LAST year China and the Asian Development Bank commemorated their 30 years of partnership.
Since they began collaborating 30 years ago, the ADB had extended a credit line totalling US$34 billion to China as of November, contributing to projects and initiatives that have left many better off in terms of living standards, gender equality and environmental well-being.
Now both are ready to take their partnership to a higher level, by, among other measures, sharing knowledge about development issues and learning from each other’s best practices.
A prime symbol of this exchange is the gradual adoption of standards such as the performance-based budget management that the ADB has been championing. These standards help inform public policy-making, introduce budgetary discipline and ensure official accountability.
Marvin Taylor-Dormond, Director General of the Independent Evaluation Department (IED) with the ADB, recently discussed his work and thoughts about performance-based evaluation with Shanghai Daily writer Ni Tao at a forum in Hangzhou, Zhejiang Province. The forum, “2017 Asian Evaluation Week,” was organized by China’s Ministry of Finance and the ADB and co-hosted by the IED and the Shanghai National Accounting Institute.
Q: As a result of the ADB-China partnership, spanning 30 years, some global standards, such as performance-based evaluation, have been steadily adopted by Chinese fiscal authorities. How have these standards contributed to more fiscally sound decision-making in China?
A: As the resources are scarce, they have to be wisely used, even though China has become wealthier. It has also become more disciplined in the use of wealth.
It is quite impressive what China has done in adopting these performance-based standards, not only at the national level, but also at the local, provincial level, introducing discipline and the use of funds based on performance metrics. It’s very consistent. These metrics provide a very solid base for performance evaluation because they are linked to the budget.
There is legislation in many other countries, but moving from legislation to implementation is the most difficult part, and making a link with the budget is the way to do that.
When you link it to the budget, it becomes really binding, it’s not simply a declaration of principles. To get the resources you need, you have to show that you perform according to the standards that are demanded of you.
So far, these metrics have been very much focused on the outputs associated with the use of funds, and not so much on outcomes — or development results.
Q: Is this growing awareness of performance-based evaluation more a result of influence from the ADB than China’s spontaneous choice?
A: I agree with Ayumi Konishi, the person responsible for ADB operations in China, that the ADB is a tiny player. So is the World Bank. The power of our influence comes from standards. It’s not so much about money.
Definitely, any progress in this area must be credited to the authorities. I have to say, even from my time at the World Bank, I’ve seen the huge will of the government of China to learn from the standards that international organizations such as the ADB and the World Bank have brought to the country.
In fact, this is the value-added benefit of this organization for China. China doesn’t necessarily need the ADB’s money. But China has on various occasions indicated that what they value from the ADB are the standards the institution has embedded in the projects the ADB finances. And I know that is the same thing with the World Bank.
Q: What are the criteria you look at when you conduct country-specific evaluations?
A: We do development effectiveness assessments. In other words, we assess whether projects, programs and strategies have been effective in delivering the expected development result.
Development result means changes in a situation that was originally identified as being undesirable — say, lack of water in a community.
The project is supposed to bring change in the provision of water and also improve the health of the population. That is called the development result.
What we normally look at is a series of criteria. We look at whether a project was relevant. In other words, is it aligned with the priorities of the government or the community? And is it aligned to the priorities of the ADB as well? That’s the first thing we see, relevance.
Then we look at effectiveness. Did they actually obtain the results? They said they would bring water to a population of a million. We look at whether they actually achieved this. Both the ADB and the government have to agree on the objectives. This is what we call objective-based evaluation.
The third dimension we look at is efficiency. We examine the use of resources with respect to the achievement of the objectives.
You could deliver water to a million people. But you took five years doing the project and it was extremely expensive. You spent much more than what you were supposed to, which makes the project less than efficient.
Finally, we look at the sustainability of projects. Now the water supply system is in place, you have achieved your objective, and you did it efficiently, but is this sustainable? Is it going to be there 10 years from now? Did you design this project in a social manner in which resources are continually provided? Is the government committed? Do they have the money and budget to continue?
So we assess these very important dimensions. We bring all these categories together, and we call the project successful or unsuccessful.
Again, in all of those projects we work in partnerships, the major actor is the government, not the ADB. The government is in the driver’s seat.
Q: Suppose a project in China or elsewhere in Asia is proven to be a failure, how would you respond?
A: This applies to projects that have already concluded or — in special cases — to those that are underway. We normally evaluate projects once all the financing has been delivered.
Projects have to reach a certain maturity. If you evaluate too early, you don’t see the result.
The point of maturity that we have agreed on among multilaterals is the point at which the financing or the disbursement has been completed.
If there is a problem while the project is still ongoing, we can do a mid-term review of the problems. The overall strategy of the ADB in China will continue nonetheless.
What is useful is to learn lessons. A lot of work we do is intended to learn lessons and enhance accountability so that shareholders and the board know what happens with the use of the investment. And it helps to correct the course of new operations, either here in China or in other parts of Asia.
China is a special partner, with a strong implementation capacity, but there are countries with much weaker capacities. It’s more difficult to work with them. You have to take that into consideration. It’s not because you were successful in developing this water project in China, you are going to be successful in another country.
Even if you use the same designs, you are working with a different partner. Success is not guaranteed.
The most important thing to bear in mind is that development is a risky business. A number of things are involved here. It is not because if you know more and you know better, you will make better decisions.
Decisions are based on many considerations — political, social, circumstantial. There are a number of things you learn from past operations that you can implement in future operations, but you should consider the context.
Q: On the demand side of the equation, how relevant are your evaluations to the clients the ADB is hoping to help?
A: Very relevant. Since we work in partnership, the lessons are not useful only for the ADB, but for individual countries as well. Again, I think the government of China has been smart. China appreciates working with the ADB, not for money, but for lessons on how to improve the effectiveness of operations.
I have seen a project in a small locality. In this case, you could see that development is painful, for it involves applying all the standards of international organizations.
But once they learn and have the whole range of knowledge of how the standards work, they can take them to a different locality and start expanding and replicating the experience.
I think it’s very Chinese — learning by imitating and then taking it further to be fully in line with your own specific needs, something that is embedded in the Confucian legacy. I find that way of working in China commendable and successful.