Asian Development Bank (ADB)

Organizational profile: The Asian Development Bank (ADB) envisions a prosperous, inclusive, resilient, and sustainable Asia and the Pacific, while sustaining its efforts to eradicate extreme poverty in the region. ADB provides financing for projects in developing member countries (DMCs) that support economic growth and social development. Projects are identified in partnership with DMCs during strategic planning processes. ADB funds activities in various sectors through loans and grants, financed from ordinary capital resources as well as special and trust funds. ADB’s five core sectors of operations are infrastructure, education, finance sector development, environment, climate change and disaster risk management, and regional cooperation and integration.

Within the Environment focus area, ADB is promoting natural resource management to protect and maintain the productive potential of the region's natural capital. This includes protecting critical stocks of land, forests, water and other natural resources, in order to maintain ecosystem services that support human societies. One of ADB's key strategic agendas is the promotion of environmental sustainability through projects that support biodiversity and conservation of ecosystems in the region. Many of ADB's projects directly support sustainable natural resources management, while its safeguard provisions aim to ensure that no net loss of biodiversity occurs as a result of any ADB project.

Financing Instrument: Loans, Technical Assistance, Grants, Equity, Guarantees

Project scale: Loans for forestry related projects have included a $40 million and $100 million project. Grants for technical assistance to forestry related projects have included a $600,000 and $800,000 project.

Applicable geographical regions/country groups: ADB works across Asia and the Pacific.

Eligibility Criteria: For sovereign loans, ADB uses a classification system to determine the eligibility of developing member countries (DMCs) to borrow based on two main criteria, (i) per capita income and (ii) creditworthiness. DMCs are classified into:

Group A (Concessional assistance-only): those in need of greatest concessionality and eligible for Asian Development Fund (ADF) grants

Group B  (OCR blend): those that need some concessionality, and

Group C (Regular OCR only): those in need of least concessionality.

DMCs within these groups are further differentiated to determine the mix of funds and lending terms they can access, based on ADB’s (i) concessional assistance policy and (ii) policy on diversified financing terms (effective 2021).

To be eligible for ADB nonsovereign financing, the proposed recipient must be:

(i) an entity wholly owned or controlled by one or more private entities

(ii) an entity, wholly owned or controlled by a sovereign, undertaking commercial activities (subsovereign and other public sector entities)

(iii) an entity, partially owned or controlled by one or more private entities and a sovereign, undertaking commercial activities

(iv) a local government or other subsovereign entity (including municipalities and other forms of local government) that can contract and obtain financing independently from the sovereign

 Application guidelines: ADB provides financing for projects in developing member countries (DMCs) that support economic growth and social development. Projects are identified in partnership with DMCs during strategic planning processes. The various stages that each project goes through, from country programming, project design, to project completion, and evaluation are known collectively as the ADB project cycle.

1. Country Partnership Strategy:

ADB works with each developing member country to define a medium-term development strategy and operational program called a country partnership strategy (CPS). The CPS is aligned with the country's development plan and poverty reduction goals, and its preparation with the DMC's development planning cycle. ADB conducts thematic and sector analyses and assessment studies in preparation for a new CPS. These will be posted on ADB's web site as available. A CPS is developed in close consultation with the government and other country stakeholders including civil society, nongovernment organizations, private sector, as well as the country's other development partners. The CPS is posted on ADB's web site at the same time they are circulated to ADB's Board of Directors for endorsement, subject to the country's consent.

2. Project Identification/Preparation:

ADB often provides grants called project/program preparatory technical assistance (PPTA) to help the government identify and prepare feasible projects. During the early stage of the PPTA, a flagging exercise—called an initial poverty and social analysis—is conducted to identify those people who may be beneficially or adversely affected. A technical assistance report is prepared as a recommendation for ADB to finance a technical assistance project.

3. Approval

The draft loan agreement and draft project proposal is submitted to all parties involved including the Government for review. Feedback is collected, and the Government is then called for negotiation with ADB.

4. Implementation:

ADB-assisted projects are implemented by the executing agency according to the agreed schedule and procedures. A project administration manual sets out the project's implementation agreements and details.

5. Completion and Evaluation:

After the project facilities and technical assistance activities are completed, ADB prepares a completion report to document the implementation experience. These reports are prepared within 12-24 months of the completion of the project.

For private sector financing, there is no standard form of application for ADB assistance. However, ADB would need some basic information to evaluate a project, including an executive summary, project description, feasibility study, background on sponsors, project ownership structure, projects' implementation arrangements, projects operations, the market, environmental and social aspects, cost estimates, financing plan, financial model, risk analysis, and permits and licenses. The credit approval process involves a preliminary review, concept review, transaction review, final review, management or board approval, then closing.