largest financing institution in the world. After the stack of Brettonwoods institutions called the World Bank.
Primarily started by the Americans in the post-WW II years, with the growingly rich Japanese chipping in with chunks of money to pull Asia’s poor and deprived out of their morass of no-education, no-water, no-health, and many other social challenges that are so enormous that it daunts even the formidable ADB.
As Manila rose from the ashes of a decimating War on the Eastern theater, and as the US began its [at the time benevolent] effort of reconstructing Asia, the Filipino capital was the natural choice. The Yankees knew the town well, what with Gen Douglas MacArthur having made it his base even before the War began. And the city, in the late 1950s when ADB was born, was way ahead of a Tokyo. Singapore was still in the agrarian backwaters; and Kuala Lumpur was a sedate plantation town.
So what does the ADB of today do? It’s working hard to tell a bagful of Asian nations that are coming off their socialist/communist somnolence, that it makes sense to run services—be it roads, power, water, education, any kind of infrastructure—without losing money year after year on grants, and subsidies. These are bankers, you have to remember.
Tucked inside the immaculate twin-tailed suits are cold, rational minds pushing every nation to accept a simple fact: you need to price things right, and realize enough money on such investments to pay back loans.
But these are bankers with a heart. Their objectives are above those of the mainstream lender. They want to see that the money they fork out, albeit at a cost, brings transformation to communities.
Together with its development partners—who are sometimes nation–states, other times agencies and corporations of the government, NGOs and entrepreneurs from the private sector—the bank is committed to helping improve and expand the delivery of infrastructure services, and to foster the integrated management of these resources.
Centrally, ADB recognizes, and emphasizes the reduction of poverty and stimulating economic growth.
In many ways, the bank, at least in its policy enunciations, aggressively supports the effort to build human capabilities in Asia.
And having been founded by the Americans in those years after the War when the victors set about with missionary zeal to rebuild the world, the bank clearly prefers market outcomes to intervention by bureaucrats alone.
If one were to redefine socialism—as many nations have started to do since the onset of the 1990s—to mean our wish for a rational and compassionate society—rather than state ownership of the means of production—, well, then, ADB is socialist. In any case, you and I would prefer this vision to describe the society that we will want our grandchildren to live in.
So what ails ADB, if there is anything at all that is wrong with it? So why do we, on a morning cuppa, read some report on an ‘ADB-assisted project’ and turn away quickly with a snort? We know, anyway, don’t we, that many of their projects over the years have meant nothing but more money down the drain, and ballooning debts that some inheriting government or bureaucrat struggles to service.
Says a long-time development observer in India, Somnath Sen, and former director of TARU: “I will confess that ADB’s record in water supply and sanitation in Asia has been quite poor beyond making infrastructure investments. They do not have any major models to show (perhaps the ADB is looking for those?), have supported quite a few failed
privatization initiatives and have been under pretty severe criticism for not making their processes participative and inclusive of communities—something that their elder Washington sibling, the World Bank, also by now fully understands and provides for, even though not so successfully!”
ADB is worrying about this, too. Says a Vice President of the Bank, Geert van der Linden, “We must move beyond policy changes, to policy implementation and enforcement.” He is dismayed, for instance, at the incredible lack of progress in achieving one of the avowed goals of ADB, Water for All. Asks Linden with not a little anguish, “Have we done enough to support good leadership in water provision? The honest answer is no. We have not. Many evaluations of our projects over ten years repeat this message again and again, pointing to the need for supporting only those projects that show adequate institutional capacity and commitment.”
By the bank’s own admission, “one of the disturbing statistics is that from 1995 to 2001, avarage coverage (of water supply under its programmes) has increased by only 0.7 per cent. At this rate, it will take 101 years to bring average coverage up to 90 per cent.”
The problem that Linden and many other concerned officers at the Bank are beginning to ask is: How do we at ADB identify and assist committed leaders? How do we help them halt and reverse the scourge of poverty?
But that won’t do in itself, says a veteran activist who has striven for over twenty years on sensitizing communities to their traditional rights over natural resources in various districts. “The trouble with most of these institutions is that they do not want to get down to offering interventions on the ground. This is trench warfare in the warrens of the village or town that one is working in. Sitting in the cool environs of their offices they want to fight these battles on their computers and at their desks.”
If that were not caustic enough, he adds, “It’s easy as experts and economists to set the strike targets. It is like war fought from the air—where goal posts and markers are clearly defined on the crosshairs.”
These scarred veterans of the development sector who have, over nearly a quarter century, done work in a broad arena across the country, believe that these banks will have to work closer with communities if they have to rid themselves of the odium that is usually attached to their involvement in development projects.
It is not without reason that the mammoth P.R. mechanism of ADB or the WB goes wrong somewhere in burnishing the bank’s persona. Says one senior ADB official based in Manila in defence, “People forget that we are only bankers. If as a businessperson, you went to a commercial bank, and secured a loan; and then failed on the project that you launched, you wouldn’t blame that bank, will you? It is the entrepreneur or company that will be seen to have failed. Why then does the ADB get rapped by the media or by development groups on the knuckles, for just doing our job of lending money, with all the concern we profess and practice on development needs?”
All these sets of predicaments that ADB wrestles with, the World Bank or the infant African Development Bank faces, too. In a meeting last year that a colleague of this writer had with the then President of the IBRD, Thomas Wolfensohn is reported to have retorted, “After all, we are bankers. How can we always ensure that the borrowing institution channels its plans toward, say, only renewables as a strategy, and not extractives?”
Things are not, of course, as simple. There are layers of complexities. And the believer has trouble understanding how these institutions can be such prolific hirers of a slew of consultants. If any one benefits from it all, it is these consultants with their pontifications which end up as colourfully printed reports that gather dust in the attic.
There are no pat solutions. None anyone can offer for the short term, anyway. This is not to say, of course, that we need to dismantle these institutions. Like Linden, many more need to do some serious soul-searching. They can’t be scared to make mistakes. And they must do more, to own the value chain beyond lending, into those processes that the borrower sets up for achieving those exalted objectives that ADB professes and genuinely shares.
That means creating simple mechanisms—not with more consultants hired, with hope—that will enhance the quality of spend at each of these projects, across corporations, across the world.
-Ed