Strategic assessment of the Asian Development Bank

• Main Author: Favis, Marotte M.
• Format: text
• Language: English
• Published: Animo Repository 2001
• Subjects: Development banks > Philippines; Banks and banking > Philippines; Asian Development Bank
• Online Access: https://animorepository.dlsu.edu.ph/etd_masteral/4003
• Institution: De La Salle University

This paper is an evaluation of the current strategy of the Asian Development Bank (ADB) based on the strategy change cycle framework. Information were gathered from ADB reports, outside references and consultations. I have divided it into seven chapters, followed by the Appendixes. The first chapter is this executive summary. The second chapter is the industry profile which presents the history, comparative analysis and challenges/trends in the multilateral development banking industry. The multilateral development banks (MDBs) are multilateral institutions that channel funds from donor to developing countries. Aside from their roles as financial intermediaries, they also serve social development objectives such as poverty reduction. ADB as an MDB. The four other MDBs are African Development Bank (AFDB), European Bank of Reconstruction and Development (EBRD), Inter-American Development Bank (IDB) and World Bank (WB). Only WB operates on a global scale. There is relatively little functional specialization among them and their ownership reflects their respective geographic focus. This is also the reason why there is a limited comparative advantage among the MDbs. I identified six industry challenges/trends involving MDBs under the following headings: (1) decline of supply and demand (2) monetary vs. sustainable development agents (3) external reviews (4) increasing presence of the private sector (5) poverty reduction and (6) globalization. The third chapter is the company profile. In includes the history, mandates, organization, operations and performance of ADB. ADB was created to support the needs of the less developed countries in Asia and the Pacific. It was established in Manila in 1966. Today, ADB's vision is an Asia and Pacific region free of poverty. Its mission to help its developing member countries improve their living conditions and quality of life, with poverty reduction being accorded the paramount priority. For the purpose of this paper, I focused on the following operations of ADB: loans, technical assistance (TA), borrowings, private sector operations, external relations, information services and technology and performance evaluation. ADB's major operating principles are to finance specific projects, adhere to conservative lending policies and take into account only economic considerations in making bank decisions. The chapter ends with ADB's overall financial performance which happens to be very positive. It has the healthiest portfolio among the MDBs. The fourth chapter is on strategy which discusses ADB's previous and current strategies. It starts with the evolution of ADB's previous strategies, followed by ADB's current poverty reduction strategy. Since1966, ADB has remained committed to the ideals of its founders to foster economic growth and cooperation in the region and to contribute to the acceleration of the process of economic development of the developing member countries, collectively and individually. To remain an effective institution relevant to the changing needs of the region , ADB has continually been adapting its priorities, assistance modalities and organizational structure and transformed itself from what was essentially a project financier to a full-fledged development institution. In 1999, ADB adopted poverty reduction as its overarching objective. The fifth chapter is the strategic framework. I selected the strategy change cycle because it is (1) tailor-made for non-profit organization such as ADB (2) insightful since the author appeared to have a good grasp of the broad workings of a development institution and its corporate culture and (3) given my very limited time and resources, it offers a flexible way of strategic evaluation and planning. The sixth chapter is the strategic assessment. Although it is most grueling (mental and even physical) exercise I have gone through in a long while, I would have to say that, surprisingly, I have benefited from making a strategic assessment myself. Honestly, I had preconceptions of what my recommendations would be as I was working in the industry and company profiles. Except for a few correct guesses, I was surprised to end up with a different set of recommendations. If there is one key lesson I can bring with me outside MBA , it is that for strategic planning to be truly effective, one should combine hard work and open-mindedness. Both are useful hard. (researching, data mining for hard to find frameworks and company/industry information), and soft (analysis, brainstorming and other creative processes) ware for strategic management. The seventh chapter summarizes my recommendations on ADB's current poverty reduction strategies. Once I finished chapter 6, this was the easiest to do based on the strategic assessment, my recommendations on the strategic agenda are (1) retain the vision (2) modify the mission (3) retain the objectives and (4) redefine regional cooperation as mutually beneficial coexistence. Based on the strategic assessment, I recommend the following on ADB's current strategic operating principles: (1) overhaul the resources fund and distribution scheme (2) undertake more aggressive efforts to improve external relations (3) redefine the poverty reduction targets and (4) promote ownership to operations among ADB's developing member countries (DMCs). The paper begins with table of contents and ends with the list of references.. I hope that the reader will find some value in this paper. It took me as much effort to gather information for such a big and complex organization as ADB and related references on its industry and management, as condensing them into a document that would be easily comprehensible to those who do not know anything about ADB or development banking. The result was this paper.