MANILA, PHILIPPINES (31 October 2024) — The Asian Development Bank (ADB) has made progress in expanding its private sector operations by diversifying into new sectors and increasing cofinancing. However, the commitment volume in dollar term has declined by 42% in 2023 as compared to 2019, an independent evaluation report showed.

The evaluation analyzes ADB’s efforts to scale up its private sector operations in alignment with its operational plan. 

“Since private sector operations need to be at a certain scale to be impactful, this decline in dollar commitment volume is concerning,” ADB Independent Evaluation Department Director General Emmanuel Jimenez said. “The operational plan was flexible allowing private sector operations to respond to the unexpected market changes, including the COVID-19 pandemic. However, it now needs to be more focused by identifying areas of operations with major development gaps.” 

The report found that while private sector operations are on track to meet the target of 2.5 times long-term cofinancing ratio by 2030, the increase in the ratio from 2019 represents a modest growth in the dollar value of cofinancing deals.

“Switching to a key performance indicator based on the number of projects, rather than dollar volume, possibly incentivized staff to increase transactions in lower middle-income countries and sectors where deal sizes are naturally smaller,” said evaluation team leader Paolo Obias. “However, ADB was unable to originate enough projects to make up for the smaller deal sizes.”

The evaluation highlights that improvements are needed in the areas of strategic prioritization, resource allocation, incentives, and the integration of private sector diagnostics into country partnership strategies.

Despite the strong growth and development achieved in Asia and the Pacific, large financing gaps remain, particularly in infrastructure, financial inclusion, and climate financing. The gaps are too large for public institutions to handle on their own because of limited fiscal space. Multilateral development banks are thus doubling down on their commitment to scaling up their private sector activities to meet development objectives.

About Independent Evaluation at ADB 

ADB's Independent Evaluation, reporting to the Board of Directors through the Development Effectiveness Committee, contributes to development effectiveness by providing feedback on ADB's policies, strategies, operations, and special concerns in Asia and the Pacific.